-----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, DyToWt5dE36mjiAtKB8/k4eLmXmHTKjL7r2CwhAljEdglvPtigPjGfzctBEWhZrI xMeFhvX4/dXRyK1nKMgFSw== 0000950117-98-000760.txt : 19980414 0000950117-98-000760.hdr.sgml : 19980414 ACCESSION NUMBER: 0000950117-98-000760 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 32 FILED AS OF DATE: 19980410 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER INDUSTRIES INC CENTRAL INDEX KEY: 0000030927 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 310268670 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957 FILM NUMBER: 98591919 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: 580 WALNUT ST PO BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45201 FORMER COMPANY: FORMER CONFORMED NAME: EAGLE PICHER CO DATE OF NAME CHANGE: 19660921 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER HOLDINGS INC CENTRAL INDEX KEY: 0001059364 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133989553 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-01 FILM NUMBER: 98591920 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAISY PARTS INC CENTRAL INDEX KEY: 0001059567 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 381406772 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-02 FILM NUMBER: 98591921 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER DEVELOPMENT CO INC CENTRAL INDEX KEY: 0001059568 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311215706 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-03 FILM NUMBER: 98591922 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER FAR EAST INC CENTRAL INDEX KEY: 0001059570 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311235685 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-04 FILM NUMBER: 98591923 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER FLUID SYSTEMS INC CENTRAL INDEX KEY: 0001059571 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311452637 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-05 FILM NUMBER: 98591924 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER MINERALS INC CENTRAL INDEX KEY: 0001059572 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311188662 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-06 FILM NUMBER: 98591925 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILLSIDE TOOL & MANUFACTURING CO CENTRAL INDEX KEY: 0001059573 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 380946293 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-07 FILM NUMBER: 98591926 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICHIGAN AUTOMOTIVE RESEARCH CORP CENTRAL INDEX KEY: 0001059575 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 382185909 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-08 FILM NUMBER: 98591927 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER TECHNOLOGIES LLC CENTRAL INDEX KEY: 0001059576 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311587660 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49957-09 FILM NUMBER: 98591928 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 S-4 1 EAGLE-PICHER INDUSTRIES, INC. ET AL S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 10, 1998 REGISTRATION NO. 33- ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ EAGLE-PICHER INDUSTRIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------------ OHIO -- 31-0268670 (STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
SUITE 500 250 EAST FIFTH STREET CINCINNATI, OHIO 45202 (513) 721-7010 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ SEE TABLE OF ADDITIONAL REGISTRANTS ------------------------ DAVID N. HALL SENIOR VICE PRESIDENT -- FINANCE EAGLE-PICHER INDUSTRIES, INC. 250 EAST FIFTH STREET, SUITE 500 CINCINNATI, OHIO 45202 (513) 721-7010 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ WITH A COPY TO: SCOTT F. SMITH, ESQ. HOWARD, DARBY & LEVIN 1330 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 (212) 841-1000 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. ------------------------ If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] ____________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] ____________ ------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE TITLE OF EACH CLASS OF SECURITIES AMOUNT OFFERING PRICE OFFERING AMOUNT OF TO BE REGISTERED TO BE REGISTERED PER NOTE(1) PRICE(1) REGISTRATION FEE(2) 9 3/8% Senior Subordinated Notes due 2008..... $220,000,000 100% $220,000,000 $64,900 Guarantees of 9 3/8% Senior Subordinated Notes due 2008.................................... -- -- -- (3) Total.................................... $220,000,000 100% $220,000,000 $64,900
(1) Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(f)(2) under the Securities Act. (2) Calculated pursuant to Rule 457(f)(2) under the Securities Act. (3) Pursuant to Rule 457(n) under the Securities Act, no registration fee is payable with respect to the Guarantees. ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ________________________________________________________________________________ TABLE OF ADDITIONAL REGISTRANTS
JURISDICTION OF PRIMARY STANDARD IRS EMPLOYER INCORPORATION OR INDUSTRIAL CLASSIFICATION IDENTIFICATION NAME ORGANIZATION CODE NUMBER NUMBER Eagle-Picher Holdings, Inc............................... Delaware 13-3989553 Daisy Parts, Inc......................................... Michigan 3714 38-1406772 Eagle-Picher Development Company, Inc.................... Delaware 6719 31-1215706 Eagle-Picher Far East, Inc............................... Delaware 5013 31-1235685 Eagle-Picher Fluid Systems, Inc.......................... Michigan 3089 31-1452637 Eagle-Picher Minerals, Inc............................... Nevada 1499 31-1188662 Eagle-Picher Technologies, LLC........................... Delaware 3691 31-1587660 Hillsdale Tool & Manufacturing Co........................ Michigan 3714 38-0946293 Michigan Automotive Research Corporation................. Michigan 8734 38-2185909
CROSS-REFERENCE SHEET PURSUANT TO RULE 404(A) AND ITEM 501 OF REGULATION S-K, SHOWING THE LOCATION IN THE PROSPECTUS OF THE INFORMATION REQUIRED TO BE INCLUDED THEREIN IN ACCORDANCE WITH PART I OF FORM S-4
ITEM NUMBER AND HEADING ON FORM S-4 CAPTION OR LOCATION IN PROSPECTUS ----------------------------------------------------------------- ------------------------------------------ 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus............................................. Facing Page and Outside Front Cover Page of the Prospectus 2. Inside Front and Outside Back Cover Pages of Prospectus.......... Inside Front and Outside Back Cover Pages of the Prospectus; Available Information; Table of Contents 3. Risk Factors, Ratio of Earnings to Fixed Charges, and Other Information.................................................... Forepart of Prospectus; Summary; Risk Factors; Summary of Historical and Pro Forma Condensed Consolidated Financial Information; Selected Historical Condensed Consolidated Financial Information; The Notes Exchange Offer 4. Terms of the Transaction......................................... Summary; The Notes Exchange Offer; Description of the Notes; Certain U.S. Federal Income Tax Considerations 5. Pro Forma Financial Information.................................. Summary of Historical and Pro Forma Condensed Consolidated Financial Information; Unaudited Pro Forma Consolidated Financial Statements; Management's Discussion and Analysis of Financial Condition and Results of Operations 6. Material Contacts with Company Being Acquired.................... * 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters.............................. * 8. Interests of Named Experts and Counsel........................... * 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities..................................... * 10. Information with Respect to S-3 Registrants...................... * 11. Incorporation of Certain Information by Reference................ * 12. Information with Respect to S-2 or S-3 Registrants............... * 13. Incorporation of Certain Information by Reference................ *
ITEM NUMBER AND HEADING ON FORM S-4 CAPTION OR LOCATION IN PROSPECTUS ----------------------------------------------------------------- ------------------------------------------ 14. Information with Respect to Registrants Other Than S-3 or S-2 Registrants.................................................... Summary; Risk Factors; Summary of Historical and Pro Forma Condensed Consolidated Financial Information; Selected Historical Condensed Consolidated Financial Information; Management's Discussion and Analysis of Financial Condition and Results of Operations; Business; Description of Industrial Revenue Bonds; Description of New Credit Agreement; Description of the Notes; Description of Preferred Stock; Description of Exchange Debentures; Financial Statements 15. Information with Respect to S-3 Companies........................ * 16. Information with Respect to S-2 or S-3 Companies................. * 17. Information with Respect to Companies Other Than S-3 or S-2 Companies...................................................... * 18. Information if Proxies, Consents or Authorizations Are to be Solicited...................................................... * 19. Information if Proxies, Consents or Authorizations Are Not to be Solicited, or in an Exchange Offer............................. Management; Executive Compensation; Security Ownership and Certain Beneficial Owners and Management of Parent; Certain Relationships and Related Transactions; The Notes Exchange Offer
- ------------ * Item is inapplicable or response thereto is in the negative. PROSPECTUS EAGLE-PICHER INDUSTRIES, INC. (AS SUCCESSOR BY MERGER TO E-P ACQUISITION, INC.) OFFER TO EXCHANGE ITS 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR ANY AND ALL OF ITS OUTSTANDING 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 THE NOTES EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED Eagle-Picher Industries, Inc., an Ohio corporation (the 'Company'), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus (the 'Prospectus') and the accompanying Letter of Transmittal (the 'Letter of Transmittal'), to exchange (the 'Notes Exchange Offer') $1,000 principal amount of its 9 3/8% Senior Subordinated Notes due 2008 (the 'New Notes') which have been registered under the Securities Act of 1933, as amended (the 'Act') for each $1,000 principal amount tendered of its outstanding 9 3/8% Senior Subordinated Notes due 2008 (the 'Old Notes' and, together with the New Notes, the 'Notes'), of which $220 million aggregate principal amount is outstanding. The form and terms of the New Notes are identical in all material respects to the form and terms of the Old Notes, except for certain transfer restrictions and registration and other rights relating to the exchange of Old Notes for New Notes. The New Notes evidence the same debt as the Old Notes and will be issued under the Indenture (as defined herein) governing the Old Notes. See 'The Notes Exchange Offer' and 'Description of the Notes.' Concurrently with the Notes Exchange Offer, Eagle-Picher Holdings, Inc., a Delaware corporation ('Parent'), which owns all of the capital stock of the Company, is offering to exchange (the 'Preferred Stock Exchange Offer' and, together with the Notes Exchange Offer, the 'Exchange Offers') shares of Parent's 11 3/4% Series B Cumulative Redeemable Preferred Stock (the 'Series B Preferred Stock') for any and all of its 14,191 outstanding shares of 11 3/4% Series A Cumulative Redeemable Exchangeable Preferred Stock (the 'Series A Preferred Stock' and, together with the Series B Preferred Stock, the 'Preferred Stock'). The Notes and the Preferred Stock are referred to herein as the 'Securities.' Interest on the New Notes is payable semi-annually on March 1 and September 1 of each year, commencing September 1, 1998. The Notes are redeemable at the option of the Company, in whole or in part, at any time on or after March 1, 2003, at the redemption prices set forth herein. The Company may also redeem up to 35% of the aggregate principal amount of the Notes at its option, at any time on or prior to March 1, 2001, at a redemption price equal to 109.375% of the principal amount thereof, plus accrued and unpaid interest and Special Interest (as defined herein), if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings (as defined herein); provided, that at least $100.0 million aggregate principal amount of Notes remains outstanding after such redemption. Upon the occurrence of a Change of Control (as defined herein), the Company will be required to offer to repurchase all or any part of each holder's Notes at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, to the date of purchase. The Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future Senior Indebtedness (as defined herein) of the Company, including the borrowings under the New Credit Agreement (as defined herein). The Notes are unconditionally guaranteed, on an unsecured senior subordinated basis (the 'Note Guarantees'), by Parent and the Company's domestic subsidiaries. As of February 28, 1998, the Company had approximately $327.0 million of Senior Indebtedness outstanding (of which approximately $323.8 million was secured). The Indenture permits the Company to incur additional indebtedness, including Senior Indebtedness, subject to certain limitations. The Company will accept for exchange any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on , 1998, unless extended (the 'Expiration Date'). Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The Notes Exchange Offer is subject to certain customary conditions. See 'The Notes Exchange Offer.' (cover continued on next page) ------------------------ SEE 'RISK FACTORS' BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BEFORE TENDERING NOTES IN THE NOTES EXCHANGE OFFER. ------------------------ THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURIITES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THE DATE OF THIS PROSPECTUS IS , 1998 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED APRIL 10, 1998 (cover continued) Prior to this offering, there has been no public market for the Notes. The Company does not intend to list the New Notes on any securities exchange or to seek approval for quotation through any automated quotation system. The Notes are expected to be eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages ('PORTAL') market of the National Association of Securities Dealers, Inc. (the 'NASD'). There can be no assurance that an active market for the New Notes will develop. The New Notes are being offered hereunder in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement (as defined herein). Based on interpretations by the staff of the Securities and Exchange Commission (the 'Commission') set forth in no-action letters issued to third parties, the Company believes the New Notes issued pursuant to the Notes Exchange Offer in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than Restricted Holders (as defined herein) or Participating Broker-Dealers (as defined herein)) without compliance with the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the 'Securities Act'). Any holder who tenders in the Notes Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes or who is an affiliate of the Company may not rely upon such interpretations by the staff of the Commission and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. Holders of Notes wishing to accept the Notes Exchange Offer must represent to the Company in the Letter of Transmittal that such conditions have been met. Each broker-dealer (other than a Restricted Holder) that receives New Notes for its own account pursuant to the Notes Exchange Offer (a 'Participating Broker-Dealer') must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an 'underwriter' within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See 'Plan of Distribution.' Any broker-dealer who is an affiliate of the Company may not rely on such no-action letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. The Company will not receive any proceeds from this Notes Exchange Offer. No dealer-manager is being used in connection with this Notes Exchange Offer. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. See 'Plan of Distribution.' Interest on the New Notes shall accrue from the last March 1 or September 1 on which interest was paid on the Old Notes so surrendered. 2 AVAILABLE INFORMATION The Company has filed with the Commission a Registration Statement on Form S-4 (together with any amendments, exhibits, annexes and schedules thereto, the 'Registration Statement,') under the Securities Act of 1933, as amended (the 'Securities Act'), with respect to the New Notes being offered by this Prospectus. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto. Statements made in this Prospectus as to the contents of any contract, agreement or other document are not necessarily complete. With respect to each such contract, agreement or other document filed or incorporated by reference as an exhibit to the Registration Statement, reference is made to such exhibit for a more complete description of the matter involved, and each such statement is qualified in its entirety by such reference. The Registration Statement (including the exhibits and schedules thereto) may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also be available for inspection and copying at the regional offices of the Commission located at Seven World Trade Center, New York, New York 10048 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The address of such site is http://www.sec.gov. Upon consummation of the Notes Exchange Offer, the Company will become subject to the information requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance therewith will be required to file periodic reports and other information with the Commission. In the event that the Company is not subject to the reporting requirements of the Exchange Act at any time following consummation of the Notes Exchange Offer, the Company will be required under the Indenture, dated as of February 24, 1998, as supplemented by the First Supplemental Indenture, dated February 24, 1998 (as so supplemented, the 'Indenture'), among the Company, Parent, certain subsidiaries of the Company and The Bank of New York, as trustee (the 'Trustee'), pursuant to which the Old Notes were, and the New Notes will be, issued, to continue to file with the Commission, and to furnish holders of the Notes with (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a 'Management's Discussion and Analysis of Financial Condition and Results of Operations' with respect to the Company, and, with respect to the annual information only, a report on the financial statements therein by the Company's certified independent accountants, and (ii) all reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. In addition, for so long as any of the Old Notes remain outstanding, the Company has agreed to make available to any prospective purchaser of the Old Notes or beneficial owner of the Old Notes in connection with any sale thereof the information required by Rule 144A(d)(4) under the Securities Act. 3 SUMMARY The following summary is qualified in its entirety and should be read in conjunction with by the more detailed information, including the financial statements and notes thereto, appearing elsewhere in this Prospectus. Except where otherwise indicated, 'Parent' means Eagle-Picher Holdings, Inc., and 'Eagle-Picher' and the 'Company' mean Eagle-Picher Industries, Inc. and its subsidiaries. Except as otherwise indicated, a 'Fiscal Year' means the fiscal year of the Company ended November 30 of the year specified, e.g., '1997 Fiscal Year' and 'Fiscal 1997' mean the fiscal year ended November 30, 1997. THE COMPANY Founded in 1843, Eagle-Picher is a diversified manufacturer of industrial products for the automotive, aerospace, defense, telecommunications, food and beverage and construction industries. The Company's long history of innovation in technology and engineering has helped it become a leader in certain niche markets in which it competes. Eagle-Picher operates more than 50 plants in the U.S., England, Germany, Spain and Mexico, and sells its products in over 60 countries worldwide. The Company has achieved significant internal growth in both sales and EBITDA (as defined herein), with a compounded annual growth rate since 1993 of 8.2% and 10.9%, respectively. For the 1997 Fiscal Year, the Company realized net sales and EBITDA of $906.1 million and $104.0 million, respectively. The Company's operations are organized under three major business groups: the Automotive Group, the Machinery Group and the Industrial Group, which accounted for 48.1%, 29.8% and 22.1% of the Company's net sales and, after allocation of corporate overhead, accounted for 49.2%, 27.0% and 23.8% of the Company's EBITDA, respectively, for the 1997 Fiscal Year. The Automotive Group. The Automotive Group designs, develops, and manufactures precision machined and rubber coated metal components for the global automotive industry. Its customers include automotive original equipment manufacturers ('OEMs') such as Ford Motor Company ('Ford'), General Motors Corporation ('GM'), Chrysler Corporation ('Chrysler'), Toyota Motor Corporation ('Toyota'), Nissan Motor Manufacturing Corporation U.S.A. ('Nissan'), Honda of America, Inc. ('Honda'), FMA (SPA) ('Fiat'), Bayerische Motoren Werke AG ('BMW') and BMW's subsidiary, Rover Group Limited ('Rover'), as well as direct suppliers to OEMs (referred to herein as 'Tier I' suppliers). The Company pioneered the development of materials and processes for coating metal with elastomer (rubber) compounds, and the Company believes its proprietary technologies in this area give it competitive advantages. The Company's rubber coated metal products consist of highly specialized gaskets and materials for high-temperature and high-pressure applications, including disc brake noise insulators, air conditioning compressor gaskets, and gaskets and coated materials for automotive powertrains. More than 150 precision machined components are produced by the Automotive Group, including vibration dampening devices for engine and drivetrain applications and automatic transmission pump assemblies. The Company believes that it is the only non-OEM in North America manufacturing high volumes of automatic transmission oil pumps and is one of the top three companies worldwide that design and produce torsional crankshaft dampers. The Automotive Group also produces fluid systems assemblies, molded rubber products, aluminum castings, and interior trim products. The Machinery Group. The Machinery Group designs and produces special purpose batteries, construction equipment and can washing and coating machinery. The Company has played a crucial role in the development of power systems for U.S. space flight, and its batteries have powered missions from the back-up system that safely brought Apollo 13 back to Earth 28 years ago, to last year's Mars Pathfinder. The Company's batteries are also used in virtually every U.S. missile system, including the Patriot and Tomahawk missiles. Recognized as one of the world leaders in nickel-hydrogen technology since it powered the first communication satellite launch in 1983, the Company believes it is a world leader in providing power systems for communications and surveillance satellites, including Motorola Inc.'s ('Motorola') Iridium'r' project. Construction equipment produced by the Machinery Group includes elevating wheel tractor scrapers, which are made under a sole-source contract with Caterpillar, Inc. ('Caterpillar'), and a premium line of heavy duty forklift trucks, as well as related replacement 4 parts. The Machinery Group also designs, manufactures and installs specialized high volume can washing and coating machinery for the manufacturers of two-piece cans primarily for the food and beverage industry. The Industrial Group. The Industrial Group is a leading producer of specialty materials, filter aids and absorbents which are used in a wide range of applications. The Company's specialty materials business, which has grown by approximately 60%, as measured by net sales, in the past two years, develops, manufactures and tests high-purity materials including germanium wafers (used in solar cells for the satellite industry), germanium tetrachloride (used in fiber optic cables for the telecommunications industry) and boron (used as a neutron absorber in nuclear power plants and as a semiconductor dopant). With a 30-year history of developing processing techniques, the Company produces the highest purity boron and germanium available in the market. Recent innovations by the Industrial Group have led to development stage production of a zinc selenide crystal that adds blue and green to the existing red color spectrum of light emitting diodes (LEDs), with potential use in flat panel displays and signage. The Industrial Group is also one of the world's largest producers of diatomaceous earth filter aids, which are used for high purity filtration by food and beverage processors and by chemical and pharmaceutical companies. BUSINESS STRATEGY The Company's strategy is to enhance its competitive position as a leading global manufacturer for the automotive, aerospace, defense, telecommunications, food and beverage, and construction industries. To achieve this objective, the Company will continue to build upon the following strengths: Leading Positions in Niche Markets. Eagle-Picher's long history of innovation and reputation for quality have afforded it leading positions in certain niche markets. The Company enjoys leading positions in, among others, the market for rubber coated metal products, the North American non-OEM market for transmission pumps, the market for nickel-hydrogen batteries and the market for two-piece can washers. The Company believes that it has achieved significant market share in these markets because of its customer relationships, engineering excellence, high quality standards and industry reputation. Strong Customer Relationships. The Company has established long-term relationships with many of its customers. It has been supplying its products to each of Ford, GM and Chrysler for more than 45 years; Lockheed Martin Corporation ('Lockheed Martin') for more than 40 years; and Motorola for more than 30 years. The Company believes it has developed strong customer relationships by working closely with customers to design products that meet the customers' specifications. Often, the Company provides innovative and cost-efficient engineering solutions to customer problems. For example, the Industrial Group continuously works with customers to develop lighter and longer-lasting battery systems to complement the latest generations of missiles and satellites. In addition, through the development of a new camshaft damper, the Automotive Group recently solved a significant powertrain vibration problem for certain OEMs. Many of the Company's facilities are located near customer plants, enhancing the Company's ability to respond to its customers' needs. The Automotive Group recently built a new transmission pump production facility in Manchester, Tennessee and a new manufacturing facility in San Luis Potosi, Mexico, in each case to meet the increasing needs of OEMs located nearby. The Company believes that its strong relationships with customers, particularly automotive and capital equipment OEMs, give the Company a competitive advantage and position the Company to capitalize on a growing trend toward outsourcing. Diversified Product Lines; Global Presence. The Company manufactures hundreds of products for the automotive, aerospace, defense, telecommunications, food and beverage and construction industries. The Company sells its products to customers located in over 60 countries through its extensive network, including global manufacturing facilities throughout the U.S. and Europe. The Automotive Group alone serves virtually all major automotive OEMs worldwide. The Company 5 believes that its product diversification and global sales reduce its exposure to any one market segment or customer. Superior Product Quality. The Company believes it has a reputation among its customers for providing technologically advanced, high quality products. The Company has been honored by many of its customers for its commitment to quality and service, and, in the last two years, has earned Ford's 'Supplier of the Year Award' (Ford's Sharonville facility), Hughes Space and Communications Company's ('Hughes SC') 'Performance Excellence Award,' McDonnell Douglas Corporation's ('MD') 'Preferred Supplier Award' and Lockheed Martin's 'Tradition of Excellence Award.' Low Cost Structure. The Company is committed to controlling costs and improving operating efficiencies. The Company believes that it is a low cost producer in many of the markets in which it competes. The Company attributes its low cost position to its leading positions in niche markets, relatively low overhead costs due to the small town locations of many of its facilities, a primarily non-union workforce, advanced proprietary technology and advanced manufacturing processes, including the Toyota Production System at one of the Automotive Group's facilities. Low cost is essential to the Company's ability to continue to remain competitive. The Company's principal executive offices are located at the Chiquita Center, 250 East Fifth Street, Cincinnati, Ohio 45202 and its telephone number is (513) 721-7010. THE ACQUISITION AND USE OF PROCEEDS On February 24, 1998, the Company was acquired (the 'Acquisition') by Granaria Industries BV ('Granaria Industries') from the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust (the 'Trust'). The Trust was established pursuant to the Company's Consolidated Plan of Reorganization upon its emergence from bankruptcy. See 'Company History;' 'Business -- Plan of Reorganization and Related Injunction.' The Acquisition was effected pursuant to the Merger Agreement, dated as of December 23, 1997, as amended by Amendment No. 1 dated February 23, 1998, (the 'Merger Agreement'), among E-P Acquisition, Inc., a Delaware corporation (the 'Issuer'), Parent, the Company and the Trust. In accordance with the Merger Agreement, on February 24, 1998, the Issuer was merged into the Company, with the Company continuing as the surviving corporation (the 'Merger'). At the closing of the Acquisition (the 'Closing'): (i) $100 million (the 'Equity Investment') was contributed to Parent by Granaria Industries and Lange Voorhout Investments B.V. ('LV Investment'), an affiliate of ABN AMRO Bank, N.V. ('ABN AMRO Bank'); (ii) Parent received gross proceeds of approximately $80 million from an offering of its 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock (the 'Preferred Stock Offering'); (iii) Parent contributed to the Issuer in the form of common equity approximately $180 million (the 'Equity Contribution') comprising the Equity Investment and all of the proceeds of the Preferred Stock Offering; (iv) the Issuer borrowed $225 million in term loans and $79.1 million in revolving loans under a syndicated senior secured loan facility (the 'New Credit Agreement') with ABN AMRO Bank, and completed the offering of the Old Notes; (v) the Company (a) terminated the Credit Agreement dated as of November 29, 1996 by and among the Company, certain subsidiaries of the Company, PNC Bank, Ohio, National Association, as Agent, and the banks named as parties therein (the 'PNC Bank Facility,' under which there was no outstanding indebtedness at Closing) and (b) redeemed 660,000 shares of common stock, par value $.01 per share (the 'Common Stock') of the Company from the Trust for an aggregate purchase price of $29 million (the 'Redemption Amount'); and (vi) the Issuer was merged into the Company. As a result of these transactions, the Company became a wholly-owned subsidiary of Parent and assumed all of the obligations and liabilities of the Issuer, including the Issuer's obligations and liabilities under the Old Notes, the Indenture, the Registration Rights Agreement and the New Credit Agreement. Simultaneously with the effectiveness of the Merger (the 'Effective Time'), the Company paid the total outstanding amount under the Company's 10% Senior Unsecured Sinking Fund Debentures due November 29, 2006 (the '10% Debentures'). In connection with the Acquisition, the Trust, the sole holder of the 10% Debentures, waived the prepayment penalty on the 10% Debentures. 6 The following table sets forth the approximate cash sources and uses of funds, including the application of the proceeds therefrom, at the Effective Time.
SOURCES OF FUNDS(A) (DOLLARS IN MILLIONS) New Credit Agreement: Revolving Credit Facility(B)............. $ 79.1 Term Loans............................... 225.0 Senior Subordinated Notes(C).................. 219.6 Equity Contribution(D)........................ 180.0 Cash.......................................... 39.5 ------ Total............................... $743.2 ------ ------ USES OF FUNDS(A) (DOLLARS IN MILLIONS) Merger Consideration(E)....................... $417.6 Repayment of Existing Indebtedness(F)......... 255.9 Common Stock Redemption(G).................... 29.0 Estimated Transaction Fees and Expenses(H).... 27.8 Management Compensation(I).................... 12.9 ------ Total............................... $743.2 ------ ------
- ------------ (A) Sources and uses of funds are based on (i) the borrowings of debt outstanding under the Company's existing credit facilities on February 24, 1998 (the 'Closing Date') and (ii) the purchase price paid for the Company in connection with the Acquisition. (B) Immediately following the Acquisition, the Company borrowed approximately $28.6 million under the revolving credit facility under the New Credit Agreement for use as credit support in the form of letters of credit, leaving approximately $52.3 million available for additional borrowings under the revolving credit facility under the New Credit Agreement. (C) Includes original issue discount of $0.4 million. (D) Parent funded the Equity Contribution from the Equity Investment and the Preferred Stock Offering (the fees and expenses of which were paid by the Company). (E) Merger Consideration (the 'Merger Consideration') represents the sum of (i) $410.0 million and (ii) an additional amount equal to 8% on an annual basis on $410.0 million from December 1, 1997 up to and including the Closing Date. (F) Consists of payment of $250.0 million principal amount due under the 10% Debentures and $5.9 million of interest accrued thereon from December 1, 1997 up to and including the Closing Date. (G) The Company redeemed 660,000 shares of Common Stock immediately prior to the Effective Time. (H) Approximately $27.8 million in transaction fees and expenses (including an amount equal to approximately 1% of the transaction value payable to Granaria Holdings (as defined herein)) was paid on the Closing Date. This amount includes $2.6 million in fees and expenses of Parent related to the Preferred Stock Offering. (I) Following the Acquisition, the Company paid approximately $10.0 million to a trust established for the benefit of certain members of senior management of the Company (the 'E-P Management Trust') and $2.9 million for the related tax obligation. The E-P Management Trust used the $10.0 million to satisfy a loan from Granaria Holdings, the proceeds of which were used by the E-P Management Trust to acquire 16% of the common stock of Granaria Industries. See 'Executive Compensation -- Compensation to Senior Management.' The Company made additional payments to certain members of senior management of the Company in the amount of approximately $7.6 million, which consists of $2.7 million in stay-put bonuses and $4.9 million in sales incentive bonuses under the STSP (as defined herein). 7 THE NOTES OFFERING The Issuer................................ The Old Notes were sold by the Issuer on February 24, 1998 (i) to 'qualified institutional buyers' (as defined in Rule 144A under the Securities Act) in reliance upon Rule 144A under the Securities Act and (ii) outside the United States to persons other than U.S. persons in reliance upon Regulation S under the Securities Act. Immediately following the sale of the Old Notes, the Issuer was merged into Eagle-Picher Industries, Inc. Upon consummation of the Merger, the Old Notes became obligations of Eagle-Picher Industries, Inc. Registration Rights Agreement............. In connection with the sale of the Old Notes, the Issuer entered into a Registration Rights Agreement, dated February 24, 1998 (the 'Registration Rights Agreement'), providing for, among other things, the Notes Exchange Offer. Upon consummation of the Merger, the Company assumed all of the obligations and liabilities of the Issuer under the Registration Rights Agreement. THE NOTES EXCHANGE OFFER The Notes Exchange Offer.................. The Company is offering to exchange up to $220,000,000 aggregate principal amount of New Notes for up to $220,000,000 aggregate principal amount of Old Notes issued in the Notes Offering in reliance upon an exemption from registration under the Securities Act. Upon consummation of the Notes Exchange Offer, the terms of the New Notes (including principal amount, interest rate, maturity and ranking) will be identical in all material respects to the terms of the Old Notes for which they may be exchanged pursuant to the Notes Exchange Offer, except that the New Notes have been registered under the Securities Act and therefore will not bear legends restricting their transfer and will not contain terms providing for an increase in the interest rate thereon under certain circumstances described in the Registration Rights Agreement. Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Notes Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by a holder thereof (other than a Restricted Holder or a Participating Broker-Dealer) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and that such holder is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, the distribution of such New Notes. Any Participating Broker-Dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker or dealer as a result of
8 market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an 'underwriter' within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with the resale of New Notes received in exchange for Old Notes where such Old Notes were acquired by such Participating Broker-Dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus available to any Participating Broker-Dealer for use in connection with any such resale. See 'Plan of Distribution.' Any holder who tenders in the Notes Exchange Offer with the intention of participating, or for the purpose of participating, in a distribution of the New Notes may not rely on the position of the staff of the Commission enunciated in no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale. Expiration Date........................... 5:00 p.m., New York City time, on , 1998, unless the Notes Exchange Offer is extended, in which case the term 'Expiration Date' means the latest date and time to which the Notes Exchange Offer is extended. Conditions to the Notes Exchange Offer.......................... The obligation of the Company to consummate the Notes Exchange Offer is subject to certain conditions. See 'The Notes Exchange Offer -- Conditions.' The Company reserves the right to terminate or amend the Notes Exchange Offer at any time prior to the Expiration Date upon the occurrence of any such condition. Procedures for Tendering Old Notes............................... Each holder of Old Notes wishing to accept the Notes Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, or transmit an Agent's Message (as defined herein) in connection with a book-entry transfer, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, such facsimile or such Agent's Message, together with the Old Notes and any other required documentation to the exchange agent (the 'Exchange Agent') at the address set forth herein. By executing the Letter of Transmittal or Agent's Message, each holder will represent to the Company that, among other things, the New Notes acquired pursuant to the Notes Exchange Offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is the holder, that neither the holder nor any such other person (i) has any arrangement or
9 understanding with any person to participate in the distribution of such New Notes, (ii) is engaging or intends to engage in the distribution of such New Notes or (iii) is an 'affiliate,' as defined under Rule 405 of the Securities Act, of the Company. See 'The Notes Exchange Offer -- Purpose and Effect of the Notes Exchange Offer,' ' -- Procedures for Tendering' and 'Plan of Distribution.' Special Procedures for Beneficial Owners....................... Any beneficial owner whose Old Notes are registrered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering his Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See 'The Notes Exchange Offer -- Procedures for Tendering.' Guaranteed Delivery Procedures.............................. Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not entirely available or who cannot deliver their Old Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date must tender their Old Notes according to the guaranteed delivery procedures set forth in 'The Notes Exchange Offer -- Guaranteed Delivery Procedures.' Withdrawal Rights......................... Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. See 'The Notes Exchange Offer -- Withdrawal of Tenders.' Acceptance of Old Notes and Delivery of New Notes................... The Company will accept for exchange any and all Old Notes which are properly tendered in the Notes Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The New Notes issued pursuant to the Notes Exchange Offer will be delivered promptly following the Expiration Date. See 'The Notes Exchange Offer -- Terms of the Notes Exchange Offer.' Exchange Agent............................ The Bank of New York is serving as Exchange Agent in connection with the Exchange Offers. See 'The Notes Exchange Offer -- Exchange Agent.'
10 THE NEW NOTES The Notes Exchange Offer applies to $220.0 million aggregate principal amount of Old Notes. The terms of the New Notes are identical in all material respects to the Old Notes, except for certain transfer restrictions and registration and other rights relating to the exchange of the Old Notes for New Notes. The New Notes will evidence the same debt as the Old Notes and will be entitled to the benefits of the Indenture under which both the Old Notes were, and the New Notes will be, issued. See 'Description of the Notes.' Notes Offered............................. $220,000,000 principal amount of 9 3/8% Senior Subordinated Notes due 2008. Maturity Date............................. March 1, 2008. Interest Payment Dates.................... March 1 and September 1 of each year, commencing September 1, 1998. Sinking Fund.............................. None. Subordination............................. The Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future Senior Indebtedness of the Company (including the Company's obligations under the New Credit Agreement). At February 28, 1998, after giving effect to the issuance of the Notes and the related financing transactions, the Company had approximately $327.0 million of Senior Indebtedness outstanding of which approximately $323.8 million was secured. Guarantees................................ The Notes are unconditionally guaranteed on an unsecured senior subordinated basis by Parent and all domestic subsidiaries of the Company (the 'Subsidiary Guarantors' and, together with Parent, the 'Guarantors'). Each Note Guarantee is a general unsecured obligation of the Guarantor thereof, subordinated in right of payment to the Guarantor's guarantee of the Company's obligations under the New Credit Agreement and to all Senior Indebtedness of such Guarantor. Optional Redemption....................... The Notes are redeemable at the option of the Company, in whole or in part, at any time on or after March 1, 2003, at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the redemption date. The Company may also redeem up to 35% of the aggregate principal amount of the Notes at its option, at any time prior to March 1, 2001, at a redemption price equal to 109.375% of the principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, to the redemption date, with the net proceeds of one or more Equity Offerings (as defined herein); provided, however, that at least $100 million in aggregate principal amount of the Notes remains outstanding following each such redemption. See 'Description of the Notes -- Optional Redemption of the Notes.' Change of Control......................... Upon the occurrence of a Change of Control, the Company will be required to offer to purchase all or any part of each holder's Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, to the date of purchase. There can be no
11 assurance that the Company will have the financial resources necessary, or be permitted by its debt or other agreements, to purchase the Notes upon a Change of Control. See 'Description of the Notes -- Change of Control.' Certain Covenants......................... The Indenture (as defined herein) contains certain covenants that, among other things, will limit the ability of the Company and the Restricted Subsidiaries (as defined herein) to incur additional indebtedness; issue capital stock of Restricted Subsidiaries; make restricted payments; pay dividends or make other distributions; incur liens; enter into certain transactions with affiliates; or enter into certain mergers or consolidations or sell all or substantially all of the assets of the Company and its subsidiaries. These covenants are subject to a number of significant exceptions and qualifications. See 'Description of the Notes -- Certain Covenants.' Use of Proceeds........................... There will be no proceeds to the Company from any exchange pursuant to the Notes Exchange Offer.
RISK FACTORS See 'Risk Factors' for a discussion of certain factors that should be considered before tendering Old Notes in the Notes Exchange Offer. 12 SUMMARY OF HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following historical condensed consolidated financial information is derived from the Consolidated Financial Statements of the Company. The unaudited pro forma condensed consolidated statement of income (loss) for the year ended November 30, 1997 gives effect to the Acquisition and the application of the proceeds as if it had been consummated on December 1, 1996. The unaudited pro forma condensed consolidated balance sheet as of November 30, 1997 gives effect to the Acquisition and the application of the proceeds as if it had been consummated on November 30, 1997. Effective November 29, 1996, the Company emerged from bankruptcy and, accordingly, it adopted fresh-start reporting in accordance with Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.' As a result, the condensed consolidated financial information for the periods subsequent to the adoption of fresh-start reporting are presented on a different cost basis than the information for prior periods and, therefore, are not comparable. Accordingly, a vertical black line is shown to separate post-emergence operations. The Company recorded a number of charges in 1995 and 1996 in connection with its reorganization and emergence from bankruptcy as set forth in the financial information herein. Given that the Company has emerged from bankruptcy, there will be no further reorganization charges. The unaudited condensed consolidated financial information presented for the three months ended February 28, 1997 and 1998 and as of February 28, 1998 are derived from the unaudited consolidated financial statements of the Company and include, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial information for such periods. As a result of the Acquisition of the Company by Granaria Industries from the Trust as of February 24, 1998, which was accounted for as a purchase, the Company's results of operations and financial position for periods after February 24, 1998 are not comparable to prior periods. See Note (I) below. The unaudited pro forma condensed consolidated statement of income (loss) for the three months ended February 28, 1998 gives effect to the Acquisition as if it had been consummated on December 1, 1997. Pro forma balance sheet data as of February 28, 1998 are not included herewith because the effects of the Acquisition have already been reflected in such balance sheet data. Neither the historical condensed consolidated financial data nor the pro forma condensed consolidated financial data are necessarily indicative of either the future results of operations or the results of operations that would have occurred if those events had been consummated on the indicated dates. The following condensed consolidated financial information should be read in conjunction with 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' the Pro Forma Condensed Consolidated Financial Statements (as defined herein) and the historical Consolidated Financial Statements, related notes, and other financial information all included elsewhere herein.
FISCAL YEAR ENDED NOVEMBER 30, ------------------------------------------------------- 1997 ----------------------- 1995 1996 ACTUAL PRO FORMA ----------- ---------- -------- --------- (DOLLARS IN THOUSANDS) STATEMENT OF INCOME (LOSS): Net sales(A).............................. $ 848,548 $ 891,287 $906,077 $906,077 Operating income.......................... 63,087 62,106 45,558(B) 38,698 Adjustment for asbestos litigation........ (1,005,511) 502,197 -- -- Fresh start revaluation................... -- 118,684(C) -- -- Reorganization items and claims(D)........ (2,225) (6,593) -- -- Interest expense.......................... (1,926) (3,083) (31,261) (54,881) Other income (expense).................... 11,704(E) 1,345 (251) (251) Income (loss) before taxes, extraordinary items and accounting changes............ (934,871) 674,656 14,046 (16,434) Income (loss) before extraordinary items and accounting changes.................. (944,171) 622,086 (3,854) (9,334) Extraordinary items and accounting changes................................. -- 1,524,305(F) -- -- Net income (loss)......................... (944,171) 2,146,391 (3,854) (9,334) BALANCE SHEET DATA (END OF PERIOD): Working capital........................... $ 243,495 $ 211,808 $187,968 $149,617 Property, plant and equipment, net........ 155,818 256,351 243,538 243,538 Total assets.............................. 580,073 848,880 746,881 867,280 Total debt................................ 20,628 386,439 273,397 547,497 Shareholder's equity (deficit)............ (2,211,308) 341,807 336,117 170,580 SELECTED FINANCIAL DATA: EBITDA(G)................................. $ 91,795 $ 92,856 $103,958 $103,958 Depreciation and amortization............. 28,708 30,750 55,989 56,749 Capital expenditures...................... 40,558 44,957 51,324(H) 51,324 SELECTED RATIOS: EBITDA/interest expense................... 47.66x 30.12x 3.33x 1.89x Total debt/EBITDA......................... 0.22 4.16 2.63 5.27 Total debt/capitalization................. N/M 53.1% 44.9% 76.2% UNAUDITED THREE MONTHS ENDED FEBRUARY 28, -------------------------------- 1998(I) --------------------- 1997 ACTUAL PRO FORMA -------- -------- --------- STATEMENT OF INCOME (LOSS): Net sales(A)..............................$223,607 $205,842 $205,842 Operating income.......................... 9,040 11,027 5,373 Adjustment for asbestos litigation........ -- -- -- Fresh start revaluation................... -- -- -- Reorganization items and claims(D)........ -- -- -- Interest expense.......................... (8,927) (6,940) (13,122) Other income (expense).................... 1,703 820 820 Income (loss) before taxes, extraordinary items and accounting changes............ 1,816 4,907 (6,929) Income (loss) before extraordinary items and accounting changes.................. (1,220) 807 (5,079) Extraordinary items and accounting changes................................. Net income (loss)......................... (1,220) 807 (5,079) BALANCE SHEET DATA (END OF PERIOD): Working capital...........................$208,373 $162,450 -- Property, plant and equipment, net........ 260,850 239,337 -- Total assets.............................. 831,943 867,139 -- Total debt................................ 372,170 546,996 -- Shareholder's equity (deficit)............ 338,642 180,005 -- SELECTED FINANCIAL DATA: EBITDA(G).................................$ 23,482 $ 25,905 $ 25,905 Depreciation and amortization............. 14,442 12,822 13,221 Capital expenditures...................... 15,857 5,692 5,692 SELECTED RATIOS: EBITDA/interest expense................... 2.63x 3.73x 2.05x Total debt/EBITDA......................... N/M N/M N/M Total debt/capitalization................. 52.4% 75.2% N/M
(footnotes on next page) 13 NOTES TO HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands) (A) In 1997, the Company sold the Plastics division, the Transicoil division and the Fabricon Products division and contributed the Suspension Systems division to the Eagle-Picher-Boge L.L.C. joint venture (collectively, the 'Divested Divisions'). In 1995, 1996, 1997, and the three months ended February 28, 1997, the Divested Divisions contributed net sales of $145,733, $138,116, $78,604 and $29,254, respectively. (B) Operating income in 1997 includes (i) amortization of reorganization value in excess of amounts allocable to identifiable assets in the amount of $16,284, (ii) depreciation of assets written up to fair value in the amount of $9,804 and (iii) loss on sale of divisions of $2,411. See 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Effects of Reorganization on Operations and Financial Condition.' (C) Fresh-start valuation gain of $118,684 reflects transactions related to emergence from bankruptcy and reorganization in accordance with Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization under the United States Bankruptcy Code.' See 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Effects of Reorganization on Operations and Financial Condition.' (D) Reflects provision for claims of $4,244 in 1996. Remaining reorganization items is net expense resulting from the Company's bankruptcy filing. See 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Effects of Reorganization on Operations and Financial Condition.' (E) Other income (expense) reflects a gain of $11,505 in 1995 relating to the sale of an investment in a Canadian mining concern. (F) Reflects (i) a gain of $1,525,540 in 1996 related to emergence from bankruptcy and reorganization in accordance with Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization under the United States Bankruptcy Code' and (ii) a loss of $1,235 in 1996 due to an accounting change of its method of computing LIFO inventories. (G) 'EBITDA' is used as defined in the Indenture. See 'Description of the Notes.' 'EBITDA' is presented because management believes it is an indicator of a company's ability to service and incur debt. EBITDA does not represent net income or cash flows from operations as those terms are defined by generally accepted accounting principles and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Under the Indenture, the definition of EBITDA excludes loss on sale of divisions. The Divested Divisions contributed $7,695, $3,615, $361 and ($652) of EBITDA in 1995, 1996, 1997, and the three months ended February 28, 1997, respectively. (H) Includes capital expenditures in 1997 of (i) $10,157 in connection with the new facility in Manchester, Tennessee, (ii) $6,495 in connection with the completion of a $13,054 diatomaceous earth processing facility in Vale, Oregon and (iii) $4,651 in connection with a new automotive facility in Tamworth, England. (I) The unaudited condensed consolidated financial statements as of and for the three months ended February 28, 1998 include the effects of the Acquisition that result as of February 24, 1998, the Closing Date. Accordingly, the historical condensed consolidated statement of income (loss) for the three months ended February 28, 1998 includes results of operations from (1) December 1, 1997 through February 24, 1998 of the Company prior to the consummation of the Acquisition (for clarity, sometimes referred to herein as the 'Predecessor Company') and (2) February 25 through February 28, 1998 of the Company. 14 RISK FACTORS In addition to the other information in this Prospectus, holders of the Old Notes should consider carefully the following risk factors before deciding to tender their Old Notes in the Notes Exchange Offer. SUBSTANTIAL LEVERAGE; RESTRICTIVE COVENANTS The Company is highly leveraged and has significant debt service requirements. On February 28, 1998, after giving effect to the Acquisition, the Company had $547.0 million of long-term debt outstanding, $323.8 million of which was secured. Under the New Credit Agreement, the Company has scheduled principal payments aggregating $5.3 million, $10.4 million and $15.4 million for the years 1998, 1999 and 2000, respectively, increasing to a maximum of $73.9 million in 2006. For the 1997 Fiscal Year, on a pro forma basis after giving effect to the Acquisition, the Company's total debt to EBITDA ratio would have been 5.27x. The degree to which the Company is leveraged could have important consequences to holders of the Notes, including: (i) the Company's ability to obtain additional financing, whether for working capital, acquisitions, capital expenditures, or other purposes, may be impaired; (ii) a substantial portion of the Company's cash flow from operations will be required for debt service, thereby reducing funds available to the Company for its operations; (iii) certain of the Company's indebtedness contains financial and other restrictive covenants which, if breached, would result in an event of default under such indebtedness; (iv) the Company's flexibility in planning for or reacting to changes in market conditions may be limited; (v) the Company may be more vulnerable upon a downturn in its business or in an industry in which it operates; and (vi) to the extent that the Company incurs any indebtedness at variable rates, including under the New Credit Agreement, the Company will be vulnerable to increases in interest rates. Based on the current level of operations (assuming the Company does not incur any material liabilities not presently known to the Company (including any environmental liabilities)) and anticipated future growth, the Company believes that its operating cash flow, together with available borrowings under the New Credit Agreement, will be sufficient to meet the debt service requirements on its indebtedness, meet its working capital needs and fund its capital expenditures and other operating expenses. However, there can be no assurance that the Company's business will generate cash flow at levels sufficient to meet these requirements. If the Company is unable to generate sufficient cash flow from operations to service its debt obligations and to meet other cash requirements, it may be required to sell assets, reduce capital expenditures, refinance all or a portion of its existing debt (including the Notes) or obtain additional financing. There can be no assurance that any such asset sales or refinancing would be possible or that any additional financing would be available, if at all, on terms acceptable to the Company. The Company's ability to meet its debt service obligations will be dependent upon its future performance which, in turn, will be subject to future economic conditions and to financial, business and other factors, many of which are beyond the Company's control. The terms of the New Credit Agreement, the Indenture, and the other agreements governing the Company's indebtedness impose operating and financing restrictions on the Company. Such restrictions affect, and in many respects limit or prohibit, among other things, the ability of the Company to incur additional indebtedness, pay dividends or repurchase stock or make other distributions, create liens, make certain investments, sell assets, or enter into mergers or consolidations. The New Credit Agreement will require the Company to comply with certain financial ratios and tests, under which the Company is required to achieve certain financial and operating results. The restrictions could limit the ability of the Company to plan for or react to market conditions or meet extraordinary capital needs or otherwise could restrict corporate activities. There can be no assurance that such restrictions will not adversely affect the Company's ability to finance its future operations or capital needs or to engage in other business activities that would be in the interest of the Company. Moreover, any default under the documents governing the indebtedness of the Company could have a significant adverse effect on the market value of the Notes. 15 SUBORDINATION OF NOTES; GUARANTEES The payment of principal of and interest on, and any premium or other amounts owing in respect of, the Notes will be subordinated to the prior payment in full of all existing and future Senior Indebtedness of the Company, including all amounts owing or guaranteed under the New Credit Agreement. The Guarantees will be similarly subordinated to all existing and future Senior Indebtedness of the Guarantors. Consequently, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to the Company or a Guarantor, assets of the Company or such Guarantor will be available to pay obligations on the Notes or Subsidiary Guarantees only after all Senior Indebtedness of the Company or the Senior Indebtedness of the Guarantors, as applicable, has been paid in full, and there can be no assurance that there will be sufficient assets to pay amounts due on any or all of the Notes. In addition, upon the occurrence of payment defaults in respect of the Senior Indebtedness, the Company and the Guarantors will be prohibited from paying principal, premium, interest or other amounts on account of the Notes or any Guarantee under certain circumstances. As of February 28, 1998, after giving effect to the Acquisition, the Company had $322.5 million of Senior Indebtedness outstanding (excluding debt of the Company's foreign subsidiaries), all of which was secured, and $4.5 million of debt of the Company's foreign subsidiaries, $1.3 million of which was secured, to which the Notes were structurally subordinated. See 'Description of the Notes -- Ranking.' In Fiscal 1997, the Subsidiary Guarantors accounted for approximately 54%, 58% and 43% of the Company's net sales, EBITDA and total assets, respectively, and the Company's foreign subsidiaries (which are not Subsidiary Guarantors) accounted for approximately 9%, 9% and 10% of the Company's net sales, EBITDA and total assets, respectively. Parent has unconditionally guaranteed, on a senior subordinated basis, all principal and interest payments on the Notes. However, because Parent's only significant asset following the Acquisition is the capital stock of the Company (and such asset is pledged to the lenders under the New Credit Agreement), should the Company be unable to meet its payment obligations with respect to the Notes, it is unlikely that Parent would be able to do so. FRAUDULENT CONVEYANCE STATUTES The Company, the Issuer, Parent and each Subsidiary Guarantor each believes that Parent's, the Issuer's and the Company's incurrence of indebtedness in connection with the issuance of the Securities and the guarantees by Parent and the Subsidiary Guarantors of indebtedness in connection with the Notes was incurred for proper purposes and in good faith and that, based on present forecasts, asset valuations and other financial information, the Company, the Issuer, Parent and each Subsidiary Guarantor is, and after the issuance of the Securities was, solvent, will have sufficient capital for carrying on its business and will be able to pay its debts as they mature. However, if a court of competent jurisdiction were to find that the Issuer, the Company, Parent or such Subsidiary Guarantor did not receive fair consideration or reasonably equivalent value for incurring such indebtedness or obligation (including any guarantee thereof) and, at the time of such incurrence, the Issuer, the Company, Parent or such Subsidiary Guarantor (i) was insolvent, (ii) was rendered insolvent by reason of such incurrence or the Acquisition, (iii) was engaged in a business or transaction for which the assets remaining in the Issuer, the Company, Parent or such Subsidiary Guarantor, as the case may be, constituted unreasonably small capital, or (iv) intended to incur or believed it would incur debts beyond its ability to pay such debts as they mature, such court, subject to applicable statutes of limitation, could, among other things, (a) invalidate, in whole or in part, such indebtedness and obligation (including any guarantee thereof) as fraudulent conveyances, the effect of which could be that the holders of the Securities may not be repaid in full, and/or (b) subordinate such indebtedness and obligation (including any guarantee thereof) to existing or future creditors of the Issuer, the Company, Parent or such Subsidiary Guarantor, as the case may be, the effect of which would be to entitle such other creditors to be paid in full before any payment could be made on the Securities. If a court were to find that the Issuer, the Company, Parent or any Subsidiary Guarantor, as the case may be, satisfied the measures of insolvency or capital inadequacy described in (i) through (iv) above, such court could avoid any previous distribution by such entity in respect of such indebtedness (including, without limitation, any 16 payment of principal or interest) or obligation, (including any guarantee thereof) and order that it be returned to the Issuer, the Company, Parent or such Subsidiary Guarantor, as the case may be, or to a fund for the benefit of the creditors of such entity. With respect to each Subsidiary Guarantee, a court may compare its estimate of the value received by each Subsidiary Guarantor with the magnitude of its obligation under such Subsidiary Guarantee. If the value received by the Subsidiary Guarantor is found to be disproportionately small as compared with its obligation under such Subsidiary Guarantee, then, to that extent, there would be a lack of fair consideration for the giving of the Subsidiary Guarantee and if the Subsidiary Guarantee came within any of the foregoing clauses (i) through (iv) above, such Subsidiary Guarantee could be held invalid to such extent. The obligation of each Subsidiary Guarantor under its Subsidiary Guarantee will be limited in a manner intended to avoid it being deemed a fraudulent conveyance under applicable law. The measure of insolvency for purposes of the foregoing will vary depending on the law of the jurisdiction being applied. Generally, however, the Issuer, the Company, Parent or any of the Subsidiary Guarantors would be considered insolvent at a particular time if the sum of its debts was then greater than all of its property at a fair valuation or if the present fair saleable value of its assets was then less than the amount that would be required to pay its probable liabilities on its existing debts as they became absolute and matured. The Company believes, based upon the financial information, the recent operating history as discussed in 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and other factors, that, after giving effect to the issuance of the Notes, none of the Issuer, the Company, Parent, or any of the Subsidiary Guarantors will be rendered insolvent, each such entity will have sufficient capital for the businesses in which it is engaged and it will be able to pay its debts as they mature. While the Company believes each of the Issuer, the Company, Parent and each Subsidiary Guarantor is solvent, there can be no assurance as to whether a court would concur with such beliefs. CYCLICALITY OF MARKETS Certain industries in which the Company competes are highly cyclical and can be affected by the strength of the economy generally. In particular, the Company's automotive and construction equipment businesses depend, in large part, on the overall strength of demand for light trucks, passenger cars, forklifts and wheel tractor scrapers. There can be no assurance that the industries for which the Company supplies components will not experience downturns in the future. An economic recession typically impacts substantially leveraged companies such as the Company more than similarly situated companies with less leverage. A decrease in overall demand for light trucks, passenger cars, forklifts and wheel tractor scrapers could have a material adverse effect on the Company's financial condition, results of operations or cash flows. RELIANCE ON PRINCIPAL CUSTOMERS; GOVERNMENT APPROVALS Sales to the Company's three largest customers, Ford, GM and Caterpillar, accounted for approximately 18.8%, 7.1% and 6.1%, respectively, of the Company's net sales for Fiscal 1997. Although the Company has ongoing relationships with Ford, GM and Caterpillar, there can be no assurance that sales to these customers will continue at the same levels. Ford has notified the Company that from December 1997 through March 1999, it will no longer purchase certain product lines of the Company. These product lines contributed approximately $19.4 million, or 2.1%, of the Company's net sales for Fiscal 1997 (which represents 11.4% of the Company's sales to Ford in Fiscal 1997). Although the Company believes that this revenue will be replaced by new programs currently being implemented with other customers, there can be no assurance that Ford or other customers will continue to purchase products for the Company at current levels. See 'Management's Discussion and Analysis of Financial Condition and Results of Operations.' Continuation of the Company's relationships with its principal customers is dependent upon the customers' satisfaction with the price, quality and delivery of the Company's products. While the Company believes its relationships with its customers (including Ford) are satisfactory, if any of its principal customers were to reduce substantially or discontinue its purchases from the Company, the 17 financial condition, results of operations or cash flows of the Company could be materially adversely affected. The Company manufactures certain products for U.S. government agencies (including National Aeronautics and Space Administration ('NASA') and the U.S. Department of Defense ('DOD')), many of which have concerns about doing business with non-U.S. entities and some of which require the Company to maintain special security clearance and other arrangements. Because the Company is controlled by a non-U.S. citizen as a result of the Acquisition, it is required to enter into additional special security clearance and other arrangements with the DOD. The Company is currently in discussions with the DOD regarding the terms of the special security clearance arrangements and a filing under the Exon-Florio provisions of the Defense Production Act. There can be no assurance, however, that the U.S. government will continue as a customer of the Company or will continue to do business with the Company at its current level. Contracts funded, directly or indirectly, by various agencies of the federal government that require security clearance represented approximately 6% of the Company's net sales for Fiscal 1997. THE OEM SUPPLIER INDUSTRY The Company's automotive business competes in the global OEM supplier industry. The automotive industry is characterized by a small number of OEMs that are able to exert considerable pressure on component and system suppliers to reduce costs, improve quality and provide additional design and engineering capabilities. In the past, OEMs have generally demanded and received price reductions and measurable increases in quality by implementing competitive selection processes, rating programs and various other arrangements. Also, through increased partnering on platform work, OEMs have generally required component and system suppliers to provide more design engineering input at earlier stages of the product development process, the costs of which have, in some cases, been absorbed by the suppliers. There can be no assurance that future price reductions, increased quality standards or additional engineering capabilities required by OEMs will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. ENVIRONMENTAL MATTERS Like companies involved in similar manufacturing businesses, the Company's operations and properties are subject to extensive federal, state, local and foreign environmental laws and regulations, including those concerning, among other things, the treatment, storage and disposal of wastes, the investigation and remediation of soil and groundwater affected by hazardous substances, the discharge or emission of substances into the soil, water or air or otherwise relating to environmental protection and various health and safety matters (collectively and as amended, 'Environmental Laws'). Certain Environmental Laws, such as the Comprehensive Environmental Response, Compensation, and Liability Act, as amended ('CERCLA'), impose strict, retroactive and joint and several liability upon persons responsible for releases of hazardous substances. Failure to comply with such Environmental Laws can lead to the imposition of civil or criminal penalties, injunctive relief and denial or loss of, or imposition of significant restrictions on, environmental permits. In addition, the Company could be subject to suit by third parties in connection with violations of or liability under Environmental Laws. The Company currently is undertaking remedial activities at a number of its facilities and properties, and has received notices under CERCLA or analogous state laws of liability or potential liability in connection with the disposal of material from the Company's operations or former operations. See 'Business -- Environmental Matters.' The Company's expenditures related to environmental matters have not had, and are not currently expected to have, a material adverse effect on the Company's financial condition, results of operations or cash flows. However, the Environmental Laws under which the Company's facilities operate are numerous, complicated and often ambiguous. Moreover, the Environmental Laws are constantly changing, historically have become increasingly more stringent, and may be applied retroactively. Accordingly, there can be no assurance that the Company will not be required to make substantial additional expenditures to remain in or to achieve compliance with Environmental Laws in the future or 18 that any such additional expenditures will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. COMPETITION The Company operates in highly competitive industries. The Company competes with major national and international manufacturers in each of its product lines, and its competitors include customers of the Company, such as automotive OEMs, many of which are significantly larger and have greater financial, technical, marketing, distribution and other resources than the Company. The Company competes with such other companies in different product lines to various degrees on the basis of price, technical performance, product features, product system compatibility, customized design, availability, quality and sales and technical support. The Company's ability to compete successfully depends on elements both within and outside of the Company's control, including its product mix, successful and timely development of new technology, products and manufacturing processes, product performance and quality, manufacturing yields and product availability, customer service, pricing, industry trends and general economic trends. The Company believes that its experience in product design and development, design engineering and implementing cost reduction programs and ability to control manufacturing and development costs should allow the Company's products and prices to remain competitive. However, there can be no assurance that the Company will be able to improve or maintain its sales or its profit margins on sales to OEMs or other customers. TECHNOLOGICAL CHANGE AND NEW PRODUCT DEVELOPMENT Certain industries in which the Company competes are subject to rapid technological change resulting in the frequent introduction of new and increasingly complex and powerful products, evolving industry standards, rapid product obsolescence and price erosion, and fluctuations in end user demand. The Company believes that its success depends, in part, on its ability to improve its existing core products, to develop new products, to develop and implement new technologies, to adapt products and processes to technological changes and to adopt emerging industry standards. If the Company is not able to implement new technologies or develop or introduce new products successfully, the Company may lose its position as a market leader and its financial condition, results of operations or cash flows may be adversely affected. The Company must continue to develop and introduce new products that compete effectively on the basis of price and performance and that satisfy customer requirements. In order to attempt to anticipate its customers' needs and market trends, the Company monitors technological changes in the various industries in which it competes and works closely with certain of its customers to develop new products. Because the development process can be time consuming, decisions to undertake development must anticipate both future demand and changes in the technology to supply such demand. There can be no assurance that the Company will be able to identify new product opportunities or that the Company will be able to develop and market new products successfully. Delays in developing new products or achieving volume production of certain new products could have a material adverse effect on the Company's financial condition, results of operations or cash flows. In addition, there can be no assurance that such products, if introduced, will gain market acceptance or that the Company will be able to respond effectively to new technological changes or new product announcements by others. ACCESS TO RAW MATERIALS Certain of the Company's manufacturing operations depend upon obtaining adequate supplies of raw materials such as steel, rubber, germanium, gallium, chemicals and gases and other inputs on a timely basis. The Company purchases such raw materials and other inputs from a limited number of suppliers which the Company believes to be reliable. The Company's financial condition, results of operations or cash flows would be adversely affected if it were unable to obtain adequate supplies of raw materials and other inputs in a timely manner or if there were significant increases in the costs of raw materials and other inputs. 19 RELIANCE ON KEY MANAGEMENT AND PERSONNEL The Company's success depends to a significant extent upon, among other factors, its ability to continue to attract, retain and motivate qualified personnel, including key senior executives and research and development, engineering, marketing, sales, manufacturing, support and other personnel. Although all of the key management employees have employment contracts with the Company and own shares of common stock of Granaria Industries, there can be no assurance that such individuals will remain employed with the Company. If, for any reason, such key personnel do not continue to be active in the Company's management, the Company's financial condition, results of operations or cash flows could be adversely affected. The Company has no key man life insurance policies with respect to any of its senior executives. CONTROL BY PRINCIPAL SHAREHOLDERS Granaria Holdings and LV Investment (the 'Shareholders') beneficially own approximately 90% of the outstanding common stock of Parent and the Company. Circumstances may occur in which the interests of the Shareholders could be in conflict with the interests of the holders of the Securities. In particular, ABN AMRO Bank, an affiliate of LV Investment, acted as agent and arranger for loan facilities of $385 million under the New Credit Agreement. See 'Description of New Credit Agreement.' If the Company encounters financial difficulties, or is unable to pay certain of its debts as they mature, the interests of the Shareholders (whether or not as holders of the Company's equity securities) might conflict with those of the holders of the Securities. In addition, the Shareholders may have an interest in pursuing acquisitions, divestitures or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to the holders of the Securities. PLAN OF REORGANIZATION AND RELATED INJUNCTION In January 1991, Eagle-Picher and seven of its U.S. subsidiaries (collectively, the 'Eagle-Picher Group') filed voluntary petitions for reorganization under the United States Bankruptcy Code, as amended (the 'Bankruptcy Code'). The Consolidated Plan of Reorganization (the 'Plan') of the Eagle-Picher Group was jointly confirmed by an order (the 'Order') of the United States Bankruptcy Court for the Southern District of Ohio (the 'Bankruptcy Court') and the United States District Court for the Southern District of Ohio (the 'Ohio District Court') in November 1996. A consolidated appeal of the Order (the 'Appeal') is currently pending before the United States Circuit Court for the Sixth Circuit (the 'Sixth Circuit'); however, the Order was not stayed pending the Appeal and the Plan was consummated and, commencing on November 29, 1996, distributions were made pursuant to the Plan. See 'Business -- Plan of Reorganization and Related Injunction.' Among other things, the Plan discharges all past, present and future asbestos-related and lead-related claims against Eagle-Picher and the Eagle-Picher Group arising out of business operations prior to the date of the bankruptcy petitions by (i) requiring the establishment of the Trust and of a separate Eagle-Picher Industries, Inc. Property Damage Settlement Trust (the 'PD Trust'), (ii) contributing to the Trust assets valued at approximately $730.0 million in the aggregate, consisting of $51.3 million in cash, $250.0 million in 10% Debentures, $69.1 million in Tax Refund Notes (as defined herein), $18.1 million in Divestiture Notes (as defined herein) and 10 million shares of Common Stock (representing all outstanding shares of Common Stock), and an escrow of $3.0 million in cash for use in funding the PD Trust once it is established and (iii) imposing injunctions (collectively, the 'Injunction') prohibiting the assertion of any asbestos-related and lead-related claims against Eagle-Picher and the Eagle-Picher Group and directing that such claims be asserted only against the Trust or the PD Trust. See 'Business -- Plan of Reorganization and Related Injunction.' Although the Injunction has not, to the Company's knowledge, been the subject of any filed legal challenges (other than the Appeal), it is possible that one or more components of the Injunction could be vacated, modified or restricted in applicability pursuant to the Appeal or otherwise. If the Injunction were for any reason to be vacated, modified or restricted, whether in connection with the Appeal or otherwise, the Company could be adversely affected. The Company believes that the Injunction and the 20 Plan will withstand legal challenge, including the Appeal, and that the Injunction and the Plan will remain as in effect today. See 'Business -- Plan of Reorganization and Related Injunction.' CHANGE OF CONTROL Upon the occurrence of a Change of Control, the holders of the Notes have the right to require the Company to offer to purchase all of the outstanding Notes at 101% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the date of repurchase. There can be no assurance that the Company will have sufficient funds available or will be permitted by its other debt agreements to repurchase the Notes upon the occurrence of a Change of Control. In addition, the occurrence of a Change of Control may require the Company to offer to repurchase other outstanding indebtedness and may cause a default under the New Credit Agreement. The inability to purchase all of the tendered Notes would constitute an Event of Default (as defined herein) under the Indenture. See 'Description of the Notes -- Change of Control.' ABSENCE OF PUBLIC MARKET The New Notes are being offered exclusively to holders of the Old Notes. The Old Notes were issued to a limited number of institutional investors on February 24, 1998. There is currently no established market for the New Notes. There can be no assurance as to the liquidity of any markets that may develop for the New Notes, the ability of the holders of the New Notes to sell their Notes or the price at which holders would be able to sell their Notes. Future trading prices of the New Notes will depend on many factors, including, among other things, prevailing interest rates, the Company's operating results, and the market for similar securities. The Company does not intend to apply for listing of the New Notes on any securities exchange. The liquidity of, and trading market for, the New Notes may also be materially and adversely affected by declines in the market for high yield securities generally. Such a decline may materially and adversely affect such liquidity and trading independent of the financial performance of, and prospects for, the Company and Parent. To the extent Old Notes are tendered and accepted in the Notes Exchange Offer, the principal amount of outstanding Old Notes will decrease with a resulting decrease in the liquidity in the market therefor. Following the consummation of the Notes Exchange Offer, holders of Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for the Old Notes will be adversely affected. CONSEQUENCES OF FAILURE TO EXCHANGE Issuance of the New Notes in exchange for the Old Notes pursuant to the Notes Exchange Offer will be made only after a timely receipt by the Company of such Old Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, holders of the Old Notes desiring to tender such Old Notes in exchange for New Notes should allow sufficient time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to the tenders of Old Notes for exchange. Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Notes Exchange Offer, including holders of Old Notes whose Old Notes are tendered but not accepted, will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legend thereon and, except in certain limited circumstances, will no longer have any registration rights with respect to the Old Notes. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Notes under the Securities Act. New Notes issued pursuant to the Notes Exchange Offer in exchange for Old Notes may be offered for resale, resold or otherwise transferred by holders thereof (other than Restricted Holders or Participating Broker-Dealers) without compliance with the registration and prospectus delivery 21 provisions of the Securities Act, provided that such holder represents, among other things, that such holder is not an 'affiliate' of the Company or any Guarantor (as defined in Rule 405 of the Securities Act), that such New Notes are acquired in the ordinary course of such holder's business and that such holder is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, the distribution of such New Notes. Any holder unable to make such representations will not be able to participate in the Notes Exchange Offer and may only sell its Old Notes pursuant to a registration statement and prospectus meeting the requirements of the Securities Act, or pursuant to an exemption from the registration requirements of the Securities Act. Each Participating Broker-Dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such Participating Broker-Dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that, by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an 'underwriter' within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such Participating Broker-Dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus available to any Participating Broker-Dealer for use in connection with any such resale. See 'Plan of Distribution.' However, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. To the extent that Old Notes are tendered and accepted in the Notes Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes will be adversely affected. FORWARD-LOOKING STATEMENTS Certain information included in this Prospectus is forward-looking, including statements contained in 'Summary,' 'Risk Factors,' 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and 'Business,' and includes statements regarding the intent, belief and current expectations of the Company and Parent and their directors and officers. Such forward-looking information involves important risks and uncertainties that could materially alter results in the future from those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks and uncertainties include, but are not limited to, the ability of the Company to maintain existing relationships with long-standing customers, the ability of the Company to successfully implement productivity improvements, cost reduction initiatives, facilities expansion and the ability of the Company and Parent to develop, market and sell new products and to continue to comply with environmental laws, rules and regulations. Other risks and uncertainties include uncertainties relating to economic conditions, acquisitions and divestitures, government and regulatory policies, technological developments and changes in the competitive environment in which the Company operates. Persons reading this Prospectus are cautioned that such statements are only predictions and that actual events or results may differ materially. In evaluating such statements, readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements, including those discussed in 'Risk Factors.' 22 COMPANY HISTORY The Company was founded in Cincinnati in 1843 and was incorporated in 1867 under the laws of the State of Ohio. The Company evolved into a diversified manufacturer of industrial products, a small portion of which were products containing asbestos. The Company's asbestos-related business operations ceased in 1974. In January 1991, the Eagle-Picher Group filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The filings were precipitated primarily by costs and expenses resulting from litigation arising out of the Eagle-Picher Group's previous asbestos-related business operations. In connection with the bankruptcy proceedings and pursuant to the Plan, which was confirmed by the Bankruptcy Court and the Ohio District Court in November 1996, all of the outstanding shares of Common Stock were transferred to the Trust on November 29, 1996. See 'Risk Factors -- Plan of Reorganization and Related Injunction;' 'Business -- Plan of Reorganization and Related Injunction.' THE ACQUISITION On February 24, 1998, the Company was acquired by Granaria Industries from the Trust. The Acquisition was effected pursuant to the Merger Agreement, in accordance with which, among other things, the Issuer was merged into the Company, with the Company continuing as the surviving corporation. Granaria Industries, which owns all of the voting stock of Parent, is controlled by Granaria Holdings B.V., a private Dutch company ('Granaria Holdings'). See 'Security Ownership and Certain Beneficial Owners and Management of Parent.' Granaria Holdings is a Netherlands-based food processing and investment company, which was founded in 1912 by Louis Wyler. Granaria Holdings' food processing division, which processes and distributes nuts and dried fruits, portion pack and partly-baked bread from its manufacturing facilities in The Netherlands, France, Poland and Russia, has annual net sales in excess of $200.0 million. Granaria Holdings' investment portfolio includes real estate investments in The Netherlands, the United Kingdom and the U.S., and minority holdings in special situation funds and private companies. The principal owner of Granaria Holdings is the Wyler family of The Netherlands. At the Closing the following occurred: (i) the Equity Investment was contributed to Parent by Granaria Industries and LV Investment; (ii) Parent received gross proceeds of approximately $80.0 million from the Preferred Stock Offering; (iii) Parent contributed to the Issuer in the form of common equity approximately $180.0 million comprising the Equity Investment and all of the proceeds of the Preferred Stock Offering; (iv) the Issuer borrowed $225.0 million in term loans and $79.1 million in revolving loans under the New Credit Agreement and completed the Notes Offering; (v) the Company (a) terminated the PNC Credit Facility (under which there was no outstanding indebtedness at Closing) and (b) redeemed 660,000 shares of Common Stock from the Trust for the Redemption Amount; and (vi) the Issuer was merged into the Company. See 'Security Ownership and Certain Beneficial Owners and Management of Parent.' As a result of these transactions, the Company became a wholly-owned subsidiary of Parent and assumed all of the obligations and liabilities of the Issuer, including the Issuer's obligations and liabilities under the Old Notes, the Indenture, the Registration Rights Agreement and the New Credit Agreement. Simultaneously with the Effective Time, the Company paid the total outstanding amount under the 10% Debentures. In connection with the Acquisition, the Trust waived the prepayment penalty on the 10% Debentures. 23 The following table sets forth the approximate cash sources and uses of funds, including the application of the proceeds therefrom, at the Effective Time.
SOURCES OF FUNDS(A) (DOLLARS IN MILLIONS) New Credit Agreement: Revolving Credit Facility(B)................ $ 79.1 Term Loans.................................. 225.0 Senior Subordinated Notes(C).................. 219.6 Equity Contribution(D)........................ 180.0 Cash.......................................... 39.5 ------ Total............................... $743.2 ------ ------ USES OF FUNDS(A) (DOLLARS IN MILLIONS) Merger Consideration(E)....................... $417.6 Repayment of Existing Indebtedness(F)......... 255.9 Common Stock Redemption(G).................... 29.0 Estimated Transaction Fees and Expenses(H).... 27.8 Management Compensation(I).................... 12.9 ------ Total............................... $743.2 ------ ------
- ------------ (A) Sources and uses of funds are based on (i) the borrowings of debt outstanding under the Company's existing credit facilities on the Closing Date and (ii) the purchase price paid for the Company in connection with the Acquisition. (B) Immediately following the Acquisition, the Company borrowed approximately $28.6 million under the revolving credit facility under the New Credit Agreement for use as credit support in the form of letters of credit, leaving approximately $52.3 million available for additional borrowings under such facility. (C) Includes original issue discount of $0.4 million. (D) Parent funded the Equity Contribution from the Equity Investment and the Preferred Stock Offering (the fees and expenses of which were paid by the Company). (E) Merger Consideration represents the sum of (i) $410.0 million and (ii) an additional amount equal to 8.0% on an annual basis on $410.0 million from December 1, 1997 up to and including the Closing Date. (F) Consists of payment of $250.0 million principal amount due under the Company's 10% Debentures and $5.9 million of interest accrued on the 10% Debentures from December 1, 1997 up to and including the Closing Date. (G) The Company redeemed 660,000 shares of Common Stock immediately prior to the Effective Time. (H) Approximately $27.8 million in transaction fees and expenses (including an amount equal to approximately 1% of the transaction value payable to Granaria Holdings) was paid on the Closing Date. This amount includes approximately $2.6 million in fees and expenses of Parent related to the Preferred Stock Offering. (I) Following the Acquisition, the Company paid approximately $10.0 million to the E-P Management Trust and $2.9 million for the related tax obligation. The E-P Management Trust used the $10.0 million to satisfy a loan from Granaria Holdings, the proceeds of which were used by the E-P Management Trust to acquire 16% of the common stock of Granaria Industries. See 'Executive Compensation -- Compensation to Senior Management.' The Company made additional payments to certain members of senior management of the Company shortly after the Acquisition in the amount of approximately $7.6 million, which consists of $2.7 million in stay-put bonuses and $4.9 million in sales incentive bonuses under the STSP. USE OF PROCEEDS There will be no proceeds to the Company from any exchange pursuant to the Exchange Offers. 24 THE NOTES EXCHANGE OFFER PURPOSE AND EFFECT OF THE NOTES EXCHANGE OFFER The Old Notes were sold by the Issuer on February 24, 1998 to SBC Warburg/Dillon Read Inc. and ABN AMRO Incorporated (together, the 'Initial Purchasers') who resold the Old Notes (i) to 'qualified institutional buyers' (as defined in Rule 144A under the Securities Act) in reliance upon Rule 144A under the Securities Act and (ii) outside the United States to persons other than U.S. persons in reliance upon Regulation S under the Securities Act. In connection therewith, the Issuer and the Initial Purchasers entered into the Registration Rights Agreement. Pursuant to the Merger, the Company assumed all of the Issuer's obligations and liabilities under the Registration Rights Agreement. The Registration Rights Agreement requires that, among other things, as soon as practicable within 45 days following the original issuance of the Old Notes, the Company file with the Commission a Registration Statement (the 'Notes Exchange Offer Registration Statement,' of which this Prospectus is a part) under the Securities Act with respect to an issue of new notes of the Company identical in all material respects to the Old Notes, use its best efforts to cause such Notes Exchange Offer Registration Statement to be declared effective by the Commission under the Securities Act on or prior to 90 days after the issuance of the Old Notes and, upon the effectiveness of the Notes Exchange Offer Registration Statement, offer to the Holders of the Old Notes the opportunity to exchange their Old Notes for a like principal amount of New Notes, to be issued without a legend restricting their transfer and which may, subject to certain exceptions described below, be reoffered and resold by the holder without restrictions or limitations under the Securities Act. A copy of the Registration Rights Agreement has been filed as an exhibit to the Notes Exchange Offer Registration Statement. The term 'Holder' with respect to any Note means any person in whose name such Note is registered on the books of the Company. Each Holder desiring to participate in the Notes Exchange Offer will be required to represent, among other things, that (i) it is not an 'affiliate' (as defined in Rule 405 of the Securities Act) of the Company or any Guarantor (ii) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the New Notes and (iii) it is acquiring the New Notes in the ordinary course of its business (a Holder unable to make the foregoing representation is referred to as a 'Restricted Holder'). A Restricted Holder will not be able to participate in the Notes Exchange Offer and may only sell its Old Notes pursuant to a registration statement containing the selling security holder information required by Item 507 of Regulation S-K under the Securities Act, or pursuant to an exemption from the registration requirement of the Securities Act. Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that the New Notes issued pursuant to the Notes Exchange Offer may be offered for resale, resold and otherwise transferred by any holder of such New Notes (other than Restricted Holders or Participating Broker-Dealers) without compliance with the registration and prospectus delivery provisions of the Securities Act. Any Holder who tenders in the Notes Exchange Offer for the purpose of participating in a distribution of the New Notes cannot rely on the staff position enunciated in the no-action letters issued to third parties referred to above and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Each Participating Broker-Dealer must acknowledge in the Letter of Transmittal that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an 'underwriter' within the meaning of the Securities Act. Based upon interpretations by the staff of the Commission, the Company believes that New Notes issued pursuant to the Notes Exchange Offer to Participating Broker-Dealers may be offered for resale, resold and otherwise transferred by a Participating Broker-Dealer upon compliance with the prospectus delivery requirements, but without compliance with the registration requirements, of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-dealer in 25 connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the date the Notes Exchange Offer Registration Statement is declared effective by the Commission, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. By acceptance of this Notes Exchange Offer, each broker-dealer that receives New Notes pursuant to the Notes Exchange Offer agrees to notify the Company prior to using this Prospectus in connection with the sale or transfer of New Notes. See 'Plan of Distribution.' As a result of the filing and the effectiveness of the Notes Exchange Offer Registration Statement and the consummation of the Notes Exchange Offer, the Company's obligation to make certain semi-annual payments with respect to the Old Notes will be terminated. The Old Notes were issued to a limited number of institutional investors on February 24, 1998 and there is no public market for them at present. To the extent Old Notes are tendered and accepted in the exchange, the principal amount of outstanding Old Notes will decrease with a resulting decrease in the liquidity in the market therefor. Following the consummation of the Notes Exchange Offer, holders of Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for the Old Notes could be adversely affected. The Registration Rights Agreement provides that if (i) the Company is not required to file the Notes Exchange Offer Registration Statement because the Notes Exchange Offer is not permitted by applicable law or Commission policy or (ii) any holder of Transfer Restricted Securities (as defined herein) notifies the Company within 20 days after the commencement of the Notes Exchange Offer that (a) it is prohibited by law or Commission policy from participating in the Notes Exchange Offer or (b) it may not resell the New Notes acquired by it in the Notes Exchange Offer to the public without delivering a prospectus, and the Prospectus contained in the Notes Exchange Offer Registration Statement is not appropriate or available for such resales or (c) it is a broker-dealer and holds Old Notes acquired directly from the Company or an affiliate of the Company, the Company will file with the Commission a shelf registration statement (the 'Shelf Registration Statement') to cover resales of the Notes by the holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. For purposes of the foregoing, 'Transfer Restricted Securities' means each Old Note or New Note until (i) the date on which such Old Note has been exchanged by a person other than a broker-dealer for a New Note in the Notes Exchange Offer, (ii) following the exchange by a broker-dealer in the Notes Exchange Offer of an Old Note for a New Note, the date on which such New Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Notes Exchange Offer Registration Statement, (iii) the date on which such Old Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Old Note could be resold pursuant to Rule 144 under the Act. The Registration Rights Agreement provides that if (a) the Company fails to file within 45 days of the Issue Date, or cause to become effective within 90 days of the Issue Date, the Notes Exchange Offer Registration Statement or (b) the Company is obligated to file the Shelf Registration Statement and such Shelf Registration Statement is not filed within 45 days, or declared effective within 90 days, of the date on which the Company became so obligated or (c) the Company fails to consummate the Notes Exchange Offer within 45 days of the Notes Exchange Offer Effective Date or (d) the Shelf Registration Statement or the Notes Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above a 'Registration Default'), interest ('Special Interest') will accrue on the principal amount of the Old Notes and the New Notes (in addition to the stated interest on the Old Notes and the New Notes) from and including the date on which any such Registration Default shall occur to but excluding the date on which any such Registration Defaults have been cured. Special Interest will accrue at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such rate exceed 1.5% per annum. 26 TERMS OF THE NOTES EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Company will accept any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. As of the date of this Prospectus, an aggregate of $220 million principal amount of the Old Notes is outstanding. The Company will issue $1,000 principal amount at maturity of New Notes in exchange for each $1,000 principal amount at maturity of outstanding Old Notes accepted in the Notes Exchange Offer. Holders may tender some or all of their Old Notes pursuant to the Notes Exchange Offer. However, Old Notes may be tendered only in integral multiples of $1,000. The form and terms of the New Notes will be identical in all material respects to the form and terms of the Old Notes, except that the New Notes have been registered under the Securities Act and therefore will not bear legends restricting the transfer thereof. The New Notes will evidence the same debt as the Old Notes and will be entitled to the benefits of the Indenture under which the Old Notes were, and the New Notes will be, issued. The Company has fixed the close of business on , 1998 as the record date for the Notes Exchange Offer for purposes of determining the persons to whom this Prospectus, together with the Letter of Transmittal, will initially be sent. Holders of the Old Notes do not have any appraisal or dissenters' rights under law or the Indenture in connection with the Notes Exchange Offer. The Company intends to conduct the Notes Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. The Company shall be deemed to have accepted validly tendered Old Notes when, as and if the Company has given oral (promptly confirmed in writing) or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purpose of receiving the New Notes from the Company. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, certificates for any such unaccepted Old Notes will be returned, without expense, to the tendering holder thereof as promptly as practicable after the Expiration Date. Holders who tender Old Notes in the Notes Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant to the Notes Exchange Offer. The Company will pay all charges and expenses, other than certain applicable taxes, in connection with the Notes Exchange Offer. See ' -- Fees and Expenses.' EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term 'Expiration Date' means 5:00 p.m., New York City time, on , 1998, unless the Company, in its sole discretion, extends the Notes Exchange Offer, in which case the term 'Expiration Date' shall mean the latest date and time to which the Notes Exchange Offer is extended. In order to extend the Notes Exchange Offer, the Company will notify the Exchange Agent of any extension by oral (promptly confirmed in writing) or written notice and will make a public announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date unless otherwise required by applicable law or regulation. The Company reserves the right, in its reasonable discretion, (i) to delay accepting any Old Notes, to extend the Notes Exchange Offer or, if any of the conditions set forth below under 'Conditions' shall not have been satisfied, to terminate the Notes Exchange Offer, by giving oral or written notice of such delay, extension or termination to the Exchange Agent, or (ii) to amend the terms of the Notes Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by a public announcement thereof. If the Notes Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment by means of a prospectus supplement that will be 27 distributed to the registered holders, and the Company will extend the Notes Exchange Offer for a period of five to ten business days, depending upon the significance of the amendment and the manner of disclosure to the registered holders, if the Notes Exchange Offer would otherwise expire during such five to ten business day period. Without limiting the manner in which the Company may choose to make public announcement of any delay, extension, termination or amendment of the Notes Exchange Offer, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a timely release to the Dow Jones News Service. PROCEDURES FOR TENDERING Only a Holder of Old Notes may tender such Old Notes in the Notes Exchange Offer. To tender in the Notes Exchange Offer, a Holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the Old Notes (or a confirmation of an appropriate book-entry transfer into the Exchange Agent's account at The Depository Trust Company ('DTC' or the 'Depositary') (as described below)) and any other required documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered effectively, the Old Notes (or a timely confirmation of a book-entry transfer of such Old Notes into the Exchange Agent's account at DTC as described below), Letter of Transmittal and other required documents must be received by the Exchange Agent at the address set forth below under 'Exchange Agent' prior to 5:00 p.m., New York City time, on the Expiration Date. The tender by a holder will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. The Exchange Agent has established an account with respect to the Old Notes at DTC, and any financial institution which is a participant in DTC may make book-entry delivery of the Old Notes by causing DTC to transfer such Old Notes into the Exchange Agent's account in accordance with DTC's procedure for such transfer. Although delivery of Old Notes may be effected through book-entry transfer into the Exchange Agent's account at DTC, the Letter of Transmittal, with any required signature guarantees and any other required documents, must in any case be transmitted to and received by the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date at one of its addresses set forth below under 'Exchange Agent', or the guaranteed delivery procedure described below must be complied with. Delivery of documents to DTC in accordance with its procedures does not constitute delivery to the Exchange Agent. All references in this Prospectus to deposit or delivery of Old Notes shall be deemed to include DTC's book-entry delivery method. The method of delivery of Old Notes and the Letter of Transmittal and all other required documents to the Exchange Agent, including delivery through DTC, is at the election and risk of the holder. Instead of delivery by mail, it is recommended that Holders use an overnight or hand delivery service. If Old Notes are sent by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to assure delivery to the Exchange Agent before the Expiration Date. No Letter of Transmittal or Old Notes should be sent to the Company. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect the above transactions for such holders. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering such owner's Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. 28 Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined below) unless the Old Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled 'Special Issuance Instructions' or 'Special Delivery Instructions' on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an 'eligible guarantor institution' within the meaning of Rule 17Ad-15 under the Exchange Act (an 'Eligible Institution'). If the Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the Notes Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any other person shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders (or, in the case of Old Notes delivered by book-entry transfer within DTC, will be credited to the account maintained within DTC by the participant in DTC which delivered such Old Notes), unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. In addition, the Company reserves the right in its sole discretion to purchase or make offers for any Old Notes that remain outstanding subsequent to the Expiration Date or, as set forth below under 'Conditions,' to terminate the Notes Exchange Offer and, to the extent permitted by applicable law, purchase Old Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Notes Exchange Offer. By tendering, each Holder will represent to the Company that, among other things, such Holder is not a Restricted Holder. In addition, each Participating Broker-Dealer must acknowledge that it will deliver a prospectus in connection with any resale of New Notes. See 'Plan of Distribution.' BOOK-ENTRY TRANSFER The Exchange Agent will establish a new account or utilize an existing account with respect to the Old Notes at the Depositary promptly after the date of this Prospectus, and any financial institution that is a participant in the Depositary and whose name appears on a security position listing as the owner of Old Notes may make a book-entry tender of Old Notes by causing the Depositary to transfer such Old Notes into the Exchange Agent's account in accordance with the Depositary's procedures for such transfer. However, although tender of Old Notes may be effected through book-entry transfer into the Exchange Agent's account at the Depositary, the Letter of Transmittal (or a manually-signed facsimile thereof), properly completed and validly executed, with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Exchange Agent at its address set forth below under the caption 'Exchange 29 Agent' on or prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. The confirmation of book-entry transfer of Old Notes into the Exchange Agent's account at the Depositary as described above is referred to herein as a 'Book-Entry Confirmation.' Delivery of documents to the Depositary in accordance with the Depositary's procedures does not constitute delivery to the Exchange Agent. The term 'Agent's Message' means a message transmitted by the Depositary to, and received by, the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that the Depositary has received an express acknowledgment from the participant in the Depositary tendering Old Notes stating (i) the aggregate principal amount of Old Notes which have been tendered by such participant, (ii) that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and (iii) that the Company may enforce such agreement against the participant. GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Old Notes and (i) whose Old Notes are not immediately available or (ii) who cannot deliver their Old Notes (or a confirmation of book-entry transfer of Old Notes into the Exchange Agent's account at DTC), the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date or (iii) who cannot complete the procedure for book-entry transfer on a timely basis, may effect a tender if: (a) the tender is made by or through an Eligible Institution; (b) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder of such Old Notes and the principal amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three (3) New York Stock Exchange, Inc. trading days after the Expiration Date, a duly executed Letter of Transmittal (or facsimile thereof) together with the Old Notes (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at DTC), and any other documents required by the Letter of Transmittal and the instructions thereto, will be deposited by such Eligible Institution with the Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile thereof), and all tendered Old Notes in proper form for transfer (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at DTC) and all other documents required by the Letter of Transmittal are received by the Exchange Agent within three (3) New York Stock Exchange, Inc. trading days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Old Notes according to the guaranteed delivery procedures set forth above. WITHDRAWAL OF TENDERS Except as otherwise provided herein, tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Old Notes in the Notes Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m.. New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the 'Depositor'), (ii) identify the Old Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Notes). (iii) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Old Notes register the transfer of such Old Notes into the name of the person withdrawing the tender and (iv) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. If the Old Notes have been delivered pursuant to the book-entry procedure set forth above under ' -- Procedures for Tendering,' any notice of withdrawal must specify the name and number of 30 the participant's account at DTC to be credited with the withdrawn Old Notes. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company in its sole discretion, which determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Notes Exchange Offer and no New Notes will be issued with respect thereto unless the Old Notes so withdrawn are validly retendered. Properly withdrawn Old Notes may be retendered by following one of the procedures described above under ' -- Procedures for Tendering' at any time prior to the Expiration Date. Any Old Notes which are tendered but which are not accepted due to withdrawal, rejection of tender or termination of the Notes Exchange Offer will be returned as soon as practicable to the holder thereof without cost to such holder (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described above, such Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Old Notes). CONDITIONS Notwithstanding any other term of the Notes Exchange Offer, the Company shall not be required to accept for exchange, or exchange New Notes for, any Old Notes, and may terminate the Notes Exchange Offer as provided herein before the acceptance of such Old Notes, if: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the Notes Exchange Offer which, in the reasonable judgment of the Company, might materially impair the ability of the Company to proceed with the Notes Exchange Offer or materially impair the contemplated benefits of the Notes Exchange Offer to the Company, or any material adverse development has occurred in any existing action or proceeding with respect to the Company or any of its subsidiaries, or (b) any change, or any development involving a prospective change, in the business or financial affairs of the Company or any of its subsidiaries has occurred which, in the reasonable judgment of the Company, might materially impair the ability of the Company to proceed with the Notes Exchange Offer or materially impair the contemplated benefits of the Notes Exchange Offer to the Company; or (c) any law, statute, rule or regulation is proposed, adopted or enacted, which, in the reasonable judgment of the Company, might materially impair the ability of the Company to proceed with the Notes Exchange Offer or materially impair the contemplated benefits of the Notes Exchange Offer to the Company; or (d) there shall have occurred (i) any general suspension of trading in, or general limitation on prices for, securities on the New York Stock Exchange, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority that adversely affects the extension of credit to the Company or (iii) a commencement of war, armed hostilities or other similar international calamity directly or indirectly involving the United States; or, in the case any of the foregoing exists at the time of commencement of the Notes Exchange Offer, a material acceleration or worsening thereof; or (e) any governmental approval has not been obtained, which approval the Company shall in its reasonable judgment, deem necessary, for the consummation of the Notes Exchange Offer as contemplated hereby. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its reasonable discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. 31 If the Company determines in its reasonable judgment that any of the conditions are not satisfied, the Company may (i) refuse to accept any Old Notes and return all tendered Old Notes to the tendering Holders (or, in the case of Old Notes delivered by book-entry transfer within DTC, credit such Old Notes to the account maintained within DTC by the participant in DTC which delivered such Notes), (ii) extend the Notes Exchange Offer and retain all Old Notes tendered prior to the expiration of the Notes Exchange Offer, subject, however, to the rights of Holders to withdraw such tenders of Old Notes (see 'Withdrawal of Tenders' above) or (iii) waive such unsatisfied conditions with respect to the Notes Exchange Offer and accept all properly tendered Old Notes which have not been withdrawn. If such waiver constitutes a material change to the Notes Exchange Offer, the Company will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered Holders, and the Company will extend the Notes Exchange Offer for a period of five to ten business days, depending upon the significance of the waiver and the manner of disclosure to the registered Holders, if the Notes Exchange Offer would otherwise expire during such five to ten business day period. EXCHANGE AGENT The Bank of New York has been appointed as Exchange Agent for the Notes Exchange Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: THE BANK OF NEW YORK By Hand or Overnight Delivery: By Facsimile Transmission By Registered or Certified Mail: 101 Barclay Street, (eligible institutions only): 101 Barclay Street, 7E Corporate Trust Service Window (212) 815-6339 New York, New York 10286 Ground Level Attn: Reorganization Section, 7E; New York, New York 10286 Santino Ginocchietti Attn: Reorganization Section, 7E; To Confirm Facsimile Santino Ginocchietti or for Information Call: (212) 815-2963
FEES AND EXPENSES The expenses of soliciting tenders will be borne by the Company. The principal solicitation is being made by mail; however, additional solicitation may be made by facsimile, telephone or in person by officers and regular employees of the Company and its affiliates. The Company has not retained any dealer-manager in connection with the Notes Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptance of the Notes Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith and will pay the reasonable fees and expenses of one firm acting as counsel for the holders of Old Notes should such holders deem it advisable to appoint such counsel. The cash expenses to be incurred in connection with the Notes Exchange Offer will be paid by the Company. Such expenses include fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs, among others. The Company will pay all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Notes Exchange Offer. If, however, New Notes or Old Notes for principal amounts not tendered or accepted for exchange are to be registered, or are to be issued in the name of, or delivered to, any person other than the registered holder, or if tendered Old Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Notes Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not 32 submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. ACCOUNTING TREATMENT The New Notes will be recorded at the same carrying value as the Old Notes on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized by the Company. The expenses of the Notes Exchange Offer and the unamortized expenses relating to the issuance of the Old Notes will be amortized over the term of the New Notes. 33 CAPITALIZATION COMPANY The following table sets forth, as of November 30, 1997, the consolidated capitalization of (i) the Company and its subsidiaries on a historical basis and (ii) the Company and its subsidiaries on an unaudited pro forma basis to give effect to the Acquisition. This table should be read in conjunction with the Company's Consolidated Financial Statements, including the notes thereto, and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' included elsewhere in this Prospectus.
NOVEMBER 30, 1997 ---------------------------------------- PRO FORMA COMPANY ACTUAL ADJUSTMENTS PRO FORMA -------- ----------------- --------- (DOLLARS IN THOUSANDS) (UNAUDITED) Long-term Debt, including Current Maturities 10% Debentures................................................... $250,000 $(250,000)(A) $ -- New Credit Agreement: Term Loan A................................................. -- 100,000(B) 100,000 Term Loan B................................................. -- 50,000(B) 50,000 Term Loan C................................................. -- 75,000(B) 75,000 Revolving Credit Facility................................... -- 79,100(C) 79,100 9 3/8% Senior Subordinated Notes due 2008........................ -- 220,000(D) 220,000 Industrial Revenue Bonds......................................... 18,400 -- 18,400 Debt of Foreign Subsidiaries..................................... 4,997 -- 4,997 -------- ----------------- --------- Total Long-term Debt, including Current Maturities.......... 273,397 274,100 547,497 -------- ----------------- --------- Shareholder's Equity Old Common Stock................................................. 341,807 (341,807)(E) -- New Common Stock................................................. -- 180,005(F) 180,005 Foreign Currency Translation..................................... (1,836) 1,836(G) -- Retained Earnings (Deficit)...................................... (3,854) (5,571)(H) (9,425) -------- ----------------- --------- Total Shareholder's Equity (Deficit)........................ 336,117 (165,537) 170,580 -------- ----------------- --------- Total Capitalization.................................................. $609,514 $ 108,563 $718,077 -------- ----------------- --------- -------- ----------------- ---------
- ------------ NOTES TO CAPITALIZATION TABLE OF THE COMPANY (Dollars in thousands) (A) Reflects the payment of $250,000 in principal amount of the 10% Debentures to the Trust. (B) Reflects senior secured term loans under the New Credit Agreement of $100,000, $50,000 and $75,000 for Term Loans A, B and C, respectively. (C) Reflects revolving credit loans under the New Credit Agreement of $160,000 of which $79,100 was drawn at Closing, $28,600 was used for credit support in the form of letters of credit and $52,300 was undrawn at Closing. See 'Description of New Credit Agreement.' (D) Reflects senior subordinated notes of $220,000. (E) Reflects the redemption of the common stock, all of which is owned by the Trust, in connection with the Acquisition. (F) Reflects issuance of new common stock to Parent. (G) Reflects elimination of prior foreign currency translation adjustments. (H) Reflects the effects on retained earnings of the reversal of the prior retained deficit of $3,854 and the recognition of management compensation expense, net of taxes, of $9,425. The components of this expense, on a pre-tax basis, are: (i) $6,100, which includes $3,200 of the first year earnings by certain members of senior management of the $10,000 that was paid to the E-P Management Trust and $2,900 for the related tax obligations and (ii) $8,400 for amounts under the STSP, of which $800 has not yet been paid. 34 PARENT The following table sets forth the consolidated capitalization of Parent and its subsidiaries (including the Company) as of November 30, 1997 assuming that Parent had been formed at such date and after giving pro forma effect to the Acquisition. This table should be read in conjunction with the Company's Consolidated Financial Statements, including the notes thereto, and the 'Management's Discussion and Analysis of Financial Condition and Results of Operations' included elsewhere in this Prospectus.
NOVEMBER 30, 1997 ---------------------- PARENT PRO FORMA ---------------------- (DOLLARS IN THOUSANDS) Long-term Debt, including Current Maturities New Credit Agreement: Term Loan A...................................................................... $100,000(A) Term Loan B...................................................................... 50,000(A) Term Loan C...................................................................... 75,000(A) Revolving Credit Facility........................................................ 79,100(B) 9 3/8% Senior Subordinated Notes due 2008............................................. 220,000(C) Industrial Revenue Bonds.............................................................. 18,400 Debt of Foreign Subsidiaries.......................................................... 4,997 ----------- Total Long-term Debt, including Current Maturities............................... 547,497 Cumulative Exchangeable Redeemable Preferred Stock......................................... 80,005(D) Shareholders' Equity Common Stock.......................................................................... 100,000 Retained Earnings (Deficit)........................................................... (9,425) ----------- Total Shareholders' Equity....................................................... 90,575 ----------- Total Capitalization....................................................................... $718,077 ----------- -----------
- ------------ NOTES TO CAPITALIZATION TABLE OF PARENT (Dollars in thousands) (A) Reflects senior secured term loans under the New Credit Agreement of $100,000, $50,000 and $75,000 for Term Loans A, B and C, respectively. (B) Reflects revolving credit loans under the New Credit Agreement of $160,000 of which $79,100 was drawn at Closing, $28,600 was used for credit support in the form of letters of credit and $52,300 was undrawn at Closing. See 'Description of New Credit Agreement.' (C) Reflects senior subordinated notes of $220,000. (D) Reflects gross proceeds of approximately $80,005 from the offering of cumulative redeemable exchangeable preferred stock offered in the Preferred Stock Offering. 35 SUPPLEMENTAL GUARANTOR INFORMATION The Company's payment obligations under the Senior Subordinated Notes issued February 24, 1998 are jointly and severally guaranteed by the Company and certain of its domestic subsidiaries. Each such note guarantee is an unsecured senior subordinated obligation of the entity providing it, and ranks junior in right of payment to all existing and future senior indebtedness. Foreign subsidiaries have not guaranteed the Senior Subordinated Notes. The following tables provide financial data with respect to such supplemental guarantor information. INDEX TO SUPPLEMENTAL GUARANTOR INFORMATION
PAGE ----- Supplemental Condensed Combining Statements of Income (Loss) For the Years Ended November 30, 1997, 1996 and 1995... 37-39 Supplemental Condensed Combined Balance Sheets as of November 30, 1997 and 1996..................................... 40-41 Supplemental Condensed Combining Statements of Cash Flows For the Years Ended November 30, 1997, 1996 and 1995...... 42-44 Supplemental Condensed Combining Statements of Operations For the Three Months Ended February 28, 1998 and 1997 (Unaudited)....................................................................................................... 45-46 Supplemental Condensed Combined Balance Sheets as of February 28, 1998 and 1997 (Unaudited)......................... 47-48 Supplemental Condensed Combining Statements of Cash Flows For the Three Months Ended February 28, 1998 and 1997 (Unaudited)....................................................................................................... 49-50
36 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF INCOME (LOSS) YEAR ENDED NOVEMBER 30, 1997
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL -------- ---------- ------------ --------- ------------ -------- (IN THOUSANDS OF DOLLARS) Net sales Customers............................. $255,330 $489,304 $ 82,839 $ 78,604 $ -- $906,077 Intercompany.......................... 12,345 9,512 5,775 29 (27,661) -- Operating costs and expenses Cost of products sold................. 202,259 407,006 71,144 71,688 (27,087) 725,010 Selling and administrative............ 42,766 22,280 7,756 4,624 (317) 77,109 Intercompany charges.................. (11,015) 9,055 -- 1,960 -- -- Depreciation.......................... 11,523 21,001 3,609 3,538 -- 39,671 Amortization of intangibles........... 3,254 13,030 34 -- -- 16,318 Loss on sale of divisions............. 699 1,712 -- -- -- 2,411 -------- ---------- ------------ --------- ------------ -------- Total............................ 249,486 474,084 82,543 81,810 (27,404) 860,519 Operating income (loss).................... 18,189 24,732 6,071 (3,177) (257) 45,558 Other income (expense) Interest expense...................... (30,932) (131) (202) -- 4 (31,261) Other income (expense)................ 1,105 147 (231) 113 (1,385) (251) -------- ---------- ------------ --------- ------------ -------- Income (loss) before taxes................. (11,638) 24,748 5,638 (3,064) (1,638) 14,046 Income taxes............................... 9,659 8,719 (636) 158 -- 17,900 -------- ---------- ------------ --------- ------------ -------- Net income (loss).......................... $(21,297) $ 16,029 $ 6,274 $ (3,222) $ (1,638) $ (3,854) -------- ---------- ------------ --------- ------------ -------- -------- ---------- ------------ --------- ------------ --------
37 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF INCOME (LOSS) YEAR ENDED NOVEMBER 30, 1996
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL ---------- ---------- ------------ --------- ------------ ---------- (IN THOUSANDS OF DOLLARS) Net sales Customers........................................ $ 242,537 $432,194 $ 78,440 $ 138,116 $ -- $ 891,287 Intercompany..................................... 11,944 6,990 5,551 80 (24,565) -- Operating costs and expenses Cost of products sold............................ 196,102 357,062 64,314 122,367 (22,919) 716,926 Selling and administrative....................... 42,262 22,616 8,834 9,166 (1,373) 81,505 Intercompany charges............................. (10,010) 7,281 -- 2,729 -- -- Depreciation..................................... 7,534 14,432 2,603 5,769 -- 30,338 Amortization of intangibles...................... 325 74 -- 13 -- 412 ---------- ---------- ------------ --------- ------------ ---------- Total....................................... 236,213 401,465 75,751 140,044 (24,292) 829,181 Operating income (loss)............................... 18,268 37,719 8,240 (1,848) (273) 62,106 Other income (expense) Interest expense................................. (2,914) -- (157) -- (12) (3,083) Other income (expense)........................... 574 (206) 939 26 12 1,345 Asbestos litigation and other claims............. 497,953 -- -- -- -- 497,953 ---------- ---------- ------------ --------- ------------ ---------- Income (loss) before reorganization items, taxes, extraordinary item and cumulative effect of accounting change................................... 513,881 37,513 9,022 (1,822) (273) 558,321 Reorganization items.................................. 116,335 -- -- -- -- 116,335 Income taxes.......................................... (46,090) (1,999) (4,326) (155) -- (52,570) ---------- ---------- ------------ --------- ------------ ---------- Income (loss) before extraordinary item and cumulative effect of accounting change......................... 584,126 35,514 4,696 (1,977) (273) 622,086 Extraordinary item -- gain on discharge of pre-petition liabilities......................... 1,525,540 -- -- -- -- 1,525,540 Cumulative effect of change in accounting for inventories......................................... (1,235) -- -- -- -- (1,235) ---------- ---------- ------------ --------- ------------ ---------- Net income (loss)..................................... $2,108,431 $ 35,514 $ 4,696 $ (1,977) $ (273) $2,146,391 ---------- ---------- ------------ --------- ------------ ---------- ---------- ---------- ------------ --------- ------------ ----------
38 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF INCOME (LOSS) YEAR ENDED NOVEMBER 30, 1995
FOREIGN DIVESTED ISSUER GUARANTOR SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL ----------- --------- ------------ --------- ------------ ----------- (IN THOUSANDS OF DOLLARS) Net sales Customers........................... $ 246,377 $ 381,297 $ 75,141 $ 145,733 $ -- $ 848,548 Intercompany........................ 11,028 6,394 3,143 51 (20,616) -- Operating costs and expenses Cost of products sold............... 198,632 314,195 62,020 126,450 (19,924) 681,373 Selling and administrative.......... 40,812 20,027 6,657 8,531 (647) 75,380 Intercompany charges................ (9,846) 6,140 -- 3,706 -- -- Depreciation........................ 6,716 13,436 2,391 5,753 -- 28,296 Amortization of intangibles......... 325 74 -- 13 -- 412 ----------- --------- ------------ --------- ------------ ----------- Total.......................... 236,639 353,872 71,068 144,453 (20,571) 785,461 Operating income (loss).................. 20,766 33,819 7,216 1,331 (45) 63,087 Other income (expense) Interest expense.................... (1,770) -- (189) -- 33 (1,926) Other income (expense).............. 11,379 377 210 (137) (125) 11,704 Adjustment for asbestos litigation........................ (1,005,511) -- -- -- -- (1,005,511) ----------- --------- ------------ --------- ------------ ----------- Income (loss) before taxes and reorganization items................... (975,136) 34,196 7,237 1,194 (137) (932,646) Reorganization items..................... (2,225) -- -- -- -- (2,225) Income taxes............................. (3,824) (2,011) (3,377) (88) -- (9,300) ----------- --------- ------------ --------- ------------ ----------- Net income (loss)........................ $ (981,185) $ 32,185 $ 3,860 $ 1,106 $ (137) $ (944,171) ----------- --------- ------------ --------- ------------ ----------- ----------- --------- ------------ --------- ------------ -----------
39 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINED BALANCE SHEET NOVEMBER 30, 1997
FOREIGN ISSUER GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL -------- ---------- ------------ ------------ -------- (IN THOUSANDS OF DOLLARS) ASSETS Cash and cash equivalents........................ $ 48,834 $ 561 $ 4,344 $ -- $ 53,739 Receivables...................................... 36,541 72,992 21,394 -- 130,927 Intercompany accounts receivable................. 2,982 3,295 -- (6,277) -- Income tax refunds receivable.................... 3,025 -- -- -- 3,025 Inventories...................................... 32,309 48,830 12,432 (1,375) 92,196 Prepaid expenses................................. 5,618 2,401 271 -- 8,290 Deferred income taxes............................ 13,793 -- -- -- 13,793 -------- ---------- ------------ ------------ -------- Total current assets........................ 143,102 128,079 38,441 (7,652) 301,970 Property, plant and equipment.................... 72,630 135,560 35,348 -- 243,538 Investment in subsidiaries....................... 59,981 5,186 -- (65,167) -- Deferred income taxes............................ 98,991 -- -- -- 98,991 Reorganization value in excess of amounts allocable to indentifiable assets.............. 9,746 39,091 -- -- 48,837 Other assets..................................... 36,395 16,462 688 -- 53,545 -------- ---------- ------------ ------------ -------- Total assets................................ $420,845 $324,378 $ 74,477 $(72,819) $746,881 -------- ---------- ------------ ------------ -------- -------- ---------- ------------ ------------ -------- LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Accounts payable............................ $ 16,974 $ 28,257 $ 7,655 $ -- $ 52,886 Intercompany accounts payable............... -- -- 6,247 (6,247) -- Accrued liabilities......................... 29,404 22,440 3,713 (138) 55,419 Income taxes................................ 2,284 -- 10 -- 2,294 Long-term debt -- current portion........... 80 -- 3,323 -- 3,403 -------- ---------- ------------ ------------ -------- Current liabilities.................... 48,742 50,697 20,948 (6,385) 114,002 Long-term debt -- less current portion........... 268,320 -- 1,674 -- 269,994 Other liabilities................................ 26,768 -- -- -- 26,768 -------- ---------- ------------ ------------ -------- Total liabilities...................... 343,830 50,697 22,622 (6,385) 410,764 Intercompany accounts............................ (240,324) 210,930 16,895 12,499 -- Shareholder's Equity............................. 317,339 62,751 34,960 (78,933) 336,117 -------- ---------- ------------ ------------ -------- Total liabilities and shareholder's equity............................... $420,845 $324,378 $ 74,477 $(72,819) $746,881 -------- ---------- ------------ ------------ -------- -------- ---------- ------------ ------------ --------
40 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINED BALANCE SHEET NOVEMBER 30, 1996
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL --------- ---------- ------------ --------- ------------ -------- (IN THOUSANDS OF DOLLARS) ASSETS Cash and cash equivalents.................... $ 26,089 $ 553 $ 5,985 $ 98 $ -- $ 32,725 Receivables.................................. 34,258 64,400 17,436 16,781 -- 132,875 Intercompany accounts receivable............. 2,721 2,915 -- -- (5,636) -- Income tax refunds receivable................ 73,720 -- -- -- -- 73,720 Inventories.................................. 28,139 49,874 10,408 14,480 -- 102,901 Prepaid expenses............................. 3,067 3,449 505 1,143 -- 8,164 Deferred income taxes........................ 26,351 -- -- -- -- 26,351 --------- ---------- ------------ --------- ------------ -------- Total current assets.................... 194,345 121,191 34,334 32,502 (5,636) 376,736 Property, plant and equipment................ 75,865 125,586 28,879 26,021 -- 256,351 Investment in subsidiaries................... 58,743 24,960 -- -- (83,703) -- Deferred income taxes........................ 102,133 -- -- -- -- 102,133 Reorganization value in excess of amounts allocable to identifiable assets........... 13,000 52,121 -- -- -- 65,121 Other assets................................. 25,561 14,045 630 8,303 -- 48,539 --------- ---------- ------------ --------- ------------ -------- Total assets............................ $ 469,647 $337,903 $ 63,843 $ 66,826 $(89,339) $848,880 --------- ---------- ------------ --------- ------------ -------- --------- ---------- ------------ --------- ------------ -------- LIABLITIES AND SHAREHOLDER'S EQUITY Current liabilities: Accounts payable........................ $ 14,844 $ 16,210 $ 4,959 $ 5,022 $ -- $ 41,035 Intercompany accounts payable........... -- -- 5,608 -- (5,608) -- Accrued liabilities..................... 25,522 15,199 5,897 3,248 -- 49,866 Income taxes............................ 3,038 -- 611 -- -- 3,649 Long-term debt -- current portion....... 70,378 -- -- -- -- 70,378 --------- ---------- ------------ --------- ------------ -------- Current liabilities................ 113,782 31,409 17,075 8,270 (5,608) 164,928 Long-term debt -- less current portion....... 316,061 -- -- -- -- 316,061 Other liabilities............................ 25,495 -- 589 -- -- 26,084 --------- ---------- ------------ --------- ------------ -------- Total liabilities.................. 455,338 31,409 17,664 8,270 (5,608) 507,073 Intercompany accounts........................ (327,498) 259,714 15,830 38,469 13,485 -- Shareholder's Equity......................... 341,807 46,780 30,349 20,087 (97,216) 341,807 --------- ---------- ------------ --------- ------------ -------- Total Liabilities and Shareholder's Equity........................... $ 469,647 $337,903 $ 63,843 $ 66,826 $(89,339) $848,880 --------- ---------- ------------ --------- ------------ -------- --------- ---------- ------------ --------- ------------ --------
41 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS YEAR ENDED NOVEMBER 30, 1997
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL --------- ---------- ------------ --------- ------------ --------- (IN THOUSANDS OF DOLLARS) Cash Flows From Operating Activities: Net Income (loss)...................... $ (21,297) $ 16,029 $ 6,274 $(3,222) $ (1,638) $ (3,854) Adjustments to reconcile net income loss to cash provided by (used in) operating activities: Depreciation and amortization.......... 14,777 34,031 3,643 3,538 -- 55,989 Loss on sale of divisions.............. 699 1,712 -- -- -- 2,411 Change in assets and liabilities: Income tax refunds receivable.......... 70,695 -- -- -- -- 70,695 Deferred income taxes.................. 15,700 -- -- -- -- 15,700 Working capital and other items........ (1,684) 9,991 (5,655) 3,051 1,239 6,942 --------- ---------- ------------ --------- ------------ --------- Net cash provided by (used in) operating activities............ 78,890 61,763 4,262 3,367 (399) 147,883 Cash Flows From Investing Activities: Proceeds from sale of divisions........ 30,735 8,272 -- -- -- 39,007 Capital expenditures................... (8,454) (31,396) (10,694) (780) -- (51,324) Other.................................. (1,670) 50 (1,271) (4) 1,385 (1,510) --------- ---------- ------------ --------- ------------ --------- Net cash provided by (used in) investing activities............ 20,611 (23,074) (11,965) (784) 1,385 (13,827) Cash Flows From Financing Activities: Issuance of long-term debt............. 8,000 -- 4,997 -- -- 12,997 Reduction of long-term debt............ (126,039) -- -- -- -- (126,039) --------- ---------- ------------ --------- ------------ --------- Net cash provided by (used in) financing activities............ (118,039) -- 4,997 -- -- (113,042) --------- ---------- ------------ --------- ------------ --------- Increase (decrease) in cash and cash equivalents............................... (18,538) 38,689 (2,706) 2,583 986 21,014 Intercompany accounts....................... 41,283 (38,681) 1,065 (2,681) (986) -- Cash and cash equivalents, beginning of year...................................... 26,089 553 5,985 98 -- 32,725 --------- ---------- ------------ --------- ------------ --------- Cash and cash equivalents, end of year............................... $ 48,834 $ 561 $ 4,344 $ -- $ -- $ 53,739 --------- ---------- ------------ --------- ------------ --------- --------- ---------- ------------ --------- ------------ ---------
42 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS YEAR ENDED NOVEMBER 30, 1996
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL ---------- ---------- ------------ --------- ------------ ----------- (IN THOUSANDS OF DOLLARS) Cash flows from operating activities: Net income (loss)....................... $2,108,431 $ 35,514 $ 4,696 $ (1,977) $ (273) $ 2,146,391 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Non-cash adjustments relating to non- operating income items..................... (2,140,942) -- -- -- -- (2,140,942) Depreciation and amortization................ 7,859 14,506 2,603 5,782 -- 30,750 Change in assets and liabilities: Deferred income taxes................... 29,170 -- -- -- -- 29,170 Working capital and other items......... 17,044 (15,532) 636 6,505 (1,161) 7,492 ---------- ---------- ------------ --------- ------------ ----------- Net cash provided by (used in) operating acitivities............ 21,562 34,488 7,935 10,310 (1,434) 72,861 Cash flows from investing activities: Proceeds from sale of divisions......... 4,248 -- -- -- -- 4,248 Capital expenditures.................... (9,417) (25,074) (5,602) (4,864) -- (44,957) Other................................... (661) (1,246) 108 44 694 (1,061) ---------- ---------- ------------ --------- ------------ ----------- Net cash provided by (used in) investing activities............. (5,830) (26,320) (5,494) (4,820) 694 (41,770) Cash flows from financing activities......... -- -- Reduction of long-term debt............. (1,520) -- (1,678) -- -- (3,198) Cash payments on effective date of plan of reorganization............................. (88,498) -- -- -- -- (88,498) ---------- ---------- ------------ --------- ------------ ----------- Increase (decrease) in cash and cash equivalents................................ (74,286) 8,168 763 5,490 (740) (60,605) Intercompany accounts........................ 13,409 (8,676) 196 (5,669) 740 -- Cash and cash equivalents, beginning of year....................................... 86,966 1,061 5,026 277 -- 93,330 ---------- ---------- ------------ --------- ------------ ----------- Cash and cash equivalents, end of year................................ $ 26,089 $ 553 $ 5,985 $ 98 $ -- $ 32,725 ---------- ---------- ------------ --------- ------------ ----------- ---------- ---------- ------------ --------- ------------ -----------
43 EAGLE-PICHER INDUSTRIES, INC. SUPLEMENTAL COMBINING STATEMENT OF CASH FLOWS YEAR ENDED NOVEMBER 30, 1995
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL --------- ---------- ------------ --------- ------------ --------- (IN THOUSANDS OF DOLLARS) Cash flows from operating activities: Net income (loss).......................... $(981,185) $ 32,185 $ 3,860 $ 1,106 $ (137) $(944,171) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Non-cash adjustments relating to non-operating income items............... 994,006 -- -- -- -- 994,006 Depreciation and amortization.............. 7,041 13,510 2,391 5,766 -- 28,708 Change in assets and liabilities: Deferred income taxes...................... (18,900) -- -- -- -- (18,900) Working capital and other items............ (9,738) (9,137) (4,302) (6,095) 85 (29,187) --------- ---------- ------------ --------- ------ --------- Net cash provided by (used in) operating activities................ (8,776) 36,558 1,949 777 (52) 30,456 Cash flows from investing activities: Proceeds from sale of investment........... 11,505 -- -- -- -- 11,505 Capital expenditures....................... (17,582) (11,051) (5,620) (6,305) -- (40,558) Other...................................... (1,337) (1,518) 2,414 (176) 957 340 --------- ---------- ------------ --------- ------ --------- Net cash provided by (used in) investing activities................ (7,414) (12,569) (3,206) (6,481) 957 (28,713) Cash flows from financing activities: Issuance of long-term debt................. -- -- 1,240 -- -- 1,240 Reduction of long-term debt................ (1,597) (42) (620) -- -- (2,259) --------- ---------- ------------ --------- ------ --------- Net cash provided by (used in) investing activities................ (1,597) (42) 620 -- -- (1,019) --------- ---------- ------------ --------- ------ --------- Increase (decrease) in cash and cash equivalents................................... (17,787) 23,947 (637) (5,704) 905 724 Intercompany accounts........................... 17,462 (23,300) 1,006 5,737 (905) -- Cash and cash equivalents, beginning of year.... 87,291 414 4,657 244 -- 92,606 --------- ---------- ------------ --------- ------ --------- Cash and cash equivalents, end of year.......... $ 86,966 $ 1,061 $ 5,026 $ 277 $-- $ 93,330 --------- ---------- ------------ --------- ------ --------- --------- ---------- ------------ --------- ------ ---------
44 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED FEBRUARY 28, 1998
FOREIGN ISSUER GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL ------- ---------- ------------ ------------ -------- (IN THOUSANDS OF DOLLARS) Net sales Customers.................................... $61,071 $123,181 $ 21,590 $ -- $205,842 Intercompany................................. 3,381 2,421 1,451 (7,253) -- Operating costs and expenses Cost of products sold........................ 48,329 102,771 18,772 (7,076) 162,796 Selling and administrative................... 9,673 5,167 2,301 -- 17,141 Management compensation expense.............. 2,056 -- -- -- 2,056 Intercompany charges......................... (2,172) 2,172 -- -- -- Depreciation................................. 2,823 5,220 940 -- 8,983 Amortization of intangibles.................. 765 3,064 10 -- 3,839 ------- ---------- ------------ ------------ -------- Total................................... 61,474 118,394 22,023 (7,076) 194,015 Operating income (loss)........................... 2,278 7,208 1,018 (177) 11,027 Other income (expense) Interest expense............................. (6,844) -- (96) -- (6,940) Other income (expense)....................... 812 333 (325) -- 820 ------- ---------- ------------ ------------ -------- Income before taxes............................... (13,054) 7,541 597 (177) 4,907 Income taxes...................................... 1,083 2,486 531 -- 4,100 ------- ---------- ------------ ------------ -------- Net income (loss)................................. $(4,137) $ 5,055 $ 66 $ (177) $ 807 ------- ---------- ------------ ------------ -------- ------- ---------- ------------ ------------ --------
45 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED FEBRUARY 28, 1997
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL ------- ---------- ------------ --------- ------------ -------- (IN THOUSANDS OF DOLLARS) Net sales Customers......................... $60,310 $114,398 $ 19,645 $ 29,254 $ -- $223,607 Intercompany...................... 3,465 2,599 1,141 37 (7,242) -- Operating costs and expenses Cost of products sold............. 47,577 95,817 16,853 27,299 (7,145) 180,401 Selling and administrative........ 11,222 4,843 2,021 1,638 -- 19,724 Intercompany charges.............. (3,518) 2,512 -- 1,006 -- -- Depreciation...................... 2,866 5,160 908 1,432 -- 10,366 Amortization of intangibles....... 813 3,258 5 -- -- 4,076 ------- ---------- ------------ --------- ------------ -------- Total........................ 58,960 111,590 19,787 31,375 (7,145) 214,567 Operating income....................... 4,815 5,407 999 (2,084) (97) 9,040 Other income (expense) Interest expense.................. (8,899) -- (28) -- -- (8,927) Other income (expense)............ 1,416 212 75 -- -- 1,703 ------- ---------- ------------ --------- ------------ -------- Income before taxes.................... (2,668) 5,619 1,046 (2,084) (97) 1,816 Income taxes........................... 113 2,040 814 69 -- 3,036 ------- ---------- ------------ --------- ------------ -------- Net income (loss)...................... $(2,781) $ 3,579 $ 232 $ (2,153) $ (97) $ (1,220) ------- ---------- ------------ --------- ------------ -------- ------- ---------- ------------ --------- ------------ --------
46 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINED BALANCE SHEET (UNAUDITED) AS OF FEBRUARY 28, 1998
FOREIGN ISSUER GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL --------- ---------- ------------ ------------ -------- (IN THOUSANDS OF DOLLARS) ASSETS Cash and cash equivalents......................... $ 12,115 $ 1,145 $ 5,513 $ 194 $ 18,967 Receivables....................................... 38,724 78,745 18,163 -- 135,632 Intercompany accounts receivable.................. 3,081 4,012 -- (7,093) -- Income tax refunds receivable..................... 2,001 -- -- -- 2,001 Inventories....................................... 37,775 44,818 13,830 (1,375) 95,048 Prepaid expenses.................................. 5,527 3,490 482 -- 9,499 Deferred income taxes............................. 19,585 -- -- -- 19,535 --------- ---------- ------------ ------------ -------- Total current assets......................... 118,758 132,210 37,988 (8,274) 280,682 Property, plant and equipment..................... 72,085 132,112 35,140 -- 239,337 Investment in subsidiaries........................ 60,908 5,185 -- (66,093) -- Excess of acquired net assets over cost........... 52,059 203,436 -- -- 255,495 Other assets...................................... 73,185 18,187 253 -- 91,625 --------- ---------- ------------ ------------ -------- Total assets................................. $ 376,995 $491,130 $ 73,381 $(74,367) $867,139 --------- ---------- ------------ ------------ -------- --------- ---------- ------------ ------------ -------- LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable.................................. $ 16,686 $ 25,241 $ 8,972 $ -- $ 50,899 Intercompany accounts payable..................... 176 110 6,340 (6,626) -- Accrued liabilities............................... 27,614 19,782 2,535 -- 49,931 Income taxes...................................... 6,658 -- 88 -- 6,746 Long-term debt -- current portion................. 7,780 -- 2,876 -- 10,656 --------- ---------- ------------ ------------ -------- Current liabilities.......................... 58,914 45,133 20,811 (6,626) 118,232 Long-term debt -- less current portion............ 534,720 -- 1,620 -- 536,340 Deferred income taxes............................. 7,634 -- -- -- 7,634 Other liabilities................................. 24,928 -- -- -- 24,928 --------- ---------- ------------ ------------ -------- Total liabilities............................ 626,196 45,133 22,431 (6,626) 687,134 Intercompany accounts............................. (429,206) 399,218 21,074 8,914 -- SHAREHOLDERS' EQUITY 180,005 46,779 29,876 (76,655) 180,005 --------- ---------- ------------ ------------ -------- Total liabilities and shareholders' equity... $ 376,995 $491,130 $ 73,381 $(74,367) $867,139 --------- ---------- ------------ ------------ -------- --------- ---------- ------------ ------------ --------
47 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINED BALANCE SHEET (UNAUDITED) AS OF FEBRUARY 28, 1997
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL --------- ---------- ------------ --------- ------------ -------- (IN THOUSANDS OF DOLLARS) ASSETS Cash and cash equivalents.............. $ 14,133 $ 443 $ 4,688 $ 112 $ -- $ 19,376 Receivables............................ 37,995 71,568 17,827 17,415 -- 144,805 Intercompany accounts receivable....... 3,538 3,313 -- -- (6,851) -- Income tax refunds receivable.......... 56,814 -- -- -- -- 56,814 Inventories............................ 28,330 52,557 10,551 14,682 -- 106,120 Prepaid expenses....................... 4,476 3,860 332 1,061 -- 9,729 Deferred income taxes.................. 20,575 -- -- -- -- 20,575 --------- ---------- ------------ --------- ------------ -------- Total current assets.............. 165,861 131,741 33,398 33,270 (6,851) 357,419 Property, plant and equipment.......... 74,790 129,929 31,136 24,995 -- 260,850 Investment in subsidiaries............. 58,656 5,132 -- -- (63,788) -- Deferred income taxes.................. 106,078 -- -- -- -- 106,078 Reorganization value in excess of amounts allocable to identifiable assets............................... 12,187 48,863 -- -- -- 61,050 Other assets........................... 23,711 14,000 1,154 7,681 -- 46,546 --------- ---------- ------------ --------- ------------ -------- Total assets...................... $ 441,283 $329,665 $ 65,688 $ 65,946 $(70,639) $831,943 --------- ---------- ------------ --------- ------------ -------- --------- ---------- ------------ --------- ------------ -------- LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable....................... $ 15,927 $ 13,360 $ 4,231 $ 5,600 -- $ 39,118 Intercompany accounts payable.......... -- -- 6,597 -- (6,597) -- Accrued liabilities.................... 30,322 12,479 4,889 3,052 -- 50,742 Income taxes........................... 3,244 -- 1,932 -- -- 5,176 Current portion -- long-term debt...... 54,010 -- -- -- -- 54,010 --------- ---------- ------------ --------- ------------ -------- Current liabilities............... 103,503 25,839 17,649 8,652 (6,597) 149,046 Long-term debt -- less current portion.............................. 315,726 -- 2,434 -- -- 318,160 Other liabilities...................... 25,515 -- 580 -- -- 26,095 --------- ---------- ------------ --------- ------------ -------- Total liabilities................. 444,744 25,839 20,663 8,652 (6,597) 493,301 Intercompany accounts.................. (342,500) 273,584 15,790 39,360 13,766 -- SHAREHOLDER'S EQUITY 339,039 30,242 29,235 17,934 (77,808) 338,642 --------- ---------- ------------ --------- ------------ -------- Total liabilities and shareholder's equity............ $ 441,283 $329,665 $ 65,688 $ 65,946 $(70,639) $831,943 --------- ---------- ------------ --------- ------------ -------- --------- ---------- ------------ --------- ------------ --------
48 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED FEBRUARY 28, 1998
NON- GUARANTOR FOREIGN ISSUER GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL --------- ---------- ------------ ------------ --------- (IN THOUSANDS OF DOLLARS) Cash flows from operating activities: Net income (loss)......................... $ (4,137) $ 5,055 $ 66 $ (177) $ 807 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization............. 3,588 8,284 950 -- 12,822 Changes in assets and liabilities......... (16,059) (9,247) 2,018 575 (22,713) --------- ---------- ------------ ------------ --------- Net cash provided by (used in) operating activities............... (16,608) 4,092 3,034 398 (9,084) Cash flows from investing activities: Capital expenditures...................... (2,300) (1,833) (1,559) -- (5,692) Other..................................... (956) 65 (846) 695 (1,042) --------- ---------- ------------ ------------ --------- Net cash provided by (used in) investing activities............... (3,256) (1,768) (2,405) 695 (6,734) Cash flows from financing activities: Issuance of long-term debt................ 524,100 -- -- -- 524,100 Reduction of long-term debt............... (250,000) -- -- -- (250,000) Redemption of common stock................ (446,638) -- -- -- (446,638) Issuance of common stock.................. 180,005 -- -- -- 180,005 Debt issue cost........................... (26,062) -- -- -- (26,062) Other..................................... -- -- (359) -- (359) --------- ---------- ------------ ------------ --------- Net cash provided by (used in) financing activities............... (18,595) -- (359) -- (18,954) --------- ---------- ------------ ------------ --------- Increase (decrease) in cash and cash equivalents.................................. (38,459) 2,324 270 1,093 (34,772) Intercompany accounts.......................... 1,740 (1,740) 899 (899) -- Cash and cash equivalents, beginning of period....................................... 48,834 561 4,344 -- 53,739 --------- ---------- ------------ ------------ --------- Cash and cash equivalents, end of period....... $ 12,115 $ 1,145 $ 5,513 $ 194 $ 18,967 --------- ---------- ------------ ------------ --------- --------- ---------- ------------ ------------ ---------
49 EAGLE-PICHER INDUSTRIES, INC. SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED FEBRUARY 28, 1997
FOREIGN DIVESTED ISSUER GUARANTORS SUBSIDIARIES DIVISIONS ELIMINATIONS TOTAL -------- ---------- ------------ ---------- ------------ -------- (IN THOUSANDS OF DOLLARS) Cash flows from operating activities: Net income (loss)....................... $ (2,781) $ 3,579 $ 232 $ (2,153) $ (97) $ (1,220) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization........... 3,679 8,418 913 1,432 -- 14,442 Changes in assets and liabilities: Income tax refunds...................... 16,906 -- -- -- -- 16,906 Working capital and other............... 3,637 (16,185) (142) 250 226 (12,214) -------- ---------- ------------ ---------- ------ -------- Net cash provided by (used in) operating activities............. 21,441 (4,188) 1,003 (471) 129 17,914 Cash flows from investing activities: Capital expenditures.................... (1,790) (9,630) (4,036) (401) -- (15,857) Other................................... 98 (162) (704) (5) (410) (1,183) -------- ---------- ------------ ---------- ------ -------- Net cash provided by (used in) investing activities............. (1,692) (9,792) (4,740) (406) (410) (17,040) Cash flows from financing activities: Reduction of long-term debt............. (16,703) -- -- -- -- (16,703) Other................................... -- -- 2,480 -- -- 2,480 -------- ---------- ------------ ---------- ------ -------- Net cash provided by (used in) financing activities............. (16,703) -- 2,480 -- -- (14,223) -------- ---------- ------------ ---------- ------ -------- Increase (decrease) in cash and cash equivalents................................ 3,046 (13,980) (1,257) (877) (281) (13,349) Intercompany accounts........................ (15,002) 13,870 (40) 891 281 -- Cash and cash equivalents, beginning of period..................................... 26,089 553 5,985 98 -- 32,725 -------- ---------- ------------ ---------- ------ -------- Cash and cash equivalents, end of period.............................. $ 14,133 $ 443 $ 4,688 $ 112 $-- $ 19,376 -------- ---------- ------------ ---------- ------ -------- -------- ---------- ------------ ---------- ------ --------
50 SELECTED HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following table sets forth the historical condensed consolidated financial data of the Company for the periods indicated. The historical selected financial information is derived from the historical Consolidated Financial Statements of Eagle-Picher. Effective November 29, 1996, the Company emerged from bankruptcy and, accordingly, it adopted fresh-start reporting in accordance with Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.' As a result, the condensed consolidated financial information for the periods subsequent to the adoption of fresh-start reporting are presented on a different cost basis than that for prior periods and, therefore, are not comparable. Accordingly, a vertical black line is shown to separate post-emergence operations. The unaudited condensed consolidated financial information presented for the three months ended February 28, 1997 and 1998 and as of February 28, 1998 are derived from the unaudited consolidated financial statements of the Company and include, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial information for such periods. As a result of the Acquisition of the Company by Granaria Industries from the Trust as of February 24, 1998, which was accounted for as a purchase, the Company's results of operations and financial position for periods after February 24, 1998 are not comparable to prior periods. See Note (K) below. The following selected historical consolidated financial information should be read in conjunction with 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' the Pro Forma Consolidated Financial Data and the Consolidated Financial Statements, related notes and other financial information included herein.
FISCAL YEAR ENDED NOVEMBER 30, ------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) 1993 1994 1995 1996 1997 ----------- ----------- ----------- ---------- -------- STATEMENT OF INCOME (LOSS): Net sales(A)............. $ 661,452 $ 756,741 $ 848,548 $ 891,287 $906,077 Operating income......... 43,754 58,281 63,087 62,106 45,558(B) Adjustment for asbestos litigation............. (1,135,500) -- (1,005,511) 502,197 -- Fresh-start revaluation............ -- -- -- 118,684(C) -- Reorganization items and claims(D).............. (45,780) (3,426) (2,225) (6,593) -- Interest expense......... (2,070) (1,809) (1,926) (3,083) (31,261) Other income (expense)... (174) 703 11,704(E) 1,345 (251) Income (loss) before taxes, extraordinary items and accounting changes................ (1,139,770) 53,749 (934,871) 674,656 14,046 Income (loss) before extraordinary items and accounting changes..... (1,144,770) 48,749 (944,171) 622,086 (3,854) Extraordinary items and accounting changes..... (12,598)(F) -- -- 1,524,305(F) -- Net income (loss)........ (1,157,368) 48,749 (944,171) 2,146,391 (3,854) BALANCE SHEET DATA (END OF PERIOD): Working capital.......... $ 187,224 $ 210,298 $ 243,495 $ 211,808 $187,968 Property, plant and equipment, net......... 134,401 144,649 155,818 256,351 243,538 Total assets............. 459,360 521,107 580,073 848,880 746,881 Total debt............... 24,449 21,622 20,628 386,439 273,397 Shareholders' equity (deficit).............. (1,317,206) (1,266,693) (2,211,308) 341,807 336,117 SELECTED FINANCIAL DATA: EBITDA(H)................ $ 68,709 $ 84,424 $ 91,795 $ 92,856 $103,958 Depreciation and amortization........... 24,955 26,143 28,708 30,750 55,989 Capital expenditures..... 28,512 35,887 40,558 44,957 51,324(G) SELECTED RATIOS: EBITDA/interest expense.. 33.19x 46.67x 47.66x 30.12x 3.33x Total debt/EBITDA........ 0.36 0.26 0.22 4.16 2.63 Total debt/capitalization.... N/M N/M N/M 53.1% 44.9% Earnings/fixed charges(I)............. --(J) 24.28x --(J) 173.50x 1.43x UNAUDITED THREE MONTHS ENDED FEBRUARY 28, --------------------------------- (DOLLARS IN THOUSANDS) 1997 1998(K) -------- --------------------- ACTUAL PRO FORMA -------- --------- STATEMENT OF INCOME (LOSS): Net sales(A).............$223,607 $205,842 $205,842 Operating income......... 9,040 11,027 5,373 Adjustment for asbestos litigation............. -- -- -- Fresh-start revaluation............ -- -- -- Reorganization items and claims(D).............. -- -- -- Interest expense......... (8,927) (6,940) (13,122) Other income (expense)... 1,703 820 820 Income (loss) before taxes, extraordinary items and accounting changes................ 1,816 4,907 6,929 Income (loss) before extraordinary items and accounting changes..... (1,220) 807 (5,079) Extraordinary items and accounting changes..... -- -- -- Net income (loss)........ (1,220) 807 (5079) BALANCE SHEET DATA (END OF PERIOD): Working capital..........$208,373 $163,650 -- Property, plant and equipment, net......... 260,850 239,337 -- Total assets............. 831,943 865,339 -- Total debt............... 372,170 546,996 -- Shareholders' equity (deficit).............. 338,642 180,005 -- SELECTED FINANCIAL DATA: EBITDA(H)................$ 23,482 $ 25,905 $ 25,905 Depreciation and amortization........... 14,442 12,822 13,221 Capital expenditures..... 15,857 5,692 5,692 SELECTED RATIOS: EBITDA/interest expense.. 2.63x 3.73x 2.05x Total debt/EBITDA........ N/M N/M N/M Total debt/capitalization.... 52.4% 75.2% N/M Earnings/fixed charges(I)............. 1.20x 1.69x N/M
(footnotes on next page) 51 NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands) (A) Includes net sales attributed to the Divested Divisions of $115,008 in 1993, $127,229 in 1994, $145,339 in 1995, $138,117 in 1996, $78,604 in 1997 and $29,254 for the three months ended February 28, 1997. (B) Operating income in 1997 includes (i) amortization of reorganization value in excess of amounts allocable to identifiable assets in the amount of $16,284, (ii) depreciation of assets written-up to fair value in the amount of $9,804 and (iii) loss on sale of divisions of $2,411. See 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Effects of Reorganization on Operations and Financial Condition.' (C) Fresh-start valuation gain of $118,684 reflects transactions related to emergence from bankruptcy and reorganization in accordance with Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization under the Bankruptcy Code.' See 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Effects of Reorganization on Operations and Financial Condition.' (D) Reflects provision for claims of $41,436 in 1993 and $4,244 in 1996. Remaining reorganization items are net expense resulting from the Company's bankruptcy filing. See 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Effects of Reorganization on Operations and Financial Condition.' (E) Other income (expense) reflects a gain of $11,505 in 1995 relating to the sale of an investment in a Canadian mining concern. (F) Reflects (i) a gain of $1,525,540 in 1996 related to emergence from bankruptcy and reorganization in accordance with Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization under the Bankruptcy Code;' (ii) a loss of $12,598 in 1993 due to an accounting change to reflect adoption of Statement of Financial Accounting Standards No. 106 'Employers Accounting for Postretirement Benefits;' and (iii) a loss of $1,235 in 1996 due to an accounting change of its method of computing LIFO inventories of boron, germanium and other rare metals. (G) Includes capital expenditures in 1997 of (i) $10,157 in connection with the new facility in Manchester, Tennessee, (ii) $6,495 in connection with a $13,054 diatomaceous earth processing facility in Vale, Oregon and (iii) $4,651 in connection with a new automotive facility in Tamworth, England. (H) 'EBITDA' as used herein is defined in the Indenture. See 'Description of the Notes.' 'EBITDA' is presented because management believes it is an indicator of a company's ability to service and incur debt. EBITDA does not represent net income or cash flows from operations as those terms are defined by generally accepted accounting principles and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Under the Indenture, the definition of EBITDA excludes loss on sale of divisions. Includes EBITDA attributed to the Divested Divisions of $7,053 in 1993, $7,552 in 1994, $7,695 in 1995, $3,615 in 1996, $361 in 1997 and ($652) for the three months ended February 28, 1997. (I) For the purpose of determining the ratio of earnings to fixed charges, 'earnings' consist of income before provision (benefit) for income taxes and fixed charges. 'Fixed charges' consist of interest expense (including amortization of deferred financing costs) and approximately 30% of rental expense, representing that portion of rental expense deemed representative of the interest factor. (J) Such ratio of earnings to fixed charges is not meaningful for 1993 and 1995 because of significant charges for an asbestos litigation and is not meaningful for 1996 because of significant reversal of asbestos litigation reserves, fresh-start revaluation and extraordinary items. Earnings were inadequate to cover fixed charges by $1,139,700 and $934,871 for the years ended November 30, 1993 and 1995, respectively. (K) The unaudited condensed consolidated financial statements as of and for the three months ended February 28, 1998 include the effects of the Acquisition that resulted as of February 24, 1998, the Closing Date. Accordingly, the historical condensed consolidated statement of income (loss) for the three months ended February 28, 1998 include results of operations from (1) December 1, 1997 through February 24, 1998 of the Predecessor Company and (2) February 25 through February 28, 1998 of the Company. 52 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma consolidated financial statements (the 'Pro Forma Financial Statements') are based on the historical financial statements of the Company included elsewhere in this Prospectus. The unaudited pro forma balance sheet as of November 30, 1997 has been prepared to give effect to the Acquisition as though it were consummated on November 30, 1997. The unaudited pro forma statement of operations for the year ended November 30, 1997 gives effect to the Acquisition as though it were consummated on December 1, 1996. The unaudited pro forma statement of operations for the three months ended February 28, 1998 gives effect to the Acquisition as though it were consummated on December 1, 1997. The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The acquisition of Eagle-Picher was accounted for using the purchase method of accounting. The preliminary allocation of the purchase price of the Company has been determined based upon estimates of fair value and are subject to change. Appraisals are currently being completed to value property, plant, equipment and identifiable intangible assets. The excess of purchase price over the assessed values of those assets will be allocated to goodwill. The Pro Forma Financial Statements do not purport to be indicative of the results that would have been obtained had such transactions described above occurred as of the assumed dates. In addition, the Pro Forma Financial Statements do not purport to project the Company's results of operations for any future date or period. The Pro Forma Financial Statements should be read in conjunction with the financial statements of the Company, and the notes thereto, included elsewhere herein. 53 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS AS OF NOVEMBER 30, 1997
PRO FORMA ACTUAL ------------------------------------ -------- ACQUISITION AND COMPANY COMPANY OFFERING ADJUSTMENTS PRO FORMA -------- -------------------- --------- (DOLLARS IN THOUSANDS) ASSETS Current assets Cash and cash equivalents................................. $ 53,739 $ (39,497)(A) $ 14,242 Receivables, net.......................................... 130,927 -- 130,927 Income tax refunds receivable............................. 3,025 -- 3,025 Inventories............................................... 92,196 373(B) 92,569 Prepaid expenses.......................................... 8,290 5,903(C) 14,193 Deferred income taxes..................................... 13,793 8,650(D) 22,443 -------- -------------------- --------- Total current assets...................................... 301,970 (24,571) 277,399 Property, plant and equipment, net............................. 243,538 -- 243,538 Deferred income taxes.......................................... 98,991 (103,627)(D) (4,636) Reorganization value in excess of amounts allocable to identifiable assets.......................................... 48,837 (48,837)(E) -- Excess of acquired net assets over cost........................ -- 255,659(F) 255,659 Other assets................................................... 53,545 41,775(G) 95,320 -------- -------------------- --------- Total assets......................................... $746,881 $ 120,399 $867,280 -------- -------------------- --------- -------- -------------------- --------- LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Accounts payable.......................................... $ 52,886 $-- $ 52,886 Accrued liabilities....................................... 55,419 (720)(H) 54,699 Management compensation................................... -- 14,500(H) 14,500 Income taxes.............................................. 2,294 -- 2,294 Long-term debt -- current portion......................... 3,403 -- 3,403 -------- -------------------- --------- Total current liabilities............................ 114,002 13,780 127,782 Long-term debt, less current portion: 10% Debentures............................................ 250,000 (250,000)(I) -- Industrial revenue bonds.................................. 18,320 -- 18,320 Debt of foreign subsidiaries.............................. 1,674 -- 1,674 Senior secured revolver................................... -- 79,100(J) 79,100 Senior secured term loan A................................ -- 100,000(J) 100,000 Senior secured term loan B................................ -- 50,000(J) 50,000 Senior secured term loan C................................ -- 75,000(J) 75,000 Senior subordinated notes................................. -- 220,000(J) 220,000 -------- -------------------- --------- Total long-term debt................................. 269,994 274,100 544,094 Post-retirement benefits....................................... 21,681 (1,944)(K) 19,737 Other long-term liabilities.................................... 5,087 -- 5,087 -------- -------------------- --------- Total liabilities.................................... $410,764 $ 285,936 $696,700 -------- -------------------- --------- SHAREHOLDER'S EQUITY Old common stock............................................... $341,807 $ (341,807)(L) $ -- New common stock............................................... -- 180,005(M) 180,005 Foreign currency translation................................... (1,836) 1,836(N) -- Retained earnings (deficit).................................... (3,854) (5,571)(O) (9,425) -------- -------------------- --------- Total shareholder's equity (deficit)................. 336,117 (165,537) 170,580 -------- -------------------- --------- Total liabilities and shareholder's equity........... $746,881 $ 120,399 $867,280 -------- -------------------- --------- -------- -------------------- ---------
(footnotes on next page) 54 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (A) The $39,497 decrease in pro forma cash and cash equivalents results from the following:
Revolving credit facility........................................................ $ 79,100 Term loans....................................................................... 225,000 Senior subordinated notes........................................................ 219,639 Equity contribution.............................................................. 180,005 Merger consideration............................................................. (417,638) Repayment of existing indebtedness............................................... (255,903) Common stock redemption.......................................................... (29,000) Estimated transaction fees and expenses.......................................... (27,800) Management compensation.......................................................... (12,900) --------- Cash and cash equivalents adjustment........................................ $ (39,497) --------- ---------
(B) To record an adjustment of $373 to fair value of inventory by elimination of LIFO inventory reserve. (C) To reflect payment of interest on the 10% Debentures in the amount of $5,903. (D) To adjust the net deferred tax asset as follows:
CURRENT NON-CURRENT ------- ----------- To recognize the excess of tax over book gain on the transaction......................................................... $3,575 $ 47,152 To recognize the deduction on payment of the 10% Debentures to the Trust............................................. (87,500) To recognize the utilization of the net operating loss carryforwards against the net transaction gain and the expiration of the remainder......................................... (61,304) To adjust for the elimination of the unrecognized pension gain........ (1,300) To adjust for the unrecognized gain in post-retirement benefits............................................................ (675) To adjust for the increase in the management compensation accrual..... 5,075 -- ------- ----------- Total............................................................ $8,650 $(103,627) ------- ----------- ------- -----------
(E) Adjustment of $48,837 to reflect elimination of reorganization value in excess of amounts allocable to identifiable assets. (F) To record the excess of purchase price over the aggregate amount of property, plant and equipment at historical costs and all other assets and liabilities at fair value, and $3,000 of fees associated with the issuance of common stock. Although the property, plant and equipment was revalued to fair value at November 29, 1996 in accordance with fresh-start reporting, management is currently re-evaluating the fair values of these assets and of identifiable intangible assets, with the excess purchase price over fair value to be allocated to goodwill. (G) To record (i) $24,800 of fees and expenses associated with issuance of new debt and redeemable preferred stock, (ii) an adjustment of $3,714 to eliminate unrecognized pension gain which will adjust prepaid pension asset to fair value, (iii) a $10,000 aggregate payment to the E-P Management Trust which will be used to acquire common stock of Granaria Industries for the benefit of certain members of senior management, (iv) a $2,900 aggregate payment to certain members of senior management as reimbursement for their individual taxes in connection with the $10,000 compensation payment referred to in (iii) above and (v) an original issue discount of $361 on the issuance of the $220,000 Senior Subordinated Notes. (H) To record the following transactions: $14,500 ($720 was expensed in 1997) aggregate amounts totaling (i) $8,400, of which $800 has not been paid, to certain members of senior management (footnotes continued on next page) 55 (footnotes continued from previous page) pursuant to the STSP; (ii) $3,200 in connection with the E-P Management Trust, which represents the value of the compensation which vests shortly after consummation of the Acquisition; and (iii) $2,900, which represents the reimbursement of taxes in connection with such compensation. Such amounts will be reflected in the future results of operations and cash flows. (I) To reflect the payment of all outstanding obligations under the 10% Debentures to the Trust. (J) To record the new debt structure as follows:
RATE AMOUNT ----- -------- Senior secured revolver Used............................................................. 8.00% $ 79,100 Letters of credit................................................ 2.25 28,600 Unused........................................................... 0.50 52,300 Senior secured term loan A............................................ 8.00 100,000 Senior secured term loan B............................................ 8.38 50,000 Senior secured term loan C............................................ 8.63 75,000 Senior subordinated notes............................................. 9.38 220,000
(K) To record $1,944 of unrecognized gain in post-retirement benefits in order to adjust to fair value. (L) Reflects the redemption of the common stock, all of which is owned by the Trust, in connection with the Acquisition. (M) Reflects issuance of new common stock to Parent. (N) Reflects elimination of prior foreign currency translation adjustments. (O) Reflects the effects on retained earnings of the reversal of the prior retained deficit of $3,854 and the recognition of management compensation expense, net of taxes, of $9,425. The components of this expense, on a pre-tax basis, are: (i) $6,100, which includes $3,200 of the first year earnings by certain members of senior management of the $10,000 that was paid to the E-P Management Trust and $2,900 for the related tax obligations and (ii) $7,600 for payments under the STSP. 56 UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 1997
PRO FORMA ACTUAL ------------------------------------ -------- ACQUISITION AND COMPANY COMPANY OFFERING ADJUSTMENTS PRO FORMA -------- -------------------- --------- (DOLLARS IN THOUSANDS) Net sales...................................................... $906,077 $-- $906,077 Operating costs and expenses: Cost of products sold..................................... 725,010 -- 725,010 Selling and administrative................................ 77,109 -- 77,109 Management compensation expense........................... -- 6,100(A) 6,100 Depreciation.............................................. 39,671 -- 39,671 Amortization of intangibles............................... 16,318 760(B) 17,078 Loss on sale of divisions................................. 2,411 -- 2,411 -------- ----------- --------- 860,519 6,860 867,379 Operating income (loss)........................................ 45,558 (6,860) 38,698 Interest expense.......................................... (31,261) (23,620)(C) (54,881) Other..................................................... (251) -- (251) -------- ----------- --------- Income (loss) before taxes..................................... 14,046 (30,480) (16,434) Income taxes (benefit)......................................... 17,900 (25,000)(D) (7,100) -------- ----------- --------- Net loss....................................................... $ (3,854) $ (5,480) $ (9,334) -------- ----------- --------- -------- ----------- ---------
- ------------ NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in thousands) (A) To record $6,100 of compensation earned by certain members of senior management for which the cash has been paid to the E-P Management Trust. (B) To reflect the difference in the amortization of the reorganization value in excess of amounts allocable to identifiable asset of $16,318 compared to the excess of assets over cost of $17,078. (C) Pro forma interest expense increased $23,620 as follows: Interest expense associated with the redemption of 10% Debentures................... $(25,000) Interest expense on New Credit Facilities and Senior Subordinated Notes............. 45,610 Amortization of debt transaction fees and expenses over weighted average life of 8.18 years........................................................ 2,750 Amortization of Preferred Stock Offering fees and expenses over 10 years.......................................................................... 260 -------- Interest expense adjustment......................................................... $ 23,620 -------- --------
The actual interest expense for the year ended November 30, 1997 included interest expense of $4,417 relating to debt obligations that were paid off in 1997. Such debt obligations primarily consisted of the Divestiture Notes and Tax Refund Notes. The pro forma adjustments do not give effect to the reduction in this interest expense. (D) To record incremental tax benefit. 57 UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED FEBRUARY 28, 1998
PRO FORMA ACTUAL ------------------------- -------- ACQUISITION COMPANY COMPANY ADJUSTMENTS PRO FORMA -------- ----------- --------- (DOLLARS IN THOUSANDS) Net sales................................................................ $205,842 $ -- $205,842 Operating costs and expenses: Cost of products sold............................................... 162,796 -- 162,796 Selling and administrative.......................................... 17,141 -- 17,141 Management compensation expense..................................... 2,056 5,255(A) 7,311 Depreciation........................................................ 8,983 -- 8,983 Amortization of intangibles......................................... 3,839 399(B) 4,238 -------- ----------- --------- 194,815 5,654 200,469 Operating income (loss).................................................. 11,027 (5,654) 5,373 Interest expense.................................................... (6,940) (6,182)(C) (13,122) Other............................................................... 820 -- 820 -------- ----------- --------- Income (loss) before taxes............................................... 4,907 (11,836) (6,929) Income taxes (benefit)................................................... 4,100 (5,950)(D) (1,850) -------- ----------- --------- Net income (loss)........................................................ $ 807 $ (5,886) $ (5,079) -------- ----------- --------- -------- ----------- ---------
- ------------ NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in thousands) (A) To record $5,255 of compensation earned by certain members of senior management. This represents the portion of the $10,000 contribution to the E-P Management Trust for the stock that has been earned and vested and the expected tax payments for the same vested stock. (B) To reflect the difference in the amortization of the reorganization value in excess of amounts allocable to identifiable assets of $3,839 (4 year amortization) compared to the excess of assets over cost of $4,238 (15 year amortization). (C) Pro forma interest expense increased $6,182 as follows: Interest expense associated with the redemption of 10% Debentures..................................................................... $(5,903) Interest expense on New Credit Facilities and Senior Subordinated Notes................................................................. 11,403 Amortization of debt transaction fees and expenses over weighted average life of the debt............................................. 617 Amortization of Preferred Stock Offering fees and expenses over 10 years...................................................................... 65 ------- Interest expense adjustment.......................................................... $ 6,182 ------- -------
(D) To record incremental tax benefit of 50.3%. 58 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless otherwise stated, any reference to a year in this section refers to the Company's fiscal year. RESULTS OF OPERATIONS The following table sets forth certain sales and operating data, net of all inter-segment transactions, for the Company's businesses for the periods indicated:
FISCAL YEAR ENDED NOVEMBER 30,1995 ------------------------------------------------------------ 1995 % 1996 % 1997 % ------ ------ ------ ------ ------ ------ (DOLLARS IN MILLIONS) Net sales and segment sales as percentage of total: Automotive................................... $433.2 51.1% $439.6 49.3% $435.2 48.0% Machinery.................................... 254.7 30.0 257.6 28.9 270.8 29.9 Industrial................................... 160.6 18.9 194.1 21.8 200.1 22.1 ------ ------ ------ ------ ------ ------ Total........................................ $848.5 100.0% $891.3 100.0% $906.1 100.0% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ EBITDA by segment: Automotive................................... $ 59.7 $ 57.2 $ 60.1 Machinery.................................... 28.8 27.5 32.0 Industrial................................... 21.7 27.5 30.6 Corporate overhead........................... (18.4) (19.3) (18.7) ------ ------ ------ Total........................................ $ 91.8 $ 92.9 $104.0 ------ ------ ------ ------ ------ ------
EFFECTS OF REORGANIZATION ON OPERATIONS AND FINANCIAL CONDITION Upon emergence from bankruptcy, the Company applied the 'fresh-start' provisions of the American Institute of Certified Public Accountants Statement of Position No. 90-7 ('SOP 90-7'). In accordance with SOP 90-7, the assets and liabilities of the Company were restated at their fair value and a valuation of equity was made based on the appraised reorganization value of the business. The reorganization value in excess of amounts allocable to identifiable assets was capitalized. Of the $268.8 million increase in total assets for the year ended November 30, 1996 over those at November 30, 1995, $86.6 million and $65.1 million were due to the restatement of property, plant and equipment at their fair value and the reorganization value in excess of amounts allocable to identifiable assets, respectively, and $69.1 million was due to a federal income tax refund receivable. Consequently, results of operations in 1996 and 1997 are not comparable, primarily due to increased depreciation on the property, plant and equipment and amortization of the reorganization value in excess of amounts allocable to identifiable assets. Adjusting the assets and liabilities to fair value resulted in the fresh-start revaluation of $118.7 million in 1996. Other reorganization items in 1996 and 1995 were the costs of the reorganization process, net of the interest income earned on accumulated cash balances. The Plan included a settlement of the Eagle-Picher Group's aggregate liability on account of present and future asbestos-related and lead-related personal injury claims. An adjustment was made to the consolidated financial statements in 1996 to reflect this settlement. The order confirming the Plan contains a permanent injunction which precludes holders of present or future asbestos-related or lead-related personal injury claims from pursuing their claims against the reorganized Eagle-Picher Group. Those claims will be channeled to the Trust, which is an independently administered qualified settlement trust established to resolve and satisfy those claims. The Company's emergence from bankruptcy on November 29, 1996 resulted in an extraordinary gain of $1.5 billion on the discharge of pre-petition liabilities, including the asbestos liability, because the value of consideration distributed and expected to be distributed to the Trust and other unsecured creditors is approximately 37% of the amount of the allowed claims. The Plan and the Order confirming 59 the Plan provide that the pre-petition unsecured claims, including the asbestos-related claims, are thereby discharged and the Eagle-Picher Group has no further liability in connection with such claims. In 1997, the Company received federal tax refunds totaling $69.1 million resulting from net operating losses ('NOLs') carried back to recover taxes paid in prior years. The majority of the NOLs were created when the Company contributed cash and securities to the Trust in the bankruptcy. Losses remaining after the NOL carryback were carried forward to reduce taxable income in future years. NOLs, which were carried forward, along with other items that are deductible in the future, such as the repayment of the debt issued in conjunction with the Company's emergence from bankruptcy, resulted in Deferred Tax Assets of $128.5 million at November 30, 1996. Deductions for debt previously contributed to the Trust are taken when the debt is repaid. The 10% Debentures were repaid in connection with the Acquisition. For tax purposes, the Acquisition was treated like a sale of assets. The gains on the sale of the assets of the Company absorbed most of the NOL carryforwards that the Company had available and any NOL carryforwards that were not absorbed were lost. Interest expense increased by $28.2 million in 1997 primarily due to the debt issued to the Trust and unsecured creditors upon the Company's emergence from bankruptcy. In addition, interest expense was not recorded on unsecured debt or undersecured debt during the duration of the bankruptcy proceedings, which resulted in minimal interest expense in 1996 and 1995. Three Months Ended February 28, 1998 Compared to Three Months Ended February 28, 1997 As a result of the Acquisition of the Company by Granaria Industries from the Trust as of February 24, 1998, which was accounted for as a purchase, the Company's results of operations and financial position for periods after February 24, 1998 are not comparable to prior periods. The unaudited condensed consolidated statement of income (loss) as of February 28, 1998 includes results of operations from (1) December 1, 1997 through February 24, 1998 of the Predecessor Company and (2) February 25 through February 28, 1998 of the Company. The effects of the purchase accounting adjustments on the Company's results of operations for the three months ended February 28, 1998 were immaterial. Net Sales. The Company's net sales decreased by approximately $17.8 million, or 8.0%, from $223.6 million in the three months ended February 28, 1997 to $205.8 million in the three months ended February 28, 1998. Included in the results for the first three months of 1997 are $29.2 million of sales of the Divested Divisions which, if excluded, would reflect an increase in the Company's quarterly net sales of approximately 5.9%. First quarter net sales for the Industrial Group, excluding net sales of the Divested Divisions, decreased 8.8% from 1997 to 1998 due primarily to decreased sales of germanium products. Germanium sales have been affected by lower market prices, increased use of recycled germanium by the Company's customers and the completion of a major satellite project. Germanium prices have decreased by as much as half during the last year due to increased supplies. In response to sharp increases in the cost of germanium during 1996, the Company's customers have increasingly been recycling scrap germanium. As a result, its customers supply a larger portion of the Company's raw materials. While the Company has been able to maintain its margins, the sales volume is less as a toll refiner than as a buyer and seller of germanium. Net sales for the Machinery Group in the first three months of 1998, excluding net sales of the Divested Divisions, increased 7.4% from the first three months of 1997 on increased sales of special purpose batteries. Net sales for the Automotive Group, excluding net sales of the Divested Divisions, increased 11.5% on increased sales of precision machined components. Cost of Products Sold. Cost of products sold, excluding depreciation expense, decreased by $17.6 million, or 9.8% from $180.4 million in the three months ended February 28, 1997 to $162.8 million in the three months ended February 28, 1998. Excluding the results of Divested Divisions, as a percentage of sales, cost of products sold remained stable at approximately 79.0%. Selling and Administrative. Selling and administrative expenses decreased by $2.6 million, or 13.1% from $19.7 million for the three months ended February 28, 1997 to $17.1 million for the three months 60 ended February 28, 1998. Excluding the results of Divested Divisions, selling and administrative expenses for the first three months of 1998 decreased by $.7 million from the first three months of 1997. Depreciation and Amortization. Depreciation and amortization decreased by $1.4 million, or 13.3% from $10.4 million for the three months ended February 28, 1997 to $9.0 million for the three months ended February 28, 1998. Excluding the results of Divested Divisions, depreciation and amortization was $9.0 million for the first three months of both 1997 and 1998. EBITDA. The Company's earnings before interest, taxes, depreciation and amortization ('EBITDA') increased by approximately $2.4 million, or 10.3%, from $23.5 million in 1997 to $25.9 million in 1998. Excluding the $.6 million negative impact of the Divested Divisions on 1997 EBITDA, the EBITDA of the Company increased $1.8 million, or 7.3%. Despite decreased sales, EBITDA of the Industrial Group for the first three months of 1998, exclusive of EBITDA of the Divested Divisions, increased by 1.3% over the first three months of 1997. This increase was due to improved results at the Company's Boron operations and the Company's ability to maintain its margins despite decreased germanium sales. First quarter 1998 EBITDA of the Machinery Group, exclusive of the results of Divested Divisions, was unchanged from the first quarter of 1997. Increased profitability of special-purpose batteries due to higher volumes was offset by startup costs of new construction equipment products. EBITDA of the Automotive Group for the first three months of 1998 increased by 9.6% from the first three months of 1997 due to higher volumes of precision machined components. Interest Expense. Interest expense decreased by $2.0 million, or 22.2%, from $8.9 million for the three months ended February 28, 1997 to $6.9 million for the three months ended February 28, 1998. Most of this decrease was due to the retirement of $125.9 million of debt during 1997, which included $50.0 million of divestiture notes, $69.1 million of tax refund notes and $6.8 million of secured notes bearing interest at 9%, 6.5% and 10%, respectively. Of the total debt that was retired during 1997, only $16.7 million was retired during the first three months of 1997. The decrease in interest expense due to debt retirements was partially offset by interest on an additional $8.0 million of Industrial Revenue Bonds issued during the third quarter of 1997 and revolving lines of credit, for which interest during the first three months of 1998 was $.1 million. Fiscal Year Ended 1997 Compared to Fiscal Year Ended 1996 In addition to the effects of reorganization, another factor affecting comparability of operations is the sale of the Plastics, Transicoil and Fabricon Products divisions in 1997. The Company's aggregate loss on these transactions was $2.4 million. The Company also contributed the assets of its former Suspension Systems division to Eagle-Picher-Boge, L.L.C., a joint venture formed in 1997 in which the Company has a 45% interest. Net Sales. The Company's net sales increased approximately $14.8 million, or 1.7%, from $891.3 million in 1996 to $906.1 million in 1997. Included are net sales of the Divested Divisions which, if excluded for both periods, would reflect an increase in the Company's net sales of approximately 9.9%. In 1996 and 1997, the Divested Divisions contributed net sales of approximately $138.2 million and $78.6 million, respectively. Net sales for the Industrial Group, excluding net sales of the Divested Divisions, increased 10.2% primarily due to increased demand for germanium products used in aerospace applications, such as solar cell substrates for satellites. In the Machinery Group, net sales increased by 7.6% (excluding net sales of the Divested Divisions), which increase was primarily attributable to increased demand for batteries used in satellite applications. Net sales for the Automotive Group (excluding net sales of the Divested Divisions) increased by 11.2% in 1997, which increase was attributable primarily to increased sales volume of precision machined components and interior trim products. Many of the precision machined components are used in light trucks, vans and sport utility vehicles which have recently grown in popularity. Several new programs at the automotive trim operation, which had been delayed by customers, are beginning to reach anticipated production volumes. The Company has been notified by Ford that it will no longer purchase certain product lines from the Automotive Group. The first program was discontinued in December 1997, and other programs will be discontinued at various times 61 through March 1999. The total amount of 1997 net sales contributed by these programs was $19.4 million. The Company anticipates that this revenue will be replaced by new programs currently being implemented. Cost of Products Sold. Cost of products sold (excluding depreciation expense) increased by $8.1 million, or 1.1%, from $716.9 million in 1996 to $725.0 million in 1997. As a percentage of net sales, cost of products sold remained constant at 80.0% excluding the cost of products sold of the Divested Divisions. Selling and Administrative. Selling and administrative expenses decreased by $4.4 million, or 5.4%, from $81.5 million in 1996 to $77.1 million in 1997. Excluding expenses of the Divested Divisions, the selling and administrative expenses remained constant from 1996 to 1997. Depreciation and Amortization. See comments above regarding the effects of reorganization. Loss on Sale of Divisions. In 1997, the Company sold the Plastics, Transicoil and Fabricon Products divisions for approximately $30.7 million, $8.3 million and $3.1 million, respectively. The aggregate loss on the sales of the Divested Divisions (excluding Suspension Systems) in 1997 was $2.4 million. EBITDA. Due to the increased depreciation and amortization in connection with the Company's emergence from bankruptcy, a comparison of 1997 and 1996 operating income is not meaningful. The Company's EBITDA increased by $11.1 million, or 11.9%, from $92.9 million in 1996 to $104.0 million in 1997. In 1996 and 1997, the EBITDA of the Divested Divisions was $3.6 million and $0.4 million, respectively. The Company's EBITDA, excluding EBITDA of the Divested Divisions, increased 17.7%. The Industrial Group's EBITDA, excluding EBITDA of the Divested Divisions, increased by 13.5%, primarily as a result of increased demand for germanium products. Also, the Industrial Group's diatomaceous earth product processing operation contributed to the increase in EBITDA for 1997 due to non-recurring charges taken in 1996. The Machinery Group's EBITDA, excluding EBITDA of the Divested Divisions, increased 18.9% as a result of increases in battery sales and an increase in the margins of the operations that manufacture wheel tractor scrapers and heavy duty forklift trucks. Despite flat sales in those product lines, EBITDA increased for wheel tractor scrapers and heavy duty forklift trucks as a result of increased efficiencies and lower costs associated primarily with expansion of the Machinery Group's operations in Mexico. The Automotive Group's EBITDA, excluding EBITDA of the Divested Divisions, increased 11.7% as a result of increased sales and a better absorption of fixed costs. Currency exchange differences offset volume gains in the European operations, and therefore, results of these operations were relatively flat. Interest Expense. Interest expense increased by $28.2 million, or 909.7%, from $3.1 million in 1996 to $31.3 million in 1997, for reasons discussed above related to the effects of reorganization on the Company's results. Fiscal Year Ended 1996 Compared to Fiscal Year Ended 1995 Net Sales. The Company's net sales increased by approximately $42.8 million, or 5.0%, from $848.5 million in 1995 to $891.3 million in 1996. The Industrial Group's net sales increased 20.9% due primarily to increased sales of germanium products. Approximately one-third of the increase was due to increases in the market price of germanium itself, which increased significantly during the year. In the Machinery Group, net sales were relatively flat. Increases in sales of special-purpose batteries were offset by declines in volume of wheel tractor scrapers and forklift trucks of 15.6% and 11.1%, respectively. The Machinery Group's sales were unusually high in 1995 because a significant order backlog of forklift trucks was worked off during 1995 and because demand for wheel tractor scrapers was high. Net sales for the Automotive Group were relatively flat from 1995 to 1996. Two factors which offset increases in volumes in the Automotive Group by approximately $14.5 million were the sale of an injection molding business in the first quarter of 1996 and the loss of sales volume at the Plastics Division, most of which resulted when GM discontinued production of its all-purpose van during 1996. 62 Cost of Products Sold. Cost of products sold (excluding depreciation), increased by $35.5 million, or 5.2%, from $681.4 million in 1995 to $716.9 million in 1996. As a percentage of net sales, cost of products sold remained constant at 80.0%. Selling and Administrative. Selling and administrative expenses increased by $6.1 million, or 8.1%, from $75.4 million in 1995 to $81.5 million in 1996 in part as a result of start-up costs associated with establishing European administrative and sales offices for the Automotive Group. EBITDA. The Company's EBITDA increased by $1.1 million, or 1.2%, from $91.8 million in 1995 to $92.9 million in 1996. The increase in sales of germanium products contributed to a 26.7% increase in EBITDA in the Industrial Group. The decline in back orders and demand in the Machinery Group, described above, as well as start-up costs of certain satellite battery programs, resulted in a decrease in the Machinery Group's EBITDA of 4.5% for 1996 as compared to 1995. The decreased volume at the Plastics Division was also a primary reason for the decrease in EBITDA from $59.7 million in 1995 to $57.2 million in 1996 in the Automotive Group. Other contributing factors to this decrease include a new plant in Brighton, Michigan that produces extruded nylon parts for fuel and brake systems. Adjustment for Asbestos Litigation and Provision for Other Claims. In December 1995, the Bankruptcy Court estimated the Company's aggregate liability for asbestos-related personal injury claims to be $2.5 billion. The Company adjusted the 1995 consolidated financial statements by $1.0 billion to increase the asbestos liability subject to compromise to $2.5 billion. In 1996, the consolidated financial statements were adjusted by $502.2 million to $2.0 billion to reflect the amount of the settlement on which the Plan was based. A provision for other claims related to the bankruptcy proceedings of $4.2 million was also made in Fiscal 1996. Interest Expense. Interest expense increased by $1.2 million, or 63.2%, from $1.9 million in 1995 to $3.1 million in 1996. The principal reason for the increase was the settlement of certain secured tax claims in the bankruptcy for which the claimants were entitled to interest. Gain on Sale of Investment. In 1995, the Company sold an investment in stock of a Canadian mining concern which resulted in a gain of $11.5 million. OPERATING ACTIVITIES Cash and cash equivalents were $53.7 million at November 30, 1997 compared to $32.7 million and $93.3 million at November 30, 1996 and 1995, respectively. Cash flows from operations in 1997, excluding a tax refund of $69.1 million, were $78.8 million, despite the small net loss of $3.9 million, and in 1996 and 1995 were $72.9 million and $30.5 million, respectively. In 1997, the repayment of the Divestiture Notes and the Tax Refund Notes resulted in deductions in excess of income, so that the Company's current federal income tax liability was minimal. Income taxes were paid primarily to foreign, state and local jurisdictions in 1997 and amounted to, net of miscellaneous small refunds, $4.3 million. In 1996 and 1995, the Company paid income taxes, including federal income taxes, of $17.3 million and $28.8 million, respectively. Cash and cash equivalents were $19.0 million at February 28, 1998. As previously discussed, depreciation and amortization increased significantly in 1997 to $56.0 million as compared to $30.8 million in 1996 and $28.7 million in 1995. The reorganization value in excess of amounts allocable to identifiable assets is being amortized over four years. Changes in working capital and other items provided approximately $6.9 million in cash in 1997. Certain divisions have been able to negotiate better terms on their accounts payable following the Company's emergence from bankruptcy. Decreases in certain working capital components have more than offset increases in receivables and inventories which have resulted from increased sales volumes. Working capital provided approximately $4.0 million in 1996, but $27.0 million was used for working capital items in 1995. In 1995 into 1996, the Company commenced several new programs in the Automotive Group that required investment in customer tooling. It is common practice in the Automotive Industry for suppliers such as the Company to accumulate customer tooling costs while the tooling is under construction and to bill the customer upon its completion. In 1995, an $11.5 million increase in the amount of tooling carried on the Company's consolidated balance sheet brought the total 63 of such amount to $26.5 million at November 30, 1995. Tooling costs recorded on the Company's consolidated balance sheet were $10.6 million and $11.5 million at November 30, 1997 and 1996, respectively. The accumulation of tooling costs was on top of 'normal' growth of working capital due to revenue growth. In 1996, as the new programs were instituted, amounts for tooling were collected from customers; however, revenue growth from these new programs resulted in 'normal' working capital growth that partially offset the decrease in working capital resulting from decreases in tooling activity. Another factor contributing to the less than expected decrease in working capital in 1996 was the increase in the price of germanium which resulted in increased inventories and receivables. INVESTING ACTIVITIES Capital expenditures were $51.3 million in 1997. Major additions included two new plants to manufacture precision machined parts, one in Manchester, Tennessee and the other in Tamworth, England. Construction on the new diatomaceous earth processing unit in Vale, Oregon, which commenced in 1996, was completed in 1997. Capital expenditures were $45.0 million and $40.6 million in 1996 and 1995, respectively. In addition to amounts spent on construction of the facility in Vale, Oregon in 1996 and the addition of a new coating line for the manufacture of rubber coated metal products in 1995, significant expenditures were made to increase machine capacity at existing facilities or improve processes, particularly in the Automotive Group. The Company does not have any plans for major expansions in the near future. The Company anticipates capital expenditures of $35.0 million for 1998. The Company believes that its minimum capital expenditure level is approximately $15.0 million. The Company sold the Plastics, Transicoil and Fabricon Products divisions in 1997. The net cash proceeds of these transactions totaled $39.0 million. The injection molding operations of the Orthane Division were sold in 1996 for $4.2 million. No other divestitures have been announced or committed to at this time; however, the possibility of future divestitures of certain businesses exists, particularly if the Company needs cash to fund future expansions. In 1995, the Company sold an investment in stock of a Canadian mining concern which had no book value for $11.5 million. The stock, which had been received in settlement of certain indebtedness, was deemed by the Company to be impaired and was written down to zero. The Company generally does not invest in marketable securities of this nature. Any available cash is generally invested in cash equivalent instruments. FINANCING ACTIVITIES The Company used the proceeds of tax refunds totaling $69.1 million received in 1997 to redeem the $69.1 million Tax Refund Notes (the 'Tax Refund Notes') which were issued by the Company to the Trust in conjunction with the Company's emergence from bankruptcy. The Divestiture Notes were issued to the Trust and other unsecured creditors on the Consummation Date (as defined herein). A total of $45.3 million of the Divestiture Notes was prepaid in August 1997 with the proceeds of the divestiture of the Divested Divisions; the remaining obligation of $4.7 million was reclassified to accrued liabilities as a reserve for the final bankruptcy distribution. The Divestiture Notes bore interest at 9% and had a maturity date of November 29, 1999. In addition, secured notes totaling $6.8 million at November 30, 1996 were repaid in full in 1997 due, in certain cases, to the sale of the assets which secured the notes. In 1997, the Company issued an $8.0 million Industrial Revenue Bond to finance the new facility in Manchester, Tennessee. Debt totaling $5.0 million was incurred in Europe to finance the expansion activities. Following the Acquisition, the Company has a $160.0 million revolving credit facility available to finance short-term borrowings and letters of credit. In connection with the Acquisition, $79.1 million was drawn against the revolving credit facility, approximately $52.3 million was available for additional borrowings and $28.6 million was used for credit support in the form of letters of credit. See 'Description of the New Credit Agreement.' The Company's European operations also had several lines of credit totaling $20.2 million at November 30, 1997, of which, at the Closing Date, $5.0 million was borrowed. At Closing, the Company had $15.7 million available under the European operations' lines of credit. The European operations' lines of credit contain financial covenants, with which the 64 Company is in compliance. The Company believes that the European operations should generate enough cash through operations and borrowings on lines of credit to finance growth in the near-term. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity needs are primarily for debt service and capital maintenance. The Company believes that its cash flows from operations and available borrowings under its bank credit facilities will be sufficient to fund its anticipated liquidity requirements for the next twelve months. In the event that the foregoing sources are not sufficient to fund the Company's expenditures and service its indebtedness, the Company would be required to raise additional funds. See 'Description of New Credit Agreement.' YEAR 2000 The Company is performing a comprehensive review to identify the systems affected by the Year 2000 issue. A project committee meets regularly to review the status of the investigation into and resolution of Year 2000 issues. As a result of the committee's progress to date, the Company expects to modify or upgrade existing systems and, in some cases, replace systems. The Company does not expect to spend any significant incremental amounts with outside contractors to complete any necessary modifications or conversions, but is redeploying existing internal resources. The Company presently believes that through the planned modification to existing systems and conversion to new systems, the Year 2000 issue will be resolved on a timely basis, and any related costs will not have a material impact on the results of operations, cash flows or financial condition of the Company. RECENTLY ISSUED ACCOUNTING STANDARDS In 1997, the FASB issued Statement of Financial Accounting Standards No. 128, 'Earnings per share' ('SFAS 128'), Statement of Financial Accounting Standards No. 130, 'Reporting Comprehensive Income' ('SFAS 130') and Statement of Financial Accounting Standards No. 131, 'Disclosures About Segments of an Enterprise and Related Information' ('SFAS 131'). SFAS 128 establishes standards for computing and presenting earnings per share ('EPS') and applies to entities with publicly held common stock or potential common stock. This statement requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS 130 establishes standards to measure all changes in equity that result from transactions and other economic events other than transactions with owners. Comprehensive income is the total of net income and all other nonowner changes in equity. SFAS 131 introduces a new segment reporting model called the 'management approach.' The management approach is based on the manner in which management organizes segments within a company for making operating decisions and assessing performance. The management approach replaces the notion of industry and geographic segments. The Company will adopt SFAS 128 in the fiscal year ending November 30, 1998, including interim periods. The Company does not expect to adopt SFAS 130 and SFAS 131 until the end of its fiscal year ending November 30, 1999. The Company believes that the adoption of SFAS 128, SFAS 130 and SFAS 131 will not significantly affect the Company's financial condition, results of operations or cash flows. 65 BUSINESS The Company operates in certain self-defined markets for which public market share information is not readily available. The market share information and description of the markets contained in this Prospectus are based on management's good faith estimates. Management's estimates are based on, among other things, the following factors: (i) management's knowledge of the market based on its historical business and industry experience; (ii) discussions with customers and competitors in the various niche markets in which the Company competes; and (iii) the Company's product sales compared to management's calculated estimates of the total product sales in each particular market. The Company has not independently verified this market share data and makes no representation as to its accuracy. GENERAL Founded in 1843, Eagle-Picher is a diversified manufacturer of industrial products for the automotive, aerospace, defense, telecommunications, food and beverage and construction industries. The Company's long history of innovation in technology and engineering has helped it become a leader in certain niche markets in which it competes. Eagle-Picher operates more than 50 plants in the U.S., England, Germany, Spain and Mexico, and sells its products in over 60 countries worldwide. The Company has achieved significant internal growth in both sales and EBITDA, with a compounded annual growth rate since 1993 of 8.2% and 10.9%, respectively. For the 1997 Fiscal Year, the Company realized net sales and EBITDA of $906.1 million and $104.0 million, respectively. The Company's operations are organized under three major business groups: the Automotive Group, the Machinery Group and the Industrial Group, which accounted for 48.0%, 29.9% and 22.1% of the Company's net sales and, after allocation of corporate overhead, accounted for 49.2%, 27.0% and 23.8% of the Company's EBITDA, respectively, for the 1997 Fiscal Year. The Automotive Group. The Automotive Group designs, develops, and manufactures precision machined and rubber coated metal components for the global automotive industry. Its customers include OEMs such as Ford, GM, Chrysler, Toyota, Nissan, Honda, Fiat, BMW and Rover, as well as Tier I suppliers. The Company pioneered the development of materials and processes for coating metal with elastomer (rubber) compounds, and the Company believes its proprietary technologies in this area give it competitive advantages. The Company's rubber coated metal products consist of highly specialized gaskets and materials for high-temperature and high-pressure applications, including disc brake noise insulators, air conditioning compressor gaskets, and gaskets and coated materials for automotive powertrains. More than 150 precision machined components are produced by the Automotive Group, including vibration dampening devices for engine and drivetrain applications and automatic transmission pump assemblies. The Company believes that it is the only non-OEM in North America manufacturing high volumes of automatic transmission oil pumps and is one of the top three companies worldwide that design and produce torsional crankshaft dampers. The Automotive Group also produces fluid systems assemblies, molded rubber products, aluminum castings, and interior trim products. The Machinery Group. The Machinery Group designs and produces special purpose batteries, construction equipment and can washing and coating machinery. The Company has played a crucial role in the development of power systems for U.S. space flight, and its batteries have powered missions from the back-up system that safely brought Apollo 13 back to Earth 28 years ago, to last year's Mars Pathfinder. The Company's batteries are also used in virtually every U.S. missile system, including the Patriot and Tomahawk missiles. Recognized as one of the world leaders in nickel-hydrogen technology since it powered the first communication satellite launch in 1983, the Company believes it is a world leader in providing power systems for communications and surveillance satellites, including Motorola's Iridium'r' project. Construction equipment produced by the Machinery Group includes elevating wheel tractor scrapers, which are made under a sole-source contract with Caterpillar, and a premium line of heavy duty forklift trucks, as well as related replacement parts. The Machinery Group also designs, manufactures and installs specialized high volume can washing and coating machinery primarily for the manufacturers of two-piece cans primarily for the food and beverage industry. The Industrial Group. The Industrial Group is a leading producer of specialty materials, filter aids and absorbents which are used in a wide range of applications. The Company's specialty materials 66 business, which has grown by approximately 60%, as measured by net sales, in the past two years, develops, manufactures and tests high-purity materials including germanium wafers (used in solar cells for the satellite industry), germanium tetrachloride (used in fiber optic cables for the telecommunications industry) and boron (used as a neutron absorber in nuclear power plants and as a semiconductor dopant). With a 30-year history of developing processing techniques, the Company produces the highest purity boron and germanium available in the market. Recent innovations by the Industrial Group have led to development stage production of a zinc selenide crystal that adds blue and true-green to the existing red color spectrum of LEDs, with potential use in flat panel displays and signage. The Industrial Group is also one of the world's largest producers of diatomaceous earth and perlite filter aids, which are used for high purity filtration by food and beverage processors and by chemical and pharmaceutical companies. BUSINESS STRATEGY The Company's strategy is to enhance its competitive position as a leading global manufacturer for the automotive, aerospace, defense, telecommunications, food and beverage, and construction industries. To achieve this objective, the Company will continue to build upon the following strengths: Leading Positions in Niche Markets. Eagle-Picher's long history of innovation and reputation for quality have afforded it leading positions in certain niche markets. The Company enjoys leading positions in, among others, the market for rubber coated metal products, the North American non-OEM market for transmission pumps, the market for nickel-hydrogen batteries and the market for two-piece can washers. The Company believes that it has achieved significant market share in these markets because of its customer relationships, engineering excellence, high quality standards and industry reputation. Strong Customer Relationships. The Company has established long-term relationships with many of its customers. It has been supplying its products to each of Ford, GM and Chrysler for more than 45 years; Lockheed Martin for more than 40 years; and Motorola for more than 30 years. The Company believes it has developed strong customer relationships by working closely with customers to design products that meet the customers' specifications. Often, the Company provides innovative and cost-efficient engineering solutions to customer problems. For example, the Industrial Group continuously works with customers to develop lighter and longer-lasting battery systems to complement the latest generations of missiles and satellites. In addition, through the development of a new camshaft damper, the Automotive Group recently solved a significant powertrain vibration problem for certain OEMs. Many of the Company's facilities are located near customer plants, enhancing the Company's ability to respond to its customers' needs. The Automotive Group recently built a new transmission pump production facility in Manchester, Tennessee and a new manufacturing facility in San Luis Potosi, Mexico, in each case to meet the increasing needs of OEMs located nearby. The Company believes that its strong relationships with customers, particularly automotive and capital equipment OEMs, give the Company a competitive advantage and position the Company to capitalize on a growing trend toward outsourcing. Diversified Product Lines; Global Presence. The Company manufactures hundreds of products for the automotive, aerospace, defense, telecommunications, food and beverage and construction industries. The Company sells its products to customers located in over 60 countries through its extensive network, including global manufacturing facilities throughout the U.S. and Europe. The Automotive Group alone serves virtually all major automotive OEMs worldwide. The Company believes that its product diversification and global sales reduce its exposure to any one market segment or customer. Superior Product Quality. The Company believes it has a reputation among its customers for providing technologically advanced, high quality products. The Company has been honored by many of its customers for its commitment to quality and service, and, in the last two years, has earned Ford's 'Supplier of the Year Award' (Ford's Sharonville facility), Hughes SC's 'Performance Excellence Award,' MD's 'Preferred Supplier Award' and Lockheed Martin's 'Tradition of Excellence Award.' Low Cost Structure. The Company is committed to controlling costs and improving operating efficiencies. The Company believes that it is a low cost producer in many of the markets in which it 67 competes. The Company attributes its low cost position to its leading positions in niche markets, relatively low overhead costs due to the small town locations of many of its facilities, a primarily non-union workforce, advanced proprietary technology and advanced manufacturing processes, including the Toyota Production System at one of the Automotive Group's facilities. Low cost is essential to the Company's ability to continue to remain competitive. INDUSTRY OVERVIEW AUTOMOTIVE The Automotive Group's performance, growth and strategic plan are directly related to certain trends within the OEM and Tier I markets, including the OEMs' increasing reliance on outsourcing, the expansion of OEM supplier responsibilities and the shift by OEMs to the purchase of 'systems' (several components assembled together) rather than individual components, all of which have contributed to a consolidation of OEM suppliers. Since the 1980's, OEMs such as Ford, GM and Chrysler have been outsourcing an increasing percentage of their production requirements. OEMs benefit from outsourcing because outside suppliers generally have significantly lower cost structures and can assist in shortening development periods for new products. Consistent with the trend toward outsourcing, OEMs have focused on developing long-term, sole source relationships with suppliers that accept significant responsibility for product management and meet increasingly strict standards for product quality, on-time delivery and lower manufacturing costs. These suppliers are expected to control all aspects of the production of system components, including design, development, component sourcing, manufacturing, quality assurance, testing and delivery to the customer's assembly plant. Many suppliers do not have the resources to meet these requirements and the Company believes that, as a result, the automotive OEM supplier market will be divided among a smaller group of high quality key suppliers. While the OEMs' focus today is on quality, cost and service, the Company believes that their focus for the future will be on global capabilities, innovation and ability to provide value-added products and systems. The OEMs have been very successful in making high quality and low cost a minimum requirement to remain in the industry, rather than a competitive advantage for certain suppliers. These evolving requirements can best be addressed by suppliers with sufficient resources to meet such demands. For suppliers such as the Company, this environment provides an opportunity to grow by obtaining business previously provided by other suppliers who can no longer meet the current or future requirements and expectations of the OEMs and by acquisitions that further enhance product manufacturing and service capabilities. INDUSTRIAL AND MACHINERY Defense and Space Power Systems. The defense and space power systems markets to which the Industrial and Machinery Groups sell their products design, develop, produce and sell components or systems for use in a variety of military applications (including missiles, smart weapons and aircraft) and space power applications (including satellites, spacecraft and launch vehicles). In recent years, the defense industry in the U.S. has been characterized by steadily declining defense budgets primarily as a result of a change in the nature of perceived threats to U.S. national security interests since the dissolution of the Soviet Union in 1991 and growing political pressure to balance the federal budget. Industry sales to the DOD declined for eight consecutive years through 1995. As a result, many U.S. spacepower and defense-related companies have focused on a strategy of downsizing and consolidation. Although the defense budget is shrinking, the U.S. government is still the largest consumer of space power. However, propelled by rapid growth in telecommunications, broadcast, aircraft navigation, and imaging applications, worldwide non-governmental spending in the space power market is growing. If this trend continues, non-governmental space power spending could surpass government space power spending within a decade. 68 Significant markets in the commercial space segment include satellites, satellite launchers and supporting ground equipment. U.S.-based companies manufacture of satellites worldwide, led by Hughes and other U.S. satellite manufacturers including Lockheed Martin, Loral Space and Communication Ltd., TRW Inc. and Ball Corporation. Despite their lead in satellite technology and production, U.S. companies command only about one-third of the worldwide satellite launch business. Market participants include Paris-based Arianespace, an affiliate of The European Space Union, as well as U.S.-based Lockheed Martin and The Boeing Company ('Boeing'). In addition, NASA's Space Shuttle is used to launch commercial as well as government satellites, and U.S. companies are developing next-generation reusable launch vehicles. Several other countries, including China, India, Israel, Brazil and Japan, are also developing satellite launch capabilities, and certain Russian and Ukrainian companies have entered into joint ventures with U.S. companies. The rapid growth in satellite launch demand has been furthered by the development of an array of satellite services companies and the development of new services such as satellite broadcast cable television and global mobile telephone services and high-volume data transfer. In the military space power market, satellite reconnaissance and communications capabilities are becoming more important. For example, the U.S. Air Force has a number of important space programs including DSP (Defense Support Program), Milstar satellite communications, and Navstar Global Positioning System, and continues to provide funding for the production of medium launch vehicles and Titan heavy launch vehicles. The primary Army space program provides ground systems for the Defense Satellite Communications System, while the Navy operates its Fleet Satellite Communications System. Telecommunications. A number of trends within the telecommunications industry have had and will continue to have a fundamental impact on the satellite market. Advances in cellular and satellite technologies have made possible mobile satellite systems that could link the entire world in a single, seamless wireless communication system. Owners and operators of communication satellites, which continually need space access, have fueled the growth in this industry and now account for virtually all of the private sector market for commercial launch services. Six new services planned for implementation between 1998 and 2000 will rely on large low earth orbiting ('LEO') satellite systems to offer global mobile telephone, television, internet and other information services. LEO satellites, with orbits of approximately 1,500 nautical miles, are typically smaller and lighter than their geostationary ('GEO') counterparts, which orbit at a distance of approximately 22,300 nautical miles, and mid-earth orbit satellite systems, which orbit the Earth at distances between the orbits of LEOs and GEOs. The demand for these services is expected to result in the production and launch of hundreds of satellites between 1998 and 2000. The Company believes that these satellite constellations will increase future demand because the satellites are expected to be replaced every five years. The primary customers of satellite components are the satellite manufacturers such as Hughes and Lockheed Martin, and satellite owners such as Iridium World Communications Ltd. (30% of which is owned by Motorola), Globalstar Telecommunications Limited ('Globalstar') (which is owned by Loral/Qualcomm Incorporated) and Orbital Sciences Corporation. The increased demand for satellites has attracted several small companies and several larger satellite manufacturers to become satellite owners. Semiconductors. Semiconductors are the basic building blocks used to create a variety of components and systems used in satellites, spacecraft and aircraft as well as a broad array of other communications, computer and computer peripheral and consumer electronics applications. Continual improvements in semiconductor processes and design technologies have enabled the production of complex, highly integrated circuits which provide faster execution, increased functionality and greater reliability at lower cost. As a result, semiconductor demand has grown substantially in its primary markets of computing and communications, and has experienced increased growth in additional markets such as consumer electronic devices, automotive products and industrial automation and control systems. Construction Equipment. The construction equipment industry in which the Machinery Group competes has a broad spectrum of participants that specialize in various product lines. The principal factors affecting the market are distribution strength, market share objectives, profit objectives, unique 69 product or service advantages and product support. The construction industry in the Midwest and Northeast is highly seasonal. Construction activity slows down, especially in these regions, beginning in November and continuing through the first quarter. North American retail demand for construction equipment is strongest in the second and fourth quarters. In the construction equipment market, the Company is the sole producer of elevating wheel tractor scrapers for Caterpillar. The other major participant in this market is Deere & Company. The primary participants in the vertical mast rough-terrain forklift truck market, in addition to the Company, are Case Corporation, JCB Inc. and Sellick Equipment Limited. The materials handling industry to which the Machinery Group supplies its cushion-tire forklift trucks, which are primarily used in the paper, metals and automotive markets, is a mature industry which historically has been cyclical. Fluctuations in the rate of orders for forklift trucks reflect the capital investment decisions of the customers, which in turn depend upon the general level of economic activity in the various industries served by such customers. In the most recent business cycle, the North American market for forklift trucks reached its lowest level in 1991 and has increased in all but one year thereafter. Can Washing Equipment. The U.S. metal beverage container industry in which the Machinery Group also competes has experienced slow demand growth at a compounded annual rate of approximately 2% over the last decade, with much of that growth in the soft drink market. As a result, capital spending on can manufacturing equipment has been minimal and the Company has focused on servicing and providing replacement parts for existing equipment. The demand for can manufacturing equipment is primarily from emerging markets such as China, Vietnam, Thailand, Poland, Russia, India and Brazil. The majority of the Company's sales of new two-piece can washers is expected to be in these emerging markets for the foreseeable future. DESCRIPTION OF BUSINESSES THE AUTOMOTIVE GROUP The Automotive Group is a supplier in the global automotive market offering a diverse range of products to three primary geographic markets -- North America, Europe and Asia. The Automotive Group is primarily engaged in the production and sale of mechanical and structural parts for passenger cars, trucks, vans and recreational and utility vehicles. Their offerings include state-of-the-art products based on proprietary technologies and staple products within different markets. Manufacturing plants, largely in the U.S., but also in England, Germany, Mexico and Spain, and sales and engineering offices in the U.S., Japan and Europe serve automotive markets around the world. The operating strategy of the Automotive Group is to identify and target niche markets and then to create substantial market positions within these niche markets. The Company believes that the Automotive Group is positioned to capitalize on the recent trend by OEMs to outsource their products. The Automotive Group distributes its products primarily to Ford, GM, Chrysler, Toyota, Nissan and Honda, and to Tier I suppliers of those manufacturers, directly through its internal sales personnel. With respect to the hundreds of products manufactured by the Automotive Group, competition varies widely as to the number and type of competitors, the methods of competition, and the Automotive Group's competitive positions. Generally, competitive conditions for the Automotive Group are characterized by a decrease in the number of competitors while at the same time an increase in the size of existing competitors, increased foreign competition (particularly from Asia), increased emphasis on quality and intense pricing pressures from major customers. 70 The Automotive Group is composed of two major product groups: Precision Machined Components and Rubber Coated Metal Products. The following table sets forth, for the last three fiscal years, the net sales and the percentage of the Company's total net sales contributed by each product group.
1995 1996 1997 ---------------------- ---------------------- ---------------------- % OF TOTAL % OF TOTAL % OF TOTAL NET SALES NET SALES NET SALES NET SALES NET SALES NET SALES --------- ---------- --------- ---------- --------- ---------- (DOLLARS IN MILLIONS) Precision Machined Components................. $ 168.9 20.0% $ 182.1 20.4% $ 205.6 22.7% Rubber Coated Metal Products.................. 77.9 9.2 83.9 9.4 80.8 8.9 Other Automotive Products..................... 92.1 10.8 92.8 10.4 112.5 12.5 Divested Automotive Products.................. 94.3 11.1 80.8 9.1 36.3 4.0 --------- ----- --------- ----- --------- ----- Total............................... $ 433.2 51.1% $ 439.6 49.3% $ 435.2 48.1% --------- ----- --------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Precision Machined Components. The Automotive Group's Hillsdale division specializes in the design, manufacture and distribution of a full line of precision machined aluminum and steel parts for the worldwide automotive market. Precision machined components include vibration dampening devices and precision machined castings and forgings which are designed and engineered for engine, transmission and driveline applications. The Automotive Group's transmission products include pump assemblies for use in automatic transmissions. The Company believes that it is the only non-OEM in North America manufacturing high volumes of automatic transmission oil pumps. The Hillsdale division produces the entire pump assembly for Ford's electronic four-speed overdrive transmission, which is used on pick-up trucks, vans and sport utility vehicles. Each pump contains over 50 components which are machined, assembled and tested by Hillsdale. The Automotive Group also produces torsional vibration dampening devices for use in engine and drivetrain applications. A damper is a vibration control device which reduces the torsional stress vibrations caused by internal combustion engine systems, thereby alleviating the stress on shafts and relaxing the flex points. Dampers reduce fatigue and prevent cracking thereby enhancing the durability of engines and their components. The Company believes it is one of the top three companies worldwide which designs and produces torsional crankshaft dampers. The Automotive Group recently expanded its international operations by opening a new facility in Tamworth, England to service existing and new customer needs. The Automotive Group also produces nearly 150 different machined castings and forgings for power steering, drivetrain and transmission applications from numerous metals. Each part is specially designed to meet a customer's specifications. Once a product is designed for a customer, the Company believes it becomes the sole source provider of such products to that customer. The Automotive Group also produces its own rubber compounds which enables it to consistently maintain high quality and to manipulate the composition of the rubber for its different products. By controlling the quality and composition of its rubber, the Automotive Group is better able to manufacture components to critical tolerances, giving it an advantage over its competitors. Hillsdale continues to diversify its customer base, application and product range, as well as its international presence, most notably in Mexico. Hillsdale has experienced growth within the expanding Japanese plant operations in the U.S. with such products as torsional vibration dampers and transmission pumps. As a result of such business, and consistent with its strategy to remain close to its customer base, Hillsdale recently completed a new manufacturing facility in Manchester, Tennessee to supply the nearby Nissan assembly plant's transmission pump needs, which were approximately 271,000 for the year ended December 31, 1997. The Company believes that its Manchester facility will have the capacity to produce 300,000 transmission pumps annually by the end of 1998. The market for precision machined components tends to have a few strong and well-positioned competitors including the OEMs, as well as Simpson Industries, Inc. and Freudenberg-NOK General Partnership ('Freudenberg'). The Automotive Group competes in this market primarily on the basis of price, delivery, quality and service. 71 Rubber Coated Metal Products. The Automotive Group's rubber coated metal products, which are manufactured by its Wolverine Gasket division, consist of highly specialized gaskets and materials for high-temperature and high-pressure applications in the automotive industry using proprietary processes and formulations. Generally, gaskets are compressible, lightweight material placed between metal parts to act as a seal and prevent fluids and gases from leaking. Rubber coated metal products are composed of three principal product lines: disc brake noise insulators, compressor gaskets for air conditioning units and gaskets and coated materials for powertrain applications (including head gaskets). Wolverine Gasket pioneered the development of materials to manufacture the high-torque sealing products needed to withstand intense heat and pressure. Wolverine Gasket also invented the process of coating materials with a thin elastomer to render them impervious to fluid penetration and able to withstand high-torque loads. This technology makes possible the coating of the wide range of substrate materials necessary to operate a complex machine such as a car, which generates intense heat and pressure. The Automotive Group's widely used compounds include Wolverine Steel N'r', a steel base with an oil-resistant specialty compounded rubber; Foamet'r', a temperature-resistant compound which is bonded to steel or aluminum; Alum-N'r', an aluminum alloy-based product coated with nitrile synthetic rubber which is particularly effective where corrosion or weight is a factor; and Vulkol'r', a coated rubber-to-vulcanized fiber sealing material. Wolverine Gasket, which is currently a supplier to OEMs including Ford, Toyota and GM, plans to expand its sales to Tier I suppliers in the future. The trend in the auto industry toward high-temperature, high-compression and longer-lasting engines requires that engine gaskets meet more stringent specifications for durability and sealing. Wolverine Gasket's coated metal products provide the most significant component of multilayer steel head gaskets, which the Company believes will become the gasket of choice for future engine designs. A multilayer steel head gasket is a sealing material which is better able to withstand intense heat and pressure, such as those which are common in diesel engines. In addition, Wolverine Gasket expects the brake insulator market to grow as more cars are equipped with four-wheel disc brakes. Wolverine Gasket's coating expertise, combined with its recent major investment in a state-of-the-art coating line, gives the Company the opportunity to sell its material to a new customer base throughout the world. The Automotive Group's new 50,000 square foot facility in Blacksburg, Virginia contains a technically- advanced liquid rubber-to-steel coil coating line which enables the Company to produce rubber coated metal to closer tolerances. The market for rubber coated metal products is highly fragmented. The Automotive Group competes against a variety of different companies in the geographical markets it supplies, and has no primary competitor. The Company believes that it is the sole supplier to the U.S. automotive compressor gasket market. The Company also believes that it has 70% of the U.S. market for disc brake noise insulators. THE MACHINERY GROUP The Machinery Group is composed of two major product groups: special purpose batteries and construction equipment. The following table sets forth, for the last three fiscal years, the net sales and percentage of the Company's total net sales contributed by each product group:
1995 1996 1997 ---------------------- ---------------------- ---------------------- % OF TOTAL % OF TOTAL % OF TOTAL NET SALES NET SALES NET SALES NET SALES NET SALES NET SALES --------- ---------- --------- ---------- --------- ---------- (DOLLARS IN MILLIONS) Special Purpose Batteries..................... $ 99.3 11.7% $ 108.8 12.2% $ 131.0 14.4% Construction Equipment........................ 108.4 12.8 95.1 10.7 96.8 10.7 Other Machinery Products...................... 32.2 3.8 35.7 4.0 30.2 3.3 Divested Machinery Products................... 14.8 1.7 18.0 2.0 12.8 1.4 --------- ----- --------- ----- --------- ----- Total............................... $ 254.7 30.0% $ 257.6 28.9% $ 270.8 29.8% --------- ----- --------- ----- --------- ----- --------- ----- --------- ----- --------- -----
72 Special Purpose Batteries The Machinery Group, primarily through its Federal Systems, Power Systems and Power Subsystems departments, designs, manufactures and tests special purpose batteries for advanced value-added products for three markets: telecommunications, aerospace and the U.S. government. The Company is the leading supplier of special purpose batteries for aerospace and defense applications. The Company's broad line of specialty batteries includes: (i) thermal batteries (used primarily in missiles, smart weapons and other defense systems); (ii) silver-zinc batteries (used primarily in military applications and in launch vehicles); (iii) nickel-hydrogen cells and batteries (used in military, scientific and commercial aerospace and telecommunications satellites); (iv) lead acid batteries (used in emergency lighting, uninterruptible power systems, telecommunications, handheld power tools and ride-on toys); and (v) nickel-cadmium batteries (used in aircraft and aerospace applications). The Company believes that its special purpose batteries have been used in virtually every U.S. missile system, including the Patriot and Tomahawk missiles used in the Persian Gulf war, and in all spacecrafts used in the principal U.S. space missions, including the space shuttle and the Mercury, Gemini and Apollo spacecrafts. Thermal Batteries and Silver-Zinc Batteries. Thermal batteries, unlike most other batteries, can remain dormant for long periods of time prior to their use. The Company is the leading supplier of batteries for missiles, submunitions, mines, sonobuoys, fuses and aerospace power backup. The Company has supplied batteries for virtually every U.S. missile system and accounts for 70% of all thermal battery sales for U.S. military applications and 50% of all such sales for military applications for the U.S. and its allies combined. It was the Company's silver-zinc batteries that provided the essential back-up power systems for the life support, guidance and communications that safely brought the Apollo 13 spacecraft back to Earth 28 years ago, as well as the batteries used to power the Mars Pathfinder in the exploration of Mars last year. The Company believes that it is the market leader in thermal and silver-zinc batteries on the basis of quality, customer satisfaction, technological innovation and cost structure. The Machinery Group's primary competitor for thermal batteries is (ASB) Aerospatiale Batteries, which has a large share of the European market. The Machinery Group's primary competitor for silver-zinc batteries is Yardney Technical Products, Inc. in the U.S. and SAFT in Europe. The Company believes that its higher quality and lower cost have enabled it to maintain its market share. Nickel-Hydrogen Batteries. The Machinery Group's Power Subsystems department is recognized as the world leader in nickel-hydrogen technology as well as being the most diversified manufacturer of special purpose NiH2 power systems. The nickel-hydrogen battery system, which is the most widely-used power source for weather, communications and military satellites, is recognized for its long-life (typically greater than 15 years), reliability and durability. The NiH2 power system, which is designed to outlast most systems in which it is installed, powered the first communication satellite launch in 1983 and is currently part of the Hubble Space Telescope. The Company believes that more than 90% of the communications and surveillance satellites manufactured in the U.S. are powered by Eagle-Picher nickel-hydrogen batteries, including all major global telecommunications systems. The Company believes that it is the primary or sole source supplier to such customers as Lockheed Martin, SS/Loral, Hughes and Boeing. The Company has several contracts for satellite components with several of these satellite projects including Motorola's Iridium'r' system consisting of 66 LEO satellites and offering digital communications (voice, data, fax and paging capability) to subscribers and Globalstar's system consisting of 48 LEO satellites to provide fixed and mobile telecommunication services by 1999. Lead-Acid Batteries. The Machinery Group manufactures an extensive line of rechargeable valve regulated lead-acid ('VRLA') batteries under the Carefree'r' brand. Carefree'r' sealed lead-acid batteries are typically small rechargeable batteries used in emergency lighting, uninterruptible power systems, telecommunications, handheld power tools and ride-on toys. The Carefree'r' line has approximately 6% of the $250 million market for less-than-60-ampere-hour VRLA batteries. Major customers of the Carefree'r' line include Peg Perego, Simplex, C.E.A. and Lithonia. The Company competes with companies that have a significantly larger market share. The Company believes that it offers the shortest lead times of any manufacturer, superior telecommunications product performance and the ability to provide unique battery shapes and sizes to adapt to a customer's needs. 73 Nickel Cadmium Batteries. The Company supplies its nickel cadmium batteries for space and satellite programs to NASA and U.S. satellite builders, such as Hughes and TRW. They also sell to the DOD and aircraft manufacturers, such as Lockheed Martin and Bell Helicopter, for use in airplanes and helicopters. The Company competes primarily on the basis of quality, performance and cost. Construction Equipment The Machinery Group's Construction Equipment division manufactures primarily two construction equipment products: elevating wheel tractor scrapers and heavy-duty industrial forklift trucks. Wheel tractor scrapers are used for removal of overburden in open-pit mining and site preparation on highway, commercial, municipal and industrial projects. The Company is the exclusive source of elevating wheel tractor scrapers to Caterpillar, which the Company believes has 85% of the U.S. market for elevating wheel tractor scrapers. In 1996, the Company received Caterpillar's 'Certified Supplier' designation. The Machinery Group manufactures several different models of heavy duty forklifts. Through its Construction Equipment division, the Machinery Group utilizes Caterpillar's dealer network to sell its own branded products, including cushion-tire forklift trucks, which are sold primarily to paper, metal and automotive manufacturers, and its R-Series, which are sold primarily to independent rental fleets such as The Hertz Corporation and U.S. Rentals. The division recently introduced a lower cost truckmounted forklift called 'TrailerMate' which is also sold to a variety of customers through the Caterpillar dealer network. The industrial forklift market is highly fragmented and many of the Company's competitors have a greater market share. However, in the niche markets in which the Company competes, such as in the heavy duty rough terrain market, the Company has a significant market share. The Company also sells to the replacement parts market, which accounts for 12% of the sales of the Company's Construction Equipment division. The Construction Equipment division recently expanded its facility in Mexico, which now has more than 300 employees. THE INDUSTRIAL GROUP The Industrial Group is composed of two product groups: specialty materials and filter aids and absorbent products. The following table sets forth, for the periods indicated, the net sales and percentage of the Company's total net sales contributed by each product line:
1995 1996 1997 ---------------------- ---------------------- ---------------------- % OF TOTAL % OF TOTAL % OF TOTAL NET SALES NET SALES NET SALES NET SALES NET SALES NET SALES --------- ---------- --------- ---------- --------- ---------- (DOLLARS IN MILLIONS) Specialty Materials............................ $ 62.2 7.3% $ 88.4 9.9% $ 101.9 11.3% Filter Aids/Absorbent Products................. 58.1 6.8 61.8 7.0 63.6 7.0 Other Industrial Products...................... 4.1 0.5 4.6 0.5 5.1 0.5 Divested Industrial Products................... 36.2 4.3 39.3 4.4 29.5 3.3 --------- ----- --------- ----- --------- ----- Total................................ $ 160.6 18.9% $ 194.1 21.8% $ 200.1 22.1% --------- ----- --------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Specialty Materials The Industrial Group, primarily through its Environmental Science and Technology ('ESAT'), Electro-Optic Materials ('EOM') and Boron departments, develops, manufactures and tests high-purity specialty materials for a wide range of services and products. The Industrial Group's significant specialty materials products include germanium and boron. Germanium. The Industrial Group is one of the world's leading manufacturers of germanium products. With over 50% of the market, the Industrial Group is one of the leading suppliers of thin polished germanium substrates (known as wafers) for solar cells on space satellites. The wafers are used in the production of solar cells which power satellites and recharge their batteries. The Industrial Group's germanium wafers are used on the Hubble Space Telescope, satellite systems including Panamsat, Indiasat, the Lockheed Martin A-2100 Buss and the Iridium'r' network. The Industrial Group also produces germanium tetrachloride, which is used as a dopant in the manufacture of fiber optic 74 cable. Germanium tetrachloride, when added to glass fiber, changes the light guiding properties of the fiber, enabling light signals to travel for over 60 miles. The Industrial Group also supplies germanium metal for use in infrared optics (such as night vision lenses) and germanium dioxide, which is used as a catalyst in the production of polyethylene terephthalate (PET) bottles in the Asian market. Boron. The Industrial Group's Boron department developed the sophisticated manufacturing processes necessary to produce isotopically pure boron, which involves the separation of boron into its isotopes, and to produce high purity enriched boron compounds. One of its primary products is enriched boric acid, which is used as a neutron absorber in nuclear power plants. The nuclear power plants that use enriched boron are primarily those that use mixed oxide ('MOX') fuels, which create a more intense reaction. Other plants that have not converted to the use of MOX fuels can use non-enriched boron, which is not manufactured by the Company, as a control material. Boron isotopes can also be used in the manufacture of nuclear control rod pellets and in storage casks used to transport and store spent nuclear fuel and other materials. The Industrial Group supplies over 90% of the world's demand for 10B and 11B isotopes. Although there are few competitors in the enriched boron markets, the Industrial Group's primary competition is manufacturers of alternate materials made of non-enriched boron compounds. The Industrial group competes in the boron market primarily on the basis of a facility's overall operating cost. Semiconductor Dopants and Crystal Growth. The Industrial Group, through its ESAT, EOM and Boron departments, also manufactures semiconductor dopants. Semiconductors which are the 'brains' of the modern computer, are tiny powerful devices that control electrical currents. In recent years, the trend in the semiconductor market has been toward producing smaller and more powerful chips which are more sensitive to impurities in the production process. The Industrial Group, through its patented 'Chromacut' purification process, purifies semiconductor dopants beyond current standards. The Industrial Group has pioneered certain development stage products including a zinc selenide crystal that adds blue and green to the existing red color spectrum of light emitting diodes (LEDs). This development provides increased brightness and definition for a variety of applications including flat panel displays (personal computers), signage (athletic facilities), aircraft cockpit display, traffic lights and automotive instrumentation. Filter Aids and Absorbent Products The Industrial Group produces diatomaceous earth (diatomite) filter aids and perlite filter aids which are used primarily by the food and beverage industry and for general industrial applications. Diatomite is an odorless and tasteless non-metallic mineral, derived from the skeletal remains of aquatic plants, with a honeycomb structure that is ideal for filtration. Perlite is a non-metallic mineral of volcanic origin that expands like popcorn when heated to elevated temperatures. The diatomite and the expanded perlite are milled and classified into appropriate particle size ranges, producing low density, efficient filter aids. Examples of diatomite and perlite filtration applications include corn sweeteners, vegetable oils, cane and beet sugar, fruit juices, beer, wine, chemicals, pharmaceuticals, and water purification. The Industrial Group also produces diatomite granular absorbents and functional fillers. These products are used as industrial absorbents, soil amendments, fillers, catalyst carriers, and for agricultural applications. The diatomite and perlite filter aids are marketed worldwide under the brand name Celatom'r' and the absorbents are marketed under the brand name Floor Dry'r'. The Industrial Group competes globally in the market for diatomaceous earth and perlite filter aids and in North America for industrial absorbents. The Company believes that it has the second largest market share in the worldwide filter aids market. The largest market share is held by World Minerals, a division of Alleghany Corporation. In the North American market for industrial absorbents, the Industrial Group has a variety of competitors, some of which have a larger market share. RESEARCH AND DEVELOPMENT In fiscal 1997, Eagle-Picher spent approximately $14.8 million for research and development and related activities, primarily for the development of new products or the improvement of existing products. Comparable costs were $18.0 million and $17.3 million for 1996 and 1995, respectively. 75 RAW MATERIALS The prices of raw materials are subject to volatility. The Company's principal raw materials are rubber, steel, zinc, nickel, germanium, gallium and boron. These raw materials are commodities that are widely available. Although the Company has alternate sources for most of its raw materials, the Company's policy is to establish arrangements with select vendors, based upon price, quality, and delivery terms. By limiting the number of its suppliers, the Company believes that it obtains materials of consistently high quality at favorable prices. BACKLOG At November 30, 1997 and 1996, the Company's order backlog was approximately $250.0 million. The Company expects the order backlog outstanding at November 30, 1997 to be filled within the 1998 Fiscal Year. Approximately $13.2 million of the Company's order backlog at November 30, 1996 was attributable to sales of the Transicoil business, which was sold by the Company in July 1997. As customary in the automotive industry, the Company enters into blanket purchase orders with their customers with respect to specific product orders. From time to time, the customer, depending on its needs, will provide the Company with releases on a blanket purchase order for a specified amount of products. As a result, the Automotive Group has virtually no order backlog. The Company's Industrial and Machinery Groups have contracts with the U.S. Government which have standard termination provisions. The U.S. Government retains the right to terminate contracts at its convenience. However, if contracts are terminated, the Company is entitled to be reimbursed for allowable costs and profits to the date of termination relating to authorized work performed to such date. U.S. Government contracts are also subject to reduction or modification in the event of changes in Government requirements or budgetary constraints. INTELLECTUAL PROPERTY The Company holds more than 50 patents, primarily in the United States and Canada. Many of the Company's products incorporate a wide variety of technological innovations, some of which are protected by individual patents. Many of these innovations are treated as trade secrets with programs in place to protect these trade secrets. Accordingly, no one patent or group of related patents is material to the Company's business. The Company also has numerous trademarks, including the Eagle-Picher name, and considers the Eagle-Picher name to be material to its business. PLAN OF REORGANIZATION AND RELATED INJUNCTION In January 1991, the Eagle-Picher Group filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. The filings were not precipitated by any fundamental business problems. Rather, the filings were caused by contingent liabilities, settlement costs and legal expenses resulting from more than two decades of litigation arising out of tens of thousands of claims asserted against the Eagle-Picher Group in connection with its asbestos-related business operations, which ceased by 1974. In August 1996, the Eagle-Picher Group, together with the Injury Claimants' Committee and the Representative for Future Claimants who was appointed by the Bankruptcy Court, proposed the Plan to the Bankruptcy Court. The Bankruptcy Court and the Ohio District Court jointly issued the Order confirming the Plan in November 1996, and the Plan was consummated on November 29, 1996 (the 'Consummation Date'). The major component of the Plan was a settlement of the Eagle-Picher Group's liability for present and future asbestos-related personal injury claims arising out of business operations prior to the date of the bankruptcy petitions under which it was agreed that these claims had a total value of $2 billion. Pursuant to the Plan, (i) the Trust was established and the Company contributed assets to the Trust valued at approximately $730 million in the aggregate (representing the approximately 37% distribution upon the $2 billion allowed claim of the asbestos claimants, as unsecured creditors), consisting of $51.3 million in cash, $250 million in the 10% Debentures, $69.1 million in Tax Refund Notes, $18.1 million in Divestiture Notes and 10,000,000 shares of Common Stock (representing all outstanding shares of Common Stock), and (ii) the PD Trust is to be established and funded with $3 million in cash (which is currently held in escrow by the Company). Pursuant to the 76 Plan, the asbestos-related claims are discharged and the Eagle-Picher Group has no further liability in connection with such claims. Pursuant to the Plan, the Eagle-Picher Group is discharged of the burden of defending more than 150,000 asbestos-related, as well as any lead-related, claims that had been, as well as any such claims that may in the future be, filed against the Eagle-Picher Group. This relief has been accomplished through the establishment of the independent trusts under the Plan to assume, administer, settle and pay such claims. In addition, the Order includes the Injunction, which prohibits claimants with asbestos-related or lead related claims from bringing actions against the Eagle-Picher Group, and instead requires these claimants to assert such claims only against the Trust or, as to asbestos-related property damage claims, against the PD Trust, each of which was, or in the case of the PD Trust, will be, funded by the Company pursuant to the Plan. Under the Plan the Trust assumed all liability and responsibility for asbestos-related and lead-related personal injury claims against the Eagle-Picher Group, and the PD Trust assumed all liability and responsibility for asbestos-related property damage claims. The Company believes that the Plan, the Injunction and the Bankruptcy Code together will enjoin any claims against the Company or the Eagle-Picher Group with respect to any past, present, or future asbestos-related or lead-related liabilities arising from or based upon business operations prior to the date of the bankruptcy petition. Following confirmation of the Plan, notices of appeal of the Order were filed by one general unsecured creditor (the 'Creditor Appellant') and the Unofficial Committee of Co-Defendants (the 'Co-Defendants'), a group of former manufacturers and distributors of asbestos-containing products that have been named as co-defendants with one or more members of the Eagle-Picher Group in asbestos personal injury lawsuits and have asserted claims against the Eagle-Picher Group for contribution, indemnity and subrogation. The allowance of contribution claims against the Eagle-Picher Group is subject to Section 502(e) of the Bankruptcy Code which states that a claim for contribution asserted by an entity that is liable with a Chapter 11 debtor shall be disallowed to the extent such contribution claim is contingent as of the time of allowance or disallowance of such claim. Neither the Creditor Appellant nor the Co-Defendants requested that the Order be stayed pending appeal. The Creditor Appellant withdrew its notice of appeal by a stipulation dated January 24, 1997. The Co-Defendants appealed the Order directly to the Sixth Circuit (the 'Confirmation Order Appeal'), raising a variety of objections to the Plan and to the Trust's procedures for processing, allowing and paying the Co-Defendants' claims. The Co-Defendants also asserted, among other things, that Section 524(g) of the Bankruptcy Code, which authorizes courts to issue injunctions to channel asbestos claims away from a reorganized company to a personal injury trust established by such company (as discussed below), is unconstitutional. The Co-Defendants did not, however, contend that the Bankruptcy Court and Ohio District Court lacked jurisdiction to enter the Injunction or that Section 524(g) of the Bankruptcy Code had not been satisfied. The Co-Defendants did not raise their objections in the bankruptcy case until after the deadline for filing objections to the Plan. The Co-Defendants also appealed to the Ohio District Court the Bankruptcy Court's denial of the Co-Defendants' motion for leave to file their late objection to the Plan discussed above (the 'Objection Appeal'). The Ohio District Court affirmed the Bankruptcy Court's denial of the Co-Defendants' motion to file a late objection to the Plan and the Co-Defendants appealed that judgment to the Sixth Circuit. The Objection Appeal, which was briefed in early 1998, was consolidated with the Confirmation Order Appeal by the Sixth Circuit. The Company anticipates that oral argument will be held on the consolidated appeals by the third quarter of 1998. The Company has argued to the Sixth Circuit that the Confirmation Order Appeal is moot in light of (i) the substantial consummation of the Plan, (ii) the fact that the Co-Defendants did not seek a stay of the Order pending appeal and (iii) the adverse effects that vacation of the Order would have on creditors and non-creditor third parties who have acted in reliance on the Order. Even if the Sixth Circuit were willing to consider the substance of the Co-Defendants' objections to the confirmation of the Plan, the Co-Defendants have represented in their court papers that they do not object to the amount of money that was transferred to the Trust, and that their objections relate to the internal Trust procedures and the identity of the trustees and members of the advisory committee for the Trust. The Company believes, therefore, that even if there is a ruling on the Co-Defendants' 77 objections, it is unlikely to adversely affect the scope of the Injunction issued pursuant to the Order, the significance of which is discussed herein. The Objection Appeal will likely be denied because the Co-Defendants failed to timely file an objection to the confirmation of the Plan notwithstanding having adequate notice of the deadline for the filing of objections to the Order. For the foregoing reasons, the Company expects that the Objection Appeal and the Confirmation Order Appeal will be denied by the Sixth Circuit. The Company believes that the Injunction is critical to its ability to continue to operate its business. Indeed, the Bankruptcy Court and the Ohio District Court found that the Injunction was 'essential' to the viability of the business operations of the Company and to the successful implementation of the Plan. Notwithstanding that the Bankruptcy Court and Ohio District Court determined that they had authority to issue the Injunction, it is possible that the Injunction could be dissolved in connection with the Co-Defendants' appeals discussed above or a later challenge. The Company believes, for the reasons discussed herein, that neither the appeals nor later challenge would result in the dissolution of the Injunction. However, although unlikely, dissolution of the Injunction is possible. A later challenge to the Injunction will likely be unsuccessful because the Bankruptcy Court and Ohio District Court entered the Injunction pursuant to Section 524(g) of the Bankruptcy Code. Section 524(g) of the Bankruptcy Code was enacted by Congress in 1994 to provide a statutory safe-harbor for asbestos manufacturing companies faced with numerous asbestos-related personal injury claims. Section 524(g) grants bankruptcy courts express statutory authority to issue injunctions that prohibit present and future asbestos claimants from suing a reorganized debtor; provided that a trust is established and funded to pay asbestos-related claims through procedures that reasonably assure that claimants with similar injuries will receive similar payments and other specific statutory requirements are satisfied. Under Section 524(g), if the injunction is issued or affirmed by a district court with jurisdiction over the reorganization, the injunction will be permanent and not subject to modification by any court once the injunction becomes final and nonappealable. In confirming the Plan and issuing the Injunction, the Bankruptcy Court and Ohio District Court determined that the Trust and the PD Trust each satisfied the requirements of Section 524(g) and that they had jurisdiction to issue the Injunction under both Section 524(g) of the Bankruptcy Code and their more general powers under the Bankruptcy Code to issue orders that are necessary or appropriate in bankruptcy cases. The Order has not yet become final, however, due to the Co-Defendants' appeal to the Sixth Circuit discussed above. Once the Order becomes final, it is likely that Section 524(g) would bar any later challenge to the Injunction. It is possible, however, that a court would rule that Section 524(g) does not operate to preclude all subsequent challenges to a qualifying injunction and that dissolution or modification of the Injunction is appropriate under the circumstances then existing. While Section 524(g) specifically addresses trusts created to resolve asbestos-related litigation and injunctions issued in connection therewith, it does not specifically address whether an injunction directing claims to a trust that will pay both asbestos-related and non-asbestos-related claims, as in this case, is protected under Section 524(g). While there is a risk that the Injunction would not apply to future lead-related claimants because lead-related claims are not addressed in Section 524(g), the Company believes that the Injunction would be upheld and enforced against lead-related claimants if challenged. That belief is based on the fact that the Bankruptcy Court and Ohio District Court, in confirming the Plan and entering the Injunction, specifically ruled that Section 524(g) does not prohibit channeling of non-asbestos related claims along with asbestos-related claims. In the event that Section 524(g) does not operate to protect the Injunction's channeling of lead-related claims, such channeling could be upheld as a necessary or appropriate order under Section 105(a) of the Bankruptcy Code. Although the filing of future lead-related lawsuits cannot be predicted, the Company believes that this risk is limited because to date, only approximately 125 lead-related claims have been asserted against the Eagle-Picher Group (as compared to the tens of thousands of asbestos-related claims asserted against the Eagle-Picher Group). On and shortly after the Consummation Date, the Eagle-Picher Group made distributions (the 'Initial Distribution') under the Plan totaling approximately $800 million in cash, common stock and debt securities (including the approximately $730 million contributed to the Trust, $3.0 million to the 78 PD Trust escrow and the remainder in connection with various other allowed claims including the environmental claims described below). Final distributions under the Plan will not be made until all remaining unresolved claims (other than asbestos-related and lead-related claims) are resolved. Approximately twelve unresolved claims remain (seven of which are subject to the Liberty Mutual Settlement discussed below, three of which relate to environmental liability claims discussed below and the others are product liability claims in connection with products manufactured prior to the filing of the bankruptcy petitions). As of February 28, 1998, the Company has recorded a reserve on the Company's balance sheet in the amount of approximately $13.5 million for the payment of such claims, as well as any other allowed or resolved claims that were not paid in the Initial Distribution, and administrative expenses (the 'Final Distribution Reserve'). Although there can be no assurance as to the amount required to resolve the remaining claims, the Company expects those claims, together with any other claims not paid in the Initial Distribution, and administrative expenses, to be resolved for an amount not in excess of the Final Distribution Reserve. On February 12, 1997, the Eagle-Picher Group commenced an adversary proceeding in the Bankruptcy Court to obtain approval of a settlement agreement between the Eagle-Picher Group and the Liberty Mutual Insurance Company and certain of its affiliates (together, 'Liberty Mutual'), a provider of the Eagle-Picher Group's primary insurance coverage, with respect to disputed coverage claims that had been asserted by the Eagle-Picher Group against Liberty Mutual and by Liberty Mutual against the Eagle-Picher Group (the 'Liberty Mutual Settlement'). The Bankruptcy Court has not yet made any ruling in connection with the Liberty Mutual Settlement. Pursuant to the Liberty Mutual Settlement, upon an order of approval of the Bankruptcy Court becoming final, and subject to certain conditions, including a permanent injunction against all other parties that might claim an interest in specified Liberty Mutual policies from taking any action or asserting any claim against such Liberty Mutual policies, Liberty Mutual would be required to remit to the Company approximately $13.8 million. The Company believes that the Liberty Mutual Settlement is fair and equitable, and, together with the other members of the Eagle-Picher Group, intends to move in the Bankruptcy Court for approval of the Liberty Mutual Settlement. Although a bankruptcy plan of reorganization generally serves to resolve all claims that arose prior to the bankruptcy proceedings, courts in a number of cases have limited the types of environmental obligations that can be discharged by bankruptcy (concluding, for example, that an order to conduct an environmental clean-up of a site may not be a 'claim' or that an environmental claim did not 'arise' before the bankruptcy). The Eagle-Picher Group has entered into the Environmental Settlement, discussed below, which is intended to relieve the Eagle-Picher Group of the burden of defending against certain claims asserted under Environmental Laws relating to conditions occurring prior to the date of the bankruptcy petition and governs certain environmentally related claims that may be asserted against the Company or the Eagle-Picher Group after the Consummation Date relating to conditions occurring prior to the date of the bankruptcy petition. See ' -- Environmental Matters.' Nevertheless, due to the limitations on the types of environmental obligations that can be discharged by bankruptcy, the Eagle-Picher Group may have obligations relating to historical noncompliance with environmental laws with respect to sites owned by the Company as of the Confirmation Date that were not asserted in the bankruptcy proceedings. See ' -- Environmental Matters.' If, regardless of the settlements, decisions, proceedings and legislation discussed herein, the Order were to be vacated, modified or restricted in applicability in a way that permits a substantial number of claims to be asserted against the Company, the successful assertion of such claims would materially adversely effect the Company's financial condition, results of operations or cash flows and could render the Company insolvent. For all of the reasons described above, however, the Company believes that any such result is highly unlikely. ENVIRONMENTAL MATTERS Like companies involved in similar manufacturing businesses, the Company's operations and properties are subject to extensive Environmental Laws. The Clean Air Act and Clean Water Act, each as amended, impose stringent standards on air emissions and water discharges, respectively. Under the Resource Conservation and Recovery Act, as amended ('RCRA'), a facility that generates hazardous 79 wastes must manage those wastes in accordance with strict standards, and a facility that treats, stores or disposes of hazardous waste on-site may be liable for corrective action costs. A facility that holds a RCRA permit may have to incur costs relating to the closure of certain 'hazardous' or 'solid' waste management units. Under CERCLA and similar state laws, an owner or operator of property at which releases of hazardous substances have occurred, or the generator of hazardous substances disposed of offsite, may be jointly and severally liable for costs of investigation and remediation of any resulting contamination and related natural resource damages, regardless of fault. Failure to comply with such Environmental Laws, which are frequently amended, can lead to the imposition of civil or criminal penalties, injunctive relief and denial or loss of, or imposition of significant restrictions on, environmental permits. In addition, the Company could be subject to suit by third parties in connection with violations of or liability under Environmental Laws. The Company has established a number of programs to facilitate compliance with Environmental Laws. In addition, from time to time, the Company has undertaken remedial activities or incurred compliance costs at or around the Company's operations or former operations, both voluntarily and as a result of federal and state agency orders, permit requirements or other notices. Further, from time to time the Company receives notice of liability or potential liability under CERCLA or analogous state laws in connection with the disposal of materials from the Company's operations. It is also possible that there are areas in which the Company's facilities have not been, are not currently, or may in the future not be, in compliance with Environmental Laws. For the last three fiscal years, the Company's average capital expenditures and operating expenses (including expenses for remedial activities) for environmental matters were $1.1 million and $7.3 million, respectively (excluding depreciation). Such amounts do not include payments made by the Company under the Plan to settle or otherwise resolve certain environmental claims asserted in the bankruptcy proceedings. See ' -- Environmental Settlement.' The Company estimates that capital expenditures and operating expenses (including expenses for remedial activities) for environmental matters will be approximately $1.9 million and $8.3 million, respectively, for fiscal year 1998 and approximately $1.2 million and $9.2 million, respectively, for fiscal year 1999. However, because Environmental Laws have historically become more stringent, costs and expenses relating to environmental control and compliance may increase in the future. In addition, the Company may have to incur additional capital expenditures and compliance costs (which it is unable to estimate at this time) in connection with the remedial activities discussed below. Accordingly, there can be no assurance that costs of compliance with existing and future Environmental Laws will not exceed current estimates and will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. The Merger Agreement provides for indemnification for costs and expenses from certain environmental exposures in connection with the operations of the Company in excess of agreed upon thresholds for specific properties, which totals approximately $24 million in the aggregate. The indemnity applies only to certain environmental claims arising out of the business or operations of the Company prior to the Closing of which the Trust is notified within three years after the Closing. The Trust's indemnity obligations are subject to a deductible of $10.0 million and the Trust is only obligated to pay $50.0 million above the deductible for all indemnity claims, including those relating to environmental matters. In addition, indemnification is unavailable in connection with certain sites specified in the Merger Agreement and, in connection with other sites, may be asserted only for the amount by which such claim exceeds the Company's projected remediation or compliance costs. The Company has recorded a reserve as of November 30, 1997 of approximately $6.1 million in connection with environmental matters, and believes such reserves to be adequate. Certain Compliance and Remedial Activities Joplin, Missouri and Colorado Springs, Colorado. The Company is undertaking closure and corrective actions under RCRA at two of its permitted hazardous waste facilities. At the Joplin, Missouri, facility, consistent with the requirements of its RCRA permit, the Company is investigating the nature and extent of contamination from two closed hazardous waste impoundments and over 100 former solid waste management units formerly in use during the 130-year operating history of this 80 property. The Company's investigation has identified areas of soil and groundwater contamination or suspected contamination, certain of which likely will require the Company to undertake remedial activities. Following completion of its investigation, the Company, in conjunction with federal and state regulators, will determine what, if any, corrective actions are appropriate at this property. At the Colorado Springs, Colorado, facility, the closure of four former hazardous waste impoundments is being completed. Materials formerly stored in the impoundments have contaminated groundwater and soil at and around the facility. A groundwater remediation system was placed in service in 1995 and continues in operation. It is anticipated that corrective actions for soils will be implemented in 1998. The Company does not believe that it will be assessed any penalty in connection with the remediation of these sites, although there can be no assurance that one will not be imposed. Galena, Kansas. The Company owned and operated a lead and zinc smelting facility, which was dismantled in 1982, on the Galena property. The Galena property is located within the Tri-State mining district, formerly one of the largest lead and zinc fields in the world. The Tri-State mining district was actively worked from the mid-1800s until the 1960s and, as a result, soil, groundwater and surface waters have been significantly and adversely impacted. In the 1980s and early 1990s, the United States Environmental Protection Agency (the 'US EPA') addressed both surface contamination (including residential soil contamination) and groundwater contamination issues in the Tri-State mining district in the immediate vicinity of the Galena property. Under the Environmental Settlement (as defined below), while the Company resolved all of its other liability under CERCLA associated with the Tri-State mining district, it specifically retained liability for the Galena property. Environmental impacts are likely at the Galena property as a result of the former smelter operation and from historic materials management practices on the Galena property. US EPA has not required remediation of the Galena property and the Company has no current expenses in connection with remedial activities at this property. However, the Company anticipates that certain investigations and remediation may be required at some point in the future. The Company does not believe that it will be assessed any penalty in connection with the remediation of this site, although there can be no assurance that one will not be imposed. The Company is undertaking other remedial actions at a number of its facilities and properties. The Company does not anticipate that such expenses, including expenses in connection with the specific sites discussed above, will have a material adverse effect on the Company's financial condition, results of operations or cash flows. However, there can be no assurance that, in the future, the Company's expenditures in connection with remedial activities will not exceed current expenditures and will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. In addition, in connection with certain sales of its assets, including the Plastics and Transicoil divisions sold in 1997, the Company has agreed to undertake remedial actions and/or to indemnify the respective purchasers of particular assets for certain liabilities under the Environmental Laws relating to that asset's operations or activities prior to the sale. The Company believes that claims under these indemnity provisions will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. Environmental Settlement During the pendency of the bankruptcy proceedings, the Eagle-Picher Group entered into a settlement agreement (the 'Environmental Settlement') with the US EPA, the United States Department of the Interior and the states of Arizona, Michigan and Oklahoma (together, the 'Settling Parties'), addressing all known and unknown environmentally-related claims that were or could have been asserted by those entities against the Eagle-Picher Group in the bankruptcy proceeding. The Environmental Settlement was approved by the Bankruptcy Court on June 6, 1996, affirmed by the Ohio District Court on July 14, 1997, and became final 30 days later. The Environmental Settlement resolved the majority of the approximately 1,100 environmental liability-related claims filed against the Eagle-Picher Group in the bankruptcy proceedings by allowing the Settling Parties general unsecured claims totaling approximately $43.8 million (pursuant to the Plan, general unsecured claims are paid at 37% of the allowed amount). All environmental claims filed in the bankruptcy proceedings not subject to the Environmental Settlement were either disallowed by the Bankruptcy Court or resolved as general 81 unsecured claims, with the exception of three claims, none of which the Company believes is material and all of which will be paid, if at all, from the Final Distribution Reserve. In addition, the Environmental Settlement provides that any additional claims by the Settling Parties against the Eagle-Picher Group in connection with pre-petition activities at any site not owned by the Company (the 'Additional Sites'), shall be resolved as if they had been asserted during the bankruptcy proceedings. Accordingly, if any member of the Eagle-Picher Group is found liable or settles any Additional Site claim, such member's liability is limited to 37% of the liability or settlement amount. The Environmental Settlement also provides that any liability, whether alleged to arise before or after the Consummation Date, relating to a site owned by the Eagle-Picher Group on or after the Consummation Date (the 'Owned Sites'), or relating to post-petition conduct by the Eagle-Picher Group, is not discharged in the bankruptcy proceedings, and will be resolved as if the Eagle-Picher Group had never filed for reorganization. Accordingly, the Eagle-Picher Group is responsible for 100% of any liability (including, if required, the performance of remedial activities) or settlement amount in connection with Owned Sites or post-petition conduct. See ' -- Certain Compliance and Remedial Activities.' Additional Sites. The Company has received notice from one or more of the Settling Parties that the Company may have liability in connection with 19 Additional Sites. The Company may be insured for a portion of these claims. The Company believes that its potential liability at 16 of these Additional Sites is not material to the Company's financial condition, results of operations or cash flows. The remaining three Additional Sites may require significant expenditures by the Company: the Henryetta Smelter Site at Henryetta, Oklahoma, the RSR Smelter Site at Dallas, Texas, and the Witter Drum Site at Asbury, Missouri. Of the $6.1 million total reserves recorded by the Company in connection with environmental matters, $1.2 million is for its anticipated costs in resolving these three claims: Henryetta Smelter Site. The Company received a notice from the US EPA in 1997, alleging liability for remediation expenses at the site of a former zinc smelting facility owned and operated by the Company at Henryetta, Oklahoma, and for the removal and disposal from surrounding residential locations of contaminated soil and gravel that originated from the facility and from other companies operating in the area. The Company operated the facility for approximately 50 years, until it was shut down in 1968. The US EPA performed remedial activities at the site at a cost of approximately $4 million to $5 million. The Company expects to settle this claim with the US EPA for some portion of that amount. RSR Smelter Site. The Company received a notice from the US EPA in 1997, alleging that it may be a Potentially Responsible Party ('PRP') regarding liability for remediation expenses at a secondary lead smelting facility in Dallas, Texas. The Company allegedly leased the facility, which was in operation until in or about 1984, for a period of at least one year in the early 1950s. The US EPA has conducted and continues to conduct extensive remedial activities at this site, and the US EPA's total expenses may amount to $60 million or more. The Company is one of more than 1,000 PRPs identified by the US EPA in connection with this site and is not identified by the US EPA as one of the 14 significant PRPs. However, the Company believes that it may be required to make some expenditure to resolve its potential liability for remediation expenses in connection with this site. Witter Drum Site. The Company received a notice from the US EPA in 1997, alleging liability in connection with a third-party facility that had provided drum reclamation services for the Company. The US EPA has investigated the site and estimates that approximately $400,000 in remedial activities will be undertaken at this site. The Company expects to settle this claim with the US EPA for some portion of that amount. The Company does not expect that its total costs associated with these sites will have a material adverse effect on the Company's financial condition, results of operations or cash flows. Because each site is an Additional Site under the Environmental Settlement, the Company will be required to pay only 37% of any amount for which it may be found liable or settle the claim. While the Company does not believe, based on current information and taking into account reserves established for environmental matters, that costs associated with compliance with and 82 remediation under Environmental Laws will have a material adverse effect on its financial condition, results of operations or cash flows, the Environmental Laws under which the Company's facilities operate are numerous, complicated and often ambiguous and historically have become increasingly more stringent. In addition, costs related to remediation of Company-owned sites may exceed current estimates. Accordingly, there can be no assurance that future events, such as changes in existing laws, the promulgation of new laws or the development of new facts or conditions, will not cause the Company to incur substantial additional expenditures or that any such additional expenditures will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows. LEGAL PROCEEDINGS On January 25, 1996, Richard Darrell Peoples, a former employee of the Company, filed a Qui Tam suit under seal in United States District Court for the Western District of Missouri (the 'Missouri Court'). A Qui Tam suit is a lawsuit brought by a private individual pursuant to federal statute, allegedly on behalf of the U.S. Government. The U.S. Government, which has the opportunity to intervene in, and take control of, a Qui Tam suit, has declined to intervene or take control of the Qui Tam suit filed against the Company. The Company became aware of the suit on October 20, 1997, when it was served on the Company, after it had been unsealed. The suit involves allegations of irregularities in expense accounts and testing procedures in connection with certain U.S. Government contracts. The allegations are substantially the same as allegations made by the former employee, and investigated by outside counsel for the Company, prior to the filing of the Qui Tam suit. Outside counsel's investigation found no evidence to support any of the employee's allegations, except for some inconsequential expense account mistakes. The Company, which believes that the U.S. Government did not incur any expense as a result of the mistakes, reported to the U.S. Government the employee's allegations and the results of outside counsel's investigation. The employee also initiated a different action against the Company in 1996 for wrongful termination, in which he alleged many of the same acts complained of in the Qui Tam suit. That action was dismissed with prejudice by the Missouri Court in October 1996. The Company believes that the Qui Tam suit is without legal or factual merit and intends to contest this suit vigorously. The Company does not believe that resolution of this suit will have a material adverse effect on the Company's financial condition, results of operations or cash flows. The Company is also involved in various other proceedings incidental to the ordinary conduct of its business. The Company believes that none of these other proceedings will have a material adverse effect on the Company's financial condition, results of operations or cash flows. EMPLOYEES AND EMPLOYEE RELATIONS As of November 30, 1997, the Company employed 1,825 salaried employees and 4,871 hourly employees. Following is a breakdown of foreign and United States employees:
SALARIED NON-SALARIED TOTAL -------- ------------ ----- United States employees....................................... 1,581 4,175 5,756 Foreign employees............................................. 244 696 940 Total employees..................................... 1,825 4,871 6,696
Approximately 20.5% of the Company's non-salaried employees (approximately 14.9% of the Company's total employees) are represented by six different labor unions under seven separate labor contracts. The International Union of Operating Engineers Local Union No. 351 represents the largest bargaining unit with approximately 400 employees. Another significant affiliation is the United Steelworkers of America, Local No. 812, representing approximately 335 employees at two facilities. Labor negotiations are conducted on a plant-by-plant basis with two to three of the outstanding contracts renegotiated in any one year. In the last five years the Company has had no work stoppages due to strikes. However, there can be no assurance that there will not be work stoppages due to strikes in the future, or that the Company would be able to continue operating at affected facilities in the event of any work stoppage or union dispute in the future. 83 PROPERTIES The principal fixed assets of the Company consist of its manufacturing, processing and storage facilities and its transportation and plant vehicles. As of November 30, 1997, properties, facilities and equipment (net of depreciation) represented approximately 33% of the Company's total assets, as reflected in its consolidated balance sheet. The following chart sets forth selected information regarding the Company's manufacturing and processing facilities:
DESCRIPTION OF BUSINESS GROUP LOCATION PROPERTY INTEREST - --------------------------------------- ------------------------------------------------------ ----------------- AUTOMOTIVE Domestic Ann Arbor, Michigan leased Blacksburg, Virginia (2 properties) owned Brighton, Michigan leased Hillsdale, Michigan (6 properties)(1) owned Hamilton, Indiana owned Inkster, Michigan owned Jonesville, Michigan owned Kalkaska, Michigan leased(2) Leesburg, Florida owned Manchester, Tennessee leased(2) Norwich, Connecticut owned Paris, Illinois owned(3) Pine Bluff, Arkansas leased Sidney, Ohio (2 properties) owned Stratford, Connecticut owned Vassar, Michigan leased International Market Harborough, England owned Ohringen, Germany owned San Luis Potosi, Mexico owned Soria, Spain owned Tamworth, England owned MACHINERY Domestic Colorado Springs, Colorado owned Colorado Springs, Colorado (2 properties) leased Galena, Kansas owned Grove, Oklahoma owned Hamilton, Ohio leased Harrisonville, Missouri owned Joplin, Missouri (6 properties) owned Joplin, Missouri (2 properties) leased Lenexa, Kansas owned Lubbock, Texas owned Seneca, Missouri owned Sharonville, Ohio owned Socorro, New Mexico(1) leased Stella, Missouri owned International Acuna, Coahuila, Mexico owned Rothenbach, Germany leased(3) INDUSTRIAL(4) Domestic Clark Station, Nevada owned Lovelock, Nevada owned Miami, Oklahoma (2 properties) owned Miami, Oklahoma (3 properties) leased Quapaw, Oklahoma (2 properties) owned Vale, Oregon leased(2) International Kyoto, Japan leased(3)
- ------------ (1) There is little, if any, activity at this time at the Socorro, New Mexico property and two of the Hillsdale, Michigan properties. (2) The Company will become owner of each property upon payment in full of all existing obligations under the respective IRB Obligations (as defined herein) in connection with such property. See 'Description of Industrial Revenue Bonds.' (3) These properties are owned or leased by certain of the Company's joint ventures. Accordingly, the Company has a 45% interest in the Paris, Illinois property through the Eagle-Picher-Boge, L.L.C. joint venture; a 35% interest in the Kyoto, Japan property though the Yamanaka EP Corporation joint venture and a 45% interest in the Rothenbach, Germany property through the Diehl & Eagle-Picher GmbH joint venture. (4) In addition, the Company's Minerals division has mining locations and numerous claims in Nevada, Oregon and California (discussed below), leases office space in Reno, Nevada and leases 14 warehouses in the United States and Canada. 84 The Company owns or leases additional office space, including sales offices in Europe and Asia, and warehouse space for certain of its operations. The Company's properties are adequate and suitable for the business of the Company, and substantially all of its buildings have been well maintained and are in sound operating condition and regular use. The Company's corporate headquarters are located in approximately 19,420 square feet of leased office space in the Chiquita Center building in Cincinnati, Ohio. The office space is leased from YCP Cincinnati, L.P. pursuant to a six-year lease, with the initial term expiring February 29, 2004. The lease provides renewal options for two additional periods of five years each. The Company believes that its existing and planned facilities are adequate for its current needs. Mining. The Industrial Group's Minerals division owns and leases diatomaceous earth and perlite mining locations as well as numerous claims in Nevada, Oregon and California (collectively, 'mining properties'). The Company's owned and leased mining properties, including those not currently being mined, comprise a total of approximately 7,000 acres in Storey, Lyon, Pershing, and Churchill Counties in Nevada and 3,600 acres in Malheur and Harney Counties in Oregon, as well as rights on 1,040 acres not currently being mined in Siskiyou County in California. The Company continually evaluates potential mining properties, and additional mining properties may be acquired in the future. The Minerals division extracts diatomaceous earth and perlite through open-pit mining using bulldozers and wheel tractor scrapers. The extracted materials are carried by truck to separate processing facilities. A total of approximately 506,000 tons of diatomaceous earth and perlite were extracted from the Company's mining properties in Nevada and Oregon during Fiscal 1997. On average, the Company has extracted a total of approximately 402,000 tons of diatomaceous earth and perlite from its Nevada and Oregon properties each year for the past three years. As ore deposits are depleted, the Company reclaims the land in accordance with reclamation plans approved by the relevant federal, state and local regulators. The following mining properties are of major significance to the Company's mining operations: Nevada. The Company's diatomaceous earth mining operations in Nevada commenced more than 50 years ago in Storey County. The Company commenced perlite mining operations in Churchill County in 1993. The Company extracted a total of approximately 380,000 tons of diatomaceous earth and perlite from its Nevada mining properties in Fiscal 1997 and, on average, extracted a total of approximately 306,000 tons of diatomaceous earth and perlite from its Nevada mining properties each year for the past three years, or approximately 76% of the Company's total diatomaceous earth and perlite production (and including 100% of its perlite production). Approximately 265 acres in Storey, where active mining activities commenced over 50 years ago, and approximately 62 acres in the Lyon/Churchill area are actively being mined by the Company for diatomaceous earth. Diatomaceous earth from the Storey, Churchill and Lyon mining properties is processed at the Clark Station, Nevada facility. The Company believes its diatomaceous earth reserves in Storey, Churchill and Lyon, including mining properties not actively being mined, to be in excess of 40 years at current levels of extraction based upon estimates prepared by its mining and exploration personnel. Diatomaceous earth extractions from the Pershing mining properties, which commenced more than 40 years ago, are processed at the Lovelock, Nevada facility. Approximately 975 acres are actively being mined for diatomaceous earth in Pershing. The Company believes its diatomaceous earth reserves in Pershing, including mining properties not actively being mined, to be in excess of 15 years at the current level of extraction based upon estimates prepared by its mining and exploration personnel. Beginning in 1993, the Company has actively mined approximately 25 acres in Churchill for perlite, which is processed at the Lovelock, Nevada facility. The Company believes its perlite reserves in Churchill, including mining properties not actively being mined, to be in excess of 50 years at the current level of extraction based upon estimates prepared by its mining and exploration personnel. Oregon. The Company commenced mining diatomaceous earth in Oregon approximately 13 years ago at its mining properties in Harney and Malheur Counties. Approximately 88 acres and 80 acres, respectively, are actively being mined in Harney and Malheur; diatomaceous earth extracted from these mines is processed at the Company's Vale, Oregon facility. The Company extracted approximately 126,000 tons of diatomaceous earth from the Harney and Malheur mining properties 85 during Fiscal Year 1997 and, on average, has extracted approximately 96,000 tons of diatomaceous earth each year for the past three years from these mining properties, or approximately 24% of the Company's total diatomaceous earth production. The Company believes its diatomaceous earth reserves in Harney and Malheur, including mining properties not actively being mined, to be in excess of 75 years at the current level of extraction based upon estimates prepared by its mining and exploration personnel. Substantially all of the Company's owned properties and assets are pledged as collateral under the New Credit Agreement. See 'Description of New Credit Agreement.' CHANGE IN INDEPENDENT AUDITORS Following the Company's emergence from bankruptcy in November 1996, the Company appointed Deloitte & Touche LLP to replace KPMG Peat Marwick LLP as the independent auditors for the Company. The Company's Board of Directors approved the dismissal of KPMG Peat Marwick LLP and their replacement with Deloitte & Touche LLP as the new independent auditors upon recommendation of the Company's Audit committee. The Company did not consult with Deloitte & Touche LLP regarding matters of accounting principles, practices or financial statement disclosure prior to the firm being engaged as auditors. In connection with the audits of the Company's financial statements for each of the two fiscal years preceding the change in accountants, there were no disagreements with KPMG Peat Marwick LLP on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of KPMG Peat Marwick LLP, would have caused KPMG Peat Marwick LLP to make reference to the matter in their report on the consolidated financial statements for such years. KPMG Peat Marwick LLP's opinion was qualified as of and for the year ended November 30, 1995, in that the consolidated financial statements were prepared assuming the Company would continue as a going concern. The filing under Chapter 11 of the Bankruptcy Code and the uncertainty associated with the Company's sale of asbestos products and certain other litigation, raised substantial doubt about the Company's ability to continue as a going concern. KPMG Peat Marwick LLP's opinion was unqualified as of and for the year ended November 30, 1996, except for consistency in the application of accounting principles as a result of the Company's change in its method of computing LIFO for certain inventories. 86 MANAGEMENT THE COMPANY The following table sets forth the name, age and position with the Company of the directors and executive officers of the Company as of the consummation of the Acquisition. Directors will hold their positions until the annual meeting of the stockholders at which their term expires or until their respective successors are elected and qualified. Executive officers will hold their positions until the annual meeting of the Board of Directors or until their respective successors are elected and qualified.
NAME AGE POSITION - ------------------------------------ ---- ---------------------------------------------------------- Joel P. Wyler....................... 48 Chairman of the Board Thomas E. Petry..................... 58 Director Andries Ruijssenaars................ 55 Director, President and Chief Executive Officer David N. Hall....................... 58 Senior Vice President - Finance Wayne R. Wickens.................... 51 Senior Vice President - Automotive
Mr. Wyler became a Director of the Company upon consummation of the Acquisition. Mr. Wyler has been the Chairman of the Board of Directors of Granaria Holdings since 1982. Mr. Petry has been a Director of the Company since 1981. Following consummation of the Acquisition, Mr. Petry resigned as Chairman of the Board of Directors, a position he held since 1989, and as Chief Executive Officer, a position he held since 1982. Mr. Petry was first employed by the Company in 1968 as assistant to the Treasurer and subsequently served as Assistant Treasurer; Treasurer; Vice President and Treasurer; President of the Akron Standard Division; and Group Vice President. Mr. Petry was elected a Director, President and Chief Operating Officer of the Company in 1981, and President and Chief Executive Officer in 1982. He served as President from 1981-89 and from 1992-94. Mr. Petry is also a director of Cinergy Corp., Star Banc Corp., Union Central Life Insurance Co., Insilco Corp. and The Wm. Powell Company. Upon consummation of the Acquisition, Mr. Ruijssenaars became Chief Executive Officer and continued as President and a Director of the Company, positions he has held since 1994. Prior to the Acquisition, Mr. Ruijssenaars was President and Chief Operating Officer of the Company from December 1994 until 1998 and Senior Vice President of the Company from 1989 until December 1994. Mr. Ruijssenaars was first employed by the Company in 1980 as General Manager of Eagle-Picher Industries GmbH in Ohringen, Germany, and has also served as Executive Vice President and then President of the Company's Ohio Rubber Company division. Mr. Hall joined the Company as Treasurer in 1977 and became Vice President and Treasurer in 1979. He has been Senior Vice President -- Finance since 1987. Mr. Wickens has been Senior Vice President -- Automotive of the Company since December 1994. From 1990 until December 1994, he was Division President of the Company's Hillsdale Tool & Manufacturing Co. Mr. Wickens joined the Company in 1976 as a management trainee with the Company's former Fabricon Automotive division, and was promoted to Plant Manager, Vice President and then President of Fabricon Automotive. Subsequently, Mr. Wickens served as President of the Wolverine Gasket division and then as Vice President of the Automotive Group. PARENT The following table sets forth the name, age and position with Parent of the directors and executive officers of Parent as of the consummation of the Acquisition. Directors will hold their positions until the annual meeting of the stockholders at which time their terms expire or until their respective successors are elected and qualified. Executive officers will hold their positions until the annual meeting of the Board of Directors or until their respective successors are elected and qualified.
NAME AGE POSITION - ------------------------------------ ---- ---------------------------------------------------------- Joel P. Wyler....................... 48 Chairman of the Board Thomas E. Petry..................... 58 Director Andries Ruijssenaars................ 55 Director, President and Chief Executive Officer David N. Hall....................... 58 Senior Vice President - Finance Wayne R. Wickens.................... 51 Senior Vice President - Automotive
87 EXECUTIVE COMPENSATION SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table sets forth information concerning the compensation for services in all capacities to the Company for the years ended November 30, 1997, 1996 and 1995, of those persons who (i) served during the fiscal year ended November 30, 1997, as the Chief Executive Officer of the Company and (ii) were, at November 30, 1997, the other five most highly compensated officers of the Company who earned more than $100,000 in salary and bonus in fiscal 1997 (collectively, the 'Named Executive Officers'). SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ------------------------------------------------------------------- FISCAL OTHER ANNUAL ALL OTHER YEAR COMPENSATION COMPENSATION NAME AND PRINCIPAL POSITION ENDED SALARY ($) BONUS ($) ($)(1) ($)(2) - ----------------------------------------------- --------- ---------- --------- ------------ ------------ Thomas E. Petry................................ 11/30/97 $ 625,000 $ 278,000 $232,737 $260,103 Chairman and Chief Executive 11/30/96 625,000 239,000 218,919 245,073 Officer 11/30/95 575,000 244,000 255,296 285,611 Andries Ruijssenaars........................... 11/30/97 525,000 205,000 179,244 206,206 President and Chief Operating 11/30/96 425,000 160,000 174,171 200,081 Officer 11/30/95 390,000 145,000 87,298 102,571 David N. Hall.................................. 11/30/97 375,000 126,000 166,629 188,163 Senior Vice President -- Finance 11/30/96 360,000 107,000 146,980 165,986 11/30/95 345,000 110,000 120,284 136,415 Wayne R. Wickens............................... 11/30/97 325,000 109,000 77,942 91,919 Senior Vice President -- Automotive 11/30/96 295,000 72,000 99,564 116,357 11/30/95 280,000 85,000 24,377 31,109 James A. Ralston............................... 11/30/97 240,000 67,000 41,069 49,762 Vice President, General 11/30/96 230,000 86,000 40,106 48,966 Counsel and Secretary 11/30/95 215,000 58,000 11,475 18,292 Carroll D. Curless............................. 11/30/97 240,000 67,000 116,456 132,211 Vice President and Controller 11/30/96 230,000 86,000 78,715 91,470 11/30/95 215,000 56,000 50,616 60,304
- ------------ (1) This column includes nothing for perquisites since in no case did perquisites exceed the reporting thresholds (the lesser of 10% of salary plus bonuses or $50,000), but includes amounts for the payment of taxes on purchases of annuities under the Supplemental Executive Retirement Plan (as defined herein). (2) All other compensation is made up entirely of the cost of annuity under the Supplemental Executive Retirement Plan and the Company's contributions to the Eagle-Picher Salaried 401(k) Plan. See ' -- Retirement Benefits.' EXECUTIVE STOCK OPTIONS On the Consummation Date, all stock option plans and any unexercised or unexercisable stock options were terminated. The Company had no other benefit plans calling for the issuance of stock by the Company. Accordingly, none of the Named Executive Officers had any unexercised stock options or SARS as of November 30, 1997. No options were issued by the Company and no options were exercised by the Named Executive Officers during the fiscal year ended November 30, 1997. RETIREMENT BENEFITS The following table shows the Named Executive Officers' Fiscal 1997 compensation relating to the cost of the annuity under the Supplemental Executive Retirement Plan and the Company's contributions to the Eagle-Picher Salaried 401(k) Plan. 88
COST OF ANNUITY UNDER COMPANY SUPPLEMENTAL CONTRIBUTIONS FISCAL EXECUTIVE TO EAGLE-PICHER YEAR RETIREMENT SALARIED 401(K) TOTAL ENDED PLAN ($) PLAN ($) ($) --------- ------------ --------------- -------- Thomas E. Petry................................. 11/30/97 $255,353 $ 4,750 $260,103 11/30/96 240,323 4,750 245,073 11/30/95 280,991 4,620 285,611 Andries Ruijssenaars............................ 11/30/97 201,456 4,750 206,206 11/30/96 195,331 4,750 200,081 11/30/95 97,951 4,620 102,571 David N. Hall................................... 11/30/97 183,413 4,750 188,163 11/30/96 161,236 4,750 165,986 11/30/95 131,795 4,620 136,415 Wayne R. Wickens................................ 11/30/97 87,169 4,750 91,919 11/30/96 111,607 4,750 116,357 11/30/95 26,489 4,620 31,109 James A. Ralston................................ 11/30/97 45,012 4,750 49,762 11/30/96 44,216 4,750 48,966 11/30/95 13,672 4,620 18,292 Carroll D. Curless.............................. 11/30/97 127,461 4,750 132,211 11/30/96 86,720 4,750 91,470 11/30/95 55,684 4,620 60,304
The following table shows the estimated total combined annual benefits to the Named Executive Officers upon retirement at age 62 payable under Social Security, the Salaried Plan (as defined herein), and the Supplemental Executive Retirement Plan:
YEARS OF SERVICE -------------------------------------------------------- RENUMERATION 15 20 25 30 35 - ------------------------------------------- -------- -------- -------- -------- -------- $ 250,000.................................. $ 90,000 $120,000 $150,000 $150,000 $150,000 300,000................................. 108,000 144,000 180,000 180,000 180,000 350,000................................. 126,000 168,000 210,000 210,000 210,000 400,000................................. 144,000 192,000 240,000 240,000 240,000 450,000................................. 162,000 216,000 270,000 270,000 270,000 500,000................................. 180,000 240,000 300,000 300,000 300,000 550,000................................. 198,000 264,000 330,000 330,000 330,000 600,000................................. 216,000 288,000 360,000 360,000 360,000 650,000................................. 234,000 312,000 390,000 390,000 390,000 700,000................................. 252,000 336,000 420,000 420,000 420,000 750,000................................. 270,000 360,000 450,000 450,000 450,000 800,000................................. 288,000 384,000 480,000 480,000 480,000 850,000................................. 306,000 408,000 510,000 510,000 510,000 900,000................................. 324,000 432,000 540,000 540,000 540,000 950,000................................. 342,000 456,000 570,000 570,000 570,000 1,000,000................................. 360,000 480,000 600,000 600,000 600,000
The Eagle-Picher Salaried Plan (the 'Salaried Plan') is a non-contributory defined benefit pension plan in which the Named Executive Officers are participants. The Supplemental Executive Retirement Plan (the 'SERP' and, together with the Salaried Plan, the 'Retirement Plans'), in which the Named Executive Officers are also participants, provides retirement benefits in addition to the benefits available under the Salaried Plan. The Retirement Plans provide benefits after retirement based on the highest average monthly compensation during five consecutive years of the last ten years preceding retirement. For purposes of the Retirement Plans, compensation includes base salary, bonuses, commissions, and severance payments; salary and bonus payments that would be included in the Retirement Plans are as reported in the Summary Compensation Table, and commissions or severance payments, if there had been any, would have been included in that Table. The benefits shown by the 89 Pension Plan Table above include amounts payable under Social Security as well as those payable under the Salaried Plan and the SERP. Benefits are computed on the basis of straight-life annuity amounts. The estimated credited years of service with the Company for the Named Executive Officers at age 62 will be: Thomas E. Petry................................................................ 33 David N. Hall.................................................................. 24 Andries Ruijssenaars........................................................... 24 Wayne R. Wickens............................................................... 32 James A. Ralston............................................................... 29 Carroll D. Curless............................................................. 36
COMPENSATION OF DIRECTORS The Company does not pay director retainers or attendance fees, or committee retainers or attendance fees, to directors who are also employees of the Company. During the 1997 Fiscal Year, until April 14, 1997, directors who were not employees of the Company were paid an annual retainer of $24,000, a fee of $1,000 for each Board meeting attended and a fee of $1,000 for each Board committee meeting attended. In addition, Board committee members, other than committee chairmen, were paid an annual retainer of $3,000 for each committee on which they served; the chairman of each Board committee was paid an annual retainer of $5,000. Effective April 14, 1997, directors who are not employees of the Company are paid an annual retainer of $50,000, with no additional attendance or committee membership fees. The Company intends to continue these compensation policies for directors following the Acquisition. Directors who were not also employees of the Company who retired with ten or more years of service as members of the Board and who were elected or appointed members of the Board prior to April 14, 1997, are paid an annual advisory fee for life in the amount equal to the annual retainer paid to active directors immediately prior to the time of their retirement. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During the 1997 Fiscal Year, until April 14, 1997, Daniel W. LeBlond (Committee Chairman), Paul W. Christensen, V. Anderson Coombe and Roger L. Howe, directors of the Company during that time, constituted the Stock Option/Compensation Committee. Since May 28, 1997, Darius W. Gaskins (Committee Chairman), Robert B. Steinberg and Will M. Storey, directors of the Company until the Effective Date, constituted the Compensation Committee. None of the members of the Compensation Committee or Stock Option/Compensation Committee have ever been an employee of the Company or any of its subsidiaries. During the 1997 Fiscal Year, Mr. Petry, Chairman and Chief Executive Officer of the Company, served as a director and as a member of the compensation committee of The Wm. Powell Company. During the 1997 Fiscal Year, Mr. Coombe, a director of the Company until April 14, 1997, was Chairman of the Board of The Wm. Powell Company. INDEMNIFICATION PROVISIONS FOR OFFICERS AND DIRECTORS Pursuant to Article 5 of the Company's Regulations, the Company will indemnify its officers and directors to the fullest extent permitted by law against all expenses, liability, loss or costs (including attorneys fees) in connection with any action, lawsuit or other proceeding brought or threatened against such officer or director by reason of the fact that he or she is or was an officer or director of the Company. The Company has purchased directors and officers liability insurance in favor of the Company and its officers and directors covering up to $15.0 million in losses, including any indemnity payment made by the Company to an officer or director, for a wrongful act of an officer or director. In addition, under the Merger Agreement, Parent and the Company have agreed to indemnify all pre-Effective Date officers and directors of the Company, and to purchase directors and officers liability insurance in their favor, for a period of six years after the Effective Date. 90 EMPLOYMENT AGREEMENTS; SEVERANCE The Company has entered into employment agreements (the 'Employment Agreements') with each of the Named Executive Officers which became effective on November 29, 1996 (the Consummation Date of the Company's Consolidated Plan of Reorganization) and each of which was amended in August 1997. The purpose of the employment agreements was to provide the Company with continuity of management following its emergence from bankruptcy. Other than the description of the duties of each Named Executive Officer, the Employment Agreements are substantially identical in their terms. The Employment Agreements terminate on the earlier of (i) the second anniversary of any change of control (as defined in the Employment Agreements) occurring prior to December 31, 1998 or (ii) May 18, 1999. The consummation of the Acquisition constituted a change of control under the Employment Agreements. The Employment Agreements provide that each Named Executive Officer will maintain his current duties and responsibilities and will not be relocated from his current geographical location. The Employment Agreements provide for salary continuation at the Named Executive Officer's then-current rate plus customary annual increases and bonuses and discretionary bonuses, as determined by the Board of Directors of the Company (as shown in the Summary Compensation Table, above). In addition, the Employment Agreements provide that each Named Executive Officer will participate in the Company's employee and executive benefit and short-term and long-term incentive plans as may be in effect from time to time (including retirement or pension plans, health plans, death or disability plans and the STSP). If the employment of a Named Executive Officer is terminated by the Company for good Cause (defined as the Commission of (i) a felony or (ii) a fraud upon the Company or willful failure to perform job duties in all material respects) or by such Named Executive Officer without good reason (as defined below), the Named Executive Officer will receive accrued and unpaid salary, payment in lieu of unused vacation and accrued benefits, if any (including the right to receive pension or retirement benefits in accordance with the Company's retirement and pension benefit plans as set forth in ' -- Retirement Benefits') (all such payments, including salary, the 'Accrued Benefits'). If the employment of a Named Executive Officer is terminated due to death or long term disability, such Named Executive Officer or his dependents or estate will receive, in addition to the Accrued Benefits, certain continuing health care benefits for a period of 30 months. If the employment of a Named Executive Officer is terminated by the Company other than for Cause, or by such officer for Good Reason (defined as material diminution of duties, diminution of salary or benefits, relocation, substantial increase in travel requirements or material breach by the Company of such Named Executive Officer's Employment Agreement) such Named Executive Officer is entitled to receive, in addition to the Accrued Benefits, a lump-sum severance benefit equivalent to two years' current base salary. Mr. Petry, who resigned as Chairman of the Board and Chief Executive Officer following consummation of the Acquisition, received in connection with his resignation a lump-sum severance benefit of $1,250,000. In addition, Mr. Petry received a payment in cash pursuant to the SERP of $742,000 in lieu of the Company's purchase of an annuity; the Company expects to make additional payments for the benefit of Mr. Petry in the amount of approximately $676,000 for related tax obligations. 91 SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF PARENT The following table sets forth certain information regarding the beneficial ownership of the Common Stock after giving effect to the Offerings of (i) each person known by the Company to own beneficially 5% or more of the voting Common Stock, (ii) each anticipated director of the Company, (iii) each executive officer of the Company and (iv) all current directors and executive officers as a group.
SHARES BENEFICIALLY OWNED -------------------------------- NUMBER OF PERCENTAGE OF NAME CLASS A SHARES CLASS A SHARES - ----------------------------------------------------------------------- -------------- -------------- Granaria Holdings N.V. ................................................ 625,001 100% Lange Voorhout 16 P.O. Box 233 2501 CE The Hague The Netherlands(1) Joel P. Wyler ......................................................... 625,001 100% Lange Voorhout 16 P.O. Box 233 2501 CE The Hague The Netherlands(2) Daniel C. Wyler(1) .................................................... 625,001 100% Lange Voorhout 16 P.O. Box 233 2501 CE The Hague The Netherlands(2) All directors and executive officers as a group ....................... 625,001 100% (five persons)(3)
- ------------ (1) Granaria Holdings N.V. is 100% owned by Wijler Holding N.V., a Dutch Antilles company, 50.1% of which is owned by Joel P. Wyler and 49.9% of which is owned by Daniel C. Wyler. (2) Includes shares held by Granaria Holdings B.V. (3) Shortly after the Acquisition, pursuant to the Incentive Stock Plan certain members of senior management of the Company received interests in the E-P Management Trust, which beneficially owns 10% of the equity of Parent. The trustees of the E-P Management Trust are Andries Ruijssenaars, Thomas E. Petry and Joel P. Wyler. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS As part of the arrangements made prior to the negotiation and execution of the Merger Agreement, the Company will make bonus payments to certain of its executive officers in connection with the consummation of any merger, acquisition, recapitalization or other transaction resulting in a change of control of the Company. The Acquisition resulted in such a change of control. The Company made special bonus payments shortly after consummation of the Acquisition in the aggregate amount of $7.6 million to certain members of senior management of the Company and expects to make an additional special bonus payment of approximately $2.4 million on the second anniversary of the Acquisition. In connection with the Acquisition, the Company paid a transaction fee of $7.3 million (approximately 1% of the transaction value) to Granaria Holdings in consideration for advisory services related to the structuring and financing of the Acquisition. The Company believes that such transaction fee is on terms no less favorable to the Company than could have been obtained from an independent third party. The Company has entered into an advisory and consulting agreement with Granaria Holdings pursuant to which the Company will pay an annual management fee of $1.75 million to Granaria Holdings. The Company believes that such management agreement is on terms no less favorable to the Company than could have been obtained from an independent third party. 92 DESCRIPTION OF INDUSTRIAL REVENUE BONDS The Company has incurred obligations under certain tax-exempt industrial revenue bond financings (the 'IRB Obligations') totaling $18.4 million at November 30, 1997 for development projects relating to the Company's facilities at its Vale, Oregon, Manchester, Tennessee and Kalkaska, Michigan facilities. The IRB Obligations for the Kalkaska, Michigan facility are collateralized by real property and equipment and bears interest at 6.0%. The industrial revenue bonds for the Vale, Oregon and Manchester, Tennessee facilities are floating rate notes that are collateralized by letters of credit. The IRB Obligations mature at various dates ranging from 2002 to 2012. DESCRIPTION OF NEW CREDIT AGREEMENT On the Closing Date, the Company entered into the New Credit Agreement with ABN AMRO Bank, providing for the establishment of $385 million aggregate principal amount of new credit facilities (the 'New Credit Facilities'). The Company drew down approximately $304.1 million on the Closing Date in connection with the Acquisition, including $225.0 million in term loan facilities and approximately $79.1 million under the revolving credit facility. In addition, $28.6 million of the revolving credit facility was used as credit support in the form of letters of credit on the Closing Date. The New Credit Facilities have been syndicated among several lenders who are parties thereto (collectively, the 'Lenders'), with ABN AMRO Bank, as Agent and Arranger, and PNC Bank, National Association, as Documentation Agent (together, the 'Agents'). The following is a summary description of the principal terms of the New Credit Agreement. The description set forth below does not purport to be complete and is qualified in its entirety by reference to the agreements setting forth the principal terms and conditions of the New Credit Facilities, which have been filed as exhibits to the Notes Exchange Offer Registration Statement of which this Prospectus constitutes a part. New Credit Facilities. The New Credit Agreement provides for (i) a senior secured revolving credit facility (the 'Revolving Credit Facility') and (ii) a senior secured term loan facility (the 'Term Loan Facility'). The Revolving Credit Facility may be borrowed in the aggregate principal amount of up to $160.0 million (of which up to $50.0 million may be utilized in the form of commercial and standby letters of credit). In connection with the Revolving Credit Facility, the Lenders will make available to the Company a swing-line facility under which the Company may make short-term borrowings up to $10.0 million, each of which reduces the availability under the Revolving Credit Facility on a dollar-for-dollar basis. The Term Loan Facility, in the aggregate principal amount of $225.0 million, consists of: (i) Tranche A Term Loan in the principal amount of $100.0 million (the 'Tranche A Term Loan'), (ii) Tranche B Term Loan in the principal amount of $50.0 million (the 'Tranche B Term Loan'), and (iii) Tranche C Term Loan in the principal amount of $75.0 million (the 'Tranche C Term Loan' and together with the Tranche A Term Loan and the Tranche B Term Loan, the 'Term Loans'). Availability. The entire amount of the Term Loans was required to be drawn in a single drawing at consummation of the Acquisition. Amounts borrowed under the Term Loan Facility that are repaid may not be reborrowed. Loans under the Revolving Credit Facility are available at any time on or after the Closing and prior to the final maturity date of the Revolving Credit Facility, in principal amounts to be agreed upon. Amounts repaid under the Revolving Credit Facility during such availability period may be reborrowed provided no event of default has occurred and is continuing and the other conditions to borrowing specified therein have been satisfied. Guarantees and Security. All obligations under the New Credit Facilities are guaranteed by Parent and the Subsidiary Guarantors. The Company's obligations under the New Credit Facilities, and Parent's and the Subsidiary Guarantors' obligations under their respective Guarantees, are secured by (i) with respect to the Company, substantially all of its U.S. property and assets (tangible and intangible), a pledge of all capital stock of its U.S. subsidiaries and up to 65% of the capital stock of its directly held non-U.S. subsidiaries, (ii) with respect to Parent, all of the capital stock of the Company (until the Company's leverage ratio falls below a certain level) and (iii) with respect to the Subsidiary Guarantors, substantially all of its U.S. property and assets (tangible and intangible) (collectively, the 'Collateral'). If at any time the Company can pledge more than 65% of the capital stock of a non-U.S. subsidiary without creating adverse tax consequences to the Company, the Company is required to pledge such stock. 93 Interest. The Senior Indebtedness Facility provides for interest rates, at the Company's option, equal to the following: (i) Revolving Credit Facility -- Adjusted LIBOR plus 2.25% or ABR plus 1.25%, (ii) Tranche A Term Loan -- Adjusted LIBOR plus 2.25% or ABR plus 1.25%, (iii) Tranche B Term Loan -- Adjusted LIBOR plus 2.625% or ABR plus 1.625%, and (iv) Tranche C Term Loan -- Adjusted LIBOR plus 2.875% or ABR plus 1.875%. The default interest rate shall be the applicable rate plus 2% per annum. 'ABR' is the higher of ABN AMRO Bank's prime rate and the Federal Funds Effective Rate plus 0.5%. 'Adjusted LIBOR' is the applicable London interbank offered rate adjusted for reserves (if any). Maturity, Amortization and Prepayments. The Revolving Credit Facility matures and shall be due and payable on the last business day of February 2004. The Term Loan Facility maturity dates are as follows: (i) the Tranche A Term Loan matures nine months after the fifth anniversary of the Closing, (ii) the Tranche B Term Loan matures six months after the seventh anniversary of the Closing, and (iii) the Tranche C Term Loan matures six months after the eighth anniversary of the Closing. Amortization of the Tranche A Term Loan commences on the last business day in August 1998 in the following quarterly payment amounts: in 1998 and 1999, $2.5 million; in 2000, $3.75 million; in 2001, $5.0 million; in 2002 through maturity, $6.25 million. Amortization of the Tranche B Term Loan commences on the last business day in November 1998 in the following annual payment amounts: in 1998, $100,000, in 1999 through 2004, $150,000 and the remaining amount due at maturity. Amortization of the Tranche C Term Loan commences on the last business day in November 1998 in the following annual payment amounts: in 1998, $100,000, in 1999 through 2005, $150,000 and the remaining amount due at maturity. Borrowings may be prepaid, and voluntary reductions of the unutilized portion of the Revolving Credit Facility made, at any time, in certain agreed upon minimum amounts, without premium or penalty, subject to LIBOR breakage costs. Any voluntary prepayments of the Term Loan Facility will be applied pro rata to the remaining amortization payments under the Term Loans. The Company will be required to make mandatory prepayments on the New Credit Facilities equal to (a) 60% of annual excess cash flow, (b) 100% of the net proceeds from the sale of assets (including insurance proceeds), subject to certain reinvestment provisions, (c) 100% of the net proceeds from the issuance of debt obligations, and (d) 50% of the net proceeds from the issuance by the Company or its subsidiaries of equity securities. Any Lender of Tranche B Term Loans or Tranche C Term Loans will have the right to decline to have such loans prepaid with the amounts set forth above, in which case such amounts shall instead be applied as a prepayment of the Tranche A Term Loan (until paid in full), and then to permanently reduce the Revolving Credit Facility to an amount not less than $100 million. For purposes of the mandatory prepayments, the term 'excess cash flow' means cash flows from the Company's operating activities as reduced by (i) certain capital expenditures, (ii) amounts expended with respect to certain permitted acquisitions, (iii) permanent principal payments and interest payments of indebtedness for borrowed money of the Company and its subsidiaries subject to certain exceptions, and (iv) unusual or non-recurring charges that decrease the Company's working capital. Certain Covenants. The New Credit Agreement contains covenants restricting the ability of the Company and its subsidiaries to, among other things, (i) declare dividends or redeem or repurchase capital stock, (ii) issue stock of a subsidiary, (iii) incur liens, (iv) make loans and investments, (v) issue additional debt, (vi) amend or otherwise alter debt agreements, (vii) create subsidiaries, (viii) engage in mergers, acquisitions and assets sales, (ix) transact with affiliates and (x) alter the business it conducts. In addition, the New Credit Agreement provides that the Company cannot make certain payments including: (i) lending money to any person, (ii) purchasing any stock, securities of or any other interest in, or making any capital contribution to, any other person, and (iii) purchasing any futures contract or otherwise becoming liable for the purchase or sale of currency or other commodities at a future date; provided that the Company and its subsidiaries may (a) acquire and hold accounts receivable acquired in the ordinary course of business, (b) hold certain cash equivalents, (c) make inter-company loans and advances to wholly-owned subsidiaries for working capital purposes and cash management, (d) hold stock of its subsidiaries, (e) enter into certain interest rate protection agreements, (f) own investments received in connection with the bankruptcy or reorganization of suppliers and customers, and (g) make loans and advances to employees for certain moving and travel expenses. The New Credit Agreement will not permit the Company and its subsidiaries to make any capital expenditures except for such expenditures which do not exceed $40.0 million in any fiscal year. The Company will also be required to 94 comply with the following financial covenants (i) a maximum leverage ratio, (ii) a minimum interest coverage ratio and (iii) a minimum fixed charge coverage ratio which ratios are set forth below:
1998 1999 2000 2001 2002 2003 2004 ---- ---- ---- ---- ---- ---- ---- Maximum leverage..................................... 5.60 5.60 4.50 3.50 3.50 3.50 3.50 Interest coverage.................................... 1.85 1.85 2.25 2.50 3.00 3.00 3.00 Fixed charge coverage................................ 1.50 1.50 1.75 1.75 1.75 1.75 1.75
DESCRIPTION OF THE NOTES The New Notes will be issued pursuant to the Indenture among the Company, the Guarantors and The Bank of New York, as trustee (the 'Trustee'), which has been filed as an exhibit to the Notes Exchange Offer Registration Statement of which this Prospectus constitutes a part. The following is a summary of the material terms and provisions of the Notes. The terms of the New Notes include those set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the 'Trust Indenture Act'). The Notes are subject to all such terms, and holders of the Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary does not purport to be a complete description of the Notes and is subject to the detailed provisions of, and qualified in its entirety by reference to, the Indenture. Capitalized terms that are used but not otherwise defined herein have the meanings assigned to them in the Indenture and such definitions are incorporated herein by reference. GENERAL On February 24, 1998, the Issuer issued $220.0 million aggregate principal amount of Old Notes under the Indenture. Pursuant to the merger of the Issuer into the Company, the Company assumed all of the Issuer's obligations and liabilities under the Old Notes and the Indenture. The terms of the New Notes are identical in all material respects to the Old Notes, except for certain transfer restrictions and registration and other rights relating to the exchange of the Old Notes for New Notes. The Trustee will authenticate and deliver New Notes for original issue only in exchange for a like principal amount of Old Notes. Any Old Notes that remain outstanding after the consummation of the Notes Exchange Offer, together with the New Notes, will be treated as a single class of securities under the Indenture. The Notes represent senior subordinated unsecured obligations of the Company limited to an aggregate principal amount of $220 million, subordinated in right of payment to all existing and future Senior Indebtedness of the Company (including the Company's obligations under the New Credit Agreement) as described below under ' -- Subordination.' The Notes are unconditionally guaranteed by each Guarantor on a senior subordinated basis, with each such guarantee subordinated to the Guarantor's guarantee of the obligations of the Company under the New Credit Agreement and to all other Senior Indebtedness of such Guarantor. The Notes bear interest at the rate shown on the cover page of this Prospectus, payable on March 1 and September 1 of each year, commencing on March 1, 1998, to holders of record at the close of business on February 15 or August 15, as the case may be, immediately preceding the relevant interest payment date. The Notes will mature on March 1, 2008 and will be issued in registered form, without coupons, and in denominations of $1,000 and integral multiples thereof. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, by wire transfer of immediately available funds or, in the case of certificated securities only, by mailing a check to the registered address of the holder. See ' -- Book Entry, Delivery and Form of Securities.' Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. SUBORDINATION The payment by the Company of principal of, and premium (if any) and interest (including Special Interest) on the Notes, and by each Guarantor of such amounts under its Note Guarantee (collectively, 95 the 'Note Indebtedness'), will be subordinated to the prior payment in full in cash when due of the principal of, and premium, if any, and accrued and unpaid interest on and all other amounts owing in respect of, all existing and future Senior Indebtedness of the Company and of each Guarantor, as the case may be. The Company has agreed in the Indenture that it will not incur, directly or indirectly, any Indebtedness that is subordinate or junior in ranking in right of payment to its Senior Indebtedness unless such Indebtedness is pari passu with or is expressly subordinated in right of payment to the Notes. In addition, each Guarantor has agreed that it will not incur, directly or indirectly, any Indebtedness that is subordinate or junior in ranking in right of payment to its Senior Indebtedness unless such Indebtedness is pari passu with or is expressly subordinated in right of payment to the Notes. At February 28, 1998, the Company and the Subsidiary Guarantors had approximately $327.0 million of Indebtedness outstanding other than the Notes, of which approximately $323.8 million was secured and $322.5 million of which was Senior Indebtedness. Subject to certain limitations, the Company and its Subsidiaries (including the Subsidiary Guarantors) may incur additional Indebtedness in the future. See ' -- Certain Covenants -- Limitations on Additional Indebtedness.' The Indenture provides that, upon any payment or distribution to creditors of the Company or any Guarantor of the assets of the Company or the Guarantors of any kind or character in a total or partial liquidation or dissolution of the Company or the Guarantors or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or any Guarantor, whether voluntary or involuntary (including any assignment for the benefit of creditors and proceedings for marshaling of assets and liabilities of the Company or any Guarantor), the holders of all Senior Indebtedness of the Company or any Guarantor then outstanding will be entitled to payment in full in cash (including interest accruing subsequent to the filing of petition of bankruptcy or insolvency at the rate specified in the document relating to the applicable Senior Indebtedness, whether or not such interest is an allowed claim enforceable against the Company or any Guarantor under applicable law) before the holders of Notes are entitled to receive any payment (other than payments made from a trust previously established pursuant to provisions described under ' -- Satisfaction and Discharge of Indenture; Defeasance') on or with respect to the Note Indebtedness and until all Senior Indebtedness receives payment in full in cash, any distribution to which the holders of Notes would be entitled will be made to holders of Senior Indebtedness. Upon the occurrence of any default in the payment of any principal of or interest on or other amounts due on any Designated Senior Indebtedness (as defined below) of the Company or any Guarantor (a 'Payment Default'), no payment of any kind or character shall be made by the Company or a Guarantor (or by any other Person on its or their behalf) with respect to the Note Indebtedness unless and until (i) such Payment Default shall have been cured or waived in accordance with the instruments governing such Indebtedness or shall have ceased to exist, (ii) such Designated Senior Indebtedness has been discharged or paid in full in cash in accordance with the instruments governing such Indebtedness or (iii) the benefits of this sentence have been waived by the holders of such Designated Senior Indebtedness or their representative, including, if applicable, the Agents, immediately after which the Company must resume making any and all required payments, including missed payments, in respect of its obligations under the Notes. Upon (1) the occurrence and continuance of an event of default (other than a Payment Default) relating to Designated Senior Indebtedness, as such event of default is defined therein or in the instrument or agreement under which it is outstanding, which event of default, pursuant to the instruments governing such Designated Senior Indebtedness, entitles the holders (or a specified portion of the holders) of such Designated Senior Indebtedness or their designated representative to immediately accelerate without further notice (except such notice as may be required to effect such acceleration) the maturity of such Designated Senior Indebtedness (whether or not such acceleration has actually occurred) (a 'Non-payment Default') and (2) the receipt by the Trustee and the Company from the trustee or other representative of holders of such Designated Senior Indebtedness of written notice (a 'Payment Blockage Notice') of such occurrence, no payment is permitted to be made by the Company or any Guarantor (or by any other Person on its or their behalf) in respect of the Note Indebtedness for a period (a 'Payment Blockage Period') commencing on the date of receipt by the Trustee of such notice and ending on the earliest to occur of the following events (subject to any blockage of payments that may then be in effect due to a Payment Default on Designated Senior 96 Indebtedness): (w) such Non-payment Default has been cured or waived or has ceased to exist; (x) a 179-consecutive-day period commencing on the date such written notice is received by the Trustee has elapsed; (y) such Payment Blockage Period has been terminated by written notice to the Trustee from the Trustee or other representative of holders of such Designated Senior Indebtedness, whether or not such Non-payment Default has been cured or waived or has ceased to exist; and (z) such Designated Senior Indebtedness has been discharged or paid in full in cash, immediately after which, in the case of clause (w), (x), (y) or (z), the Company must resume making any and all required payments, including missed payments, in respect of its obligations under the Notes. Notwithstanding the foregoing, (a) not more than one Payment Blockage Period may be commenced in any period of 365 consecutive days and (b) no default or event of default with respect to the Designated Senior Indebtedness of the Company that was the subject of a Payment Blockage Notice which existed or was continuing on the date of the giving of any Payment Blockage Notice shall be or serve as the basis for the giving of a subsequent Payment Blockage Notice whether or not within a period of 365 consecutive days unless such default or event of default shall have been cured or waived for a period of at least 90 consecutive days after such date. Notwithstanding anything in the Indenture to the contrary, there must be 180 consecutive days in any 365-day period in which no Payment Blockage Period is in effect. Notwithstanding the foregoing, holders of Notes may receive and retain Permitted Junior Securities and payment from the money or the proceeds held in any defeasance trust described under ' -- Satisfaction and Discharge of Indenture; Defeasance' below, and no such receipt or retention will be contractually subordinated in right of payment to any Senior Indebtedness or subject to the restrictions described in this 'Subordination' section. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company or any Guarantor, whether in cash, property or securities, shall be received by the Trustee or the holders of Notes at a time when such payment or distribution is prohibited by the foregoing provisions, such payment or distribution shall be segregated from other funds or assets and held in trust for the benefit of the holders of Senior Indebtedness of the Company or such Guarantor, as the case may be, and shall be paid or delivered by the Trustee or such holders, as the case may be, to the holders of the Senior Indebtedness of the Company or such Guarantor, as the case may be, remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness of the Company or such Guarantor, as the case may be, may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness of the Company or such Guarantor, as the case may be, held or represented by each, for application to the payment of all Senior Indebtedness of the Company or such Guarantor, as the case may be, remaining unpaid, to the extent necessary to pay or to provide for the payment in full in cash of all such Senior Indebtedness after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. If the Company fails to make any payment on the Notes when due or within any applicable grace period, whether or not such failure is on account of the subordination provisions referred to above, such failure would constitute an Event of Default under the Indenture and would enable the holders of Notes to accelerate the maturity of the Notes. See ' -- Events of Default.' By reason of the subordination provisions contained in the Indenture, in the event of bankruptcy, liquidation, insolvency or other similar proceedings, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the holders of the Notes, and creditors of the Company who are not holders of Senior Indebtedness may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the holders of the Notes. GUARANTEES The Company's payment obligations under the Notes will be jointly and severally guaranteed (the 'Note Guarantees') by Parent and by each Subsidiary Guarantor. Each Note Guarantee will be an unsecured senior subordinated obligation of the Guarantor providing it, and will rank junior in right of payment to all existing and future Senior Indebtedness of such Guarantor, including such Guarantor's guarantee of the Company's obligations under the New Credit Agreement. The obligations of each 97 Guarantor under its Note Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. The Indenture provides that no Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person whether or not affiliated with such Subsidiary Guarantor unless (i) the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all of the obligations of such Subsidiary Guarantor pursuant to a supplemental indenture, in form and substance satisfactory to the Trustee, under the Notes and the Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) immediately after giving effect to such transaction, the Coverage Ratio Incurrence Condition would be met. OPTIONAL REDEMPTION OF THE NOTES The Notes may not be redeemed prior to March 1, 2003, but will be redeemable at the option of the Company, in whole or in part, at any time on or after March 1, 2003, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the redemption date, if redeemed during the twelve-month period beginning March 1:
OPTIONAL YEAR REDEMPTION PRICE - --------------------------------------------------------------------------- ---------------- 2003....................................................................... 104.688% 2004....................................................................... 103.125% 2005....................................................................... 101.563% 2006 and thereafter........................................................ 100.000%
Notwithstanding the foregoing, at any time prior to March 1, 2001, the Company may redeem up to 35% of the aggregate principal amount of the Notes outstanding on the Closing Date with the net cash proceeds of one or more Equity Offerings at a redemption price equal to 109.375% of the principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, to the redemption date; provided that (a) at least $100 million aggregate principal amount of the Notes remains outstanding immediately after the occurrence of such redemption and (b) such redemption occurs within 60 days of the date of the closing of any such Equity Offering. If less than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder whose Notes are to be redeemed at the registered address of such holder. On and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. CHANGE OF CONTROL Upon the occurrence of a Change of Control, each holder of the Notes will have the right to require that the Company repurchase such holder's Notes for a cash price (the 'Change of Control Purchase Price') equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest and Special Interest, if any, to the date of repurchase, all in accordance with the following paragraph. Within 30 days following any Change of Control, the Company will mail to the Trustee (who shall mail to each holder at the Company's expense) a notice (i) describing the transaction or transactions that constitute the Change of Control, (ii) offering to repurchase, pursuant to the procedures required by the Indenture and described in such notice (a 'Change of Control Offer'), on a date specified in such notice (which shall be a business day not earlier than 30 days or later than 60 days from the date such notice is mailed) and for the Change of Control Purchase Price, all Notes properly tendered by such holder pursuant to such offer to purchase for the Change of Control Purchase Price and (iii) describing the procedures that holders must follow to accept the Change of Control Offer. The Change of Control Offer is required to remain open for at least 20 business days or for such longer period as is required by law. 98 The occurrence of the events constituting a Change of Control under the Indenture may result in an event of default in respect of other Indebtedness (including the Senior Indebtedness) of the Company and its Subsidiaries and, consequently, the lenders thereof may have the right to require repayment of such Indebtedness in full. If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay for all or any of the Notes that might be delivered by holders of Notes seeking to accept the Change of Control Offer. There can be no assurance that in the event of a Change of Control the Company will be able to obtain the consents necessary to consummate a Change of Control Offer from the lenders under agreements governing outstanding Indebtedness which may prohibit such an offer. The Company's obligation to make a Change of Control Offer will be satisfied if a third party makes the Change of Control Offer in the manner and at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer. The definition of Change of Control includes the sale of 'all or substantially all' of the assets of the Company or Parent and their Subsidiaries, in either case taken as a whole, the determination of which depends upon the circumstances of any such sale and is subject to interpretation under applicable legal precedent. The Change of Control feature of the Notes, by requiring a Change of Control Offer, may in certain circumstances make more difficult or discourage a sale or takeover of the Company, and, thus, the removal of incumbent management. The Change of Control feature, however, is not part of a plan by management to adopt a series of antitakeover provisions. Instead, the Change of Control feature is a result of negotiations between the Company and the Initial Purchasers. Subject to the limitations discussed below, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect the Company's capital structure or credit ratings. The Company will comply with the applicable tender offer rules, including the requirements of Rule 14e-1 under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Change of Control Offer. CERTAIN COVENANTS Limitations on Additional Indebtedness. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness (including without limitation Acquired Indebtedness); provided that (i) the Company and its Restricted Subsidiaries may incur Permitted Indebtedness and (ii) the Company may incur additional Indebtedness if, after giving effect thereto, the Company's Consolidated Interest Coverage Ratio on the date thereof would be at least 2.0 to 1, determined on a pro forma basis as if the incurrence of such additional Indebtedness, and the application of the net proceeds therefrom, had occurred at the beginning of the four-quarter period used to calculate the Company's Consolidated Interest Coverage Ratio. Limitation on the Issuance of Capital Stock of Restricted Subsidiaries. The Indenture provides that the Company will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell any shares of its Capital Stock (including options, warrants or other rights to purchase shares of such Capital Stock) except (i) to the Company or a Wholly-Owned Restricted Subsidiary, (ii) if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary or (iii) to the extent such shares represent directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Wholly-Owned Restricted Subsidiary. The proceeds of any sale of Capital Stock permitted hereunder and referred to in clauses (ii) and (iii) above will be treated as Net Available Proceeds and must be applied in a manner consistent with the provisions of the covenant described under ' -- Limitations on Asset Sales.' Limitations on Layering Debt. The Indenture provides that the Company will not, and will not permit any Subsidiary Guarantor to, incur any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness of the Company or such Subsidiary Guarantor unless such Indebtedness by its terms is pari passu with, or subordinated to, the Notes or the Note Guarantee of such Subsidiary Guarantor, as the case may be. 99 Limitations on Restricted Payments. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment (except as permitted below) if at the time of such Restricted Payment: (i) a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; (ii) the Company would be unable to meet the Coverage Ratio Incurrence Condition; or (iii) the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments (except as expressly provided in the second following paragraph) made after the Issue Date, exceeds the sum of (A) 50% of the Company's Consolidated Net Income (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the Company's most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, if such aggregate Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit) plus (B) the net cash proceeds from the issuance and sale (other than to a Subsidiary of the Company) after the Issue Date of (1) the Company's Capital Stock that is not Disqualified Capital Stock or (2) debt securities of the Company that have been converted into the Company's Capital Stock that is not Disqualified Capital Stock and that is not then held by a Subsidiary of the Company, plus (C) to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, the lesser of (x) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (y) the initial amount of such Restricted Investment plus (D) the amount of Restricted Investment outstanding in an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary of the Company in accordance with the definition of 'Unrestricted Subsidiary.' The foregoing provisions do not prohibit (1) the payment of any dividend by the Company or any Restricted Subsidiary within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (2) the redemption, repurchase, retirement or other acquisition of any Capital Stock of the Company in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of other Capital Stock of the Company (other than any Disqualified Capital Stock); (3) the defeasance, redemption, repurchase or other retirement of Subordinated Indebtedness in exchange for, or out of the proceeds of, the substantially concurrent issue and sale of Capital Stock of the Company (other than (x) Disqualified Capital Stock, (y) Capital Stock sold to a Subsidiary of the Company and (z) Capital Stock purchased with the proceeds of loans from the Company or any of its Subsidiaries); (4) the making of a Related Business Investment in joint ventures or Unrestricted Subsidiaries out of the proceeds of the substantially concurrent issue and sale of Capital Stock of the Company (other than (x) Disqualified Capital Stock, (y) Capital Stock sold to a Subsidiary of the Company and (z) Capital Stock purchased with the proceeds of loans from the Company or any of its Subsidiaries); (5) Specified Transaction Payments; (6) payments of up to $1.75 million to Granaria Holdings or any of its Affiliates in the aggregate in any fiscal year pursuant to any Related Party Agreement entered into between Granaria Holdings or any of its Affiliates and the Company or its Subsidiaries to provide management and similar services to any such Persons or to Parent; (7) the payments of dividends or distributions to Parent solely in amounts and at the times necessary to permit Parent to purchase, redeem, acquire, cancel or otherwise retire for value Capital Stock of Parent, or permit payments of dividends or distributions by Parent to its shareholders solely in amounts and at the times necessary to permit such shareholders to (or permit subsequent distributions to permit their respective shareholders to) purchase, redeem, acquire, cancel or otherwise retire for value Capital Stock of such shareholders, in each case held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates), or a trust established for the benefit of any of the foregoing of Parent, the Company or its Subsidiaries, upon death, disability, retirement, severance or termination of employment or service or pursuant to any agreement under which such Capital Stock or related rights were issued; provided that the amount of such payments under this clause (7) after the Issue Date does not exceed in the aggregate $5.0 million; (8) the payment of dividends or distributions of amounts to Parent in amounts and at such times as are sufficient to pay the scheduled interest or dividends owed 100 by Parent on the Parent Preferred Stock or Exchange Debentures so long as (x) Parent is the direct Parent of the Company owning 100% of the Capital Stock of the Company and (y) such Parent Preferred Stock or Exchange Debentures contains no scheduled requirement for the payment of cash interest or dividends, as applicable, until at least five years from the date of their original issuance, provided that at the time of such Restricted Payment and after giving effect thereto, either (A) the Company would be able to meet the Coverage Ratio Incurrence Condition or (B) the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments made after the Issue Date, does not exceed the sum referred to in clause (iii) of the next preceding paragraph; (9) Restricted Investments the amount of which, together with the amount of all other Restricted Investments made pursuant to this clause (9) after the Issue Date, does not exceed $10.0 million, provided that, in the case of clauses (8) and (9), no Default or Event of Default shall have occurred and be continuing or occur as a consequence of the actions or payments set forth therein; or (10) during any period in which Parent files consolidated income tax returns that include the Company, payments to Parent in amounts not in excess of the amount that the Company would have paid if it had filed consolidated tax returns on a separate-company basis, in each case solely in amounts and at the times necessary to permit Parent to pay its consolidated income taxes. Each Restricted Payment permitted pursuant to the preceding paragraph (other than the Restricted Payments referred to in clauses (2) through (5) or (10) thereof, and, to the extent deducted in determining Consolidated Net Income in any period, the Restricted Payments referred to in clauses (6) and (7) thereof) shall be included once in calculating whether the conditions of clause (iii) of the second preceding paragraph have been met with respect to any subsequent Restricted Payments. For purposes of determining compliance with this 'Limitation on Restricted Payments' covenant, in the event that a transaction meets the criteria of more than one of the types of Restricted Payments described in the clauses of the immediately preceding paragraph or of the clauses of the definition of 'Restricted Payment,' the Company, in its sole discretion, shall classify such transaction and only be required to include the amount and type of such transaction in one of such clauses. If an issuance of Capital Stock of the Company is applied to make a Restricted Payment pursuant to clause (2), (3) or (4) above, then, in calculating whether the conditions of clause (iii) of the second preceding paragraph have been met with respect to any subsequent Restricted Payments, the proceeds of any such issuance shall be included under such clause (iii) only to the extent such proceeds are not applied as so described in this sentence. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant 'Limitations on Restricted Payments' were computed, which calculations shall be based upon the Company's latest available financial statements. Limitations on Restrictions on Distributions from Restricted Subsidiaries. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual Payment Restriction with respect to any of its Restricted Subsidiaries, except for (a) any such Payment Restriction in effect on the Issue Date under the New Credit Agreement or the Parent Preferred Stock or any similar Payment Restriction under any similar credit facility, or any amendment, restatement, renewal, replacement or refinancing of any of the foregoing, provided that such similar Payment Restrictions are not, taken as a whole, materially more restrictive than the Payment Restrictions in effect on the Issue Date under the New Credit Agreement or the Parent Preferred Stock, (b) any such Payment Restriction in effect on the Issue Date consisting of customary net worth or leverage tests in effect on the Issue Date under any credit facility of any Foreign Subsidiary, or any amendment, restatement, renewal, replacement or refinancing of any of the foregoing (including for purposes of this clause (b), any increase in the principal amount available thereunder) (a 'Replacement Facility'), provided that such Payment Restrictions in any such Replacement Facility are not, taken as a whole, materially more restrictive than the Payment Restrictions in effect on the Issue Date under the facility amended, restated, renewed, replaced or refinanced, (c) any such Payment Restriction under any agreement evidencing any Acquired Indebtedness that was permitted to be incurred pursuant to the Indenture in effect at the time of such incurrence and not created in contemplation of such event, provided that such Payment Restriction is not extended to apply to any of the assets of the entities not previously subject thereto, (d) any such Payment Restriction arising in connection with Refinancing Indebtedness; provided that any such 101 Payment Restrictions that arise under such Refinancing Indebtedness are not, taken as a whole, materially more restrictive than those under the agreement creating or evidencing the Indebtedness being refunded or refinanced and (e) any such restriction by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business. Limitations on Transactions with Affiliates. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, in one transaction or a series of related transactions, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an 'Affiliate Transaction'), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction (or series of related transactions) involving aggregate payments in excess of $1.0 million, an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and a Secretary's Certificate which sets forth and authenticates a resolution that has been adopted by a vote of a majority of the Independent Directors approving such Affiliate Transaction or, if at the time fewer than three Independent Directors are then in office, a Secretary's Certificate which sets forth and authenticates a resolution that has been adopted unanimously by the Company's Board of Directors and (b) with respect to any Affiliate Transaction (or series of related transactions) involving aggregate payments of $5.0 million or more, the certificates described in the preceding clause (a) and an opinion as to the fairness to the Company or such Subsidiary from a financial point of view issued by an Independent Financial Advisor; provided, however, that the following shall not be deemed to be Affiliate Transactions: (i) transactions exclusively between or among (1) the Company and one or more Restricted Subsidiaries or (2) Restricted Subsidiaries, provided, in each case, that no Affiliate of the Company (other than another Restricted Subsidiary) owns Capital Stock of any such Restricted Subsidiary; (ii) transactions between the Company or any Restricted Subsidiary and any qualified employee stock ownership plan established for the benefit of the Company's employees, or the establishment or maintenance of any such plan; (iii) reasonable director, officer and employee compensation and other benefit, and indemnification arrangements approved by a majority of the Independent Directors on the Board of Directors; (iv) transactions permitted by the 'Limitations on Restricted Payments' covenant; (v) the pledge of Capital Stock of Unrestricted Subsidiaries to support the Indebtedness thereof; (vi) the entering into of any Tax Sharing Agreement, and any payment pursuant thereto; (vii) the payment on behalf of Parent of ministerial administrative and operating fees and expenses in the ordinary course to Persons other than to Affiliates of Parent or the Company, provided that the aggregate amount thereof in any fiscal year of the Company does not exceed $750,000; (viii) arrangements with ABN AMRO Bank or any of its Affiliates or their respective successors (x) under the New Credit Agreement or the Notes or in connection therewith, (y) in connection with the offering of the Notes or the Series A Senior Preferred Stock or (z) pursuant to other banking, financing or underwriting activity entered into in the ordinary course of business; (ix) transactions between the Company or any Restricted Subsidiary and any Affiliate of the Company or such Restricted Subsidiary that is a joint venture, provided that no direct or indirect holder of an equity interest in such joint venture (other than the Company or a Restricted Subsidiary) is an Affiliate of the Company or such Restricted Subsidiary; and (x) Specified Transaction Payments. Limitations on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, incur or permit to exist any Lien of any nature whatsoever on any property of the Company or any Restricted Subsidiary (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, which secures Indebtedness that is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with (or if such Lien secures Indebtedness that is subordinated to the Notes, prior to) such Indebtedness for so long as such Indebtedness is secured by a Lien. The foregoing restrictions shall not apply to (i) Liens existing on the Issue Date securing Indebtedness outstanding on the Issue Date; (ii) Liens in favor of the Company or a Subsidiary 102 Guarantor; (iii) Liens to secure Indebtedness that is non-recourse to the Company or any of its Subsidiaries or any of their respective assets other than the assets acquired or improved with such Indebtedness; (iv) Liens securing Acquired Indebtedness permitted to be incurred under the Indenture, provided that the Liens do not extend to property or assets not subject to such Lien at the time of acquisition (other than improvements thereon); (v) Liens on property of a Person existing at the time such Person is acquired or merged with or into or consolidated with the Company or any such Restricted Subsidiary (and not created in anticipation or contemplation thereof); (vi) Liens to secure Refinancing Indebtedness of Indebtedness secured by Liens referred to in the foregoing clauses (iv) and (v), provided that in each case such Liens do not extend to any additional property or assets (other than improvements thereon). Limitations on Asset Sales. (a) The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate any Asset Sale unless (i) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets included in such Asset Sale (evidenced by the delivery by the Company to the Trustee of an Officers' Certificate certifying that such Asset Sale complies with this clause (i)), (ii) immediately before and immediately giving effect to such Asset Sale, no Default or Event of Default shall have occurred and be continuing, and (iii) at least 80% of the consideration received by the Company or such Restricted Subsidiary therefor is in the form of cash paid at the closing thereof. The amount (without duplication) of any (x) Indebtedness (other than Subordinated Indebtedness) of the Company or such Restricted Subsidiary that is expressly assumed by the transferee in such Asset Sale and with respect to which the Company or such Restricted Subsidiary, as the case may be, is unconditionally released by the holder of such Indebtedness, and (y) any Cash Equivalents, or other notes, securities or items of property received from such transferee that are promptly (but in any event within 15 days) converted by the Company or such Restricted Subsidiary to cash (to the extent of the cash actually so received), shall be deemed to be cash for purposes of clause (ii) and, in the case of clause (x) above, shall also be deemed to constitute a repayment of, and a permanent reduction in, the amount of such Indebtedness for purposes of the following paragraph (b). If at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such conversion or disposition shall be deemed to constitute the date of an Asset Sale hereunder and the Net Available Proceeds thereof shall be applied in accordance with this covenant. A transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to a Restricted Subsidiary will not be deemed to be an Asset Sale and a transfer of assets that constitutes a Restricted Investment and that is permitted under ' -- Limitations on Restricted Payments' will not be deemed to be an Asset Sale. (b) If the Company or any Restricted Subsidiary engages in an Asset Sale, the Company or any Restricted Subsidiary shall, no later than 360 days after such Asset Sale (i) apply all or any of the Net Available Proceeds therefrom to repay amounts outstanding under the New Credit Agreement or any other Senior Indebtedness; provided, in each case, that the related loan commitment (if any) of any Indebtedness constituting revolving credit debt is thereby permanently reduced by the amount of such Indebtedness so repaid and/or (ii) invest all or any part of the Net Available Proceeds thereof in the purchase of fixed assets to be used by the Company and its Restricted Subsidiaries in a Related Business (together with any short-term assets incidental thereto), or the making of a Related Business Investment. The amount of such Net Available Proceeds not applied or invested as provided in this paragraph will constitute 'Excess Proceeds.' (c) When the aggregate amount of Excess Proceeds equals or exceed $5.0 million, the Company will be required to make an offer to purchase, from all holders of the Notes, an aggregate principal amount of Notes equal to the amount of such Excess Proceeds as follows: (i) The Company will make an offer to purchase (a 'Net Proceeds Offer') from all holders of the Notes in accordance with the procedures set forth in the Indenture the maximum principal amount (expressed as a multiple of $10,000) of Notes that may be purchased out of the amount (the 'Payment Amount') of such Excess Proceeds. 103 (ii) The offer price for the Notes will be payable in cash in an amount equal to 100% of the principal amount of the Notes tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest and Special Interest, if any, to the date such Net Proceeds Offer is consummated (the 'Offered Price'), in accordance with the procedures set forth in the Indenture. To the extent that the aggregate Offered Price of Notes tendered pursuant to a Net Proceeds Offer is less than the Payment Amount relating thereto (such shortfall constituting a 'Net Proceeds Deficiency'), the Company may use such Net Proceeds Deficiency, or a portion thereof, for general corporate purposes, subject to the limitations of the 'Limitations on Restricted Payments' covenant. (iii) If the aggregate Offered Price of Notes validly tendered and not withdrawn by holders thereof exceeds the Payment Amount, Notes to be purchased will be selected on a pro rata basis. (iv) Upon completion of such Net Proceeds Offer in accordance with the foregoing provisions, the amount of Excess Proceeds with respect to which such Net Proceeds Offer was made shall be deemed to be zero. The Company will not permit any Subsidiary to enter into or suffer to exist any agreement that would place any restriction of any kind (other than pursuant to law or regulation) on the ability of the Company to make a Net Proceeds Offer following any Asset Sale. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, if applicable, in the event that an Asset Sale occurs and the Company is required to purchase Notes as described above. Limitations on Mergers and Certain Other Transactions. The Indenture provides that the Company will not, in a single transaction or a series of related transactions, (i) consolidate or merge with or into (other than a merger with a Wholly-Owned Restricted Subsidiary solely for the purpose of changing the Company's jurisdiction of incorporation to another State of the United States), or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Company or the Company and its Subsidiaries (taken as a whole), or assign any of its obligations under the Notes and the Indenture, to any Person or (ii) adopt a Plan of Liquidation unless, in either case: (a) the Person formed by or surviving such consolidation or merger (if other than the Company) or to which such sale, lease, conveyance or other disposition or assignment shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the 'Successor'), is a corporation organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Notes and the Indenture; (b) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; and (c) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (1) the Consolidated Net Worth of the Company or the Successor, as the case may be, would be at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction and (2) the Company or the Successor, as the case may be, could meet the Coverage Ratio Incurrence Condition; and (d) each Subsidiary Guarantor, unless it is the other party to the transactions described above, shall have by amendment to its guarantee confirmed that its guarantee of the Notes shall apply to the obligations of the Company or the Successor under the Notes and the Indenture. For purposes of this covenant, any Indebtedness of the Successor which was not Indebtedness of the Company immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction. Additional Note Guarantees. The Indenture provides that if the Company or any of its Subsidiaries shall acquire or create another Subsidiary (other than (x) any Foreign Subsidiary or (y) a Subsidiary that has been designated as an Unrestricted Subsidiary or (z) an Immaterial Subsidiary), then such newly acquired or created Subsidiary will be required to execute a Note Guarantee, in accordance with the terms of the Indenture. Reports. Whether or not required by the rules and regulations of the Securities and Exchange Commission (the 'Commission'), so long as any Notes are outstanding, the Company and the Guarantors will file with the Commission, to the extent such filings are accepted by the Commission, 104 and will furnish (within 15 days after such filing) to the Trustee and to the holders of Notes all quarterly and annual reports and other information, documents and reports that would be required to be filed with the Commission pursuant to Section 13 of the Exchange Act if the Company and the Guarantors were required to file under such section. In addition, the Company and the Guarantors will make such information available to prospective purchasers of the Notes, securities analysts and broker-dealers who request it in writing. The Company and the Guarantors have agreed that, for so long as any Notes remain outstanding, they will furnish to the holders and beneficial holders of Notes and to prospective purchasers of Notes designated by the holders of Transfer Restricted Securities and to broker dealers, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. EVENTS OF DEFAULT An 'Event of Default' is defined in the Indenture as (i) failure by the Company to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days; (ii) failure by the Company to pay the principal or premium, if any, on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise; (iii) failure by the Company to comply with any of its agreements or covenants described above under 'Certain Covenants -- Limitations on Mergers and Certain Other Transactions', or in respect of its obligations to make a Change of Control Offer or a Net Proceeds Offer described in 'Change of Control' and 'Certain Covenants -- Limitations on Asset Sales', respectively; (iv) failure by the Company to comply with any other covenant in the Indenture and continuance of such failure for 60 days after notice of such failure has been given to the Company by the Trustee or by the holders of at least 25% of the aggregate principal amount of the Notes then outstanding; (v) failure by either the Company or any of its Restricted Subsidiaries to make any payment when due after the expiration of any applicable grace period, in respect of any Indebtedness of the Company or any of such Restricted Subsidiaries, or the acceleration of the maturity of such Indebtedness by the holders thereof because of a default, with an aggregate outstanding principal amount for all such Indebtedness under this clause (v) of $10.0 million or more (but excluding in any event any such Indebtedness that is paid when so due after expiration of any applicable grace period, or upon acceleration of the maturity thereof, pursuant to any letter of credit); (vi) one or more final, non-appealable judgments or orders that exceed $10.0 million in the aggregate for the payment of money have been entered by a court or courts of competent jurisdiction against the Company or any Subsidiary of the Company and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered; (vii) certain events of bankruptcy, insolvency or reorganization involving the Parent, the Company or any Significant Subsidiary; and (viii) except as permitted by the Indenture, any Note Guarantee ceases to be in full force and effect or any Guarantor repudiates its obligations under any Note Guarantee. In the case of an Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, upon the acceleration of the Notes. If an Event of Default occurs prior to March 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to March 1, 2003, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable, to the extent permitted by law, in an amount equal to 10.0%. If an Event of Default (other than an Event of Default specified in clause (vii) above with respect to the Company), shall have occurred and be continuing under the Indenture, the Trustee, by written notice to the Company, or the holders of at least 25% in aggregate principal amount of the Notes then outstanding by written notice to the Company and the Trustee may declare all amounts owing under the Notes to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal of, premium, if any, and interest on the outstanding Notes shall immediately become due and payable. If an Event of Default results from bankruptcy, insolvency or reorganization with respect to the Company, all outstanding Notes shall become due and payable without any further action or notice. 105 In certain cases, the holders of a majority in aggregate principal amount of the Notes then outstanding may waive an existing Default or Event of Default and its consequences, except a default in the payment of principal of, premium, if any, and interest on the Notes. The holders may not enforce the provisions of the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power; provided however, that such direction does not conflict with the terms of the Indenture. The Trustee may withhold from the holders notice of any continuing Default or Event of Default (except any Default or Event of Default in payment of principal of, premium, if any, or interest on the Notes) if the Trustee determines that withholding such notice is in the holders' interest. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture and, upon any Officer of the Company becoming aware of any Default or Event of Default, a statement specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE The Company may terminate its obligations under the Indenture at any time by delivering all outstanding Notes to the Trustee for cancellation and paying all sums payable by it thereunder. The Company, at its option, (i) will be discharged from any and all obligations with respect to the Notes (except for certain obligations of the Company to register the transfer or exchange of such Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold moneys for payment in trust) or (ii) need not comply with certain of the restrictive covenants with respect to the Indenture, if the Company deposits with the Trustee, in trust, U.S. Legal Tender or U.S. Government Obligations or a combination thereof that, through the payment of interest and premium thereon and principal amount at maturity in respect thereof in accordance with their terms, will be sufficient to pay all the principal amount at maturity of and interest and premium on the Notes on the dates such payments are due in accordance with the terms of such Notes as well as the Trustee's fees and expenses. To exercise either such option, the Company is required to deliver to the Trustee (A) an Opinion of Counsel and, in connection with a discharge pursuant to clause (i) above, confirmation of such counsel that (I) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (II) since the date of the Indenture there has been a change in the applicable federal income tax law, in either case to the effect that the holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of the deposit and related defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised, (B) subject to certain qualifications, an Opinion of Counsel to the effect that funds so deposited will not violate the Investment Company Act of 1940 and will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law and (C) an Officers' Certificate and an Opinion of Counsel to the effect that the Company has complied with all conditions precedent to the defeasance. TRANSFER AND EXCHANGE A holder will be able to register the transfer of or exchange Notes only in accordance with the provisions of the Indenture. The Registrar may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. Without the prior consent of the Company, the Registrar is not required (i) to register the transfer of or exchange any Note selected for redemption, (ii) to register the transfer of or exchange any Note for a period of 15 days before the mailing of a notice of redemption and ending on the date of such mailing or (iii) to register the transfer or exchange of a Note between a record date and the next succeeding interest payment date. The registered holder of a Note will be treated as the owner of such Note for all purposes. 106 AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the holders of a majority in principal amount of the Notes then outstanding; provided that: (A) no such modification or amendment may, without the consent of the holders of 75% in aggregate principal amount of Notes then outstanding, amend or modify the obligation of the Company under the caption 'Change of Control' or the definitions related thereto that could adversely affect the rights of any holder of the Notes; and (B) without the consent of each holder affected, the Company and the Trustee may not: (i) extend the maturity of any Note; (ii) affect the terms of any scheduled payment of interest on or principal of the Notes (including without limitation any redemption provisions); (iii) take any action that would subordinate the Notes or the Note Guarantees to any other Indebtedness of the Company or any of Guarantors, respectively (except as provided under 'Subordination' above), or otherwise affect the ranking of the Notes or the Note Guarantees; or (iv) reduce the percentage of holders necessary to consent to an amendment, supplement or waiver to the Indenture. Without the consent of any holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to holders in the case of a merger or acquisition, or to make any change that does not adversely affect the rights of any holder. CONCERNING THE TRUSTEE The Bank of New York is the Trustee under the Indenture and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes. The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee is permitted to engage in other transactions; however, if it acquires any conflicting interest (as defined in the Indenture), it must eliminate such conflict or resign. The holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that, in case an Event of Default occurs and is not cured, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder, unless such holder shall have offered to the Trustee security and indemnity satisfactory to the Trustee. GOVERNING LAW Each of the Indenture, the Notes and the Note Guarantees provides that it will be governed by, and construed in accordance with, the laws of the State of New York. BOOK-ENTRY, DELIVERY AND FORM OF SECURITIES The Old Notes were initially issued in the form of one or more Global Notes (collectively, the 'Old Global Note'). The New Notes will initially be issued in the form of one or more Global Notes (collectively, the 'New Global Note'). The Old Global Note was deposited on the date of closing of the sale of the Old Notes, and the New Global Note will be deposited on the date of closing of the Notes 107 Exchange Offer, with or on behalf of the Depositary and registered in the name of Cede & Co., as nominee of the Depositary (such nominee being referred to herein as the 'Global Note Holder'). The Depositary is a limited-purpose trust company that was created to hold securities for its participating organizations (collectively, the 'Participants' or the 'Depositary's Participants') and to facilitate the clearance and settlement of transactions in such securities between Participants through electronic book-entry changes in accounts of its Participants. The Depositary's Participants include securities brokers and dealers (including the Initial Purchasers), banks and trust companies, clearing corporations and certain other organizations. Access to the Depositary's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the 'Indirect Participants' or the 'Depositary's Indirect Participants') that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalf of the Depositary only through the Depositary's Participants or the Depositary's Indirect Participants. Pursuant to procedures established by the Depositary (i) upon deposit of the Global Note, the Depositary will credit the accounts of Participants in connection with the Notes with portions of the principal amount of the Global Note and (ii) ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by the Depositary (with respect to the interests of the Depositary's Participants), the Depositary's Participants and the Depositary's Indirect Participants. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer the Notes will be limited to such extent. So long as the Depositary or its nominee is the registered owner of a Global Note, the Depositary or its nominee, as the case may be, will be considered the sole owner or holder of outstanding Notes represented by such Global Note for all purposes under the Indenture and the New Notes. Except as provided below, owners of Notes will not be entitled to have Notes registered in their names and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any directions, instructions or approvals to the Trustee thereunder. None of the Company, the Guarantors or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by the Depositary, or for maintaining, supervising or reviewing any records of the Depositary relating to such Notes. Payments in respect of the principal of, premium, if any, and interest on any Notes registered in the name of a Global Note Holder on the applicable record date will be payable by the Trustee to or at the direction of such Global Note Holder in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee may treat the persons in whose names any Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, none of the Company or the Trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of Notes (including principal, premium, if any, and interest). The Company believes, however, that it is currently the policy of the Depositary immediately to credit the accounts of the relevant Participants with such payments, in amounts proportionate to their respective beneficial interests in the relevant security as shown on the records of the Depositary. Payments by the Depositary's Participants and the Depositary's Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practice and will be the responsibility of the Depositary's Participants or the Depositary's Indirect Participants. Subject to certain conditions, any person having a beneficial interest in the Global Notes may, upon request to the Trustee, exchange such beneficial interest for Notes in definitive form. Upon any such issuance, the Trustee is required to register such Notes in the name of, and cause the same to be delivered to, such person or persons (or the nominee of any thereof). In addition, if (i) the Company notifies the Trustee in writing that the Depositary is no longer willing or able to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes in definitive form under the Indenture, then, upon surrender by the relevant Global Note Holder of its Global Note, Notes in such 108 form will be issued to each person that such Global Note Holder and the Depositary identifies as being the beneficial owner of the related Notes. Neither the Company nor the Trustee will be liable for any delay by the Global Note Holder or the Depositary in identifying the beneficial owners of Notes and the Company and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the Global Note Holder or the Depositary for all purposes. REGISTRATION RIGHTS Holders of New Notes are not entitled to any registration rights with respect to the New Notes. The Company has agreed for a period of 180 days from the consummation of the Notes Exchange Offer to make available a prospectus meeting the requirements of the Securities Act to any broker-dealer for use in connection with any resale of any New Notes. The Registration Statement of which this Prospectus is a part constitutes the registration statement for the Notes Exchange Offer which is the subject of the Registration Rights Agreement. Upon the closing of the Notes Exchange Offer, subject to certain limited exceptions, Holders of untendered Old Notes will not retain any rights under the Registration Rights Agreement. ADDITIONAL INFORMATION Anyone who receives this Prospectus may obtain a copy of the Indenture without charge by contacting the Company at 250 East Fifth Street, Suite 500, Cincinnati, Ohio 45202 or by telephone at (513) 721-7010. CERTAIN DEFINITIONS Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms. 'Acquired Indebtedness' means (a) with respect to any Person that becomes a Restricted Subsidiary after the date of the Indenture, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary that was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (b) with respect to the Company or any of its Restricted Subsidiaries, any Indebtedness of a Person (other than the Company or a Restricted Subsidiary) existing at the time such Person is merged with or into the Company or a Restricted Subsidiary, or Indebtedness assumed by the Company or any of its Restricted Subsidiaries in connection with the acquisition of an asset or assets from another Person, which Indebtedness was not, in any case, incurred by such other Person in connection with, or in contemplation of, such merger or acquisition. 'Affiliate' of any Person means any Person (i) which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person, (ii) which beneficially owns or holds, directly or indirectly, 10% or more of any class of the Voting Stock, or more than 20% of all classes of Capital Stock (other than preferred stock) in the aggregate, of the referent Person, (iii) of which 10% or more of the Voting Stock, or more than 20% of all classes of Capital Stock (other than preferred stock) in the aggregate, is beneficially owned or held, directly or indirectly, by the referent Person or (iv) with respect to an individual, any immediate family member of such Person. For purposes of this definition, control of a Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. 'Asset Sale' means any sale, issuance, conveyance, transfer, lease, assignment or other disposition to any Person other than the Company or any of its Restricted Subsidiaries (including, without limitation, by means of a Sale and Leaseback Transaction or a merger or consolidation) (collectively, for purposes of this definition, a 'transfer'), directly or indirectly, in one transaction or a series of related transactions, of (a) any Capital Stock of any Subsidiary or (b) any other properties or assets of the Company or any of its Subsidiaries other than transfers of cash, Cash Equivalents, accounts receivable, 109 inventory or other properties or assets in the ordinary course of business. For the purposes of this definition, the term 'Asset Sale' shall not include any of the following: (i) any transfer of properties or assets (including Capital Stock) that is governed by, and made in accordance with, the provisions described under 'Covenants -- Limitations on Mergers and Certain Other Transactions'; (ii) any transfer of properties or assets to an Unrestricted Subsidiary, if permitted under the 'Limitations on Restricted Payments' covenant; (iii) sales of damaged, worn-out or obsolete equipment or assets that, in the Company's reasonable judgment, are either no longer used or useful in the business of the Company or its Subsidiaries, provided that the proceeds thereof are used to purchase replacement or similar assets for use in the business of the Company and its Subsidiaries; and (iv) any transfers that, but for this clause (iv), would be Asset Sales, if after giving effect to such transfers, the aggregate Fair Market Value of the properties or assets transferred in such transaction or any such series of related transactions does not exceed $500,000. 'Attributable Indebtedness,' when used with respect to any Sale and Leaseback Transaction, means, as at the time of determination, property subject to such Sale and Leaseback Transaction and the present value (discounted at a rate equivalent to the Company's then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such Sale and Leaseback Transaction. 'Board Resolution' means a duly adopted resolution of the Board of Directors of the Company. 'Capital Stock' of any Person means (i) any and all shares or other equity interests (including without limitation common stock, preferred stock and partnership interests) in such Person and (ii) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person. 'Capitalized Lease Obligations' of any Person means the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. 'Cash Equivalents' means (i) marketable obligations with a maturity of 360 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) U.S. dollar denominated time deposits and certificates of deposit of any financial institution (a) that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million or (b) whose short-term commercial paper rating or that of its parent company is at least A-1 or the equivalent thereof from S&P or P-1 or the equivalent thereof from Moody's (any such bank, an 'Approved Bank'), in each case with a maturity of 360 days or less from the date of acquisition; (iii) commercial paper issued by any Approved Bank or by the parent company of any Approved Bank and commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or guaranteed by any industrial company with a long term unsecured debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as the case may be, and in each case maturing no more than 360 days from the date of acquisition; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any commercial bank meeting the specifications of clause (ii)(a) above; (v) investments in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (i) through (iv) above; and (vi) time deposits and certificates of deposit of any commercial bank of recognized standing having capital and surplus in excess of the local currency equivalent of $100,000,000 incorporated in a country where the Company has one or more locally operating Foreign Subsidiaries, and that is, as of the Issue Date, providing banking services to the Company or any of its Foreign Subsidiaries. 'Change of Control' means the occurrence of any of the following: (i) the consummation of any transaction the result of which is (x) if such transaction occurs prior to the first sale of Voting Stock of Parent or the Company pursuant to a registration statement under the Securities Act that results in at 110 least 20% of the then outstanding Voting Stock of Parent or the Company having been sold to the public, that either (A) Control Group Members beneficially own, directly or indirectly, less than 51% of the Voting Stock of the Company or Parent (such percentage determined, for purposes of this definition, as a percentage of the total voting power of all Voting Stock of the relevant Person) or (B) any other Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of 51% of the Voting Stock of the Company or Parent (including in any event through direct or indirect beneficial ownership of Capital Stock of Control Group Members referred to in clause (ii) of the definition thereof) and (y) if such transaction occured thereafter, that any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than Control Group Members), is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of 40% of the Voting Stock of the Company or Parent at any time at which Control Group Members do not beneficially own, directly or indirectly, at least 51% of the Voting Stock of the Company and Parent, (ii) the Company or Parent consolidates with, or merges with or into, another Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the assets of the Company or Parent and their Subsidiaries, in either case taken as a whole, to any Person, or any Person consolidates with, or merges with or into, the Company or Parent, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company or Parent, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction where the outstanding Voting Stock of the Company or Parent, as the case may be, is converted into or exchanged for Voting Stock (other than Disqualified Capital Stock) of the surviving or transferee corporation and the beneficial owners of the Voting Stock of the Company or Parent, as the case may be, immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving or transferee corporation immediately after such transaction, or (iii) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company or Parent (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company or Parent, as the case may be, was approved by either (i) a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved or (ii) a Control Group Member) cease for any reason to constitute a majority of the Board of Directors of the Company or Parent, as the case may be, then in office. 'Consolidated Amortization Expense' for any period means the amortization expense of the Company and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income), determined on a consolidated basis in accordance with GAAP. 'Consolidated Depreciation Expense' for any period means the depreciation expense of the Company and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income), determined on a consolidated basis in accordance with GAAP. 'Consolidated Income Tax Expense' for any period means the provision for taxes based on income and profits of the Company and its Restricted Subsidiaries to the extent such income or profits were included in computing Consolidated Net Income for such period. 'Consolidated Interest Coverage Ratio' means, with respect to any determination date, the ratio of (a) EBITDA for the four full fiscal quarters immediately preceding the determination date (for any determination, the 'Reference Period'), to (b) Consolidated Interest Expense for such Reference Period. In making such computations, (i) EBITDA and Consolidated Interest Expense shall be calculated on a pro forma basis assuming that (A) the Indebtedness to be incurred or the Disqualified Capital Stock to be issued (and all other Indebtedness incurred or Disqualified Capital Stock issued after the first day of such Reference Period referred to in the covenant described under ' -- Certain Covenants Limitations on Additional Indebtedness' through and including the date of determination), and (if applicable) the application of the net proceeds therefrom (and from any other such Indebtedness or Disqualified Capital Stock), including the refinancing of other Indebtedness, had been incurred on the first day of such Reference Period and, in the case of Acquired Indebtedness, on the assumption that the related transaction (whether by means of purchase, merger or otherwise) also had occurred on such date with the appropriate adjustments with respect to such acquisition being included in such pro 111 forma calculation and (B) any acquisition or disposition by the Company or any Restricted Subsidiary of any properties or assets outside the ordinary course of business or any repayment of any principal amount of any Indebtedness of the Company or any Restricted Subsidiary prior to the stated maturity thereof, in either case since the first day of such Reference Period through and including the date of determination, had been consummated on such first day of such Reference Period; (ii) the Consolidated Interest Expense attributable to interest on any Indebtedness required to be computed on a pro forma basis in accordance with the covenant described under ' -- Certain Covenants -- Limitations on Additional Indebtedness' and (A) bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period and (B) which was not outstanding during the period for which the computation is being made but which bears, at the option of the Company, a fixed or floating rate of interest, shall be computed by applying, at the option of the Company, either the fixed or floating rate; (iii) the Consolidated Interest Expense attributable to interest on any Indebtedness under a revolving credit facility required to be computed on a pro forma basis in accordance with the covenant described under ' -- Certain Covenants -- Limitations on Additional Indebtedness' shall be computed based upon the average daily balance of such Indebtedness during the applicable period, provided that such average daily balance shall be reduced by the amount of any repayment of Indebtedness under a revolving credit facility during the applicable period, which repayment permanently reduced the commitments or amounts available to be reborrowed under such facility; (iv) notwithstanding the foregoing clauses (ii) and (iii), interest on Indebtedness determined on a floating rate basis, to the extent such interest is covered by agreements relating to Hedging Obligations, shall be deemed to have accrued at the rate per annum resulting after giving effect to the operation of such agreements; and (v) if after the first day of the applicable Reference Period and before the date of determination, the Company has permanently retired any Indebtedness out of the net proceeds of the issuance and sale of shares of Capital Stock (other than Disqualified Capital Stock) of the Company within 60 days of such issuance and sale, Consolidated Interest Expense shall be calculated on a pro forma basis as if such Indebtedness had been retired on the first day of such period. 'Consolidated Interest Expense' for any period means the sum, without duplication, of the total interest expense of the Company and its consolidated Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and including, without limitation (i) imputed interest on Capitalized Lease Obligations and Attributable Indebtedness, (ii) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations and bankers' acceptance financing, (iii) the net costs associated with Hedging Obligations, (iv) amortization of other financing fees and expenses, (v) the interest portion of any deferred payment obligations, (vi) amortization of debt discount or premium, if any, (vii) all other non-cash interest expense, (viii) capitalized interest, (ix) all cash dividend payments (and non-cash dividend payments in the case of a Restricted Subsidiary) on any series of preferred stock of the Company or any Restricted Subsidiary, (x) all interest payable with respect to discontinued operations, and (xi) all interest on any Indebtedness of any other Person guaranteed by the Company or any Restricted Subsidiary. 'Consolidated Net Income' for any period means the net income (or loss) of the Company and its consolidated Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication (i) the net income (or loss) of any Person (other than a Restricted Subsidiary) in which any Person other than the Company and its Restricted Subsidiaries has an ownership interest, except to the extent that any such income has actually been received by the Company and its Restricted Subsidiaries in the form of cash dividends during such period; (ii) except to the extent includible in the consolidated net income of the Company pursuant to the foregoing clause (i), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any Restricted Subsidiary or (b) the assets of such Person are acquired by the Company or any Restricted Subsidiary; (iii) the net income of any Restricted Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income (a) is not 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 during such period or (b) would be subject to 112 any taxes payable on such dividend or distribution; (iv) any gain (or, only in the case of a determination of Consolidated Net Income as used in EBITDA, any loss), together with any related provisions for taxes on any such gain (or, if applicable, the tax effects of such loss), realized during such period by the Company or any Restricted Subsidiary upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the Company or any Restricted Subsidiary or (b) any Asset Sale by the Company or any of its Restricted Subsidiary; (v) any extraordinary gain (or, only in the case of a determination of Consolidated Net Income as used in EBITDA, any extraordinary loss), together with any related provision for taxes on any such extraordinary gain (or, if applicable, the tax effects of such extraordinary loss), realized by the Company or any Restricted Subsidiary during such period; (vi) any non-cash loss during Fiscal 1998 reflecting the decrease in deferred tax assets resulting from the Acquisition and transactions consummated in connection therewith; and (vii) in the case of a successor to the Company by consolidation, merger or transfer of its assets, any earnings of the successor prior to such merger, consolidation or transfer of assets; and provided, further, that (A) any gain referred to in clauses (iv) and (v) above that relates to a Restricted Investment and which is received in cash by the Company or a Restricted Subsidiary during such period shall be included in the consolidated net income of the Company, (B) to the extent deducted in determining consolidated net income for such period and not otherwise added back pursuant to the foregoing clauses of this definition, the amount of expenses in respect of Specified Transaction Payments attributable to such period shall be added back in determining Consolidated Net Income for such period, and (C) to the extent not otherwise deducted in determining such consolidated net income for any period, all payments made to Parent pursuant to any Tax Sharing Agreement or otherwise (including pursuant to the 'Certain Covenants -- Limitations on Restricted Payments') in respect of taxes for such period shall be deducted from the consolidated net income of the Company. 'Consolidated Net Worth' means, with respect to any Person as of any date, the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date, less all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within twelve months after the acquisition of such business) subsequent to the date of the Indenture in the book value of any asset owned by such Person or a Subsidiary of such Person. 'Control Group Members' means (i) the natural person or persons who are the ultimate beneficial owners of Granaria Holdings N.V. on the Issue Date, as disclosed under 'Security Ownership and Certain Beneficial Owners and Management of Parent' and members of their immediate families and any spouse, parent or descendant of any such person, or a trust the beneficiaries of which include only any of the foregoing, and any corporation or other entity all of the Capital Stock of which (other than directors' qualifying shares) is owned by any of the foregoing or (ii) any corporation or other entity at least 51% of the Voting Stock of which is owned by any of the Persons referred to in clause (i). 'Coverage Ratio Incurrence Condition' would be met at any specified time only if the Company (or its Successor, as the case may be) would be able to incur $1.00 of additional Indebtedness at such specified time pursuant to the Consolidated Interest Coverage Ratio test set forth in the covenant described under ' -- Certain Covenants -- Limitations on Additional Indebtedness.' 'Default' means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default. 'Designated Senior Indebtedness' means (i) Indebtedness under the New Credit Agreement (whether incurred pursuant to the definition of Permitted Indebtedness or pursuant to the covenant described under ' -- Limitations on Additional Indebtedness' covenant) and (ii) any other Indebtedness constituting Senior Indebtedness that at the date of determination, has an aggregate principal amount outstanding of at least $25.0 million and that is specifically designated by the Company, in the instrument creating or evidencing such Senior Indebtedness or in an Officer's Certificate delivered to the Trustee, as 'Designated Senior Indebtedness.' 'Disqualified Capital Stock' means any Capital Stock of such Person or any of its Subsidiaries that, by its terms, by the terms of any agreement related thereto or by the terms of any security into which it is convertible, putable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed or repurchased by such Person or any to its Subsidiaries, whether or 113 not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the final maturity date of the Notes; provided, however, that any class of Capital Stock of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Capital Stock that is not Disqualified Capital Stock, and that is not convertible, puttable or exchangeable for Disqualified Capital Stock or Indebtedness, shall not be deemed to be Disqualified Capital Stock so long as such Person satisfies its obligations with respect thereto solely by the delivery of Capital Stock that is not Disqualified Capital Stock. 'EBITDA' for any period mean without duplication, the sum of the amounts for such period of (i) Consolidated Net Income plus (ii) in each case to the extent deducted in determining Consolidated Net Income for such period (and without duplication), (A) Consolidated Income Tax Expense, (B) Consolidated Amortization Expense (but only to the extent not included in Consolidated Interest Expense), (C) Consolidated Depreciation Expense, (D) Consolidated Interest Expense and (E) all other non-cash items reducing the Consolidated Net Income (excluding any such non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period, in each case determined on a consolidated basis in accordance with GAAP and minus (iii) the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such Period. 'Eligible Junior Securities' means (a) the common stock of Parent and (b) any preferred stock of Parent that (i) has a maturity date or mandatory redemption date not earlier than March 1, 2009, (ii) has no remedies for missed dividends other than accrual on a cumulative basis and appointment of not more than two directors to the Board of Directors of Parent, (iii) is not convertible, puttable or exchangeable into any other security of Parent other than common stock and (iv) is not, by its terms, by the terms of any agreement related thereto or by the terms of any security into which it is convertible, puttable or exchangeable, and upon the happening of any event or the passage of time would not be, required to be redeemed or repurchased by such Person or any of its Subsidiaries, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to March 1, 2009. 'Equity Offering' means an underwritten primary offering of Eligible Junior Securities of Parent pursuant to a registration statement filed with the Commission in accordance with the Securities Act, or pursuant to a private placement pursuant to an available exemption from registration and, in the case of any such private placement, a majority of such placement of which is sold to Persons that are not then and were not at the Issue Date Affiliates of Granaria Holdings. 'Exchange Act' means the Securities Exchange Act of 1934, as amended. 'Exchange Debentures' means the 11 3/4% Exchange Debentures due 2008 of Parent. 'Existing Indebtedness' means all of the Indebtedness of the Company and its Subsidiaries that is outstanding on the Issue Date. 'Fair Market Value' of any asset or items means the fair market value of such asset or items as determined in good faith by the Board of Directors and evidenced by a Board Resolution. 'Foreign Subsidiary' means any Subsidiary of the Company that is not incorporated or organized in the United States or in any State thereof. 'GAAP' means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date. 'Granaria Holdings' means Granaria Holdings N.V., a Dutch corporation, and its successors. 'Guarantee' means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without 114 limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. 'Guarantors' means each of the Subsidiary Guarantors and Parent, and 'Guarantor' means any one of the foregoing. 'Hedging Obligations' of any Person means the obligations of such Person pursuant to (i) any interest rate swap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in interest rates, (ii) agreements or arrangements designed to protect such Person against fluctuations in foreign currency exchange rates in the conduct of its operations, or (iii) any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices, in each case, entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculation. 'Immaterial Subsidiary' means (i) any Subsidiary of the Company which does not own assets in excess of $50,000, (ii) any Name Holder Subsidiary, and (iii) Eagle-Picher Inc., a Virgin Island foreign sales corporation. 'incur' means, with respect to any Indebtedness or Obligation, incur, create, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to such Indebtedness or Obligation; provided that (i) the Indebtedness of a Person existing at the time such Person became a Restricted Subsidiary shall be deemed to have been incurred by such Restricted Subsidiary and (ii) neither the accrual of interest nor the accretion of accreted value shall be deemed to be an incurrence of Indebtedness. 'Indebtedness' of any Person at any date means, without duplication: (i) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof); (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto); (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services, which payable is not overdue by more than 60 days according to the original terms of sale unless such payable is being contested in good faith; (v) the maximum fixed redemption or repurchase price of all Disqualified Capital Stock of such Person; (vi) all Capitalized Lease Obligations of such Person; (vii) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; (viii) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Company or its Subsidiaries that is guaranteed by the Company or the Company's Subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Company and its Subsidiaries on a consolidated basis; (ix) all Attributable Indebtedness; and (x) to the extent not otherwise included in this definition, Hedging Obligations of such Person. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (vii), the lesser of (A) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (B) the amount of the Indebtedness secured. For purposes of the preceding sentence, the 'maximum fixed redemption or repurchase price' of any Disqualified Capital Stock that does not have a fixed redemption or repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased or redeemed on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock (or any equity security for which it may be exchanged or converted), such fair market value shall be determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution. 'Independent Director' means a director of the Company who has not and whose Affiliates have not, at any time during the twelve months prior to the taking of any action hereunder, directly or 115 indirectly, received, or entered into any understanding or agreement to receive, any compensation, payment or other benefit, of any type or form, from the Company or any of its Affiliates, other than customary directors fees for serving on the Board of Directors of the Company or any Affiliate and reimbursement of out-of-pocket expenses for attendance at the Company's or Affiliate's board and board committee meetings. 'Independent Financial Advisor' means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Company's Board of Directors, qualified to perform the task for which it has been engaged and disinterested and independent with respect to the Company and its Affiliates. 'Investments' of any Person means (i) all investments by such Person in any other Person in the form of loans, advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business) or similar credit extensions constituting Indebtedness of such Person, and any guarantee of Indebtedness of any other Person, (ii) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Capital Stock or other securities of any other Person and (iii) all other items that would be classified as investments (including without limitation purchases of assets outside the ordinary course of business) on a balance sheet of such Person prepared in accordance with GAAP. 'Issue Date' means the date the Notes are initially issued. 'Lien' means, with respect to any asset or property, any mortgage, deed of trust, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect of such asset or property, whether or not filed, recorded or otherwise perfected under applicable law, including without limitation any conditional sale or other title retention agreement, and any lease in the nature thereof, any option or other agreement to sell, and any filing of, or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction (other than cautionary filings in respect of operating leases). 'Moody's' means Moody's Investors Service, Inc., and its successors. 'Name Holder Subsidiary' means any Subsidiary of the Company incorporated and existing solely for the purpose of reserving the corporate name of such Subsidiary and which does not conduct any business or hold any assets other than shares of another Name Holder Subsidiary. 'Net Available Proceeds' means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary), net of (i) brokerage commissions and other fees and expenses (including fees and expenses of legal counsel, accountants and investment banks) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) amounts required to be paid to any Person (other than the Company or any Restricted Subsidiary) owning a beneficial interest in the properties or assets subject to the Asset Sale or having a Lien therein and (iv) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pensions and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officers' Certificate delivered to the Trustee; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Available Proceeds. 'New Credit Agreement' means the Credit Agreement dated as of February 24, 1998 by and among ABN AMRO Bank N.V., as agent, PNC Bank, National Association, as documentation agent, the banks party thereto, the Company and the Guarantors, together with any additional guarantees by the Guarantors and security agreements, as any of the foregoing may be subsequently amended, restated, refinanced, or replaced from time to time, and shall include agreements in respect of Hedging 116 Obligations designed to protect against fluctuations in interest rates and entered into with respect to loans thereunder. 'Non-Recourse Purchase Money Indebtedness' means Indebtedness of the Company or any of its Subsidiaries incurred (a) to finance the purchase of any assets of the Company or any of its Subsidiaries within 90 days of such purchase, (b) to the extent the amount of Indebtedness thereunder does not exceed 100% of the purchase cost of such assets, (c) to the extent the purchase cost of such assets is or should be included in 'additions to property, plant and equipment' in accordance with GAAP, and (d) to the extent that such Indebtedness is non-recourse to the Company or any of its Subsidiaries or any of their respective assets other than the assets so purchased. 'Obligation' means any principal, interest (including, in the case of Senior Indebtedness, interest accruing subsequent to the filing of a petition in bankruptcy or insolvency at the rate specified in the document relating to such Indebtedness, whether or not such interest is an allowed claim permitted to be enforced against the obligor under applicable law), penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under the documentation governing any Indebtedness. 'Officer' means any of the following of the Company: the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary. 'Officers' Certificate' means a certificate signed by any two Officers. 'Opinion of Counsel' means a written opinion from legal counsel (such counsel may be an employee of or counsel to the Company or the Trustee) that complies with the requirements of this Indenture. 'Parent' means Eagle-Picher Holdings, Inc., a Delaware corporation, and its successors. 'Parent Preferred Stock' means collectively the Series A 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock of Parent and Series B 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock of Parent. 'Payment Restriction' with respect to a Subsidiary of any Person, means any encumbrance, restriction of limitation, whether by operation of the terms of its charter or by reason of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation, on the ability of (i) such Subsidiary to (a) pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or advances to such Person or any other Subsidiary or such Person, (c) guarantee any Indebtedness of the Company or any Restricted Subsidiary or (d) transfer any of its properties or assets to such Person or any other Subsidiary of such Person (other than customary restrictions on transfers of property subject to a Lien permitted under the Indenture) or (ii) such Person or any other Subsidiary of such Person to receive or retain any such dividends, distributions or payments, loans or advances, guarantee, or transfer of properties or assets. 'Permitted Indebtedness' means any of the following: (i) Indebtedness of the Company and any Subsidiary Guarantor under the New Credit Agreement in an aggregate principal amount at any time outstanding not to exceed (a) under the Senior Secured Term Loan Facility, $225 million, less the amount thereof that has been repaid under the covenant described under ' -- Limitations on Asset Sales' and (b) under the Revolving Loan Facility the greater of (x) $175 million and (y) the sum of 80% of the book value of the eligible accounts receivable and 50% of inventory of the Company and its Subsidiaries, calculated on a consolidated basis and in accordance with GAAP; (ii) Indebtedness under the Notes, the Note Guarantees and the Indenture; (iii) Existing Indebtedness; (iv) Indebtedness under Hedging Obligations, provided that (1) such Hedging Obligations are related to payment obligations on Permitted Indebtedness or Indebtedness otherwise permitted by the 'Limitations on Additional Indebtedness' covenant, and (2) the notional principal amount of 117 such Hedging Obligations at the time incurred does not exceed the principal amount of such Indebtedness to which such Hedging Obligations relate; (v) Indebtedness of the Company to a Subsidiary Guarantor and Indebtedness of any Subsidiary Guarantor to the Company or any other Subsidiary Guarantor; provided, however, that upon either (1) the subsequent issuance (other than directors' qualifying shares), sale, transfer or other disposition of any Capital Stock or any other event which results in any such Subsidiary Guarantor ceasing to be a Subsidiary Guarantor or (2) the transfer or other disposition of any such Indebtedness (except to the Company or a Subsidiary Guarantor), the provisions of this clause (v) shall no longer be applicable to such Indebtedness and such Indebtedness shall be deemed, in each case, to be incurred and shall be treated as an incurrence for purposes of the 'Limitations on Additional Indebtedness' covenant at the time the Subsidiary Guarantor in question ceased to be a Subsidiary Guarantor or the time such transfer or other disposition occurred; (vi) Indebtedness in respect of bid, performance or surety bonds issued for the account of the Company in the ordinary course of business, including guarantees or obligations of the Company with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed); (vii) Indebtedness in respect of Non-Recourse Purchase Money Indebtedness incurred by the Company or any Restricted Subsidiary; (viii) Refinancing Indebtedness; and (ix) Indebtedness, in addition to Indebtedness incurred pursuant to the foregoing clauses of this definition, with an aggregate principal face or stated amount (as applicable) at any time outstanding for all such Indebtedness incurred pursuant to this clause not in excess of $35.0 million; provided, however, that (A) Indebtedness under letters of credit and performance bonds issued for the account of a Foreign Subsidiary pursuant to this clause to finance trade activities or otherwise in the ordinary course of business, and not to support borrowed money or the obtaining of advances or credit, may not exceed $10.0 million in an aggregate stated or face amount for all such letters of credit and performance bonds and (B) the aggregate principal amount at any time outstanding for all other Indebtedness incurred by all Foreign Subsidiaries pursuant to this clause may not exceed $25.0 million. 'Permitted Junior Securities' means any securities of the Company provided for by a plan of reorganization or readjustment that are subordinated in right of payment to all Senior Indebtedness that may at the time be outstanding to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Indebtedness. 'Person' means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. 'Plan of Liquidation' with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (i) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (ii) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Capital Stock of such Person. 'Refinancing Indebtedness' means Indebtedness of the Company or a Restricted Subsidiary issued in exchange for, or the proceeds from the issuance and sale or disbursement of which are used substantially concurrently to repay, redeem, refund, refinance, discharge or otherwise retire for value, in whole or in part (collectively, 'repay'), or constituting an amendment, modification or supplement to or a deferral or renewal of (collectively, an 'amendment'), any Indebtedness of the Company or any Restricted Subsidiary (the 'Refinanced Indebtedness') in a principal amount not in excess of the principal amount of the Refinanced Indebtedness (or, if such Refinancing Indebtedness refinances Indebtedness under a revolving credit facility or other agreement providing a commitment for subsequent borrowings, with a maximum commitment not to exceed the maximum commitment under 118 such revolving credit facility or other agreement); provided that: (i) the Refinancing Indebtedness is the obligation of the same Person as that of the Refinanced Indebtedness, (ii) if the Refinanced Indebtedness was subordinated to or pari passu with the Note Indebtedness, then such Refinancing Indebtedness, by its terms, is expressly pari passu with (in the case of Refinanced Indebtedness that was pari passu with) the Note Indebtedness, or subordinate in right of payment to (in the case of Refinanced Indebtedness that was subordinated to) the Note Indebtedness at least to the same extent as the Refinanced Indebtedness; (iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes; and (iv) the Refinancing Indebtedness is secured only to the extent, if at all, and by the assets (which may include after-acquired assets), that the Refinanced Indebtedness is secured. 'Related Business' means any business in which the Company and its Subsidiaries operate on the Issue Date, or that is closely related to or complements the business of the Company and its Subsidiaries, as such business exists on the Issue Date. 'Related Business Investment' means any Investment directly by the Company or its Subsidiaries in any Related Business. 'Related Party Agreement' means any management or advisory agreements or other arrangements with any Affiliate of the Company or with any other direct or indirect holder of more than 10% of any class of the Company's or Parent's capital stock (except, in any such case, Parent, the Company or any Restricted Subsidiary), but excluding in any event arrangements with ABN AMRO Bank N.V. and its Affiliates of their respective successors (i) under the New Credit Agreement or in connection therewith, (ii) in connection with the offering of the Notes or the Series A Senior Preferred Stock or (iii) pursuant to other banking, financing or underwriting activity entered into in the ordinary course of business. 'Restricted Debt Payment' means any purchase, redemption, defeasance (including without limitation in substance or legal defeasance) or other acquisition or retirement for value, directly or indirectly, by the Company or a Restricted Subsidiary, prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness. 'Restricted Investment' means any Investment by the Company or any Restricted Subsidiary (other than investments in Cash Equivalents) in any Person that is not the Company or a Restricted Subsidiary, including in any Unrestricted Subsidiary. 'Restricted Payment' means with respect to any Person: (i) the declaration or payment of any dividend (other than a dividend declared and paid (x) by a Wholly-Owned Restricted Subsidiary to holders of its Capital Stock, or (y) by a Subsidiary (other than a Wholly-Owned Restricted Subsidiary) to its shareholders on a pro rata basis, but only to the extent of the dividends actually received by the Company or a Restricted Subsidiary) or the making of any other payment or distribution of cash, securities or other property or assets in respect of such Person's Capital Stock (except that a dividend payable solely in Capital Stock (other than Disqualified Capital Stock) of such Person shall not constitute a Restricted Payment); (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of (A) the Capital Stock of the Company or (B) the Capital Stock of any Restricted Subsidiary, or any other payment or distribution made in respect thereof, either directly or indirectly (other than a payment solely in Capital Stock that is not Disqualified Capital Stock, and excluding any such payment to the extent actually received by the Company or a Restricted Subsidiary); (iii) any Restricted Investment; (iv) any Restricted Debt Payment; or (v) payments by the Company or its Restricted Subsidiaries in respect of any Related Party Agreement. 'Restricted Subsidiary' means any Subsidiary of the Company other than an Unrestricted Subsidiary. 'Revolving Loan Facility' means the revolving loan facility provided under the New Credit Agreement. 119 'S&P' means Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors. 'Sale and Leaseback Transactions' means with respect to any Person an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the leasing by such Person of any property or asset of such Person which has been or is being sold or transferred by such Person to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or asset. 'Securities Act' means the U.S. Securities Act of 1933, as amended. 'Senior Indebtedness' means all Indebtedness and other Obligations specified below payable directly or indirectly by the Company or any Guarantor, as the case may be, whether outstanding on the Issue Date or thereafter created, incurred or assumed by the Company or such Guarantor: (i) the principal of and interest on and all other Indebtedness and Obligations related to the New Credit Agreement (including, without limitation, all loans, letters of credit and unpaid drawings with respect thereto and other extensions of credit under the New Credit Agreement, and all expenses, fees, reimbursements, indemnities and other amounts owing pursuant to the New Credit Agreement), (ii) amounts payable in respect of any Hedging Obligations, (iii) in addition to the amounts described in (i) and (ii), all Indebtedness not prohibited by the 'Limitations on Additional Indebtedness' covenant that is not expressly pari passu with, or subordinated to, the Notes or the Note Guarantees, as the case may be, (iv) all Capital Lease Obligations outstanding on the Issue Date, and (v) all Refinancing Indebtedness permitted under the Indenture. Notwithstanding anything to the contrary in the foregoing Senior Indebtedness will not include (a) any Indebtedness which by the express terms of the agreement or instrument creating, evidencing or governing the same is junior or subordinate in right of payment to any item of Senior Indebtedness, (b) any trade payable arising from the purchase of goods or materials or for services obtained in the ordinary course of business, (c) Indebtedness incurred (but only to the extent incurred) in violation of the Indenture as in effect at the time of the respective incurrence, (d) any Indebtedness of the Company that, when incurred, was without recourse to the Company, (e) any Indebtedness to any employee of the Company or any of its respective Subsidiaries or (f) any liability for taxes owned or owing by the Company. 'Senior Preferred Stock' means, collectively, the Series A Senior Preferred Stock and the Series B Senior Preferred Stock. 'Senior Secured Term Loan Facility' means the term loan facility providing for the senior secured Tranche A, Tranche B and Tranche C term loans. 'Senior Subordinated Indebtedness' of the Company means the Notes and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. 'Senior Subordinated Indebtedness' of any Guarantor has a correlative meaning. 'Series A Senior Preferred Stock' means the 11 3/4% Series A Cumulative Redeemable Exchangeable Preferred Stock of Parent. 'Series B Senior Preferred Stock' means the 11 3/4% Series B Cumulative Redeemable Exchangeable Preferred Stock of Parent. 'Significant Subsidiary' means any Subsidiary of the Company that would be a 'Significant Subsidiary' as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date, except all references to '10 percent' in such definition shall be changed to '2 percent.' 'Specified Transaction Payments' means the following payments made to or for the benefit of present or future officers and employees of the Company and its Affiliates, or to Granaria Holdings and its Affiliates, in each case in connection with the Acquisition and on terms (including without limitation the amount thereof) substantially as described in the Prospectus, but only to the extent that the aggregate amount thereof does not exceed $43.2 million for all periods from and after the Issue Date: (i) payments to finance or refinance the purchase by such officers and employees (or a trust for their 120 benefit) of capital stock of Parent or its parent company, the grant or vesting of any award of such capital stock and the payment by such officers and employees of income taxes in respect thereof, (ii) stay put and other incentive bonuses, (iii) severance payments and (iv) transaction fees paid to Granaria Holdings. 'Subordinated Indebtedness' means Indebtedness of the Company or any Restricted Subsidiary that is subordinated in right of payment to the Notes or the Note Guarantee of such Restricted Subsidiary, respectively. 'Subsidiary' of any Person means (i) any corporation of which at least a majority of the aggregate voting power of all classes of the Voting Stock is owned by such Person directly or through one or more other Subsidiaries of such Person and (ii) any entity other than a corporation in which such Person, directly or indirectly, owns at least a majority of the Voting Stock of such entity entitling the holder thereof to vote or otherwise participate in the selection of the governing body, partners, managers or others that control the management and policies of such entity. Unless otherwise specified, 'Subsidiary' means a Subsidiary of the Company. 'Subsidiary Guarantor' means each domestic Restricted Subsidiary of the Company (other than an Immaterial Subsidiary) and each other person who is required to become (or whom the Company otherwise causes to become) a Subsidiary Guarantor by the terms of the Indenture. 'Tax Sharing Agreement' means any tax sharing agreement or arrangement entered or to be entered into by Parent, the Company and its Subsidiaries, providing for payments by or to Parent, the Company and its Subsidiaries that, in each case, are not in excess of the tax liabilities that would have been payable by such Person on a stand-alone basis. 'Unrestricted Subsidiary' means (i) any Subsidiary that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary, and any such designation shall be deemed to be a Restricted Investment at the time of and immediately upon such designation by the Company and its Restricted Subsidiaries in the amount of the Consolidated Net Worth of such designated Subsidiary and its consolidated Subsidiaries at such time, provided that such designation shall be permitted only if (A) the Company and its Restricted Subsidiaries would be able to make the Restricted Investment deemed made pursuant to such designation at such time, (B) no portion of the Indebtedness or any other obligation (contingent or otherwise) of such Subsidiary (x) is Guaranteed by the Company or any Restricted Subsidiary, (y) is recourse to the Company or any Restricted Subsidiary or (z) subjects any property or asset of the Company or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof and (C) no default or event of default with respect to any Indebtedness of such Subsidiary would permit any holder of any Indebtedness of the Company or any Restricted Subsidiary to declare such Indebtedness of the Company or any restricted Subsidiary due and payable prior to its maturity. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary, and any such designation shall be deemed to be an incurrence by the Company and its Subsidiaries of the Indebtedness (if any) of such Subsidiary so designated for purposes of the ' -- Limitations on Additional Indebtedness' covenant as of the date of such designation, provided that such designation shall be permitted only if immediately after giving effect to such designation and the incurrence of any such additional Indebtedness deemed to have been incurred thereby (x) the Company would meet the Coverage Ratio Incurrence Condition and (y) no Default or Event of Default shall be continuing. Any such designation by the Board of Directors described in the two preceding sentences shall be evidenced to the Trustee by the filing with the Trustee of a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and setting forth the underlying calculations of such certificate. 'Voting Stock' with respect to any Person, means securities of any class of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock or other relevant equity interest has voting power by reason of any contingency) to vote in the election of members of the board of directors of such Person. 121 'Weighted Average Life to Maturity', when applied to any Indebtedness at any date, means the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness. 'Wholly-Owned Restricted Subsidiary' means a Restricted Subsidiary of which 100% of the Capital Stock (except for directors' qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) is owned directly by the Company or through one or more Wholly-Owned Restricted Subsidiaries. DESCRIPTION OF PREFERRED STOCK The Series A Preferred Stock was offered and sold by Parent pursuant to a Certificate of Designation and the By-laws of Parent. The Series A Preferred Stock was issued in a private transaction that was not subject to the registration requirements of the Securities Act. Concurrently with the Notes Exchange Offer, Parent is offering to exchange its Series B Preferred Stock for Series A Preferred Stock in the Preferred Stock Exchange Offer. GENERAL The Certificate of Incorporation of Parent authorizes 50,000 shares of preferred stock, of which 14,191 shares of Preferred Stock are outstanding, and the same number will be outstanding after giving effect to the Preferred Stock Exchange Offer. The liquidation preference of the Preferred Stock was initially $5,637.7 per share and accretes from March 1, 1998 to March 1, 2003, on a daily basis, at the rate of 11.75% per annum, compounded semi-annually, to a liquidation preference of $10,000 per share on March 1, 2003. The accreted value of the Preferred Stock, at any date of determination, will hereinafter be referred to as the 'Liquidation Preference.' RANK The Preferred Stock, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of Parent, ranks (i) senior to all classes of common stock of Parent and each other class of capital stock or series of preferred stock established after February 20, 1998 (the date of the Offering Memorandum in connection with the offer of the Series A Preferred Stock (the 'Preferred Stock Offering Memorandum')) by the Board of Directors of Parent (the 'Board') the terms of which do not expressly provide that it ranks on a parity with the Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of Parent (collectively referred to as 'Junior Securities') and (ii) subject to certain conditions, on a parity with any class of capital stock or series of preferred stock established the Board of Directors of Parent, the terms of which expressly provide that such class or series will rank on a parity with the Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of Parent (collectively referred to as 'Parity Securities'). Creditors of Parent will have priority over the Preferred Stock with respect to claims on the assets of Parent. Parent has provided guarantees under the New Credit Agreement and the Notes, and pledged the capital stock of the Company in support of its guarantee under the New Credit Agreement. In addition, creditors and stockholders of Parent's Subsidiaries will have priority over the holders of Preferred Stock with respect to claims on the assets of such Subsidiaries. DIVIDENDS No dividends will accrue on the Preferred Stock prior to March 1, 2003. After March 1, 2003, holders of Preferred Stock will be entitled to receive, when, as and if declared by the Board, out of funds legally available therefor, dividends on the Preferred Stock at a rate per annum equal to 11.75% of the Liquidation Preference per share of Preferred Stock. All dividends will be cumulative whether or 122 not earned or declared on a daily basis from March 1, 2003 and will be payable on March 1 and September 1 of each year, commencing on September 1, 2003. The terms of certain debt instruments of Parent and the Company, including the New Credit Agreement and the Indenture, restrict the payment of cash dividends by Parent and the payment to Parent of cash dividends by the Company, and future agreements may provide the same. See 'Description of New Credit Agreement' and 'Description of the Notes -- Certain Covenants.' OPTIONAL REDEMPTION The Preferred Stock is redeemable at the option of Parent, in whole or in part, at any time (subject to contractual and other restrictions with respect thereto and to the legal availability of funds therefor) on or after March 1, 2003, at certain redemption prices set forth in the Preferred Stock Exchange Offer Prospectus, together with accrued and unpaid dividends, and Special Accretion, if any. Notwithstanding the foregoing, at any time prior to March 1, 2001, Parent may redeem up to 35% of shares of Preferred Stock outstanding on the Issue Date out of the proceeds of one or more Equity Offerings, at any time or from time to time in part, at a redemption price equal to 111.75% of the Liquidation Preference (excluding any Special Accretion) at the time of redemption, together with the amount of any Special Accretion to the date of redemption; provided, that (a) at least $50 million aggregate amount of Liquidation Preference remains outstanding after each such redemption and (b) such redemption occurs within 60 days of the date of the closing of any such Equity Offering. MANDATORY REDEMPTION The Preferred Stock is mandatorily redeemable by Parent on the earlier of March 1, 2008 and making of a Mandatory Redemption Demand upon the occurrence of certain Mandatory Redemption Events at a price equal to the then effective Liquidation Preference, together with all accrued and unpaid dividends, and Special Interest, if any, to the redemption date. CHANGE OF CONTROL Upon the occurrence of a Change of Control, each holder of Preferred Stock will have the right to require that Parent repurchase such holder's shares of Preferred Stock for a cash price equal to 101% of the aggregate Liquidation Preference (excluding any Special Accretion) of the Preferred Stock at the time of the occurrence of the Change of Control, plus all accumulated and unpaid dividends and the amount of Special Accretion, if any, to the date of repurchase. VOTING RIGHTS Holders of the Preferred Stock have no voting rights with respect to general corporate matters except as provided by law or as set forth in the Certificate. The Certificate provides that in certain circumstances, holders of Preferred Stock will be entitled to elect a majority of Parent's Board of Directors or to vote for certain mergers, consolidations or sales of all or substantially all of the assets of Parent. EARLY MANDATORY REDEMPTION EVENTS It will be considered an Early Mandatory Redemption Event under the Certificate if Parent does not comply with specific limitations on its ability: (a) to incur additional indebtedness, issue capital stock, engage in any activities other than the performance of its guarantees under the New Credit Agreement and the Notes Indenture, or merge or consolidate with any other person or (b) to permit the Company or its Restricted Subsidiaries to incur additional indebtedness, issue capital stock, make restricted payments, pay dividends or make other distributions, enter into certain transactions with affiliates, or enter into certain mergers or consolidations or sell all or substantially all of the assets of the Company and the Restricted Subsidiaries. These Early Mandatory Redemption Events are subject to a number of significant exceptions and qualifications. The Certificate also requires Parent to deliver certain reports and information to holders of the Preferred Stock. 123 EXCHANGE FEATURE On March 1, 2003 or any subsequent dividend payment date, Parent may, at its option, but subject to certain conditions, exchange all, but not less than all of the shares of Preferred Stock then outstanding for the Exchange Debentures. REGISTRATION RIGHTS Parent and the Initial Purchasers have entered into a Registration Rights Agreement (the 'Preferred Stock Registration Rights Agreement'). Pursuant to the Preferred Stock Registration Rights Agreement, Parent has agreed to file with the Commission a registration statement on an appropriate form under the Securities Act with respect to an offer to exchange the Series A Preferred Stock for a new issue of Series B Preferred Stock of Parent registered under the Securities Act, with terms identical in all material respects to those of the Series A Preferred Stock (the 'Preferred Stock Exchange Offer'). Parent is making the Preferred Stock Exchange Offer concurrently with the Company's Notes Exchange Offer. In certain circumstances, Parent or an affiliate of Parent will be required to file with the Commission a shelf registration statement to cover resales of the shares of Preferred Stock by holders thereof. If Parent fails to satisfy these registration obligations, the Preferred Stock will be subject to Special Accretion until all such registration defaults are cured. DESCRIPTION OF EXCHANGE DEBENTURES The Exchange Debentures, if issued, will be issued pursuant to an indenture (the 'Exchange Debentures Indenture') between Parent and a trustee to be determined (the 'Trustee'). The Exchange Debentures will be general unsecured obligations of Parent, subordinated in right of payment to all existing and future Senior Indebtedness (as defined in the Exchange Debentures Indenture) of Parent, including its guarantee of the Notes and borrowings under the New Credit Agreement. The Exchange Debentures will bear interest from the Exchange Date at a rate of 11.75% per annum, payable in cash semiannually, commencing with the first such date to occur after the Exchange Date. The Exchange Debentures will mature on March 1, 2008. OPTIONAL REDEMPTION The Exchange Debentures will be redeemable at the option of Parent, in whole or in part, at any time on or after March 1, 2003, at certain redemption prices set forth in the Preferred Stock Exchange Offer Prospectus, together with accrued and unpaid interest, if any, thereon to the redemption date. CHANGE OF CONTROL Upon the occurrence of a Change of Control, each holder of Exchange Debentures will have the right to require Parent to repurchase all or any part of such holder's Exchange Debentures at an offer price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon to the date of repurchase. There can be no assurance that Parent will have financial resources necessary to repurchase the Exchange Debentures upon a Change of Control. CERTAIN COVENANTS The Exchange Debentures Indenture will contain covenants that, among other things, limit the ability of Parent, among other things: (a) to incur additional indebtedness, issue capital stock, engage in activities other than the performance of its guarantee under the New Credit Agreement and the Notes, or merger or consolidate with any other Person and (b) to permit the Company and its Restricted Subsidiaries (as defined in the Exchange Debenture Indenture) to: incur additional indebtedness; issue capital stock, pay dividends or make certain other distributions; enter into certain transactions with affiliates; or merge or consolidate with any other Person or sell all or substantially all of the assets of the Company and its Restricted Subsidiaries. These covenants are subject to a number of significant exceptions and qualifications. The Exchange Debentures Indenture will also require Parent to deliver certain reports and information to holders of the Preferred Stock. 124 PLAN OF DISTRIBUTION Each Holder desiring to participate in the Notes Exchange Offer will be required to represent, among other things, that (i) it is not an 'affiliate' (as defined in Rule 405 of the Securities Act) of the Company or any Guarantor (ii) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the New Notes and (iii) it is acquiring the New Notes in the ordinary course of its business (a Holder unable to make the foregoing representation is referred to as a 'Restricted Holder'). A Restricted Holder will not be able to participate in the Notes Exchange Offer and may only sell its Old Notes pursuant to a registration statement containing the selling security holder information required by Item 507 of Regulation S-K under the Securities Act, or pursuant to an exemption from the registration requirement of the Securities Act. Each broker-dealer (other than a Restricted Holder) that receives New Notes for its own account pursuant to the Notes Exchange Offer (a 'Participating Broker-Dealer') must acknowledge in the Letter of Transmittal that it will deliver a prospectus in connection with any resale of such New Notes. Based upon interpretations by the staff of the Commission, the Company believes that New Notes issued pursuant to the Notes Exchange Offer to Participating Broker-Dealers may be offered for resale, resold, and otherwise transferred by a participating Broker-Dealer upon compliance with the prospectus delivery requirements, but without compliance with the registration requirements, of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Broker-Dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any Participating Broker-Dealer for use in connection with any such resale. If the Company is not so notified by any Participating Broker-Dealers that they may be subject to such requirements or if it is later notified by all such Participating Broker-Dealers that they are no longer subject to such requirements, the Company will not be required to maintain the effectiveness of the Notes Exchange Offer Registration Statement or to amend or supplement this Prospectus following the consummation of the Notes Exchange Offer or following such date of notification, as the case may be. The Company believes that during such period of time, delivery of this Prospectus, as it may be amended or supplemented, will satisfy the prospectus delivery requirements of a Participating Broker-Dealer engaged in market-making or other trading activities. Based on interpretations by the staff of the Commission, the Company believes that New Notes issued pursuant to the Notes Exchange Offer may be offered for resale, resold, and other transferred by a Holder thereof (other than a Restricted Holder or a Participating Broker-Dealer) without compliance with the registration and prospectus delivery requirements of the Securities Act. The Company will not receive any proceeds from any sale of New Notes by broker-dealers (including Participating Broker-Dealers). New Notes received by Participating Broker-Dealers for their own accounts pursuant to the Notes Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Participating Broker-Dealer and/or the purchasers of any such New Notes. Any Participating Broker-Dealer that resells New Notes may be deemed to be an 'underwriter' within the meaning of the Securities Act and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an 'underwriter' within the meaning of the Securities Act. The Company has agreed to pay all expenses incidental to the Notes Exchange Offer other than commissions and concessions of any brokers or dealers and will indemnify Holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act, as set forth in the Registration Rights Agreement. 125 By acceptance of the Notes Exchange Offer, each Participating Broker-Dealer that receives New Notes pursuant to the Notes Exchange Offer hereby agrees to notify the Company prior to using the Prospectus in connection with the sale or transfer of New Notes, and acknowledges and agrees that, upon receipt of notice from the Company of the happening of any event that makes any statement in the Prospectus untrue in any material respect or which requires the making of any changes in the Prospectus in order to make the statements therein not misleading (which notice the Company agrees to deliver promptly to such Participating Broker-Dealer), such Participating Broker-Dealer will suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented prospectus to such Participating Broker-Dealer. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of certain material United States federal income tax consequences generally applicable to the exchange of Old Notes for New Notes and the ownership and disposition of Notes. The federal income tax considerations set forth below are based upon currently existing provisions of the Code, applicable Treasury Regulations ('Treasury Regulations'), judicial authority, and current administrative rulings and pronouncements of the Internal Revenue Service (the 'IRS'). There can be no assurance that the IRS will not take a contrary view, and no ruling from the IRS has been, or will be, sought on the issues discussed herein. Legislative, judicial, or administrative changes or interpretations may be forthcoming that could alter or modify the statements and conclusions set forth herein. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences discussed below. As used in this summary, 'Note' means either a New Note or an Old Note, and, where the context so requires, 'the Note' or 'such Note' includes a Note for which the relevant Note was exchanged pursuant to the Note Exchange Offer. As used in this summary, the term 'U.S. Holder' means the beneficial owner of a Note that is for U.S. federal income tax purposes (i) an individual citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust. As used in this summary, the term 'Non-United States Holder' means an owner of a Note that is, for United States federal income tax purposes, (i) a nonresident alien individual, (ii) a foreign corporation or (iii) a foreign estate or foreign trust. The summary is not a complete analysis or description of all potential federal tax considerations that may be relevant to, or of the actual tax effect that any of the matters described herein will have on, particular U.S. Holders and Non-U.S. Holders (collectively, 'Holders'), and does not address foreign, state, local or other tax consequences. This summary does not address the federal income tax consequences to (a) special classes of taxpayers (such as S corporations, mutual funds, insurance companies, financial institutions, small business investment companies, foreign companies, nonresident alien individuals, regulated investment companies, real estate investment trusts, dealers in securities or currencies, broker-dealers and tax-exempt organizations) who are subject to special treatment under the federal income tax laws, (b) Holders that hold Notes as part of a position in a 'straddle,' or as part of a 'hedging,' 'conversion,' or other integrated investment transaction for federal income tax purposes, (c) Holders that do not hold the Notes as capital assets within the meaning of section 1221 of the Code or (d) Holders whose functional currency is not the U.S. dollar. Furthermore, estate and gift tax consequences are not discussed herein. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH PROSPECTIVE PURCHASER OF THE NEW NOTES IS STRONGLY URGED TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO HIS OR HER PARTICULAR TAX SITUATION AND AS TO ANY FEDERAL, FOREIGN, STATE, LOCAL OR OTHER TAX CONSIDERATIONS 126 (INCLUDING ANY POSSIBLE CHANGES IN TAX LAW) AFFECTING THE PURCHASE, HOLDING AND DISPOSITION OF THE NEW NOTES. Note Exchange Offer The exchange of Notes for the New Notes pursuant to the Note Exchange Offer should not be a taxable event for U.S. federal income tax purposes. As a result, there should be no U.S. federal income tax consequences to holders exchanging the Notes for the New Notes pursuant to the Note Exchange Offer, and immediately after the Expiration Date a holder should have the same tax basis and holding period in the New Notes as in the Old Notes exchanged therefor. TAX CONSEQUENCES TO U.S. HOLDERS Interest Generally, interest paid on the Notes will be taxable to a U.S. Holder as ordinary income at the time it accrues or is received in accordance with such U.S. Holder's method of accounting for U.S. federal income tax purposes. Market Discount If a Note is acquired at a 'market discount,' some or all of any gain realized upon a subsequent sale, other disposition, or full or partial principal payment, of such Note (including of a New Note received in exchange for an Old Note that was acquired at a 'market discount') may be treated as ordinary income, as described below. For this purpose, 'market discount' is the excess (if any) of the principal amount of a Note over the purchase price thereof, subject to a statutory de minimis exception. Unless a U.S. Holder has elected to include the market discount in income as it accrues, gain, if any, realized on any subsequent disposition (other than in connection with certain nonrecognition transactions) or full or partial principal payment of such Note will be treated as ordinary income to the extent of the market discount that is treated as having accrued during the period such U.S. Holder held such Note. The amount of market discount treated as having accrued will be determined either (i) on a straight-line basis by multiplying the market discount times a fraction, the numerator of which is the number of days the Note was held by the U.S. Holder and the denominator of which it is the total number of days after the date such U.S. Holder acquired the Note up to and including the date of its maturity or (ii) if the U.S. Holder so elects, on a constant interest rate method. A U.S. Holder may make that election with respect to any Note but, once made, such election is irrevocable. A U.S. Holder of a Note acquired at a market discount may elect to include market discount in income currently, through the use of either the straight-line inclusion method or the elective constant interest method in lieu of recharacterizing gain upon disposition as ordinary income to the extent of accrued market discount at the time of disposition. Once made, this election will apply to all notes and other obligations acquired by the electing U.S. Holder at a market discount during the taxable year for which the election is made, and all subsequent taxable years, unless the IRS consents to a revocation of the election. If an election is made to include market discount in income currently, the basis of the Note in the hands of the U.S. Holder will be increased by the amount of the market discount that is included in income. Unless a U.S. Holder who acquires a Note at a market discount elects to include market discount in income currently, such U.S. Holder may be required to defer deductions for a portion of the interest paid on indebtedness allocable to such Note in an amount not exceeding the deferred market discount, until such income is realized. Bond Premium Under the Code and regulations, including new regulations generally effective for bonds acquired on or after March 2, 1998 (or certain others by election), if a U.S. Holder purchases a Note and 127 immediately after the purchase the adjusted basis of the Note exceeds the sum of all amounts payable on the instrument after the purchase date (other than payments of stated interest), the Note will be treated as having been acquired with 'bond premium.' A U.S. Holder may elect to amortize such bond premium over the remaining term of such Note (or, if it results in a smaller amount of amortizable bond premium, until an earlier call date). If bond premium is amortized, the amount of interest that must be included in the U.S. Holder's income for each period ending on an interest payment date or at the stated maturity, as the case may be, will be reduced by the portion of premium allocable to such period based on the U.S Holder's yield to maturity with respect to the Note as determined under the bond premium rules. Under the new regulations, if the amortizable bond premium allocable to an accrual period exceeds the amount of stated interest allocable to such accrual period, such excess would be allowed as a deduction for such accrual period, but only to the extent of the U.S. Holder's prior interest inclusions on the Note; any excess is generally carried forward and allocable to the next accrual period. A U.S. Holder who elects to amortize bond premium must reduce his tax basis in the Note as described below under 'Disposition of the Notes.' If such an election to amortize bond premium is not made, a U.S. Holder must include the full amount of each interest payment in income in accordance with his or her regular method of accounting and may receive a tax benefit (in the form of capital loss or reduced capital gain) from the premium only in computing such U.S. Holder's gain or loss upon the sale or disposition or payment of the principal amount of the Note. An election to amortize premium will apply to amortizable bond premium on all notes and other bonds, the interest on which is includible in the U.S. Holder's gross income, held at the beginning of the U.S. Holder's first taxable year to which the election applies or that are thereafter acquired, and may be revoked only with the consent of the IRS. Disposition of the Notes Upon the sale, exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or loss equal to the difference between the amount realized on the sale, exchange or retirement (except to the extent attributable to accrued interest that has not been included in income) and such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in a Note will generally equal the U.S. Holder's purchase price for such Note, increased by any market discount previously included in income by the U.S. Holder and decreased by any principal payments received by the U.S. Holders, any amortizable bond premium used to offset stated interest and certain other amortizable bond premium allowed as a deduction under the new regulations described above under 'Bond Premium,' deducted over the term of the Note. Gain or loss realized on the sale, exchange or retirement of a Note generally will be capital gain or loss. Recently enacted legislation includes substantial changes to the federal taxation of capital gains recognized by individuals, including a 20% maximum tax rate for certain gains from the sale of capital assets held for more than 18 months. The deduction of capital losses is subject to certain limitations. Prospective investors should consult their tax advisors regarding the treatment of capital gains and losses. The Company does not intend to treat the possibility of an optional redemption or repurchase of the Notes as giving rise to any accrual of original issue discount or recognition of ordinary income upon redemption, sale or exchange of a Note. U.S. Holders may wish to consider that Treasury Regulations regarding the treatment of certain contingencies were recently issued and may wish to consult their tax advisers in this regard. Backup Withholding Under section 3406 of the Code and applicable Treasury Regulations, a noncorporate U.S. Holder of the Notes may be subject to backup withholding at the rate of 31 percent with respect to 'reportable payments,' which include interest paid on or the proceeds of a sale, exchange or redemption of, the Notes. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a Taxpayer Identification Number ('TIN') to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a 'notified payee 128 underreporting' described in section 3406(c) of the Code or (iv) there has been a failure of the payee to certify under penalty of perjury that the payee is not subject to withholding under section 3406(a)(1)(C) of the Code. As a result, if any one of the events listed above occurs, the payor will be required to withhold an amount equal to 31 percent from any interest payment made with respect to the Notes or any payment of proceeds of a redemption of the Notes to a noncorporate U.S. Holder. Amounts paid as backup withholding do not constitute an additional tax and will be credited against the U.S. Holder's federal income tax liability, so long as the required information is provided to the IRS. The payor generally will report to the U.S. Holders of the Notes and to the IRS the amount of any 'reportable payments' for each calendar year and the amount of tax withheld, if any, with respect to payment on those securities. TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS Interest paid by the Company to a Non-United States Holder will not be subject to United States federal income or withholding tax if such interest is not effectively connected with the conduct of a trade or business within the United States (or a permanent establishment therein, if a tax treaty applies) by such Non-United States Holder and such Non-United States Holder (i) does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company; (ii) is not a controlled foreign corporation with respect to which the Company is a 'related person'; (iii) is not a bank whose receipt of interest on a Note is described in Section 881(c) (3)(A) of the United States Internal Revenue Code of 1986, as amended, (the 'Code'); and (iv) certifies, under penalties of perjury, that such Holder is not a United States person and provides the Company with such Holder's name and address or a securities clearing organization, bank, or other financial institution that holds customers' securities in the ordinary course of its trade or business certifies, under penalties of perjury, that such certification and information has been received by it or a qualifying intermediary from the Non-United States Holder and furnishes the Company with a copy thereof. If a Non-United States Holder of a Note is engaged in a trade or business in the United States, and if interest (including market discount) on the Note (or gain realized on its sale, exchange or other disposition) is effectively connected with the conduct of such trade or business, the Non-United States Holder, although exempt from the withholding tax discussed in the preceding paragraph, will generally be subject to regular United States income tax on such effectively connected income in the same manner as if it were a U.S. Holder. See 'U.S. Holders' above. Such Holder will be required to provide to the withholding agent a properly executed IRS Form 4224 (or, after December 31, 1998, a Form W-8) to claim an exemption from withholding tax. In addition, if such Non-United States Holder is a foreign corporation, it may be subject to a 30% branch profits tax (unless reduced or eliminated by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments. For purposes of the branch profits tax, interest (including market discount) on, and any gain recognized on the sale, exchange or other disposition of, a Note will be included in the effectively connected earnings and profits of such Non-United States Holder if such interest or gain, as the case may be, is effectively connected with the conduct by the Non-United States Holder of a trade or business in the United States. Gain on Disposition A Non-United States Holder will generally not be subject to United States federal income tax on gain recognized on a sale, redemption or other disposition of a Note unless (i) the gain is effectively connected with the conduct of a trade or business within the United States (or a permanent establishment therein, if a tax treaty applies) by the Non-United States Holder, (ii) in the case of a Non-United States Holder who is a nonresident alien individual and holds the Note as a capital asset, such Holder is present in the United States for 183 or more days in the taxable year and certain other requirements are met or (iii) the Holder is subject to tax pursuant to the provisions of the Code applicable to certain United States expatriates. 129 Information Reporting and Backup Withholding The Company will, where required, report to the Non-United States Holders of Notes and the IRS the amount of any interest paid on the Notes in each calendar year and the amounts of tax withheld, if any, with respect to such payments. In the case of payments of interest to Non-United States Holders, Treasury regulations provide that the 31% backup withholding tax and certain information reporting will not apply to such payments with respect to which either the requisite certification, as described above, has been received or an exemption has otherwise been established; provided that neither the Company nor its payment agent has actual knowledge that the Non-United States Holder is a United States person or that the conditions of any other exemption are not in fact satisfied. Under Treasury regulations, these information reporting and backup withholding requirements will apply, however, to the gross proceeds paid to a Non-United States Holder on the disposition of the Notes by or through a United States office of a United States or foreign broker, unless such Holder certifies to the broker under penalties of perjury as to its name, address and status as a foreign person or the Holder otherwise establishes an exemption. Information reporting requirements, but not backup withholding, will also apply to a payment of the proceeds of a disposition of the Notes by or through a foreign office of a United States broker or foreign brokers with certain types of relationships to the United States unless such broker has documentary evidence in its file that the Non-United States Holder of the Notes is not a United States person, and such broker has no actual knowledge to the contrary, or the Non-United States Holder establishes an exemption. Neither information reporting nor backup withholding generally will apply to a payment of the proceeds of a disposition of the Notes by or through a foreign office of a foreign broker not subject to the preceding sentence. The Treasury Department recently adopted regulations regarding the withholding and information reporting rules discussed above. In general, the final regulations do not alter the substantive withholding and information reporting requirements but unify current certification procedures and forms and clarify reliance standards. These regulations will become effective for payments made after December 31, 1998, subject to certain transition rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the Non-United States Holder's United States federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. LEGAL MATTERS The legality of the New Notes will be passed upon on behalf of the Company by Howard, Darby & Levin, New York, New York. EXPERTS The consolidated financial statements of Eagle-Picher Industries, Inc. as of and for the year ended November 30, 1997, included in this Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein and have been so included in reliance upon the report of such firm given on their authority as experts in auditing and accounting. The consolidated financial statements of Eagle-Picher Industries, Inc. as of November 30, 1996 and for each of the two years in the period ended November 30, 1996, included in this Prospectus, have been audited by KPMG Peat Marwick LLP, independent auditors, as stated in their report appearing herein, and are given upon the authority of said firm as experts in auditing and accounting. See 'Business -- Change in Independent Auditors.' 130 INDEX TO FINANCIAL STATEMENTS
PAGE ---- Eagle-Picher Industries, Inc. Independent Auditors' Reports......................................................................... F-2 Consolidated Statements of Income (Loss) For the Years Ended November 30, 1997, 1996 and 1995......... F-4 Consolidated Balance Sheets as of November 30, 1997 and 1996.......................................... F-5 Consolidated Statements of Cash Flows For the Years Ended November 30, 1997, 1996 and 1995....................................................................................... F-6 Consolidated Statements of Shareholders' Equity (Deficit) For the Years Ended November 30, 1997, 1996 and 1995............................................................................................. F-7 Notes to Consolidated Financial Statements............................................................ F-8 Condensed Consolidated Statements of Income (Loss) For the Three Months Ended February 28, 1998 and 1997 (Unaudited)..................................................................................... F-23 Condensed Consolidated Balance Sheets as of February 28, 1998 and 1997 (Unaudited)......................................................................................... F-24 Condensed Consolidated Statements of Cash Flows For the Three Months Ended February 28, 1998 and 1997 (Unaudited).......................................................................................... F-25 Notes to Condensed Consolidated Financial Statements (Unaudited)...................................... F-26 Eagle-Picher Holdings, Inc. Independent Auditors' Report.......................................................................... F-28 Balance Sheet and Notes to Balance Sheet as of December 22, 1997...................................... F-29 Condensed Consolidated Statements of Income For the Three Months Ended February 28, 1998 and 1997 (Unaudited).............................................................. F-30 Condensed Consolidated Balance Sheets as of February 28, 1998 and 1997 (Unaudited)......................................................................................... F-31 Condensed Consolidated Statements of Cash Flows For the Three Months Ended February 28, 1998 and 1997 (Unaudited).......................................................................................... F-32 Notes to Condensed Consolidated Financial Statements (Unaudited)...................................... F-33
F-1 INDEPENDENT AUDITORS' REPORT The Board of Directors Eagle-Picher Industries, Inc.: We have audited the accompanying consolidated balance sheet of Eagle-Picher Industries, Inc. and subsidiaries as of November 30, 1997, and the related consolidated statements of loss, shareholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. As discussed in Notes B and C to the consolidated financial statements, effective November 29, 1996, the Company emerged from Chapter 11 of the United States Bankruptcy Code and adopted 'fresh-start' reporting principles in accordance with the American Institute of Certified Public Accountants' Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.' As a result, the consolidated financial statements for the period subsequent to the adoption of fresh-start reporting are presented on a different cost basis than that for prior periods and, therefore, are not comparable. DELOITTE & TOUCHE LLP Cincinnati, Ohio January 15, 1998 F-2 INDEPENDENT AUDITORS' REPORT The Board of Directors Eagle-Picher Industries, Inc.: We have audited the accompanying consolidated balance sheet of Eagle-Picher Industries, Inc. and subsidiaries as of November 30, 1996, and the related consolidated statements of income (loss), shareholders' equity (deficit), and cash flows for each of the years in the two-year period ended November 30, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eagle-Picher Industries, Inc. and subsidiaries as of November 30, 1996, and the results of their operations and their cash flows for each of the years in the two-year period ended November 30, 1996 in conformity with generally accepted accounting principles. As discussed in Notes B and C to the consolidated financial statements, effective November 29, 1996, the Company emerged from chapter 11 of the United States Bankruptcy Code and adopted 'fresh-start' reporting principles in accordance with the American Institute of Certified Public Accountants' Statement of Position 90-7, 'Financial Reporting by Entities in Reorganization under the Bankruptcy Code.' As discussed in Note E to the consolidated financial statements, the Company changed its method of computing LIFO for inventories of boron, germanium and other rare metals in 1996. KPMG PEAT MARWICK LLP Cincinnati, Ohio February 5, 1997 F-3 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEARS ENDED NOVEMBER 30, ------------------------------------- 1997 1996 1995 -------- ---------- ----------- Net sales................................................................ $906,077 $ 891,287 $ 848,548 Operating costs and expenses Cost of products sold............................................... 725,010 716,926 681,373 Selling and administrative.......................................... 77,109 81,505 75,380 Depreciation........................................................ 39,671 30,338 28,296 Amortization of intangibles......................................... 16,318 412 412 Loss on sale of divisions........................................... 2,411 -- -- -------- ---------- ----------- 860,519 829,181 785,461 -------- ---------- ----------- Operating income......................................................... 45,558 62,106 63,087 Adjustment for asbestos litigation....................................... -- 502,197 (1,005,511) Provision for other claims............................................... -- (4,244) -- Interest expense (contractual interest of $9,889 in 1996 and $8,897 in 1995).................................................................. (31,261) (3,083) (1,926) Gain on sale of investment............................................... -- -- 11,505 Other income (expense)................................................... (251) 1,345 199 -------- ---------- ----------- Income (loss) before reorganization items, taxes, extraordinary item and cumulative effect of accounting change................................. 14,046 558,321 (932,646) Fresh start revaluation.................................................. -- 118,684 -- Reorganization items..................................................... -- (2,349) (2,225) -------- ---------- ----------- Income (loss) before taxes, extraordinary item and cumulative effect of accounting change...................................................... 14,046 674,656 (934,871) Income taxes............................................................. 17,900 52,570 9,300 -------- ---------- ----------- Income (loss) before extraordinary item and cumulative effect of accounting change...................................................... (3,854) 622,086 (944,171) Extraordinary item -- gain on discharge of pre-petition liabilities...... -- 1,525,540 -- Cumulative effect of change in accounting for inventories................ -- (1,235) -- -------- ---------- ----------- Net income (loss).............................................. $ (3,854) $2,146,391 $ (944,171) -------- ---------- ----------- -------- ---------- ----------- Income (loss) per share: Income (loss) before extraordinary item and cumulative effect of accounting change................................................. $ (.39) $ 56.34 $ (85.51) Extraordinary item -- gain on discharge of pre-petition liabilities....................................................... -- 138.17 -- Cumulative effect of change in accounting for inventories........... -- (.11) -- -------- ---------- ----------- Net income (loss) per share.............................................. $ (.39) $ 194.40 $ (85.51) -------- ---------- ----------- -------- ---------- -----------
See accompanying notes to consolidated financial statements. F-4 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF DOLLARS)
NOVEMBER 30, -------------------- 1997 1996 -------- -------- ASSETS Current assets: Cash and cash equivalents............................................................ $ 53,739 $ 32,725 Receivables, less allowances of $1,614 in 1997 and $2,233 in 1996.................... 130,927 132,875 Income tax refunds receivable........................................................ 3,025 73,720 Inventories.......................................................................... 92,196 102,901 Prepaid expenses..................................................................... 8,290 8,164 Deferred income taxes................................................................ 13,793 26,351 -------- -------- Total current assets............................................................ 301,970 376,736 -------- -------- Property, plant and equipment Land and land improvements........................................................... 19,832 20,010 Buildings............................................................................ 65,289 67,836 Machinery and equipment.............................................................. 173,909 145,309 Construction in progress............................................................. 20,817 23,196 -------- -------- 279,847 256,351 Less accumulated depreciation............................................................. 36,309 -- -------- -------- Net property, plant and equipment......................................................... 243,538 256,351 -------- -------- Deferred income taxes..................................................................... 98,991 102,133 Reorganization value in excess of amounts allocable to identifiable assets, net of accumulated amortization of $16,284 in 1997............................................. 48,837 65,121 Other assets.............................................................................. 53,545 48,539 -------- -------- Total assets.................................................................... $746,881 $848,880 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable..................................................................... $ 52,886 $ 41,035 Compensation and employee benefits................................................... 22,630 18,127 Long-term debt -- current portion.................................................... 3,403 70,378 Income taxes......................................................................... 2,294 3,649 Reorganization items................................................................. 13,128 13,292 Other accrued liabilities............................................................ 19,661 18,447 -------- -------- Total current liabilities....................................................... 114,002 164,928 -------- -------- Long-term debt, less current portion...................................................... 269,994 316,061 Postretirement benefits other than pensions............................................... 21,681 21,675 Other long-term liabilities............................................................... 5,087 4,409 -------- -------- Total liabilities............................................................... 410,764 507,073 -------- -------- Shareholders' equity Common stock -- no par value Authorized 20,000,000 shares; issued and outstanding 10,000,000 shares............. 341,807 341,807 Retained deficit..................................................................... (3,854) -- Foreign currency translation......................................................... (1,836) -- -------- -------- Total shareholders' equity...................................................... 336,117 341,807 -------- -------- Total liabilities and shareholders' equity...................................... $746,881 $848,880 -------- -------- -------- --------
See accompanying notes to consolidated financial statements. F-5 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
YEARS ENDED NOVEMBER 30, -------------------------------------- 1997 1996 1995 --------- ----------- ---------- Cash flows from operating activities: Net income (loss).................................................. $ (3,854) $ 2,146,391 $ (944,171) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Changes due to reorganization activities: Extraordinary gain on discharge of pre-petition liabilities... -- (1,525,540) -- Fresh start revaluation....................................... -- (118,684) -- Adjustment for asbestos litigation................................. -- (502,197) 1,005,511 Provision for other claims......................................... -- 4,244 -- Cumulative effect of accounting change............................. -- 1,235 -- Depreciation and amortization...................................... 55,989 30,750 28,708 Loss on sale of divisions.......................................... 2,411 -- -- Gain on sale of investment......................................... -- -- (11,505) Changes in assets and liabilities, net of effects of divestitures: Receivables................................................... (14,562) (7,664) (17,914) Income tax refunds receivable................................. 70,695 3,535 (2,156) Inventories................................................... (3,393) (6,283) (1,665) Deferred income taxes......................................... 15,700 29,170 (18,900) Accounts payable.............................................. 16,351 657 (3,373) Other......................................................... 8,546 17,247 (4,079) --------- ----------- ---------- Net cash provided by operating activities.......................... 147,883 72,861 30,456 Cash flows from investing activities: Proceeds from sale of divisions.................................... 39,007 4,248 -- Proceeds from sale of investment................................... -- -- 11,505 Capital expenditures............................................... (51,324) (44,957) (40,558) Other.............................................................. (1,510) (1,061) 340 --------- ----------- ---------- Net cash used in investing activities......................... (13,827) (41,770) (28,713) Cash flows from financing activities: Issuance of long-term debt......................................... 12,997 -- 1,240 Reduction of long-term debt........................................ (126,039) (3,198) (2,259) --------- ----------- ---------- Net cash used in financing activities......................... (113,042) (3,198) (1,019) Cash payments on effective date of plan of reorganization............... -- (88,498) -- --------- ----------- ---------- Net increase (decrease) in cash and cash equivalents.................... 21,014 (60,605) 724 --------- ----------- ---------- Cash and cash equivalents, beginning of year............................ 32,725 93,330 92,606 --------- ----------- ---------- Cash and cash equivalents, end of year.................................. $ 53,739 $ 32,725 $ 93,330 --------- ----------- ---------- --------- ----------- ----------
See accompanying notes to consolidated financial statements F-6 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS OF DOLLARS)
UNREALIZED ADDITIONAL GAIN (LOSS) COMMON PAID-IN RETAINED ON STOCK CAPITAL DEFICIT INVESTMENTS -------- ---------- ----------- ----------- Balance November 30, 1994............................................. $ 13,906 $ 36,378 $(1,317,118) $-- Cumulative effect of change in accounting for marketable securities..................................................... -- -- -- 5,377 Net loss......................................................... -- -- (944,171) -- Realized gain on investment...................................... -- -- -- (5,044) Foreign currency translation..................................... -- -- -- -- -------- ---------- ----------- ----------- Balance November 30, 1995............................................. 13,906 36,378 (2,261,289) 333 Net income....................................................... -- -- 2,146,391 -- Foreign currency translation..................................... -- -- -- -- Unrealized loss on investment.................................... -- -- -- (141) Cancellation of the former common shares per the Plan of Reorganization................................................. (13,906) (36,378) 48,371 -- Issuance of the new common shares per the Plan of Reorganization................................................. 341,807 -- -- -- Fresh-start revaluation.......................................... -- -- 66,527 (192) -------- ---------- ----------- ----------- Balance November 30, 1996............................................. 341,807 -- -- -- Net loss......................................................... -- -- (3,854) -- Foreign currency translation..................................... -- -- -- -- -------- ---------- ----------- ----------- Balance November 30, 1997............................................. $341,807 $ -- $ (3,854) $-- -------- ---------- ----------- ----------- -------- ---------- ----------- ----------- TOTAL FOREIGN SHAREHOLDERS' CURRENCY TREASURY EQUITY TRANSLATION STOCK (DEFICIT) ----------- -------- ------------- Balance November 30, 1994............................................. $ 2,054 $ (1,913) $ (1,266,693) Cumulative effect of change in accounting for marketable securities..................................................... -- -- 5,377 Net loss......................................................... -- -- (944,171) Realized gain on investment...................................... -- -- (5,044) Foreign currency translation..................................... (777) -- (777) ----------- -------- ------------- Balance November 30, 1995............................................. 1,277 (1,913) (2,211,308) Net income....................................................... -- -- 2,146,391 Foreign currency translation..................................... 129 -- 129 Unrealized loss on investment.................................... -- -- (141) Cancellation of the former common shares per the Plan of Reorganization................................................. -- 1,913 -- Issuance of the new common shares per the Plan of Reorganization................................................. -- -- 341,807 Fresh-start revaluation.......................................... (1,406) -- 64,929 ----------- -------- ------------- Balance November 30, 1996............................................. -- -- 341,807 Net loss......................................................... -- -- (3,854) Foreign currency translation..................................... (1,836) -- (1,836) ----------- -------- ------------- Balance November 30, 1997............................................. $(1,836) $ -- $ 336,117 ----------- -------- ------------- ----------- -------- -------------
See accompanying notes to consolidated financial statements. F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company's subsidiaries which are more than 50% owned and controlled. Intercompany accounts and transactions have been eliminated. Investments in unconsolidated affiliates which are at least 20% owned and over which the Company exercises significant influence are accounted for using the equity method. Revenue Recognition Sales are recognized primarily upon shipment of products except for a division of the Company that sells products under contracts and subcontracts with various United States Government agencies and aerospace and defense contractors. On cost-reimbursable contracts, sales are recognized as costs are incurred and include a portion of the total estimated earnings to be realized in the ratio that costs incurred relate to total estimated costs. On fixed-price contracts, sales are recognized using the percentage of completion method, when deliveries are made or upon completion of specified tasks. Contract losses are provided for in their entirety in the period they become known, without regard to the percentage-of-completion. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reporting for Reorganization Eagle-Picher Industries, Inc. (the 'Company') has accounted for all transactions related to its chapter 11 proceedings and reorganization in accordance with Statement of Position 90-7 ('SOP 90-7'), 'Financial Reporting by Entities in Reorganization Under the Bankruptcy Code' (See Note B). The adjustments to reflect the Company's emergence from bankruptcy have been reflected in the accompanying consolidated financial statements. Accordingly, a vertical black line is shown in the consolidated financial statements to separate post-emergence operations from those prior to November 29, 1996 since they have not been prepared on a comparable basis. Cash and Cash Equivalents Marketable securities with original maturities of three months or less are considered to be cash equivalents. Financial Instruments The Company's financial instruments consist primarily of investments in cash and cash equivalents, receivables and certain other assets as well as obligations under accounts payable and long-term debt. The carrying values of these financial instruments, with the exception of long-term debt, approximate fair value (See Note G). Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade accounts receivable. The Company's customer base includes all significant automotive manufacturers and their first tier suppliers in North America and Europe. Although the Company is directly affected by the well-being of the automotive industry, management does not believe significant credit risk existed at November 30, 1997. F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Inventories Inventories are valued at the lower of cost or market, which approximates current replacement cost. A substantial portion of domestic inventories are valued using the last-in first-out ('LIFO') method while the balance of the Company's inventories are valued using the first-in first-out method. Property, Plant and Equipment The Company records investments in property, plant and equipment at cost. The Company provides for depreciation of plant and equipment using the straight-line method over the estimated lives of the assets which are generally 20 to 40 years for buildings and 3 to 10 years for machinery and equipment. Improvements which extend the useful life of property are capitalized, while repair and maintenance costs are charged to operations as incurred. In accordance with fresh-start reporting, property, plant and equipment in service at November 30, 1996 were stated at fair value, based on independent appraisals, as of that date. Intangible Assets Reorganization value in excess of amounts allocable to identifiable assets is being amortized on a straight-line basis over four years. The recoverability of the assets is evaluated periodically based on current and estimated future cash flows of the Company over the remaining amortization period. Prior to the Company's emergence from chapter 11, the excess of cost over net assets acquired was being amortized using the straight-line method primarily over 40 years. Environmental Remediation Costs The Company accrues for environmental expenses resulting from existing conditions relating to past operations when the costs are probable and reasonably estimable. Income Taxes Income taxes are provided based upon income for financial statement purposes. Deferred tax assets and liabilities are established based on the difference between the financial statement and income tax bases of assets and liabilities using existing tax rates. Foreign Currency Translation Assets and liabilities of foreign subsidiaries are translated at current exchange rates, and income and expenses are translated using weighted average exchange rates. Adjustments resulting from translation of financial statements stated in local currencies generally are excluded from the results of operations and accumulated in a separate component of Shareholders' Equity (Deficit). Gains and losses from foreign currency transactions are included in the determination of net income (loss) and were immaterial. Reclassifications Certain prior year amounts have been reclassified to conform with current year consolidated financial statement presentation. B. REORGANIZATION AND EMERGENCE FROM CHAPTER 11 On November 18, 1996, the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division (the 'Bankruptcy Court'), together with the U.S. District Court for the Southern District of Ohio, Western Division (the 'District Court'), confirmed the Third Amended Consolidated Plan of Reorganization (the 'Plan') of the Company and seven of its domestic subsidiaries. The Company F-9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) emerged from bankruptcy on November 29, 1996 (the 'Effective Date'). The Plan was filed jointly by the Company, the Injury Claimants' Committee, which represented approximately 150,000 persons alleging injury due to exposure to asbestos-containing products manufactured by the Company from 1934 until 1971, and the Representative for Future Claimants, which represented future personal injury claimants. The Plan was also supported by the Unsecured Creditors' Committee. The Company's chapter 11 case commenced January 7, 1991 (the 'Petition Date'). The Plan was based on a settlement of $2.0 billion for the Company's liability for present and future asbestos-related personal injury claims. As a result of the settlement, which was reached in the third quarter of 1996, an adjustment was made to the consolidated financial statements to reduce the asbestos liability subject to compromise from $2.5 billion, the amount the Bankruptcy Court had previously estimated as the Company's liability for asbestos-related personal injury claims. The order confirming the Plan contains a permanent injunction which precludes holders of present and future asbestos or lead-related personal injury claims from pursuing their claims against the reorganized Company. Those claims will be channeled to an independently administered qualified settlement trust (the 'PI Trust') which has been established to resolve and satisfy those claims. Asbestos-related property damage claims will be channeled to and resolved by a separate trust (the 'PD Trust'). The Plan provided for distributions of $6.5 million in cash to holders of priority claims, convenience claims, certain secured claims, and administrative expenses. The PD Trust received $3.0 million in cash under the Plan. At November 30, 1996, the Company retained $15.0 million in cash for operating purposes, held $4.2 million in escrow from a division sale and set aside $13.5 million for remaining administrative expenses and unresolved claims. The remaining consideration was distributed to the holders of other general unsecured claims, which totaled approximately $152 million, and the PI Trust. The PI Trust and each holder of a general unsecured claim received a distribution that was proportionate to the size of its claim to the aggregate amount of unsecured claims of $2,152 million. Pursuant to the terms of the Plan, the general unsecured creditors received half of their consideration in cash and half in three-year notes of the reorganized Company. These notes were repaid in 1997. The PI Trust received, in the initial distribution, $51.3 million in cash, $18.1 million in such three-year notes, $69.1 million in Tax Refund notes, which were paid in 1997, $250.0 million in ten-year debentures and all of the outstanding shares of common stock of the reorganized Company. The Company's then existing shareholders received no distribution and their shares were canceled. Following the confirmation of the Plan, one general unsecured creditor and the Unofficial Asbestos Co-defendants' Committee each filed a notice indicating its intention to appeal the confirmation order issued by the Bankruptcy Court and the U.S. District Court. After the end of the Company's fiscal year, the general unsecured creditor formally withdrew its notice of appeal. The Company and the Unofficial Asbestos Co-defendants Committee have submitted appellate briefs to the United States Court of Appeals for the Sixth Circuit with respect to the appeal of the confirmation order. The Company expects a decision on the appeal in fiscal 1998. Further, the Company expects that the order confirming the Plan will be upheld by all appellate courts. It is anticipated that a final distribution will be made to the PI Trust and all unsecured claimants, other than those holding convenience claims, when all claims asserted in the chapter 11 cases (other than those channeled to the PI Trust and the PD Trust) are resolved. Based on certain assumptions, the Company anticipates that holders of general unsecured claims will ultimately receive consideration having a value equal to approximately 37% of their allowed claims. The Plan resulted in the discharge of pre-petition liabilities through the distribution of cash and securities to the PI Trust and the other creditors. The value of the consideration distributed and expected to be distributed to the PI Trust and other unsecured creditors was less than the amount of the allowed claims resulting in an extraordinary gain of approximately $1.5 billion. The net expense resulting from the Company's chapter 11 filings was segregated from expenses related to ordinary operations in the accompanying Consolidated Statements of Income (Loss) and includes the following: F-10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1996 1995 ------------- ----------- (IN THOUSANDS OF DOLLARS) Professional fees............................................................ $ 5,298 $ 7,047 Debt financing costs......................................................... 700 -- Other expenses............................................................... 1,711 181 Interest income.............................................................. (5,360) (5,003) ------------- ----------- $ 2,349 $ 2,225 ------------- ----------- ------------- -----------
Interest income was attributable to the accumulation of cash and cash equivalents subsequent to the petition date. C. FRESH-START REPORTING The Company adopted fresh-start reporting on the Effective Date in accordance with SOP 90-7. Fresh-start reporting requires valuation of assets and liabilities at fair value and valuation of equity based on the appraised reorganization value of the ongoing business. The Company's reorganization value was based on consideration of many factors and several valuation methods, including discounted cash flows and selected comparable publicly traded company multiples. The discounted cash flow approach was based on the Company's forecast of unleveraged, after-tax cash flows calculated for each year over the five-year period from 1997 through 2001. A growth rate of 3.5% was assumed to capitalize cash flows for years after 2001. Amounts were discounted to present value at rates ranging from 11.5% to 15%, which approximate the Company's projected weighted average cost of capital. The present value of future tax benefits was also considered. D. SUBSEQUENT EVENT On December 23, 1997, the PI Trust entered into an agreement (the 'Merger Agreement') to sell its 100% interest in the common equity of the Company to a unit of Granaria Holdings BV of The Netherlands. The transaction, which is subject to certain conditions, is expected to close in February 1998. E. INVENTORIES Inventories consisted of:
1997 1996 ------------- ----------- (IN THOUSANDS OF DOLLARS) Raw materials and supplies................................................... $51,797 $ 50,026 Work-in-process.............................................................. 25,932 34,250 Finished goods............................................................... 14,840 18,625 ------------- ----------- 92,569 102,901 Adjustment to state inventory at LIFO value.................................. (373) -- ------------- ----------- $92,196 $ 102,901 ------------- ----------- ------------- -----------
The percentage of inventories valued using the LIFO method was 81% in 1997 and 74% in 1996. In connection with fresh-start reporting, a new LIFO base layer was established based on inventory levels at November 30, 1996. The effects of liquidations of LIFO inventory quantities carried at lower costs prevailing in prior years were immaterial. Effective December 1, 1995, the Company changed its method of computing LIFO inventories of boron, germanium and other rare metals from a double-extension method to an index method. The Company believes that the index method results in better matching of revenues and expenses. The cumulative effect of the change on prior years was $1.2 million on an after tax basis. The effect of this change was to increase net income $8.1 million in fiscal year 1996. F-11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) F. OTHER ASSETS Other assets consisted of:
1997 1996 ------------- ----------- (IN THOUSANDS OF DOLLARS) Prepaid pension cost -- Note J............................................... $36,621 $34,724 Investments in and receivables from unconsolidated affiliates................ 8,732 3,102 Notes receivable -- Note N................................................... 3,920 2,797 Other........................................................................ 4,272 7,916 ------------- ----------- $53,545 $48,539 ------------- ----------- ------------- -----------
On June 1, 1997, the Company contributed certain of the assets of the former Suspension Systems Division totaling $5.1 million to a joint venture, Eagle-Picher-Boge, L.L.C. ('E-P-Boge'). The Company retained a 45% interest in E-P-Boge and recorded no gain on this transaction. The Company is accounting for this investment in accordance with the equity method. The Company also received a note from E-P-Boge in the amount of $2,827,000. This note is due June 1, 2000, and bears interest of 7.5%. The note is secured by the accounts receivable of E-P-Boge. Included in the Consolidated Statements of Income (Loss) are the following results of the former Suspension Systems Division:
1997 1996 1995 ------- ------- ------- (IN THOUSANDS OF DOLLARS) Net sales............................................................ $10,577 $19,606 $18,681 ------- ------- ------- ------- ------- ------- Operating income (loss).............................................. $ 96 $ (998) $ (506) ------- ------- ------- ------- ------- -------
G. LONG-TERM DEBT AND SHORT-TERM BORROWINGS Credit Agreements On the Effective Date, the Company entered a financing agreement which provides a three-year, $60,000,000 unsecured committed revolving credit facility (the 'Facility'). The Facility expires November 29, 1999 and is available for cash borrowings and issuance of letters of credit. The Facility replaced debtor in possession financing (the 'Debtor in Possession Facility') which provided a $40,000,000 committed revolving credit facility secured by accounts receivable and inventories. There were no cash borrowings under either revolving credit facility at any time during 1997 or 1996. Letters of credit totaling $27,700,000 and $32,200,000 were outstanding at November 30, 1997 and 1996, respectively, leaving the Company with $32,300,000 and $27,800,000, respectively, of borrowing capacity. Fees for letters of credit have declined from 1.5% to 1.25% per annum and commitment fees on the unused portion have declined from .4% to .3% per annum. The Facility contains covenants which limit other debt and asset sales (other than those funding the Divestiture Notes), prohibit dividends and the sale of Company securities by the PI Trust, and require minimum financial coverages and bank approval for certain changes in corporate management and control. The Company was in compliance with the covenants of the Facility at November 30, 1997. It is anticipated, however, that the Facility would be replaced with another financing agreement upon sale of the Company. Several of the Company's foreign subsidiaries have entered into agreements with various banks which provide lines of credit totaling approximately $20,200,000 at November 30, 1997 and $18,100,000 at November 30, 1996. At November 30, 1997, $5,000,000 of borrowings were outstanding leaving $15,200,000 in borrowing capacity. There were no borrowings outstanding on any of these agreements at November 30, 1996. These agreements, of which the substantial majority is committed and unsecured, expire in 1998 and 2001. The annual rates of interest on these lines of credit range from .75% to 1.5% over the banks' base rates. Some have no commitment fees; the fees on the others range from .25% to .65% per annum on the unused portion. These agreements also contain covenants which include F-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) restrictions on dividends and minimum financial requirements. The Company is in compliance with these covenants at November 30, 1997. Long-term debt consisted of:
1997 1996 ------------- ----------- (IN THOUSANDS OF DOLLARS) Senior unsecured sinking fund debentures..................................... $ 250,000 $ 250,000 Divestiture notes............................................................ -- 50,000 Tax refund notes............................................................. -- 69,146 Industrial revenue bonds..................................................... 18,400 10,475 Secured notes................................................................ -- 6,818 Debt of foreign subsidiaries................................................. 4,997 -- ------------- ----------- 273,397 386,439 Less: Current portion.............................................................. 3,403 70,378 ------------- ----------- Long-term debt, less current portion......................................... $ 269,994 $ 316,061 ------------- ----------- ------------- -----------
Long-term debt had estimated fair value of approximately $287,000,000 at November 30, 1997 and the estimated fair value approximated carrying value at November 30, 1996. The estimated fair value of long-term debt was calculated using discounted cash flow analysis based on current rates offered for similar debt issues. Senior Unsecured Sinking Fund Debentures The Company issued Senior Sinking Fund Debentures ('Debentures') to the PI Trust on the Effective Date in the amount of $250 million. The Debentures bear interest of 10% per annum, payable semi-annually, and mature in ten years. The Debentures will have a mandatory sinking fund of $20 million annually in the third through ninth years, with a final payment of $110 million at maturity. Beginning in the third year, the Company has the option to retire additional amounts of principal; however, a premium will be due on the amount in excess of twice the scheduled sinking fund amount. It is anticipated that the Debentures will be retired in conjunction with the Purchase Agreement and the premium for pre-payment will be waived. Divestiture Notes The Divestiture Notes, which were issued to the PI Trust and other unsecured creditors on the Effective Date, were unsecured, bore interest of 9% and were to mature November 29, 1999. These notes were repaid on August 25, 1997, without a penalty. Tax Refund Notes The Company issued Tax Refund Notes in the aggregate principal amount of the expected Federal income tax refund (see Note H), to the PI Trust on the Effective Date. These notes were repaid in 1997 when the Federal income tax refund was received. Industrial Revenue Bonds Certain secured industrial revenue bonds, due in 2002 and 2004, were reinstated at their original terms during the chapter 11 process. The Company issued an additional industrial revenue bond in 1997 in the amount of $8 million which matures in 2012. Generally, the industrial revenue bonds bear interest at variable rates based on the market for similar issues and are secured by letters of credit. F-13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Secured Notes Certain secured notes, which were reissued on the effective date at 10% per annum, were repaid in 1997. The Company paid interest of $31,044,000, $2,767,000 and $1,966,000 during 1997, 1996 and 1995, respectively. Long-term debt is scheduled to mature over the next five years as follows: $3,403,000 in 1998, $20,080,000 in 1999, $20,080,000 in 2000, $21,754,000 in 2001 and $20,080,000 in 2002. Lease Commitments Future minimum rental commitments over the next five years as of November 30, 1997 under noncancellable operating leases, which expire at various dates, are as follows: $3,450,000 in 1998, $2,930,000 in 1999, $2,460,000 in 2000, $1,200,000 in 2001 and $530,000 in 2002. Rental expense in 1997, 1996, 1995 was approximately $4,900,000, $5,000,000 and $4,600,000, respectively. H. INCOME TAXES The following is a summary of the components of income taxes (benefit) from operations and fresh start revaluation in 1996:
1997 1996 1995 ------- ------- ------- (IN THOUSANDS OF DOLLARS) Current: Federal......................................................... $ 1,000 $17,200 $20,900 Foreign......................................................... (600) 4,350 3,400 State and local................................................. 1,800 1,850 3,900 ------- ------- ------- 2,200 23,400 28,200 Deferred: Federal......................................................... 11,300 29,170 (18,900) State and local................................................. 4,400 -- -- ------- ------- ------- 15,700 29,170 (18,900) ------- ------- ------- $17,900 $52,570 $ 9,300 ------- ------- ------- ------- ------- -------
Total income tax benefit for the year ended November 30, 1996 of $117,880,000 consisted of $52,570,000 expense from operations and the fresh-start revaluation, $169,785,000 tax benefit from the extraordinary gain on the discharge of pre-petition liabilities, and $665,000 tax benefit from the cumulative effect of the change in accounting for inventories. The sources of income (loss) before income tax expense (benefit), extraordinary gain on discharge of pre-petition liabilities and cumulative effect of accounting change are as follows:
1997 1996 1995 ------- -------- --------- (IN THOUSANDS OF DOLLARS) United States..................................................... $ 7,873 $665,907 $(941,971) Foreign........................................................... 6,173 8,749 7,100 ------- -------- --------- $14,046 $674,656 $(934,871) ------- -------- --------- ------- -------- ---------
F-14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The differences between the total income tax expense from operations and fresh start revaluation in 1996 and the income tax expense computed using the Federal income tax rate were as follows:
1997 1996 1995 ------- --------- --------- (IN THOUSANDS OF DOLLARS) Income tax expense (benefit) at Federal statutory rate............. $ 4,900 $ 236,130 $(327,200) Change in valuation allowance...................................... 1,200 (187,950) 332,900 Foreign taxes rate differential.................................... (3,800) 900 600 State and local taxes, net of Federal benefit...................... 3,600 1,200 2,500 Non-deductible amortization of reorganization value in excess of amounts allocable to identifiable assets......................... 5,700 -- -- Non-deductible fresh start items................................... -- 4,100 -- Expired tax credits................................................ 5,900 -- -- Other.............................................................. 400 (1,810) 500 ------- --------- --------- Total income tax expense................................. $17,900 $ 52,570 $ 9,300 ------- --------- --------- ------- --------- ---------
Components of deferred tax balances as of November 30 are as follows:
1997 1996 -------- -------- (IN THOUSANDS OF DOLLARS) Deferred tax liabilities: Property, plant and equipment.............................................. $(46,761) $(58,885) Prepaid pension............................................................ (12,817) (12,154) Other...................................................................... (5,735) (6,461) -------- -------- Total deferred tax liabilities........................................ (65,313) (77,500) -------- -------- Deferred tax assets: Notes to former creditors.................................................. 87,500 122,787 Net operating loss carryforwards........................................... 74,142 64,328 Credit carryforwards....................................................... 14,686 20,653 Accrued liabilities........................................................ 14,356 9,851 Postretirement benefit liability........................................... 7,588 7,586 Other...................................................................... 8,067 7,851 -------- -------- Total deferred tax assets............................................. 206,339 233,056 -------- -------- Valuation allowance........................................................ (28,242) (27,072) -------- -------- Net deferred tax assets............................................... $112,784 $128,484 -------- -------- -------- --------
At November 30, 1997, undistributed earnings of foreign subsidiaries totaled $30 million. Deferred tax liabilities have not been recognized for these undistributed earnings because it is management's intention to reinvest such undistributed earnings outside the United States. If all undistributed earnings were remitted to the United States, the amount of incremental United States Federal and foreign income taxes payable, net of foreign tax credits, would be approximately $10.5 million. On the Effective Date, the Company contributed cash, notes and stock to the PI Trust and distributed cash and notes to other unsecured creditors. The distribution of cash and stock resulted in a net operating loss for tax purposes for the fiscal year ended November 30, 1996. A portion of this operating loss was applied to prior years' taxable income according to carryback rules to generate a Federal tax refund of $69,146,000 which was received in 1997. The remainder is carried forward to offset taxable income in future years. Deductions for the notes distributed are taken as the notes are repaid. Net operating loss carryforwards of approximately $161 million and $34 million will expire in 2011 and 2012, respectively. As a result of the net operating loss carried back to obtain a refund, tax credits totaling $9,708,000, which had been previously used to reduce tax liability in the carryback years, were restored and are F-15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) available to offset tax liability in future years. These credits are scheduled to expire in the years 1998 through 2012, but are expected to expire unutilized. Therefore, a provision for these items is included in the valuation allowance. The Company also has available minimum tax credits of approximately $5,000,000 which may be used indefinitely to reduce Federal income tax liability. While the Company was in chapter 11, significant uncertainties existed relating to the amounts of deferred tax benefits that would be realized. Accordingly, the valuation allowance reflected these uncertainties. The Company reversed a significant portion of the valuation allowance upon emergence from chapter 11 when the Company was able to determine more accurately the amounts of the deferred tax benefits. Based on its history of prior years' operations and its expectations for the future, the Company has determined that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax benefits before they expire, excluding the tax credits referred to above. Although the Automotive Segment is susceptible to economic cycles and recessions, the Industrial and Machinery Segments of the Company consist of certain businesses which are not impacted as significantly by economic downturns. The Company paid income taxes, net of refunds received, of $4,300,000 in 1997 (with the exception of the Federal tax refund received of $69,146,000), $17,300,000 in 1996 and $28,800,000 in 1995. I. INCOME (LOSS) PER SHARE The calculation of net income (loss) per share is based upon the average number of shares outstanding. The average number of shares used in the computation of net income (loss) per share was 10,000,000 in 1997 and 11,040,932 in 1996 and 1995. J. RETIREMENT BENEFIT PLANS Substantially all employees of the Company and its subsidiaries are covered by various pension or profit sharing retirement plans. The cost of providing retirement benefits was $1,900,000 in 1997, $2,300,000 in 1996 and $1,900,000 in 1995. Amounts for a supplemental executive retirement plan to provide senior management with benefits in excess of normal pension benefits are included in the cost of providing retirement benefits. Under the plan, annuities are purchased by the Company and distributed to participants on an annual basis. The cost of these annuities was $1,058,000 in 1997, $1,279,000 in 1996 and $964,000 in 1995. The Company's funding policy for defined benefit plans is to fund amounts on an actuarial basis to provide for current and future benefits in accordance with the funding guidelines of ERISA. Plan benefits for salaried employees are based primarily on employees' highest five consecutive years' earnings during the last ten years of employment. Plan benefits for hourly employees typically are based on a dollar unit multiplied by the number of service years. Net periodic pension expense for the Company's defined benefit plans included the following components:
1997 1996 1995 -------- -------- -------- (IN THOUSANDS OF DOLLARS) Service cost-benefits earned during the period...................... $ 4,848 $ 5,497 $ 4,001 Interest cost on projected benefit obligation....................... 14,276 13,701 12,972 Actual gain on plan assets.......................................... (36,544) (29,296) (40,975) Net amortization and deferral....................................... 16,669 10,000 24,336 -------- -------- -------- Net periodic pension cost (income).................................. $ (751) $ (98) $ 334 -------- -------- -------- -------- -------- --------
In addition, in 1997, the Company recognized a curtailment gain of $1,662,000 due to the reduction in active participants in the Company's retirement plans that resulted primarily from the divestiture of divisions. F-16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The plans' assets consist primarily of listed equity securities and publicly traded notes and bonds. The actual net return on plan assets was 15.3% in 1997, 13.5% in 1996 and 21.2% in 1995, and generally reflects the performance of the equity and bond markets. The following table sets forth the plans' funded status and amounts recognized in the Company's Consolidated Balance Sheets at November 30:
1997 1996 --------- --------- (IN THOUSANDS OF DOLLARS) Actuarial present value of: Vested benefit obligation................................................ $(184,123) $(168,896) --------- --------- --------- --------- Accumulated benefit obligation........................................... $(191,148) $(175,191) --------- --------- --------- --------- Projected benefit obligation............................................. $(209,701) $(191,667) Plan assets at fair value..................................................... 250,036 226,391 --------- --------- Projected benefit obligation less than plan assets............................ 40,335 34,724 Unrecognized net gain......................................................... (3,761) -- Unrecognized prior service cost............................................... 47 -- --------- --------- Prepaid pension cost recognized............................................... $ 36,621 $ 34,724 --------- --------- --------- ---------
The discount rate and weighted average rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.0% and 4.2%, and 7.5% and 4.2%, respectively, at November 30, 1997 and 1996, respectively. The expected long-term rate of return on assets was 9.0% in 1997 and in 1996. Upon the adoption of fresh start reporting, all unrecognized items as of November 30, 1996 were recognized and recorded on the Company's Consolidated Balance Sheet. K. EMPLOYEE BENEFITS OTHER THAN PENSIONS In addition to providing pension retirement benefits, the Company makes health care and life insurance benefits available to certain retired employees on a limited basis. Generally, the medical plans pay a stated percentage of medical expenses reduced by deductibles and other coverages. Eligible employees may elect to be covered by these health and life insurance benefits if they reach early or normal retirement age while working for the Company. In most cases, a retiree contribution for health insurance coverage is required. The Company funds these benefit costs primarily on a pay-as-you-go basis. The net amounts funded approximate $1,000,000 on an annual basis. The components of net periodic postretirement benefit cost were as follows:
1997 1996 1995 ------ ------ ------ (IN THOUSANDS OF DOLLARS) Service cost -- benefits earned during the period.......................... $ 554 $ 710 $ 396 Interest cost on accumulated postretirement benefit obligation............. 1,241 1,424 1,202 Amortization of unrecognized net gain...................................... (93) -- (179) ------ ------ ------ Net periodic postretirement benefit cost................................... $1,702 $2,134 $1,419 ------ ------ ------ ------ ------ ------
In addition, in 1997, the Company recognized a curtailment gain of $564,000 due to the reduction in eligible employees that resulted primarily from the divestiture of divisions. F-17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The accumulated postretirement benefit obligation at November 30 consisted of the following components:
1997 1996 ------- ------- (IN THOUSANDS OF DOLLARS) Retirees and dependents........................................................... $10,670 $12,561 Eligible active participants...................................................... 2,074 2,021 Other active participants......................................................... 6,993 7,093 ------- ------- Accumulated postretirement benefit obligation..................................... 19,737 21,675 Unrecognized net gain............................................................. 1,944 -- ------- ------- Accrued postretirement benefit costs.............................................. $21,681 $21,675 ------- ------- ------- -------
Benefit costs were estimated assuming retiree health care costs would initially increase at an 9% annual rate which decreases to an ultimate rate of 6% in 4 years. If this annual trend rate would increase by 1%, the accumulated postretirement obligation as of November 30, 1997 would increase by $2,460,000 with a corresponding increase of $323,000 in the postretirement benefit expense in 1997. The discount rates used in determining the accumulated postretirement obligation at November 30, 1997 and 1996 were 6.5% and 7.0%, respectively. The unrecognized net gain as of November 30, 1996 was recognized and recorded in the Consolidated Balance Sheet per the provisions of fresh-start reporting. L. ASBESTOS LITIGATION AND CLAIMS As discussed in Note B, above, the Plan provides that all present and future asbestos-related personal injury claims will be channeled to and resolved by the PI Trust. Such claims result from exposure to asbestos-containing industrial insulation products that the Company manufactured from 1934 to 1971. The Company expects that the approximately 150,000 such claims that were filed pursuant to the bar date for such claims, and the tens of thousands of such claims that will arise for several decades into the future, will be administered and resolved by such trust. In fact, the Company has learned that the PI Trust began resolving and paying such claims in fiscal 1997. Further, the Company expects that the channeling injunction provided by section 524 of the Bankruptcy Code will prevent any such claimants from prosecuting such claims against the reorganized Company. The Company is not aware of any attempt by any asbestos-related personal injury claimant to nullify the channeling injunction provided by section 524 of the Bankruptcy Code subsequent to the entry of that injunction by the Bankruptcy Court and the District Court in November, 1996. In addition, the Plan also resolved and discharged all asbestos property damage claims against the Company. The class of holders of such claims voted to accept a settlement for such claims that was contained in the Plan. Pursuant to the settlement, the Company has set aside $3 million in cash to fund the PD Trust to resolve such claims. Certain of the holders of such claims will appoint trustees to establish and administer such trust. The Company expects that such trust will be established in due course. Further, the Company expects that an injunction provided by the Plan, which orders all holders of asbestos property claims to pursue such claims solely against the PD Trust, will prevent any such claimants from prosecuting such claims against the reorganized Company. M. ENVIRONMENTAL AND OTHER LITIGATION CLAIMS Most of the pre-petition claims against the Company alleging a right to payment due to environmental and litigation matters were resolved prior to the Effective Date. The holders of those claims which were allowed have received a proportionate distribution of the assets of the estate based on the amount of their claims to the total liabilities of the Company. In addition to the items discussed below, the Company is also involved in routine litigation, environmental proceedings and claims pending with respect to matters arising out of the normal course of business. As of November 30, 1997, the Company has reserved $6.1 million associated with F-18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) environmental remediation activities at some of its current and former sites. In management's opinion, the ultimate liability resulting from all claims, individually or in the aggregate, will not materially affect the Company's consolidated financial position, results of operations or cash flows. Environmental The settlement among the Company, the United States Environmental Protection Agency, and the United States Department of Interior which resolved the majority of the 1,102 proofs of claim timely filed alleging a right to payment because of environmental matters, was approved by the Bankruptcy Court in June, 1996. Certain parties that may be liable at certain of the sites resolved by the settlement appealed such approval. In August 1997, the District Court affirmed the Bankruptcy Court's approval of the settlement. The time within which such affirmance may be appealed has expired without any further appeal having been taken. Thus, the settlement has become final and binding on all parties. One of the significant features of the settlement is the agreement with respect to 'Additional Sites.' Additional Sites are those superfund sites for which the Company's liability allegedly arises as a result of pre-petition waste disposal or recycling. The Company retains all of its defenses, legal or factual, at such sites. However, if the Company is found liable at any Additional Sites or settles any claims for any Additional Sites, the Company is required to pay as if such claims had been resolved in the reorganization under chapter 11. Thus, the Company's liability at Additional Sites will be paid at approximately 37% of any amount due. In fiscal 1997, the Company received notice that it may have liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 at sixteen Additional Sites. The Company believes, after an investigation of these claims, that it has only de minimis liability at thirteen of these sites. Three of the sixteen sites may require expenditures above the de minimis level. The Company has valid legal and factual defenses at these sites and intends to contest vigorously its liability. Lead Chemicals The Plan that was consummated on November 29, 1996 provides that all lead-related personal injury claims that were pending on the Plan's Effective Date and all future lead-related personal injury claims, will be channeled to and resolved by the PI Trust discussed in Notes B and L, above. The Company expects that the channeling injunction provided by section 524 of the Bankruptcy Code will prevent any such claimants from prosecuting such claims against the reorganized Company. The Company is not aware of any attempt by any lead-related personal injury claimant to nullify the channeling injunction provided by section 524 of the Bankruptcy Code subsequent to the entry of that injunction by the Bankruptcy Court and the District Court in November 1996. All claims asserting liability against the Company based on property damage from lead chemicals allegedly manufactured and sold by the Company were disallowed during the reorganization. Other Litigation Claims In May 1997, Caradon Doors and Windows, Inc. ('Caradon') filed a suit against the Company in the U.S. District Court in Atlanta, Georgia alleging breach of contract and asserting contribution rights against the Company. Prior to this suit, Caradon had been found liable to Therma-Tru Corporation ('Therma-Tru') in the amount of approximately $8.8 million for infringing a Therma-Tru patent for plastic door components manufactured by the Company's now divested Plastics Division. Caradon settled the litigation with Therma-Tru and was seeking to recover some or all of its liability from the Company. In May 1997, Therma-Tru also attempted to hold the Company liable for patent infringement for plastic door components that the Plastics Division manufactured and sold to Pease Industries, Inc. ('Pease'). Further, after the Company divested its Plastics Division in July 1997, Therma-Tru attempted to hold the purchaser of the Plastics Division, Cambridge Industries, Inc. ('Cambridge'), liable for infringement for Cambridge's manufacture of door components for Pease after the divestiture, but using the prior technology. The Company had agreed to indemnify Cambridge for those sales. Thus, Therma- F-19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Tru's suit against Cambridge might also be a liability of the Company. The Company estimates that the total damages that Therma-Tru is seeking to recover, jointly and severally, from the Company and Pease in these two suits is approximately $11.4 million. The Company asserted, in a motion filed to dismiss these claims, that all of Caradon's and Therma-Tru's claims had been discharged in the Company's reorganization under chapter 11. On December 24, 1997, the Bankruptcy Court decided that all of Caradon's claim and approximately $9.8 million of Therma-Tru's claim were discharged and could not be asserted against the Company. The Company believes that these decisions will be upheld on appeal. Further, the Company believes that it has valid legal and factual defenses and intends to contest vigorously all such claims, either on appeal or in any proceeding on the approximately $1.6 million of Therma-Tru's claim that was not held to be discharged by the Bankruptcy Court's decision. In December 1997, two distributors of forklift trucks manufactured by the Company's Construction Equipment Division filed suit against the Company and two co-defendants in the Superior Court of Maricopa County, Arizona after such distributors were notified that they would be terminated as distributors. The suit alleges three causes of action, only two of which are against the Company. The suit alleges that the Company violated the Arizona Equipment Dealer Protection Law and breached its implied covenant of good faith and fair dealing. The suit seeks not less than $10 million in damages on each count pled against the Company and not less than $30 million in punitive damages against all three defendants. The Company believes that it has valid legal and factual defenses to the allegations and it intends to contest vigorously this suit. Because the suit has recently been filed, the Company has not been required to answer or otherwise respond to the suit and no legal discovery has begun. N. DIVESTITURES Pursuant to the Plan, the Company sold its Plastics, Transicoil and Fabricon Divisions to fund the repayment of the Divestiture Notes. The Company received net cash proceeds of $39,007,000. The aggregate loss on these transactions was $2,411,000. The Company received a note for $3,719,000 from the buyer of the Fabricon Division, which is included in Other Assets. The note bears interest of 8% per annum and is secured by accounts receivable and inventory. Payments of $300,000 are required on the first and second anniversaries of the note with the balance due on October 31, 2000. The Company remains as guarantor on the lease of the building in which the former Transicoil Division is located, and is liable should the buyer not perform on the lease. The remaining lease payments total approximately $10,100,000 over the lease term which expires in 2005. The Company believes the likelihood of being liable for the lease to be remote. Included in the Consolidated Statements of Income (Loss) are the following results of these divested divisions (excluding net loss on sale of divisions):
1997 1996 1995 ------- -------- -------- (IN THOUSANDS OF DOLLARS) Net sales............................................................ $68,028 $118,508 $126,658 ------- -------- -------- ------- -------- -------- Operating income (loss).............................................. $(1,313) $ 1,732 $ 6,141 ------- -------- -------- ------- -------- --------
O. OTHER INCOME The Company held certain equity investments related to shares of stock in a Canadian mining concern that the Company received in 1990 in settlement of certain indebtedness. The Company had previously deemed the investments to be permanently impaired and had recorded a loss on the investments in the amount of its full book value. Subsequently, the value of the stock increased significantly. These investments were sold in June 1995, resulting in realized gain of $11.5 million. F-20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) P. INDUSTRY SEGMENT INFORMATION The Company is a diversified manufacturer serving global markets and many industries. A general description of the products manufactured and the markets served by the Company's three industry segments is: Industrial Diatomaceous earth products, rubber products, rare metals, fiberglass reinforced plastic parts and industrial chemicals are produced by the Industrial Segment operations serving the food and beverage, recreation, nuclear, telecommunications, electronics, and other industrial markets globally. Sales and operating income (excluding net loss on sale of divisions), respectively, of divested operations included in this Segment were $29,534,000 and $1,500,000 in 1997, $39,344,000 and $1,008,000 in 1996 and $36,236,000 and $1,000,000 in 1995. Machinery The Machinery Segment serves the commercial aerospace, construction, food and beverage and other industrial markets. Its products include earth moving machines, heavy-duty forklift trucks, aerospace and defense batteries and components, metal cleaning and finishing systems and other industrial machinery. Divested operations included in this segment had sales and operating income (excluding net loss on sale of divisions), respectively, of $12,788,000 and $834,000 in 1997, $18,023,000 and $934,000 in 1996 and $14,766,000 and $715,000 in 1995. Automotive The operations in the Automotive Segment provide mechanical, structural, and trim parts for passenger cars, trucks, vans and sport utility vehicles for the original equipment manufacturers and replacement markets. Resources are concentrated in serving the North American, European and Pacific Rim markets. Sales and operating income (loss) (excluding net loss on sale of divisions), respectively, of divested operations and operations contributed to the E-P-Boge joint venture, which are included in the Automotive Segment were $36,284,000 and $(3,551,000) in 1997, $80,747,000 and $(1,208,000) in 1996 and $94,337,000 and $3,920,000 in 1995. Consolidated sales to Ford Motor Company amounted to $170,500,000 in 1997, $167,700,000 in 1996 and $166,800,000 in 1995. No other customer accounted for 10% or more of consolidated sales. Other Information Sales between segments were not material. Research and development costs are expensed as incurred. In fiscal 1997, the Company spent approximately $14,800,000 for research and development and related activities, primarily for the development of new products or the improvement of existing products. Comparable costs were $18,000,000 and $17,300,000 for 1996 and 1995, respectively. United States net sales include export sales to non-affiliated customers of $113,600,000 in 1997, $108,500,000 in 1996 and $92,500,000 in 1995. The Company does not derive more than 10% of its revenues from, nor do 10% of its assets reside in, its foreign operations, which are located primarily in Europe and Mexico. Intercompany transactions with foreign operations are made at established transfer prices. F-21 INDUSTRY SEGMENT INFORMATION FOR THE YEARS ENDED NOVEMBER 30
INDUSTRIAL MACHINERY -------------------------- ----------------------------- 1997 1996 1995 1997 1996 1995 ------ ------ ------ ------ ------ --------- (IN MILLIONS OF DOLLARS) Sales.............................................................. $200.1 $194.1 $160.6 $270.8 $257.6 $ 254.7 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- Operating Income................................................... 15.0 20.6 15.6 20.0 22.5 24.1 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- Depreciation and amortization...................................... 14.4 6.9 6.1 10.3 5.0 4.7 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- Capital expenditures............................................... 10.6 10.8 4.4 5.9 4.5 7.6 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- Identifiable assets................................................ 138.1 146.3 80.6 122.3 136.0 112.0 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- AUTOMOTIVE ------------------------------ 1997 1996 1995 ------ ------ --------- (IN MILLIONS OF DOLLARS) Sales.............................................................. $435.2 $439.6 $ 433.2 ------ ------ --------- ------ ------ --------- Operating Income................................................... 29.7 38.5 42.1 ------ ------ --------- ------ ------ --------- Depreciation and amortization...................................... 30.9 18.7 17.6 ------ ------ --------- ------ ------ --------- Capital expenditures............................................... 34.6 29.5 28.3 ------ ------ --------- ------ ------ --------- Identifiable assets................................................ 274.0 292.8 217.1 ------ ------ --------- ------ ------ ---------
SEGMENT TOTAL CORPORATE -------------------------- ----------------------------- 1997 1996 1995 1997 1996 1995 ------ ------ ------ ------ ------ --------- (IN MILLIONS OF DOLLARS) Sales.............................................................. $906.1 $891.3 $848.5 $ -- $ -- $ -- ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- Operating income (loss)............................................ 64.7 81.6 81.8 (19.1) (19.5) (18.7) ------ ------ ------ ------ ------ ------ Adjustment for asbestos litigation................................. -- 502.2 (1,005.5) Interest expenses.................................................. (31.3) (3.1) (1.9) Other income (expense)............................................. (0.3) (2.9) 11.6 Reorganization items............................................... -- 116.3 (2.2) ------ ------ --------- ------ ------ --------- Income (loss) before taxes......................................... Depreciation and amortization...................................... 55.6 30.6 28.4 0.4 0.2 0.3 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- Capital expenditures............................................... 51.1 44.8 40.3 0.2 0.2 0.3 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- Indentifiable assets............................................... 534.4 575.1 409.7 212.5 273.8 170.4 ------ ------ ------ ------ ------ --------- ------ ------ ------ ------ ------ --------- TOTAL ------------------------------ 1997 1996 1995 ------ ------ --------- (IN MILLIONS OF DOLLARS) Sales.............................................................. $906.1 $891.3 $ 848.5 ------ ------ --------- ------ ------ --------- Operating income (loss)............................................ 45.6 62.1 63.1 Adjustment for asbestos litigation................................. -- 502.2 (1,005.5) Interest expenses.................................................. (31.3) (3.1) (1.9) Other income (expense)............................................. (0.3) (2.9) 11.6 Reorganization items............................................... -- 116.3 (2.2) ------ ------ --------- Income (loss) before taxes......................................... 14.0 674.6(1) (934.9) ------ ------ --------- ------ ------ --------- Depreciation and amortization...................................... 56.0 30.8 28.7 ------ ------ --------- ------ ------ --------- Capital expenditures............................................... 51.3 45.0 40.6 ------ ------ --------- ------ ------ --------- Indentifiable assets............................................... 746.9 848.9 580.1 ------ ------ --------- ------ ------ ---------
- ------------ (1) Before extraordinary gain and cumulative effect of accounting change. F-22 EAGLE-PICHER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) (IN THOUSANDS OF DOLLARS)
THREE MONTHS ENDED FEBRUARY 28, -------------------- 1998 1997 -------- -------- NET SALES................................................................................. $205,842 $223,607 OPERATING COSTS AND EXPENSES Cost of products sold..................................................................... 162,796 180,401 Selling and administrative................................................................ 17,141 19,724 Management compensation expenses.......................................................... 2,056 -- Depreciation.............................................................................. 8,983 10,366 Amortization of intangibles............................................................... 3,839 4,076 -------- -------- 194,815 214,567 Operating income.......................................................................... 11,027 9,040 OTHER INCOME (EXPENSE) Interest expense.......................................................................... (6,940) (8,927) Other income.............................................................................. 820 1,703 -------- -------- INCOME BEFORE TAXES....................................................................... 4,907 1,816 INCOME TAXES.............................................................................. 4,100 3,036 -------- -------- NET INCOME (LOSS)......................................................................... $ 807 $ (1,220) -------- -------- -------- --------
See accompanying notes to condensed consolidated financial statements. F-23 EAGLE-PICHER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS OF DOLLARS)
FEBRUARY 28, -------------------- 1998 1997 -------- -------- ASSETS Current assets: Cash and cash equivalents............................................................ $ 18,967 $ 19,376 Receivables, less allowances......................................................... 135,632 144,805 Income tax refunds receivable........................................................ 2,001 56,814 Inventories: Raw materials and supplies...................................................... 56,970 51,804 Work in process................................................................. 22,569 35,071 Finished goods.................................................................. 15,509 19,245 -------- -------- 95,048 106,120 Prepaid expenses..................................................................... 9,499 9,729 Deferred income taxes................................................................ 19,535 20,575 -------- -------- Total current assets....................................................... 280,682 357,419 Property, plant and equipment............................................................. 239,337 271,181 Less accumulated depreciation........................................................ -- 10,331 -------- -------- Net property, plant and equipment............................................... 239,337 260,850 Deferred income taxes..................................................................... -- 106,078 Excess of acquired net assets over cost................................................... 255,495 -- Reorganization value in excess of amounts allocable to identifiable assets, net of accumulated amortization of $4,071...................................................... -- 61,050 Other assets.............................................................................. 91,625 46,546 -------- -------- Total assets............................................................... $867,139 $831,943 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Accounts payable..................................................................... $ 50,899 $ 39,118 Accrued liabilities.................................................................. 49,931 50,742 Income taxes......................................................................... 6,746 5,176 Current portion -- long-term debt.................................................... 10,656 54,010 -------- -------- Total current liabilities.................................................. 118,232 149,046 Long-term debt -- less current portion.................................................... 536,340 318,160 Deferred income taxes..................................................................... 7,634 -- Other liabilities......................................................................... 24,928 26,095 -------- -------- Total liabilities.......................................................... 687,134 493,301 -------- -------- Shareholder's equity Common shares -- authorized 1,000 shares, issued and outstanding 100 shares.......... 180,005 -- Common shares -- authorized 20,000,000 shares, issued and outstanding 10,000,000 shares.............................................................................. -- 341,807 Foreign currency translation......................................................... -- (1,945) Accumulated deficit Beginning balance............................................................... -- -- Net loss year to date........................................................... -- (1,220) -------- -------- Total shareholder's equity................................................. 180,005 338,642 -------- -------- Total liabilities and shareholder's equity................................. $867,139 $831,943 -------- -------- -------- --------
See accompanying notes to the condensed consolidated financial statements. F-24 EAGLE-PICHER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS OF DOLLARS)
THREE MONTHS ENDED FEBRUARY 28, --------------------- 1998 1997 --------- -------- Cash flows from operating activities: Net income (loss)................................................................... $ 807 $ (1,220) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization....................................................... 12,822 14,442 Changes in assets and liabilities: Receivables.................................................................... (4,705) (11,930) Inventories.................................................................... (2,235) (3,219) Accounts payable............................................................... (2,787) (1,917) Accrued liabilities............................................................ (5,488) 2,176 Income tax refunds receivable.................................................. 1,024 16,906 Deferred taxes................................................................. 2,600 1,831 Other.......................................................................... (11,121) 845 --------- -------- Net cash provided by (used in) operating activities................................. (9,083) 17,914 Cash flows from investing activities: Capital expenditures................................................................ (5,692) (15,857) Other............................................................................... (1,042) (1,183) --------- -------- Net cash used in investing activities............................................... (6,734) (17,040) Cash flows from financing activities: Issuance of long-term debt.......................................................... 524,100 -- Reduction of long-term debt......................................................... (250,000) (16,703) Redemption of common stock.......................................................... (446,638) -- Issuance of common stock............................................................ 180,005 -- Debt issue cost..................................................................... (26,062) -- Other............................................................................... (360) 2,480 --------- -------- Net cash used in financing activities............................................... (18,955) (14,223) Net decrease in cash and cash equivalents................................................ (34,772) (13,349) --------- -------- Cash and cash equivalents, beginning of period........................................... 53,739 32,725 --------- -------- Cash and cash equivalents, end of period................................................. $ 18,967 $ 19,376 --------- -------- --------- -------- Supplemental cash flow information: Cash paid during the three month period: Interest paid.................................................................. $ 6,402 $ 475 Income tax (refunds received net of payments).................................... $ (376) $(15,928)
See accompanying notes to the condensed consolidated financial statements. F-25 EAGLE-PICHER INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A. BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS The unaudited financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included elsewhere in this document for the fiscal year ended November 30, 1997. The financial statements presented herein reflect all adjustments (consisting of normal and recurring accruals) which, in the opinion of management, are necessary to fairly state the results of operations for the three months ended February 28, 1998 and 1997. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. See Note B. B. ACQUISITION OF THE COMPANY On February 24, 1998 ('Closing Date'), Eagle-Picher Industries, Inc. ('Company') was acquired by a subsidiary of Granaria Industries BV, Eagle-Picher Holdings, Inc. ('Parent'), from the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust ('Trust'). The Trust was established pursuant to the Company's Plan of Reorganization upon its emergence from bankruptcy. These unaudited condensed consolidated financial statements as of and for the three months ended February 28, 1998 include the effects of the Acquisition that result as of February 24, 1998, the Closing Date. Accordingly, the condensed consolidated statement of income (loss) for the three months ended February 28, 1998 includes results of operations from (1) December 1, 1997 through February 24, 1998 of the Company prior to the consummation of the Acquisition (for clarity, sometimes referred to herein as the 'Predecessor Company') and (2) February 25 through February 28, 1998 of the Company. The effects of the purchase accounting adjustments on the Company's results of operations for the three months ended February 28, 1998 were immaterial. Upon closing of the acquisition, the Parent received $100 million equity investment from Granaria Industries BV and an equity partner. The Parent also received proceeds approximating $80 million from its offering of preferred stock. These proceeds were invested in the Company, which issued approximately $180 million of common stock to the Parent. The Company also borrowed $225 million in term loans and $79.1 million in revolving credit loans under a syndicated senior secured loan facility, and issued $220 million in senior subordinated notes ('Subordinated Notes'), the proceeds of which were used to redeem the Company's 10% Senior Unsecured Sinking Fund Debentures ('Debentures') and common stock, both held by the Trust. The Company, a wholly-owned subsidiary of the Parent, is the operating entity. The Parent's results of operations and cash flows approximate those of the Company. C. EARNINGS PER SHARE The calculation of net income (loss) per share is based upon the average number of shares outstanding, which was 9,555,560 and 10,000,000 in the three months ended February 28, 1998 and 1997, respectively.
THREE MONTHS ENDED FEBRUARY 28, ---------------------- 1998 1997 -------- ---------- Net income (loss) per share................................ N/M $ (.12) -------- ---------- -------- ----------
F-26 EAGLE-PICHER INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) D. LONG-TERM DEBT On the Closing Date, the Company's existing $60 million unsecured committed revolving credit facility was terminated. It was replaced by a syndicated senior secured loan facility ('Credit Agreement') which provided $225 million in term loans and a $160 million revolving credit facility, of which $79.1 million was drawn at the time of closing. Immediately following the closing, the Company borrowed approximately $28.6 million for use as credit support in the form of letters of credit, leaving approximately $52.3 million in available credit. The Credit Agreement matures February 29, 2004. The Credit Agreement is secured by the capital stock of the Company, up to 65% of the capital stock of foreign subsidiaries and substantially all other property in the United States. Both the Credit Agreement and the Subordinated Notes are guaranteed by certain of the Company's domestic subsidiaries. Long-term debt consisted of:
FEBRUARY 28, ----------------------- 1998 1997 ------ ------ (IN MILLIONS OF DOLLARS) New Credit Agreement: Revolving Credit Facility........................................................ $ 79.1 $ -- Term Loans....................................................................... 225.0 -- Senior Subordinated Notes............................................................. 220.0 -- Senior Unsecured Sinking Fund Debentures.............................................. -- 250.0 Divestiture Notes..................................................................... -- 50.0 Tax Refund Notes...................................................................... -- 52.6 Industrial Revenue Bonds.............................................................. 18.4 10.5 Secured Notes......................................................................... -- 6.7 Debt of Foreign Subsidiaries.......................................................... 4.5 2.4 ------ ------ 547.0 372.2 Less current portion.................................................................. 10.7 54.0 ------ ------ Long-term debt, less current portion.................................................. $536.3 $318.2 ------ ------ ------ ------
E. INCOME TAXES The acquisition of the Company has been treated as a sale of its assets for purposes of income taxes. The deferred tax benefits relating to the Debentures, which were repaid on the Closing Date, and most of the benefits relating to the net operating loss carryforwards will be realized to shelter the gain on the sale of the assets. Any remaining net operating loss carryforwards will be lost. The Company, however, will be liable for approximately $2.0 in alternative minimum taxes and $1.6 million in state income taxes as a result of the transaction. These taxes are recognized as part of the Acquisition adjustments. F. LEGAL MATTERS The Company is involved in routine litigation, environmental proceedings and claims pending with respect to matters arising out of the normal course of business. In management's opinion, the ultimate liability resulting from all claims, individually or in the aggregate, will not materially affect the Company's consolidated financial position, results of operations or cash flows. F-27 INDEPENDENT AUDITORS' REPORT To the Board of Directors Eagle-Picher Holdings, Inc.: We have audited the accompanying balance sheet of Eagle-Picher Holdings, Inc. as of December 22, 1997. This financial statement is the responsibility of Eagle-Picher Holdings, Inc. management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. In our opinion, such balance sheet presents fairly, in all material respects, the financial position of the Company at December 22, 1997, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Cincinnati, Ohio January 15, 1998 F-28 EAGLE-PICHER HOLDINGS, INC. BALANCE SHEET DECEMBER 22, 1997 ASSETS Cash..................................................................................................... $1,000 ------ ------ SHAREHOLDERS' EQUITY Common stock -- authorized 1,000 shares of $.01 par value each; 100 shares issued and outstanding................................................................................. 1 Additional Paid-in-Capital............................................................................... 999 ------ Total............................................................................................... $1,000 ------ ------
- ------------ NOTES TO BALANCE SHEET (1) Eagle-Picher Holdings, Inc. ('Holdings'), a Delaware corporation, was organized on December 22, 1997, and had no operations prior to that date. (2) On December 23, 1997, Holdings and its wholly-owned subsidiary, E-P Acquisition, Inc. ('Acquisition'), approved the merger of Acquisition with and into Eagle-Picher Industries, Inc. In connection with the merger, Holdings will offer $80,000,000 of cumulative redeemable exchangeable preferred stock. F-29 EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS OF DOLLARS)
THREE MONTHS ENDED FEBRUARY 28, -------------------- 1998 1997 -------- -------- NET SALES................................................................................. $205,842 $223,607 OPERATING COSTS AND EXPENSES Cost of products sold..................................................................... 162,796 180,401 Selling and administrative................................................................ 17,141 19,724 Management compensation expenses.......................................................... 2,056 -- Depreciation.............................................................................. 8,983 10,366 Amortization of intangibles............................................................... 3,839 4,076 -------- -------- 194,815 214,567 Operating income.......................................................................... 11,027 9,040 OTHER INCOME (EXPENSE) Interest expense.......................................................................... (6,940) (8,927) Other income.............................................................................. 820 1,703 -------- -------- INCOME BEFORE TAXES....................................................................... 4,907 1,816 INCOME TAXES.............................................................................. 4,100 3,036 -------- -------- NET INCOME................................................................................ $ 803 $ (1,200) -------- -------- -------- --------
See accompanying notes to condensed consolidated financial statements. F-30 EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS)
FEBRUARY 28, -------------------- 1998 1997 -------- -------- ASSETS Current assets: Cash and cash equivalents............................................................ $ 18,968 $ 19,376 Receivables, less allowances......................................................... 135,632 144,805 Income tax refund receivable......................................................... 2,001 56,814 Inventories: Raw materials and supplies...................................................... 56,970 51,804 Work in process................................................................. 22,569 35,071 Finished goods.................................................................. 15,509 19,245 -------- -------- 95,048 106,120 Prepaid expenses..................................................................... 9,499 9,729 Deferred income taxes................................................................ 19,535 20,575 -------- -------- Total current assets............................................................ 280,683 357,419 Property, plant and equipment............................................................. 239,337 271,181 Less accumulated depreciation........................................................ 10,331 -------- -------- Net property, plant and equipment............................................... 255,495 260,850 Excess of acquired net assets over cost................................................... 254,295 -- Other assets.............................................................................. 91,625 107,596 -------- -------- Total assets.................................................................... $867,140 $831,943 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable..................................................................... $ 50,899 $ 39,118 Other accrued liabilities............................................................ 49,931 50,742 Long-term debt -- current portion.................................................... 10,656 54,010 Income taxes......................................................................... 6,746 5,176 -------- -------- Total current liabilities....................................................... 118,232 149,046 Long-term debt -- less current portion.................................................... 536,340 318,160 Deferred income taxes..................................................................... 7,634 -- Other liabilities......................................................................... 24,928 26,095 -------- -------- Series A 11 3/4% Cumulative Exchangeable Preferred Stock; authorized 50,000 shares; issued and outstanding 14,191 shares........................................................... 80,005 -- Shareholders' equity Class A Common stock, authorized 625,001 shares; issued and outstanding 625,001 shares.............................................................................. 55,001 -- Class B Common stock, authorized 374,999 shares; issued and outstanding 374,999 shares.............................................................................. 45,000 -- Common shares -- authorized 20,000,000 shares, issued and outstanding 10,000,000 shares.............................................................................. 341,807 Foreign currency translation......................................................... (1,945) Accumulated deficit -- net loss year to date......................................... (1,220) -------- -------- Total shareholders' equity...................................................... 100,001 338,642 -------- -------- Total liabilities and shareholders' equity...................................... $867,140 $831,943 -------- -------- -------- --------
See accompanying notes to the condensed consolidated financial statements. F-31 EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED FEBRUARY 28, --------------------- 1998 1997 --------- -------- Cash flows from operating activities: Net income.......................................................................... $ 807 $ (1,220) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization....................................................... 12,822 14,442 Changes in assets and liabilities: Receivables.................................................................... (4,705) (11,930) Inventories.................................................................... (2,235) (3,219) Accounts payable............................................................... (2,787) (1,917) Accrued liabilities............................................................ (5,488) 2,176 Income tax refund receivable................................................... 1,024 16,906 Deferred taxes................................................................. 2,600 1,831 Other.......................................................................... (11,121) 845 --------- -------- Net cash used in operating activities............................................... (9,083) 17,914 Cash flows from investing activities: Capital expenditures................................................................ (5,692) (15,857) Other............................................................................... (1,042) (1,183) --------- -------- Net cash used in investing activities............................................... (6,734) (17,040) Cash flows from financing activities: Issuance of long-term debt.......................................................... 524,100 -- Reduction of long-term debt......................................................... (250,000) (16,703) Redemption of common stock.......................................................... (446,638) -- Issuance of common stock............................................................ 100,001 -- Issuance of preferred stock......................................................... 80,005 -- Debt issue cost..................................................................... (26,062) -- Other............................................................................... (360) 2,480 --------- -------- Net cash used in financing activities.......................................... (18,954) (14,223) Net decrease in cash and cash equivalents................................................ (34,771) (13,349) --------- -------- Cash and cash equivalents, beginning of period........................................... 53,739 32,775 --------- -------- Cash and cash equivalents, end of period................................................. $ 18,968 $ 19,376 --------- -------- --------- -------- Supplemental cash flow information: Cash paid during the three month period: Interest paid.................................................................. $ 6,402 $ 475 Income tax (refunds received net of payments).................................. $ (376) $(15,928)
See accompanying notes to the condensed consolidated financial statements. F-32 EAGLE-PICHER HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A. BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS The unaudited financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included elsewhere in this document for the fiscal year ended November 30, 1997. The financial statements presented herein reflect all adjustments (consisting of normal and recurring accruals) which, in the opinion of management, are necessary to fairly state the results of operations for the three month periods ended February 28, 1998 and 1997. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. See Note B. B. ACQUISITION OF THE COMPANY On February 24, 1998 ('Closing Date'), Eagle-Picher Industries, Inc. ('Company') was acquired by a subsidiary of Granaria Industries BV, Eagle-Picher Holdings, Inc. ('Parent'), from the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust ('Trust'). The Trust was established pursuant to the Company's Plan of Reorganization upon its emergence from bankruptcy. These unaudited condensed consolidated financial statements as of and for the three months ended February 28, 1998 include the effects of the Acquisition that result as of February 24, 1998, the Closing Date. Accordingly, the condensed consolidated statement of income (loss) for the three months ended February 28, 1998 includes results of operations from (1) December 1, 1997 through February 24, 1998 of the Company prior to the consummation of the Acquisition (for clarity, sometimes referred to herein as the 'Predecessor Company') and (2) February 25 through February 28, 1998 of the Company. The effects of the purchase accounting adjustments on the Company's results of operations for the three months ended February 28, 1998 were immaterial. Upon closing of the acquisition, the Parent received $100 million equity investment from Granaria Industries BV and an equity partner. The Parent also received proceeds approximating $80 million from its offering of preferred stock. These proceeds were invested in the Company, which issued approximately $180 million of common stock to the Parent. The Company also borrowed $225 million in term loans and $79.1 million in revolving credit loans under a syndicated senior secured loan facility, and issued $220 million in senior subordinated notes ('Subordinated Notes'), the proceeds of which were used to redeem the Company's 10% Senior Unsecured Sinking Fund Debentures ('Debentures') and common stock, both held by the Trust. The Company, which is the operating entity, is a wholly-owned subsidiary of the Parent. The Parent's results of operations and cash flows approximate those of the Company. C. EARNINGS PER SHARE The calculation of net income (loss) per share is based upon the average number of shares outstanding, which was 9,600,072 and 10,000,000 in the three months ended February 28, 1998 and 1997, respectively.
THREE MONTHS ENDED FEBRUARY 28, ---------------------- 1998 1997 --------- --------- Net income (loss) per share........................... N/M $(.12) --------- --------- --------- ---------
F-33 EAGLE-PICHER HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) D. LONG-TERM DEBT On the Closing Date, the Company's existing $60 million unsecured committed revolving credit facility was terminated. It was replaced by a syndicated senior secured loan facility ('Credit Agreement') which provided $225 million in term loans and a $160 million revolving credit facility, of which $79.1 million was drawn at the time of closing. Immediately following the closing, the Company borrowed approximately $28.6 million for use as credit support in the form of letters of credit, leaving approximately $52.3 million in available credit. The Credit Agreement matures February 29, 2004. The Credit Agreement is secured by the capital stock of the Company, up to 65% of the capital stock of foreign subsidiaries and substantially all other property in the United States. Both the Credit Agreement and the Subordinated Notes are guaranteed by certain of the Company's domestic subsidiaries. Long-term debt consisted of:
FEBRUARY 28, ------------------ 1998 1997 ------ ------ (IN MILLIONS OF DOLLARS) New Credit Agreement: Revolving Credit Facility.............................................................. $ 79.1 $ -- Term Loans............................................................................. 225.0 -- Senior Subordinated Notes................................................................... 220.0 -- Senior Unsecured Sinking Fund Debentures.................................................... -- 250.0 Divestiture Notes........................................................................... -- 50.0 Tax Refund Notes............................................................................ -- 52.6 Industrial Revenue Bonds.................................................................... 18.4 10.5 Secured Notes............................................................................... -- 6.7 Debt of Foreign Subsidiaries................................................................ 4.5 2.4 ------ ------ 547.0 372.2 Less current portion........................................................................ 10.7 54.0 ------ ------ Long-term debt, less current portion........................................................ $536.3 $318.2 ------ ------ ------ ------
E. INCOME TAXES The acquisition of the Company has been treated as a sale of its assets for purposes of income taxes. The deferred tax benefits relating to the Debentures, which were repaid on the Closing Date, and most of the benefits relating to the net operating loss carryforwards will be realized to shelter the gain on the sale of the assets. Any remaining net operating loss carryforwards will be lost. The Company, however, will be liable for approximately $2.0 in alternative minimum taxes and $1.6 million in state income taxes as a result of the transaction. These taxes are recognized as part of the Acquisition adjustments. F. LEGAL MATTERS The Company is involved in routine litigation, environmental proceedings and claims pending with respect to matters arising out of the normal course of business. In management's opinion, the ultimate liability resulting from all claims, individually or in the aggregate, will not materially affect the Company's consolidated financial position, results of operations or cash flows. F-34 _____________________________ _____________________________ NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF A TIME SUBSEQUENT TO THE DATE HEREOF OR THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE. TABLE OF CONTENTS
PAGE ---- Available Information....................................................................................................... 3 Summary..................................................................................................................... 4 Risk Factors................................................................................................................ 15 Company History............................................................................................................. 23 The Acquisition............................................................................................................. 23 Use of Proceeds............................................................................................................. 24 The Notes Exchange Offer.................................................................................................... 25 Capitalization.............................................................................................................. 34 Supplemental Guarantor Information.......................................................................................... 36 Selected Historical Condensed Consolidated Financial Information............................................................ 51 Unaudited Pro Forma Consolidated Financial Statements....................................................................... 53 Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 59 Business.................................................................................................................... 66 Industry Overview........................................................................................................... 68 Description of Businesses................................................................................................... 70 Management.................................................................................................................. 87 Executive Compensation...................................................................................................... 88 Security Ownership and Certain Beneficial Owners and Management of Parent................................................... 92 Certain Relationships and Related Transactions.............................................................................. 92 Description of Industrial Revenue Bonds..................................................................................... 93 Description of New Credit Agreement......................................................................................... 93 Description of the Notes.................................................................................................... 95 Description of Preferred Stock.............................................................................................. 122 Description of Exchange Debentures.......................................................................................... 124 Plan of Distribution........................................................................................................ 125 Certain U.S. Federal Income Tax Considerations.............................................................................. 126 Legal Matters............................................................................................................... 130 Experts..................................................................................................................... 130 Index to Financial Statements............................................................................................... F-1
EAGLE-PICHER INDUSTRIES, INC. OFFER TO EXCHANGE ITS 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 FOR ANY AND ALL OF ITS OUTSTANDING 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 ---------------------- PROSPECTUS ---------------------- _____________________________ _____________________________ PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Section 1701.13 of the Ohio General Corporation Law permits an Ohio corporation to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed civil, criminal, administrative, or investigative action, suit or proceeding by reason of the fact that such person is or was a director, officer, employee, or agent of the corporation, or is or was serving as such with respect to another corporation or entity at the request of the corporation, provided that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the company and, with respect to any criminal action or proceeding, without reasonable cause to believe the conduct was unlawful. Where the action or suit is by or in the right of the corporation, the corporation may not indemnify such person for liability in connection with unlawful loans, dividends or distributions; nor may the corporation indemnify such person for any act of negligence or misconduct except as otherwise approved by the Ohio court of common pleas or the court in which the action or suit was brought. The Registrant has provided in its Regulations that its directors and officers will be indemnified and held harmless against all expenses, liability and loss (including attorneys' fees, and, in respect of claims not made by or in the right of the Company, judgments, fines ERISA excise taxes or penalties and amounts paid in settlement) to the fullest extent provided by the law as it exists or may hereafter be amended. Section 1701.13 of the Ohio General Corporation Law and the Regulations of the Registrant also permit the Registrant to purchase insurance for the benefit of any person who is or was a director, officer, employee, or agent of the corporation against any liability incurred by such person, whether or not the corporation would have the power to indemnify such person against such liability. The Registrant has purchased insurance on behalf of its directors and officers, in such amounts as it deems reasonable, against certain liabilities that may be asserted against, or incurred by, such persons in their capacities as directors or officers of Registrant, including liabilities under the federal and state securities laws. Each individual Employment Agreement entered into by Registrant with each Named Executive Officer contains provisions for the indemnification of such Named Executive Officer to the fullest extent permitted or required by the laws of the State of Ohio and for the procurement by Registrant of such insurance as Registrant deems necessary or appropriate to protect Registrant's interest. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits: 2.1 -- Third Amended Plan of Reorganization of Eagle-Picher Industries, Inc. (the 'Company') 2.2 -- Exhibits to Third Amended Plan of Reorganization of the Company 3.1 -- Articles of Incorporation of the Company, as amended 3.2 -- Regulations of the Company 3.3 -- Amended and Restated Certificate of Incorporation of Eagle-Picher Holdings, Inc. 3.4 -- Bylaws of Eagle-Picher Holdings, Inc. 3.5 -- Articles of Incorporation of Daisy Parts, Inc.* 3.6 -- Bylaws of Daisy Parts, Inc.* 3.7 -- Certificate of Incorporation of Eagle-Picher Development Company, Inc.* 3.8 -- Bylaws of Eagle-Picher Development Company, Inc.* 3.9 -- Certificate of Incorporation of Eagle-Picher Far East, Inc.* 3.10 -- Bylaws of Eagle-Picher Far East, Inc.* 3.11 -- Articles of Incorporation of Eagle-Picher Fluid Systems, Inc.* 3.12 -- Bylaws of Eagle-Picher Fluid Systems, Inc.* 3.13 -- Articles of Incorporation of Eagle-Picher Minerals, Inc.* 3.14 -- Bylaws of Eagle-Picher Minerals, Inc.* 3.15 -- Certificate of Formation of Eagle-Picher Technologies, LLC*
II-1 3.16 -- Operating Agreement of Eagle-Picher Technologies, LLC* 3.17 -- Articles of Incorporation of Hillsdale Tool & Manufacturing Co.* 3.18 -- Bylaws of Hillsdale Tool & Manufacturing Co.* 3.19 -- Articles of Incorporation of Michigan Automotive Research Corporation* 3.20 -- Bylaws of Michigan Automotive Research Corporation* 4.1 -- Indenture, dated as of February 24, 1998, between E-P Acquisition, Inc., Eagle-Picher Holdings, Inc. as a Guarantor, the Subsidiary Guarantors (Daisy Parts, Inc. Eagle-Picher Development Company, Inc., Eagle-Picher Far East, Inc., Eagle-Picher Fluid Systems, Inc., Eagle-Picher Minerals, Inc., Eagle-Picher Technologies, LLC, Hillsdale Tool & Manufacturing Co., Michigan Automotive Research Corporation (together, the 'Subsidiary Guarantors' or the 'Domestic Subsidiaries'), and The Bank of New York as Trustee (the 'Trustee') 4.2 -- Cross Reference Table showing the location in the Indenture of the provisions of Sections 310 through 318(a), inclusive, of the Trust Indenture Act of 1939. 4.3 -- First Supplemental Indenture dated as of February 24, 1998, between the Company and the Trustee 4.4 -- Form of Global Note (attached as Exhibit A to the Indenture filed as Exhibit 4.1 to the Registration Statement) 5.1 -- Opinion of Howard, Darby & Levin as to the Legality of the New Notes* 10.1 -- Merger Agreement, dated as of December 23, 1997, among the Company, the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, Eagle-Picher Holdings, Inc. and E-P Acquisition, Inc. 10.2 -- Amendment No. 1 to the Merger Agreement, dated as of February 23, 1998, among the Company, the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, Eagle-Picher Holdings, Inc. and E-P Acquisition, Inc. 10.3 -- Supplemental Executive Retirement Plan of the Company* 10.4 -- Notes Purchase Agreement, dated February 19, 1998, among E-P Acquisition, Inc. the Company, Eagle-Picher Holdings, SBC Warburg Dillon Read and ABN AMRO Incorporated 10.5 -- Assumption Agreement for the Notes Purchase Agreement, dated as of February 24, 1998, between the Company and the Subsidiary Guarantors 10.6 -- Registration Rights Agreement, dated as of February 24, 1998, between E-P Acquisition, SBC Warburg Dillon Read and ABN AMRO Incorporated 10.7 -- Assumption Agreement for the Registration Rights Agreement, dated as of February 24, 1998, of the Company 10.8 -- Credit Agreement, dated as of February 19, 1998, among E-P Acquisition, Inc. (to be merged with and into the Company), Various Lenders from time to time party thereto, ABN AMRO Bank N.V., as Agent (the 'Agent'), PNC Bank, National Association, as Documentation Agent and DLJ Capital Funding, Inc., as Syndication Agent 10.9 -- Assumption Agreement dated as of February 24, 1998, between the Company and the Agent 10.10 -- Security Agreement, dated as of February 24, 1998, among the Company, the Agent and the Domestic Subsidiaries 10.11 -- Holdings Pledge Agreement, dated as of February 24, 1998, between Eagle-Picher Holdings, Inc. and the Agent 10.12 -- Borrower and Subsidiary Pledge Agreement, dated as of February 24, 1998, among the Company, E-P Development, E-P Minerals and the Agent 10.13 -- Holdings Guaranty Agreement, dated as of February 24, 1998, by Eagle-Picher Holdings, Inc., accepted and agreed by the Agent 10.14 -- Subsidiary Guaranty Agreement, dated as of February 24, 1998, by the Domestic Subsidiaries, accepted and agreed by the Agent 10.15 -- Trademark Collateral Agreement, dated February 24, 1998, between the Company and the Agent 10.16 -- Patent Collateral Agreement, dated February 24, 1998, between the Company and the Agent 10.17 -- Copyright Collateral Agreement, dated February 24, 1998, between the Company and the Agent 10.18 -- Subordination Agreement, dated as of February 24, 1998, among E-P Acquisition, Inc., the Company and the Domestic Subsidiaries
II-2 10.19 -- Management Agreement dated as of February 24, 1998 between the Company and Granaria Holdings B.V. 10.20 -- Eagle-Picher Management Trust made February 17, 1998, among Granaria Industries B.V. and Thomas E. Petry, Andries Ruijssenaars and Joel Wyler as trustees (the 'E-P Management Trust')* 10.21 -- Incentive Stock Plan of Eagle-Picher Industries, Inc., effective as of February 25, 1998* 10.22 -- Employment Agreements dated November 29, 1996 between Registrant and each Named Executive Officer* 10.23 -- Amendments dated August 5, 1997 to Employment Agreements between the Company and each Named Executive Officer* 10.24 -- Sales Incentive Program of the Company* 10.25 -- Letter Agreements dated August 5, 1997 between the Company and each Named Executive Officer regarding Short Term Sale Program* 10.26 -- Letter Agreement dated September 12, 1997 between the Company and Carroll D. Curless regarding Sale Incentive Bonus* 10.27 -- Letter Agreements dated February 18, 1998 between the Company and each Named Executive Officer regarding Short Term Sale Program* 10.28 -- Side Letter, dated February 23, 1998, regarding Amendments to the Short Term Sale Program* 11.1 -- Statement re: Computation of Per Share Earnings* 12.1 -- Statement re: Computation of Ratios* 16.1 -- Letter of KPMG Peat Marwick LLP re Change in Certifying Accountant* 21.1 -- Chart of Subsidiaries of the Company 23.1 -- Consent of Deloitte & Touche LLP 23.2 -- Consent of KPMG Peat Marwick LLP 23.3 -- Consent of Howard, Darby & Levin* 24.1 -- Power of Attorney of Directors and Officers (set forth on the signature pages of this Registration Statement) 25.1 -- Statement of Eligibility of Trustee on Form T-1 related to the Notes 27.1 -- Financial Data Schedule* 99.1 -- Letter of Transmittal for the Notes* 99.2 -- Form of Letter of Guaranteed Delivery* (b) Financial Statement Schedules*
- ------------ * To be filed by amendment. ITEM 22. UNDERTAKINGS. (a) Each undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933 (the 'Securities Act'), the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by such registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Each undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the Prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. II-3 (c) Each undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (d) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of each registrant pursuant to the foregoing provisions, or otherwise, such registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by such registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, such registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 9, 1998. EAGLE-PICHER INDUSTRIES, INC. By /s/ ANDRIES RUIJSSENAARS .................................. NAME: ANDRIES RUIJSSENAARS TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ ANDRIES RUIJSSENAARS Director, President and Chief Executive April 9, 1998 ......................................... Officer ANDRIES RUIJSSENAARS /s/ DAVID N. HALL Senior Vice President - Finance April 8, 1998 ......................................... DAVID N. HALL /s/ CARROLL D. CURLESS Vice President and Controller April 8, 1998 ......................................... CARROLL D. CURLESS /s/ JOEL P. WYLER Director April 9, 1998 ......................................... JOEL P. WYLER /s/ THOMAS E. PETRY Director April 9, 1998 ......................................... THOMAS E. PETRY
II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 9, 1998. EAGLE-PICHER HOLDINGS, INC. By /s/ ANDRIES RUIJSSENAARS .................................. NAME: ANDRIES RUIJSSENAARS TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ ANDRIES RUIJSSENAARS Director, President and Chief Executive April 9, 1998 ......................................... Officer ANDRIES RUIJSSENAARS /s/ DAVID N. HALL Senior Vice President - Finance April 8, 1998 ......................................... DAVID N. HALL /s/ CARROLL D. CURLESS Vice President and Controller April 8, 1998 ......................................... CARROLL D. CURLESS /s/ JOEL P. WYLER Chairman of the Board April 9, 1998 ......................................... JOEL P. WYLER /s/ THOMAS E. PETRY Director April 9, 1998 ......................................... THOMAS E. PETRY
II-6 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 10, 1998. DAISY PARTS, INC. By /s/ MICHAEL E. ASLANIAN .................................. NAME: MICHAEL E. ASLANIAN TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ MICHAEL E. ASLANIAN President April 10, 1998 ......................................... MICHAEL E. ASLANIAN /s/ HARRY A. NEELY Treasurer and Director April 8, 1998 ......................................... HARRY A. NEELY /s/ DAVID P. KELLEY Controller April 10, 1998 ......................................... DAVID P. KELLEY /s/ WAYNE R. WICKENS Director April 8, 1998 ......................................... WAYNE R. WICKENS /s/ JAMES A. RALSTON Director April 8, 1998 ......................................... JAMES A. RALSTON
II-7 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 9, 1998. EAGLE-PICHER DEVELOPMENT COMPANY, INC. By /s/ ANDRIES RUIJSSENAARS .................................. NAME: ANDRIES RUIJSSENAARS TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ ANDRIES RUIJSSENAARS President and Director April 9, 1998 ......................................... ANDRIES RUIJSSENAARS /s/ HARRY A. NEELY Treasurer April 8, 1998 ......................................... HARRY A. NEELY /s/ CARROLL D. CURLESS Controller April 8, 1998 ......................................... CARROLL D. CURLESS /s/ JAMES A. RALSTON Director April 8, 1998 ......................................... JAMES A. RALSTON /s/ WAYNE R. WICKENS Director April 8, 1998 ......................................... WAYNE R. WICKENS
II-8 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 9, 1998. EAGLE-PICHER FAR EAST, INC. By /S/ SADAO TAKAHASHI .................................. NAME: SADAO TAKAHASHI TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ SADAO TAKAHASHI President April 9, 1998 ......................................... SADAO TAKAHASHI /s/ HARRY A. NEELY Treasurer April 8, 1998 ......................................... HARRY A. NEELY /s/ CARROLL D. CURLESS Controller April 8, 1998 ......................................... CARROLL D. CURLESS /s/ ANDRIES RUIJSSENAARS Director April 9, 1998 ......................................... ANDRIES RUIJSSENAARS /s/ JAMES A. RALSTON Director April 8, 1998 ......................................... JAMES A. RALSTON /s/ DAVID N. EVANS Director April 8, 1998 ......................................... DAVID N. EVANS
II-9 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 9, 1998. EAGLE-PICHER FLUID SYSTEMS, INC. By /s/ SCOTT F. MALY .................................. NAME: SCOTT F. MALY TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ SCOTT F. MALY President April 9, 1998 ......................................... SCOTT F. MALY /s/ HARRY A. NEELY Treasurer April 8, 1998 ......................................... HARRY A. NEELY /s/ DANIEL T. HOAG Controller April 8, 1998 ......................................... DANIEL T. HOAG /s/ JAMES A. RALSTON Director April 8, 1998 ......................................... JAMES A. RALSTON
II-10 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 8, 1998. EAGLE-PICHER MINERALS, INC. By /s/ WESLEY D. LEE .................................. NAME: WESLEY D. LEE TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ WESLEY D. LEE President April 8, 1998 ......................................... WESLEY D. LEE /s/ HARRY A. NEELY Treasurer April 8, 1998 ......................................... HARRY A. NEELY /s/ NANCY C. REED Controller April 8, 1998 ......................................... NANCY C. REED /s/ ANDRIES RUIJSSENAARS Director April 9, 1998 ......................................... ANDRIES RUIJSSENAARS /s/ JAMES A. RALSTON Director April 8, 1998 ......................................... JAMES A. RALSTON /s/ DAVID N. EVANS Director April 8, 1998 ......................................... DAVID N. EVANS
II-11 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 8, 1998. EAGLE-PICHER TECHNOLOGIES, LLC By /S/ WILLIAM E. LONG .................................. NAME: WILLIAM E. LONG TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ WILLIAM E. LONG President and Director April 8, 1998 ......................................... WILLIAM E. LONG /s/ J.D. SELLER Treasurer, Chief Financial Officer April 8, 1998 ......................................... and Controller J.D. SELLER /s/ PAUL G. KAMINSKI Director April 8, 1998 ......................................... DR. PAUL KAMINSKI Director ......................................... NEIL A. ARMSTRONG /s/ ANDRIES RUIJSSENAARS Director April 9, 1998 ......................................... ANDRIES RUIJSSENAARS /s/ JOEL P. WYLER Director April 9, 1998 ......................................... JOEL P. WYLER
II-12 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 10, 1998. HILLSDALE TOOL & MANUFACTURING CO. By /s/ MICHAEL E. ASLANIAN .................................. NAME: MICHAEL E. ASLANIAN TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ MICHAEL E. ASLANIAN President April 10, 1998 ......................................... MICHAEL E. ASLANIAN /s/ HARRY A. NEELY Treasurer and Director April 8, 1998 ......................................... HARRY A. NEELY /s/ DAVID P. KELLEY Controller April 10, 1998 ......................................... DAVID P. KELLEY /s/ WAYNE R. WICKENS Director April 8, 1998 ......................................... WAYNE R. WICKENS /s/ JAMES A. RALSTON Director April 8, 1998 ......................................... JAMES A. RALSTON
II-13 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 8, 1998. MICHIGAN AUTOMOTIVE RESEARCH CORPORATION By /S/ MICHAEL J. BOERMA .................................. NAME: MICHAEL J. BOERMA TITLE: PRESIDENT POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Andries Ruijssenaars and David N. Hall and each of them, with full power to act alone, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ MICHAEL J. BOERMA President and Director April 8, 1998 ......................................... MICHAEL J. BOERMA /s/ TERENCE J. RHOADES Treasurer and Controller April 8, 1998 ......................................... TERENCE J. RHOADES /s/ WAYNE R. WICKENS Director April 8, 1998 ......................................... WAYNE R. WICKENS /s/ JAMES A. RALSTON Director April 8, 1998 ......................................... JAMES A. RALSTON
II-14 STATEMENT OF DIFFERENCES ------------------------ The registered trademark symbol shall be expressed as ............'r' The section symbol shall be expressed as .........................'SS' EX-2.1 2 EXHIBIT 2.1 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) ) - ------------------------------- THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION [THIS PAGE LEFT BLANK INTENTIONALLY] ARTICLE 1 DEFINITIONS ............................................................... 1 1.1 Defined Terms ................................................... 1 1.1.1 Administrative Expense .................................... 1 1.1.2 Administrative Expense Creditor ........................... 1 1.1.3 Affiliate ................................................. 1 1.1.4 Affiliate Claims and Interests ............................ 1 1.1.5 Agent Bank ................................................ 2 1.1.6 Allowed ................................................... 2 1.1.7 Allowed Amount ............................................ 3 1.1.8 Amended and Restated Articles of Incorporation ............ 3 1.1.9 Amended and Restated Code of Regulations .................. 3 1.1.10 Amplicon Lease Secured Claim ............................. 3 1.1.11 Articles of Incorporation ................................ 3 1.1.12 Asbestos and Lead PI Permanent Channeling Injunction ..... 3 1.1.13 Asbestos and Lead PI Trust Agreement ..................... 4 1.1.14 Asbestos or Lead Contribution Claim ...................... 4 1.1.15 Asbestos PD Trust ........................................ 4 1.1.16 Asbestos PD Trust Agreement .............................. 4 1.1.17 Asbestos PD Trust Funding Obligation ..................... 4 1.1.18 Asbestos PD Trust Share .................................. 4 1.1.19 Asbestos Personal Injury Claim ........................... 4 1.1.20 Asbestos Property Damage Claim ........................... 5 1.1.21 Asbestos Property Damage Contribution Claims ............. 5 1.1.22 Available Cash ........................................... 5 1.1.23 Ballot ................................................... 6 1.1.24 Ballot Date .............................................. 6 1.1.25 Bankruptcy Code .......................................... 6 1.1.26 Bankruptcy Court ......................................... 6 1.1.27 Bankruptcy Rules ......................................... 6 1.1.28 Bearer Unsecured Debt Securities ......................... 6 1.1.29 Board of Directors ....................................... 6 1.1.30 Business Day ............................................. 6 1.1.31 Chapter 11 Cases ......................................... 6 1.1.32 Claim .................................................... 6 1.1.33 Claims Settlement Guidelines ............................. 6 1.1.34 Claims Trading Injunction ................................ 6 1.1.35 Confirmation Date ........................................ 7 1.1.36 Confirmation Deadline .................................... 7 1.1.37 Confirmation Order ....................................... 7 1.1.38 Connecticut Mutual Note Secured Claim .................... 7 1.1.39 Contingent Claim ......................................... 7 1.1.40 Convenience Claim ........................................ 7 1.1.41 Creditor ................................................. 7 1.1.42 Debtors .................................................. 7 1.1.43 Debtors in Possession .................................... 7 1.1.44 Demand ................................................... 8 1.1.45 Designated Real Property Tax Claim ...................... 8
1.1.46 DIP Credit Facility ..................................... 8 1.1.47 DIP Credit Facility Claim ............................... 8 1.1.48 DIP Lenders ............................................. 8 1.1.49 Disallowed Claim ........................................ 8 1.1.50 Disputed Claim .......................................... 8 1.1.51 Disputed Claim Amount ................................... 8 1.1.52 Distribution ............................................ 8 1.1.53 Distribution Amount ..................................... 8 1.1.54 Distribution Value ...................................... 8 1.1.55 District Court .......................................... 8 1.1.56 Divestiture Notes ....................................... 9 1.1.57 Eagle-Picher ............................................ 9 1.1.58 Effective Date .......................................... 9 1.1.59 Encumbrance ............................................. 9 1.1.60 Entity .................................................. 9 1.1.61 Environmental Claim ..................................... 9 1.1.62 Environmental Settlement Agreement ...................... 9 1.1.63 Equity Interest ......................................... 9 1.1.64 Equity Security Holders' Committee ...................... 9 1.1.65 Equity Value: ........................................... 9 1.1.66 Estimated Amount ........................................ 10 1.1.67 Existing Eagle-Picher Common Stock ...................... 10 1.1.68 Final Distribution Date ................................. 10 1.1.69 Final Order ............................................. 10 1.1.70 First Fidelity Group .................................... 10 1.1.71 First Fidelity Lease Secured Claim ...................... 10 1.1.72 Fleet Credit Secured Claim .............................. 10 1.1.73 Future Claimants' Representative ........................ 10 1.1.74 GE Capital Secured Claim ................................ 10 1.1.75 Grove IRB Secured Claim ................................. 11 1.1.76 Henry County IRBs ....................................... 11 1.1.77 Hillsdale ............................................... 11 1.1.78 Houston IRBs ............................................ 11 1.1.79 IBM Credit Corporation Secured Claim .................... 11 1.1.80 Initial Distribution Date ............................... 11 1.1.81 Injury Claimants' Committee ............................. 11 1.1.82 Inter-Market Note Secured Claim ......................... 11 1.1.83 Internal Revenue Code ................................... 11 1.1.84 IRS ..................................................... 12 1.1.85 Kalkaska Claim .......................................... 12 1.1.86 Lead Personal Injury Claim .............................. 12 1.1.87 Leesburg Note ........................................... 12 1.1.88 Leesburg Secured Claim .................................. 12 1.1.89 Mansfield IRBs .......................................... 12 1.1.90 MARCO ................................................... 12 1.1.91 New Debt Securities ..................................... 12 1.1.92 New Eagle-Picher Common Stock ........................... 12 1.1.93 Northwestern Group ...................................... 12 1.1.94 Northwestern Group Secured Claims ....................... 13 1.1.95 Other Product Liability Tort Claim ...................... 13
1.1.96 Other Secured Claim ..................................... 13 1.1.97 Penalty Claim ........................................... 13 1.1.99 Petition Date ........................................... 13 1.1.100 PI Protected Party ..................................... 13 1.1.101 PI Trust ............................................... 14 1.1.102 PI Trust Share ......................................... 14 1.1.103 Plan ................................................... 14 1.1.104 Priority Claim ......................................... 14 1.1.105 Pro Rata Share ......................................... 14 1.1.106 Product Liability Tort Claim ........................... 14 1.1.107 Record Date ............................................ 15 1.1.108 Registered Unsecured Debt Securities ................... 15 1.1.109 Related Parties ........................................ 15 1.1.110 Reorganized Debtors .................................... 15 1.1.111 Reorganized Eagle-Picher ............................... 15 1.1.112 Retention Period ....................................... 15 1.1.113 Schedules .............................................. 15 1.1.114 Senior Unsecured Sinking Fund Debentures................ 15 1.1.115 Secured Claim .......................................... 15 1.1.117 Supplemental Severance Program ......................... 16 1.1.118 Tax Claim .............................................. 16 1.1.119 Tax Refund Notes ....................................... 16 1.1.121 Trustees ............................................... 16 1.1.122 Unliquidated Claim ..................................... 16 1.1.123 Unsecured Claim ........................................ 16 1.1.124 Unsecured Creditors' Committee ......................... 16 1.1.125 Unsecured Debt Securities .............................. 16 1.1.126 Unsecured Debt Securities Indenture .................... 16 1.1.127 Unsecured Debt Securities Trustee ...................... 16 1.1.128 Vale EDBs .............................................. 16 1.1.129 Vale EDBs Claims ....................................... 17 1.1.130 Voting Procedures Order ................................ 17 1.2 Other Terms..................................................... 17 1.3 Exhibits........................................................ 17 ARTICLE 2 PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSES AND TAX CLAIMS ......... 18 2.1 Payment of Allowed Administrative Expenses ..................... 18 2.2 Compensation and Reimbursement ................................. 18 2.3 DIP Credit Facility Claim ...................................... 18 2.4 Tax Claims ..................................................... 18 ARTICLE 3 CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS .............. 19 3.1 Summary ........................................................ 19 3.2 Classification and Treatment ................................... 20 3.3 Compromise and Settlement Relating to the Amount of the PI Trust Share........................................................... 32
3.4 Controversy Concerning Impairment............................... 33 ARTICLE 4 MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN ...................... 34 4.1 Modification of the Plan ....................................... 34 4.2 Revocation or Withdrawal ....................................... 34 4.2.1 Right to Revoke ......................................... 34 4.2.2 Effect of Withdrawal or Revocation ...................... 34 4.3 Amendment of Plan Documents .................................... 34 ARTICLE 5 PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS .............................. 35 5.1 Objections to Claims; Prosecution of Disputed Claims 35 5.2 Amendment of Claims Settlement Guidelines ...................... 35 5.3 Distributions on Account of Disputed Claims .................... 35 ARTICLE 6 ACCEPTANCE OR REJECTION OF THE PLAN ...................................... 36 6.1 Impaired Classes to Vote ....................................... 36 6.2 Acceptance by Class of Claims .................................. 36 6.3 Nonconsensual Confirmation ..................................... 36 ARTICLE 7 IMPLEMENTATION OF THE PLAN ............................................... 37 7.1 Amendment of Articles of Incorporation ......................... 37 7.2 Amendment of Code of Regulations ............................... 37 7.3 Distributions under the Plan ................................... 37 7.4 Timing of Distributions under the Plan ......................... 37 7.5 Manner of Payment under the Plan ............................... 37 7.6 Hart-Scott-Rodino Compliance ................................... 38 7.7 Fractional Shares or Other Distributions ....................... 38 7.8 Occurrence of the Confirmation Date ............................ 38 7.9 Occurrence of the Effective Date ............................... 40 7.10 Distribution of Unclaimed Property ............................ 41 7.11 Management of the Reorganized Debtors ......................... 41 7.12 Supplemental Severance Program ................................ 41 7.13 Corporate Action .............................................. 41 7.14 Effectuating Documents and Further Transactions ............... 42 7.15 Dissolution of EDI, Inc. ...................................... 42 7.16 Allocation of Plan Distributions Between Principal and Interest 42 7.17 District Court Approval of the Confirmation Order.............. 42 ARTICLE 8 EXECUTORY CONTRACTS AND UNEXPIRED LEASES ................................. 43 8.1 Assumption of Executory Contracts and Unexpired Leases ......... 43 8.2 Rejection of Executory Contracts and Unexpired Leases .......... 43
8.3 Claims Arising from Rejection or Termination ................... 43 8.4 Previously Scheduled Contracts ................................. 44 8.5 Insurance Policies ............................................. 44 8.5.1 Assumed Insurance Policies ............................... 44 8.5.2 Rejected Insurance Agreements ............................ 44 8.5.3 Reservation of Rights .................................... 44 8.6 Indemnification and Reimbursement Obligations .................. 44 8.7 Compensation and Benefit Programs .............................. 45 ARTICLE 9 RETENTION OF JURISDICTION ................................................ 46 ARTICLE 10 TRANSFERS OF PROPERTY TO AND ASSUMPTION OF CERTAIN LIABILITIES BY THE PI TRUST ............................................................. 48 10.1 Transfer of Certain Property to the PI Trust .................. 48 10.1.1 Transfer of Books and Records .......................... 48 10.1.2 Transfer of Certain Insurance Rights ................... 48 10.1.3 Transfer of Plan Consideration ......................... 48 10.2 Assumption of Certain Liabilities by the PI Trust.............. 49 10.3 Certain Property Held in Trust by the Reorganized Debtors ..... 49 10.4 Authority of the Debtors ...................................... 49 ARTICLE 11 TRANSFERS OF PROPERTY TO AND ASSUMPTION OF CERTAIN LIABILITIES BY THE ASBESTOS PD TRUST .................................................... 50 11.1 Transfer of Certain Property to the Asbestos PD Trust ......... 50 11.2 Assumption of Certain Liabilities by the Asbestos PD Trust..... 50 11.3 Certain Property Held in Trust by the Reorganized Debtors...... 50 11.4 Authority of the Debtors ...................................... 51 ARTICLE 12 MISCELLANEOUS PROVISIONS ................................................. 52 12.1 Payment of Statutory Fees ..................................... 52 12.2 Discharge of the Debtors ...................................... 52 12.3 Rights of Action .............................................. 52 12.4 Third Party Agreements ........................................ 52 12.5 Dissolution of Committees ..................................... 52 12.6 Exculpation ................................................... 53 12.7 Title to Assets; Discharge of Liabilities ..................... 53 12.8 Surrender and Cancellation of Instruments ..................... 53 12.9 Notices ....................................................... 53 12.10 Headings ..................................................... 55 12.11 Severability ................................................. 55 12.12 Governing Law ................................................ 55 12.13 Filing of Additional Documents ............................... 55
12.14 Compliance with Tax Requirements ............................. 55 12.15 Exemption from Transfer Taxes ................................ 56
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN ) Debtors. ) ) - ---------------------------------- ) THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION The Debtors, Future Claimants' Representative, and Injury Claimants' Committee (collectively, the "Plan Proponents") hereby collectively propose the following third amended consolidated plan of reorganization: ARTICLE 1 DEFINITIONS 1.1 DEFINED TERMS. As used herein, the following terms shall have the respective meanings specified below, unless the context otherwise requires: 1.1.1 Administrative Expense: Any Claim constituting a cost or expense of administration in the Chapter 11 Cases under section 503 of the Bankruptcy Code, including, without express or implied limitation, any actual and necessary costs and expenses of preserving the estate of the Debtors, any actual and necessary costs and expenses of operating the businesses of the Debtors, any indebtedness or obligations incurred or assumed by any of the Debtors in Possession in connection with the conduct of its or their business or for the acquisition or lease of property or the rendition of services, any allowed compensation or reimbursement of expenses under section 503(b)(2)-(5) of the Bankruptcy Code, and any fees or charges assessed against the estate of any of the Debtors under section 1930, chapter 123, title 28, United States Code. 1.1.2 Administrative Expense Creditor: Any Creditor entitled to payment of an Administrative Expense. 1.1.3 Affiliate: Any Entity that is an "affiliate" of any of the Debtors within the meaning of section 101(2) of the Bankruptcy Code except (i) American Imaging Services, Inc., (ii) Tri Sigma Corporation, and (iii) the PI Trust. 1.1.4 Affiliate Claims and Interests: All Claims against any of the Debtors held by an Affiliate or any interest in any of the Debtors other than in Eagle-Picher. 1.1.5 Agent Bank: NBD Bank, N.A., as agent under the DIP Credit Facility. 1.1.6 Allowed: 1.1.6.1 With respect to any Claim other than an Administrative Expense, Asbestos Property Damage Claim, or Product Liability Tort Claim, proof of which was filed within the applicable period of limitation fixed in accordance with Bankruptcy Rule 3003(c)(3) by the Bankruptcy Court, (i) as to which no objection to the allowance thereof has been interposed within the applicable period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules, or a Final Order of the Bankruptcy Court, such Claim to the extent asserted in the proof of such Claim, or (ii) as to which an objection has been interposed, such Claim to the extent that it has been allowed in whole or in part by a Final Order of the Bankruptcy Court. 1.1.6.2 With respect to any Claim other than an Administrative Expense or Product Liability Tort Claim, as to which no proof of claim was filed within the applicable period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules, or a Final Order of the Bankruptcy Court, such Claim to the extent that it has been listed by one of the Debtors in its Schedules as liquidated in amount and not disputed or contingent. 1.1.6.3 With respect to any Claim that is asserted to constitute an Administrative Expense (i) that represents an actual or necessary expense of preserving the estate or operating the business of the Debtors, any such Claim to the extent that the Debtors determine it to constitute an Administrative Expense, (ii) other than with respect to a Claim of a professional person employed under section 327 or 1103 of the Bankruptcy Code that is required to apply to the Bankruptcy Court for the allowance of compensation and reimbursement of expenses pursuant to section 330 of the Bankruptcy Code, that the Debtors do not believe constitutes an Administrative Expense, any such Claim to the extent it is allowed in whole or in part by a Final Order of the Bankruptcy Court and only to the extent that such allowed portion is deemed, pursuant to a Final Order of the Bankruptcy Court, to constitute a cost or expense of administration under sections 503(b) and 507(a)(1) of the Bankruptcy Code, or (iii) that represents a Claim of a professional person employed under section 327 or 1103 of the Bankruptcy Code that is required to apply to the Bankruptcy Court for the allowance of compensation and reimbursement of expenses pursuant to section 330 of the Bankruptcy Code, such Claim to the extent it is allowed by a Final Order of the Bankruptcy Court under section 330 of the Bankruptcy Code. 1.1.6.4 With respect to any Asbestos Personal Injury Claim or Lead Personal Injury Claim, such Claim to the extent that it is allowed in accordance with the procedures established pursuant to the Asbestos and Lead PI Trust Agreement and the claims resolution procedures implemented in accordance therewith. 1.1.6.5 With respect to any Asbestos Property Damage Claim, proof of which was filed within the applicable period of limitation fixed in accordance with Bankruptcy Rule 3003(c)(3) by the Bankruptcy Court, such Claim to the extent that it is allowed in accordance with the claims resolution procedures established for Class 16 of the Plan and such other procedures as may be established in connection with the Asbestos PD Trust. A-2 1.1.6.6 With respect to any Other Product Liability Tort Claim, such Claim to the extent (i) it is timely asserted against the Debtors or the Reorganized Debtors, as the case may be, and (ii) it is litigated to judgment in a liquidated amount by a Final Order of a court of competent jurisdiction or is liquidated by the agreement of the respective Reorganized Debtor and the holder of such Other Product Liability Tort Claim. 1.1.7 Allowed Amount: The lesser of (a) the dollar amount of an Allowed Claim or (b) the Estimated Amount of such Claim. Unless otherwise specified herein or by Final Order of the Bankruptcy Court, the Allowed Amount of an Allowed Claim shall not include interest accruing on such Allowed Claim from and after the Petition Date. 1.1.8 Amended and Restated Articles of Incorporation: The Articles of Incorporation, to be amended and restated in accordance with section 7.1 hereof, in substantially the form of Exhibit "1.1.8" to the Plan. 1.1.9 Amended and Restated Code of Regulations: The Code of Regulations of Eagle-Picher, to be amended and restated in accordance with section hereof, in substantially the form of Exhibit "1.1.9" to the Plan. 1.1.10 Amplicon Lease Secured Claim: All Claims under or relating to that certain (a) Lease Agreement, dated February 2, 1990, between Transicoil Inc. and Amplicon, Inc. and Schedule No. 1 thereto and (b) Lease Guaranty, dated February 2, 1990, by Eagle-Picher, as guarantor, to the extent that such Claims constitute Secured Claims under that certain Stipulation and Order for Adequate Protection, which was "so ordered" by the Bankruptcy Court on or about October 21, 1992. 1.1.11 Articles of Incorporation: The Articles of Incorporation of Eagle-Picher, as such Articles of Incorporation may be amended by the Amended and Restated Articles of Incorporation or otherwise. 1.1.12 Asbestos and Lead PI Permanent Channeling Injunction: An order or orders of the Bankruptcy Court or the District Court permanently and forever staying, restraining, and enjoining any Entity from taking any of the following actions for the purpose of, directly or indirectly, collecting, recovering, or receiving payment of, on, or with respect to any Asbestos Personal Injury Claims or Lead Personal Injury Claims (other than actions brought to enforce any right or obligation under the Plan, any Exhibits to the Plan, or any other agreement or instrument between any of the Debtors or the Reorganized Debtors and the PI Trust, which actions shall be in conformity and compliance with the provisions hereof): a. commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding (including, without express or implied limitation, a judicial, arbitral, administrative, or other proceeding) in any forum against or affecting any PI Protected Party or any property or interests in property of any PI Protected Party; b. enforcing, levying, attaching (including, without express or implied limitation, any prejudgment attachment), collecting, or otherwise recovering by any means or in any manner, whether directly or indirectly, any judgment, award, decree, or other order against any PI Protected Party or any property or interests in property of any PI Protected Party; A-3 c. creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any Encumbrance against any PI Protected Party or any property or interests in property of any PI Protected Party; d. setting off, seeking reimbursement of, contribution from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability owed to any PI Protected Party or any property or interests in property of any PI Protected Party; and e. proceeding in any manner in any place with regard to any matter that is subject to resolution pursuant to the PI Trust, except in conformity and compliance therewith. 1.1.13 Asbestos and Lead PI Trust Agreement: That certain Eagle-Picher Industries, Inc. Personal Injury Settlement Trust Agreement, substantially in the form of Exhibit "1.1.13" to the Plan. 1.1.14 Asbestos or Lead Contribution Claim: Any right to payment, claim, remedy, liability, or Demand now existing or hereafter arising, whether or not such right, claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability, or Demand are known or unknown, that is (i) held by (A) any Entity (other than a director or officer entitled to indemnification pursuant to section of the Plan) who has been, is, or may be a defendant in an action seeking damages for death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to (x) asbestos or asbestos-containing products or (y) products that contain lead chemicals, or (B) any assignee or transferee of such Entity, and (ii) on account of alleged liability of any of the Debtors for reimbursement or contribution of any portion of any damages such Entity has paid or may pay to the plaintiff in such action. 1.1.15 Asbestos PD Trust: The trust established in accordance with the Asbestos PD Trust Agreement. 1.1.16 Asbestos PD Trust Agreement: That certain Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust Agreement, substantially in the form of Exhibit "1.1.16" to the Plan. 1.1.17 Asbestos PD Trust Funding Obligation: Either (a) if Class 16 votes to accept the Plan, cash in the amount of Three Million and 00/100 Dollars ($3,000,000.00) or (b) if Class 16 votes to reject the Plan, the Pro Rata Share with respect to the Asbestos PD Trust Share of the Distribution Value, payable in an amount of the Senior Unsecured Sinking Fund Debentures equal to such Pro Rata Share. 1.1.18 Asbestos PD Trust Share: Either (a) if Class 16 votes to reject the Plan, a value to be established by the Bankruptcy Court as the estimated aggregate value of Asbestos Property Damage Claims as of the Petition Date or (b) if Class 16 votes to accept the Plan, $0.00. 1.1.19 Asbestos Personal Injury Claim: Any right to payment, claim, remedy, liability, or Demand now existing or hereafter arising, whether or not such right, claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, A-4 matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability, or Demand are known or unknown, for, under any theory of law, equity, admiralty, or otherwise, death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to asbestos or asbestos-containing products that were manufactured, sold, supplied, produced, distributed, released, or in any way marketed by any of the Debtors prior to the Petition Date, including, without express or implied limitation, any right, claim, remedy, liability, or Demand for compensatory damages (such as loss of consortium, wrongful death, survivorship, proximate, consequential, general, and special damages) and including punitive damages and any Asbestos or Lead Contribution Claim. 1.1.20 Asbestos Property Damage Claim: Any Claim against any of the Debtors, under any theory of law, equity, admiralty, or otherwise, for damages arising from the presence in buildings or other structures of asbestos or asbestos-containing products that was or were manufactured, sold, supplied, produced, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, or for which any of the Debtors is otherwise liable due to the acts or omissions of any of the Debtors, including, without express or implied limitation, all such Claims for compensatory damages (such as proximate, consequential, general, and special damages) and punitive damages, but excluding Asbestos Property Damage Contribution Claims. 1.1.21 Asbestos Property Damage Contribution Claims: Any Claim against any of the Debtors that is (i) held by (A) any Entity (other than a director or officer entitled to indemnification pursuant to section of the Plan) who has been, is, or may be a defendant in an action seeking damages arising from the presence in buildings or other structures of asbestos or asbestos-containing products that was or were manufactured, sold, supplied, produced, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, or for which any of the Debtors is otherwise liable due to the acts or omissions of any of the Debtors or (B) any assignee or transferee of such Entity, and (ii) on account of alleged liability by any of the Debtors for reimbursement or contribution of any portion of any damages such Entity has paid or may pay to the plaintiff in such action. 1.1.22 Available Cash: All cash (other than restricted cash, including, without express or implied limitation, any cash held in escrow by or on behalf of the Debtors and cash held in the "Divestiture Account" maintained at Star Bank, N.A., Cincinnati) that would be shown on a balance sheet of Eagle-Picher and its consolidated subsidiaries as of the last day of the month in which the Effective Date occurs, prepared in accordance with generally accepted accounting principles, less the sum of the following as of such date: (i) Fifteen Million and 00/100 Dollars ($15,000,000.00), (ii) the Allowed Amount of Allowed Administrative Expenses, (iii) a reasonable estimate by the Debtors of additional Administrative Expenses (such as professional fees and expenses) that may become Allowed thereafter, (iv) the Allowed Amount of Allowed Tax Claims, (v) a reasonable estimate by the Debtors of additional Tax Claims that may become Allowed thereafter, (vi) the DIP Credit Facility Claim, (vii) the Amplicon Lease Secured Claim, (viii) the First Fidelity Lease Secured Claim, (ix) the Fleet Credit Secured Claim, (x) the GE Capital Secured Claim, (xi) the Grove IRB Secured Claim, (xii) the IBM Credit Corporation Secured Claim, (xiii) the Leesburg Secured Claim, (xiv) the Allowed Amount of Other Secured Claims, (xv) a reasonable estimate by the Debtors of additional Other Secured Claims that may become Allowed thereafter, (xvi) the Allowed Amount of Allowed Convenience Claims, (xvii) a reasonable estimate by the Debtors of additional Convenience Claims that may become Allowed thereafter, (xviii) if Class 16 votes to accept the Plan, the Asbestos PD Trust Funding Obligation, and (xix) the amount reasonably estimated by the Debtors to be the cost of curing any defaults under the executory contracts and unexpired leases to be assumed by the Debtors under the Plan. A-5 1.1.23 Ballot: The form or forms distributed to holders of impaired Claims on which is to be indicated the acceptance or rejection of the Plan. 1.1.24 Ballot Date: The date set by the Bankruptcy Court by which all completed ballots must be received. 1.1.25 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended, and as codified in title 11 of the United States Code, as applicable to the Chapter 11 Cases. 1.1.26 Bankruptcy Court: The United States District Court for the Southern District of Ohio, Western Division, having jurisdiction over the Chapter 11 Cases and, to the extent of any reference made pursuant to section 157 of title 28 of the United States Code, the unit of such District Court constituted pursuant to section 151 of title 28 of the United States Code. 1.1.27 Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure, as amended, as applicable to the Chapter 11 Cases, including the Local Rules of the Bankruptcy Court. 1.1.28 Bearer Unsecured Debt Securities: Such of the Henry County IRBs, Houston IRBs, and the Mansfield IRBs that are not registered in the name of the holder (whether fully registered or as to principal only), including such of the Henry County IRBs, Houston IRBs, and the Mansfield IRBs as are registered to "bearer." 1.1.29 Board of Directors: The Board of Directors of Eagle-Picher, as it may exist from time to time. 1.1.30 Business Day: Any day on which commercial banks are required to be open for business in Cincinnati, Ohio. 1.1.31 Chapter 11 Cases: The cases of the Debtors commenced by the filing by each of the Debtors of a voluntary petition for relief under chapter 11 of the Bankruptcy Code on the Petition Date and procedurally consolidated as Case No. 1-91-00100. 1.1.32 Claim: (a) A "claim," as defined in section 101(5) of the Bankruptcy Code, against any of the Debtors or Debtors in Possession, whether or not asserted, whether or not the facts of or legal bases therefor are known or unknown, and specifically including, without express or implied limitation, any rights under sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, any claim of a derivative nature, any potential or unmatured contract claims, and any other Contingent Claim, and (b) any Environmental Claim or Product Liability Tort Claim, whether or not it constitutes a "claim," as defined in section 101(5) of the Bankruptcy Code. 1.1.33 Claims Settlement Guidelines: The settlement guidelines and authority contained in that certain Order Authorizing Debtors to Compromise or Settle Claims and Controversies, entered by the Clerk of the Bankruptcy Court on December 1, 1991, as amended in accordance with section of the Plan. 1.1.34 Claims Trading Injunction: An order or orders of the Bankruptcy Court or the District Court permanently and forever staying, restraining, and enjoining any Entity from, directly or indirectly, purchasing, selling, transferring, assigning, conveying, pledging, or otherwise acquiring or disposing of any Asbestos Personal Injury Claim, Lead Personal Injury Claim, or Asbestos Property Damage Claim; provided, however, that the foregoing shall not apply to (i) the transfer of an Asbestos Personal Injury Claim, Lead Personal Injury Claim, or Asbestos Property A-6 Damage Claim to the holder of an Asbestos or Lead Contribution Claim or Asbestos Property Damage Contribution Claim, as the case may be, solely as a result of such holder's satisfaction of such Asbestos Personal Injury Claim, Lead Personal Injury Claim, or Asbestos Property Damage Contribution Claim, as the case may be, or (ii) the transfer of an Asbestos Personal Injury Claim, Lead Personal Injury Claim, or Asbestos Property Damage Claim by will or under the laws of descent and distribution. Any such order or orders will also provide that any action taken in violation thereof will be void ab initio. 1.1.35 Confirmation Date: The date on which the Confirmation Order is entered by the Clerk of the Bankruptcy Court. 1.1.36 Confirmation Deadline: The date that is one hundred fifty (150) days after the filing of the Plan with the Bankruptcy Court. 1.1.37 Confirmation Order: The order or orders of the Bankruptcy Court confirming the Plan in accordance with the provisions of chapter 11 of the Bankruptcy Code, which will contain, inter alia, the Asbestos and Lead PI Permanent Channeling Injunction and the Claims Trading Injunction. 1.1.38 Connecticut Mutual Note Secured Claim: All Claims under that certain (a) Note in the original principal amount of Six Million One Hundred Fourteen Thousand Six Hundred Fifty-Nine and 00/100 Dollars ($6,114,659.00) issued by Hillsdale to Connecticut Mutual Life Insurance Company on or about July 29, 1988, (b) Agreement, dated July 29, 1988, between Hillsdale and Connecticut Mutual Life Insurance Company, and (c) Security Agreement, dated July 29, 1988, between Hillsdale, as grantor, and Connecticut Mutual Life Insurance Company, as lender and secured party, to the extent that such Claims constitute "Secured Claims" under that certain Stipulation and Order for Adequate Protection, which was "so ordered" by the Bankruptcy Court on November 25, 1991. 1.1.39 Contingent Claim: Any Claim, the liability for which attaches or is dependent upon the occurrence or happening, or is triggered by, an event, which event has not yet occurred, happened, or been triggered, as of the date on which such Claim is sought to be estimated or an objection to such Claim is filed, whether or not such event is within the actual or presumed contemplation of the holder of such Claim and whether or not a relationship between the holder of such Claim and any of the Debtors now or hereafter exists or previously existed. 1.1.40 Convenience Claim: As to each holder of an Unsecured Claim, (a) an Unsecured Claim held by such holder in an Allowed Amount of Five Hundred and 00/100 Dollars ($500.00) or less, or (b) an Unsecured Claim of such holder the Allowed Amount of which has been reduced to Five Hundred and 00/100 Dollars ($500.00) by the election of the holder thereof, as provided on the Ballot. 1.1.41 Creditor: Any Entity that holds a Claim against any of the Debtors or Debtors in Possession. 1.1.42 Debtors: Collectively, Eagle-Picher, Daisy Parts, Inc., Transicoil Inc., MARCO, EDI, Inc., Eagle-Picher Minerals, Inc., and Hillsdale. 1.1.43 Debtors in Possession: The Debtors, each in its respective capacity as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. A-7 1.1.44 Demand: A demand for payment, present or future, that (i) was not a Claim during the Chapter 11 Cases; (ii) arises out of the same or similar conduct or events that gave rise to the Claims addressed by the Asbestos and Lead PI Permanent Channeling Injunction; and (iii) pursuant to the Plan, is to be paid by the PI Trust. 1.1.45 Designated Real Property Tax Claim: Any Claim for taxes assessed against Parcel No. 27-B-040-0-00-001-0 in Lake County, Ohio. 1.1.46 DIP Credit Facility: The postpetition credit facility furnished to the Debtors in Possession by the DIP Lenders, the specific terms of which are set forth in that certain Credit and Agency Agreement, dated May 29, 1991, as extended by that certain First Amendment to Credit Agreement, dated as of February 26, 1992, and as amended and restated by that certain Credit and Agency Agreement, dated November 5, 1992, as amended by that certain First Amendment to Credit Agreement, dated as of August 29, 1994. 1.1.47 DIP Credit Facility Claim: Collectively, all Claims of the DIP Lenders arising under the DIP Credit Facility. 1.1.48 DIP Lenders: NBD Bank, N.A., for itself and as agent, and Star Bank, N.A., Cincinnati, PNC Bank, Ohio, N.A., f/k/a The Central Trust Company, N.A., and The Bank of Nova Scotia. 1.1.49 Disallowed Claim: A Claim that is disallowed in its entirety by a Final Order of the Bankruptcy Court or such other court of competent jurisdiction. 1.1.50 Disputed Claim: A Claim that is neither an Allowed Claim nor a Disallowed Claim; provided, however, that no Environmental Claim shall be considered a Disputed Claim for the purposes of the Plan. 1.1.51 Disputed Claim Amount: The Estimated Amount of a Disputed Claim, or, if no Estimated Amount exists, the amount set forth in the proof of claim relating to such Disputed Claim as the liquidated amount of such Disputed Claim. 1.1.52 Distribution: The payment or distribution under the Plan of property or interests in property to the holders of Allowed Claims (other than Asbestos Personal Injury Claims, Lead Personal Injury Claims, and Asbestos Property Damage Claims) and to the PI Trust and the Asbestos PD Trust. 1.1.53 Distribution Amount: The amount of Distribution Value payable to a holder of an Allowed Environmental Claim pursuant to section of the Plan, an Allowed Unsecured Claim in accordance with section , or a Specified Treatment Claim in accordance with section of the Plan on the Initial Distribution Date or the Final Distribution Date, as the case may be. 1.1.54 Distribution Value: The sum of the Equity Value plus Available Cash plus the aggregate face amount of the New Debt Securities. 1.1.55 District Court: The United States District Court for the Southern District of Ohio, Western Division, having jurisdiction over the Chapter 11 Cases. A-8 1.1.56 Divestiture Notes: Those certain Senior Unsecured Notes in the aggregate principal amount of Fifty Million and 00/100 Dollars ($50,000,000.00), bearing interest at a rate determined by McDonald & Company Securities, Inc., after consultation with the financial advisers to the Unsecured Creditors' Committee, on the Effective Date as the rate such Senior Unsecured Notes should bear in order to have a market value of one hundred percent (100%) of their principal amount on the Effective Date, and substantially in the form of Exhibit "1.1.56" to the Plan. 1.1.57 Eagle-Picher: Eagle-Picher Industries, Inc., an Ohio corporation. 1.1.58 Effective Date: The first Business Day after the date on which all of the conditions precedent to the effectiveness of the Plan specified in Section have been satisfied or waived or, if a stay of the Confirmation Order is in effect on such date, the first Business Day after the expiration, dissolution, or lifting of such stay. 1.1.59 Encumbrance: With respect to any asset, any mortgage, lien, pledge, charge, security interest, assignment, or encumbrance of any kind or nature in respect of such asset (including, without express or implied limitation, any conditional sale or other title retention agreement, any security agreement, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction). 1.1.60 Entity: An individual, corporation, partnership, association, joint stock company, joint venture, estate, trust, unincorporated organization, or government or any political subdivision thereof, or other person or entity. 1.1.61 Environmental Claim: Any Claim as to which the treatment thereof is set forth in (a) the Environmental Settlement Agreement or (b) an agreement by and between any of the Debtors and any party asserting a Claim against any of the Debtors relating to alleged contamination under the federal or state environmental laws or regulations, pursuant to which agreement all or a portion of such Claim (to the extent and subject to the limitations imposed by such agreement) may be asserted by the holder thereof after the Effective Date, to the extent that such agreement is approved and authorized by a Final Order of the Bankruptcy Court or otherwise in accordance with the Claims Settlement Guidelines. 1.1.62 Environmental Settlement Agreement: That certain Settlement Agreement, lodged with the Bankruptcy Court on March 23, 1995, by and between the Debtors and the parties listed on the signatory pages thereof, to the extent that such Settlement Agreement is approved and authorized by the Bankruptcy Court by a Final Order of the Bankruptcy Court. 1.1.63 Equity Interest: Any interest in Eagle-Picher represented by shares of Existing Eagle-Picher Common Stock. 1.1.64 Equity Security Holders' Committee: The Official Committee of Equity Security Holders consisting of Entities appointed as members in the Chapter 11 Cases in accordance with section 1102(a) of the Bankruptcy Code and their duly appointed successors, if any, as the same may be reconstituted from time to time. 1.1.65 Equity Value: The residual value of the equity of Reorganized Eagle-Picher (i.e., after excluding the amount of cash to be distributed under the Plan and debt of the Reorganized Debtors), as determined by McDonald & Company Securities, Inc., after consultation with the financial advisers to the Unsecured Creditors' Committee, as of the date of the A-9 commencement of the hearing on confirmation of the Plan, or as otherwise determined in a factual finding contained in the Confirmation Order. 1.1.66 Estimated Amount: The estimated dollar value of an Unliquidated Claim, Disputed Claim, or Contingent Claim pursuant to section 502(c) of the Bankruptcy Code. 1.1.67 Existing Eagle-Picher Common Stock: Voting common stock of Eagle-Picher, with a par value of $1.25 for each share, authorized pursuant to the Articles of Incorporation as in effect immediately prior to the Effective Date. 1.1.68 Final Distribution Date: A date on or after the Initial Distribution Date and after all Disputed Claims (other than Asbestos Personal Injury Claims, Lead Personal Injury Claims, and Asbestos Property Damage Claims) have become either Allowed Claims or Disallowed Claims that is selected by Reorganized Eagle-Picher in its discretion but, in any event, is no later than thirty (30) days thereafter, or such later date as the Bankruptcy Court may establish, upon request by Reorganized Eagle-Picher, for cause shown. 1.1.69 Final Order: An order as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue, or rehear shall have been waived in writing in form and substance satisfactory to the Debtors or the Reorganized Debtors, as the case may be, and their counsel or, in the event that an appeal, writ of certiorari, or reargument or rehearing thereof has been sought, such order shall have been affirmed by the highest court to which such order was appealed, or certiorari has been denied or from which reargument or rehearing was sought, and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired. 1.1.70 First Fidelity Group: First Fidelity Leasing Group, Inc. 1.1.71 First Fidelity Lease Secured Claim: All Claims under that certain Master Lease Finance Agreement, dated October 31, 1990, between Eagle-Picher and First Fidelity Group, to the extent that such Claims constituted Secured Claims as of November 1, 1991, less the aggregate amount of payments made by Eagle-Picher to First Fidelity Group pursuant to that certain Stipulation and Order Setting Motions of First Fidelity Group, which was "so ordered" by the Bankruptcy Court and entered by the Bankruptcy Court on March 17, 1992. 1.1.72 Fleet Credit Secured Claim: All Claims under certain equipment schedules, dated January 25, 1988, March 24, 1988, May 19, 1988, and May 24, 1988, respectively, between MARCO and Fleet Credit Corporation, to the extent that such Claims constitute Secured Claims under that certain Stipulation and Order Settling Motions of Fleet Credit Corporation, which was "so ordered" by the Bankruptcy Court on July 20, 1992. 1.1.73 Future Claimants' Representative: The Legal Representative for Future Claimants appointed pursuant to the order of the Bankruptcy Court dated October 31, 1991. 1.1.74 GE Capital Secured Claim: The Secured Claim of General Electric Capital Corporation in the amount of Twenty-Two Thousand Four Hundred Fifty-Four and 89/100 Dollars ($22,454.89), pursuant to that certain Stipulation and Order of Dismissal between Eagle-Picher and General Electric Capital Corporation, which was "so ordered" by the Bankruptcy Court on January 18, 1994. A-10 1.1.75 Grove IRB Secured Claim: Claims under that certain (a) Note, dated August 9, 1989, from Eagle-Picher to the Grove Industrial Development Authority of Grove, Oklahoma, in the original principal amount of $450,000.00 and (b) Mortgage, filed on August 9, 1989, in the State of Oklahoma, Delaware County, to the extent that such Claims constitute Secured Claims. 1.1.76 Henry County IRBs: The Henry County Development Authority Industrial Development Revenue Bonds (Eagle-Picher Industries, Inc. Project), Series 1981, in the original principal amount of Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00). 1.1.77 Hillsdale: Hillsdale Tool & Manufacturing Co., a Michigan corporation. 1.1.78 Houston IRBs: The Port Development Corporation Industrial Development Revenue Bonds, Series 1980 (Eagle-Picher Industries, Inc., Project), in the original principal amount of Three Million and 00/100 Dollars ($3,000,000.00). 1.1.79 IBM Credit Corporation Secured Claim: All Claims of IBM Credit Corporation under that certain Term Lease Master Agreement No. ZHOAO43 between The Ohio Rubber Co., a former division of Eagle-Picher, and IBM Credit Corporation, dated May 16, 1989, and the related Term Lease Supplements thereto, to the extent that such Claims constituted Secured Claims as of November 1, 1991, less the aggregate amount of payments made by Eagle-Picher to IBM Credit Corporation pursuant to that certain Stipulation and Order Settling Motion of IBM Credit Corporation, which was "so ordered" by the Bankruptcy Court on January 15, 1992. 1.1.80 Initial Distribution Date: A date on or after the Effective Date that is selected by Reorganized Eagle-Picher in its discretion but, in any event, is within thirty (30) days after the Effective Date, or such later date as the Bankruptcy Court may establish, upon request by Reorganized Eagle-Picher, for cause shown. 1.1.81 Injury Claimants' Committee: The Official Committee of Injury Claimants, consisting of Entities appointed as members in the Chapter 11 Cases in accordance with section 1102(a) of the Bankruptcy Code and their duly appointed successors, if any, as the same may be reconstituted from time to time. 1.1.82 Inter-Market Note Secured Claim: All Claims under that certain (a) Note Agreement, dated July 7, 1988, between Inter-Market Capital Corporation and Eagle-Picher, (b) 9.8820% Promissory Note issued by Eagle-Picher to New England Mutual Life Insurance Company on or about July 7, 1988, and (c) Security Agreement, dated September 14, 1989, between Hillsdale, as grantor and guarantor, and New England Mutual Life Insurance Company, as lender and secured party, to the extent that such Claims constitute "Secured Claims" under that certain Stipulation and Order Providing Adequate Protection of Interests of New England Mutual Life Insurance Company, which was "so ordered" by the Bankruptcy Court on April 7, 1992, as modified and extended by that certain Stipulation Providing Adequate Protection of Interests of Certain Affiliates of Morgens, Waterfall, Vintiadis & Company, Inc., which was approved by the Bankruptcy Court by an order entered on February 14, 1995. 1.1.83 Internal Revenue Code: The Internal Revenue Code of 1986, as amended, and any applicable rulings, regulations (including temporary and proposed regulations) A-11 promulgated thereunder, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or the IRS. 1.1.84 IRS: The United States Internal Revenue Service. 1.1.85 Kalkaska Claim: Allowed Unsecured Claim in the amount of Two Million and 00/100 Dollars ($2,000,000.00) pursuant to a settlement approved by an order of the Bankruptcy Court entered on or about November 24, 1993. 1.1.86 Lead Personal Injury Claim: Any right to payment, claim, remedy, liability, or Demand, now existing or hereafter arising, whether or not such right, claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability, or Demand are known or unknown, for, under any theory of law, equity, admiralty, or otherwise, death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to products that contained lead chemicals that were manufactured, sold, supplied, produced, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, including, without express or implied limitation, any right, claim, remedy, liability, or Demand for compensatory damages (such as loss of consortium, wrongful death, survivorship, proximate, consequential, general, and special damages) and including punitive damages and any Asbestos or Lead Contribution Claim. 1.1.87 Leesburg Note: That certain note, dated as of October 4, 1977, from William Robert Jacobsen to Sun First National Bank of Leesburg, as Trustee of the J.D. Manly Construction Company Living Trust. 1.1.88 Leesburg Secured Claim: All Claims under (a) the Leesburg Note and (b) that certain mortgage, dated October 4, 1977, recorded at O.R. 638, pages 1587 through 1591, inclusive, of the Public Records of Lake County, Florida, as amended by a mortgage amendment, recorded at O.R. 691, page 55, of the Public Records of the Lake County, Florida, which note and mortgage were assumed by Eagle-Picher pursuant to a certain Real Estate Agreement, dated as of May 18, 1979, between Eagle-Picher and William R. Jacobsen. 1.1.89 Mansfield IRBs: The Industrial Development Revenue Bonds (Eagle- Picher Industries, Inc. Project) issued by the City of Mansfield, Ohio, in the original principal amount of Two Million and 00/100 Dollars ($2,000,000.00). 1.1.90 MARCO: Michigan Automotive Research Corporation, a Michigan corporation. 1.1.91 New Debt Securities: Collectively, the Divestiture Notes, the Senior Unsecured Sinking Fund Debentures, and the Tax Refund Notes. 1.1.92 New Eagle-Picher Common Stock: Voting common stock, with no par value, of Reorganized Eagle-Picher from and after the Effective Date after giving effect to the Amended and Restated Articles of Incorporation. 1.1.93 Northwestern Group: Northwestern National Life Insurance Company, Northern Life Insurance Company, The North Atlantic Life Insurance Company of America, and American Investors Life Insurance Company. A-12 1.1.94 Northwestern Group Secured Claims: All Claims under that certain (a) Note Purchase Agreement, dated April 21, 1989, between Eagle-Picher and the Northwestern Group and (b) Security Agreement, dated April 21, 1989, executed by Eagle-Picher in favor of the Northwestern Group, to the extent that such Claims constituted Secured Claims as of March 12, 1991, less the aggregate amount of payments made by Eagle-Picher to the Northwestern Group or any successor in interest to the Northwestern Group pursuant to that certain Stipulation and Order for Adequate Protection Payments to Northwestern Group, which was entered by the Bankruptcy Court on May 9, 1991. 1.1.95 Other Product Liability Tort Claim: Any Product Liability Tort Claim as to which the facts or existence of first become apparent to the holder of such Claim after the Effective Date other than Asbestos Personal Injury Claims and Lead Personal Injury Claims. 1.1.96 Other Secured Claim: Any Secured Claim other than the Amplicon Lease Secured Claim, the Connecticut Mutual Note Secured Claim, the Designated Real Property Tax Claim, the Grove IRB Secured Claim, the First Fidelity Lease Secured Claim, the Fleet Credit Secured Claim, the IBM Credit Corporation Secured Claim, the Inter-Market Note Secured Claim, the Leesburg Secured Claim, the Northwestern Group Secured Claim, and the Vale EDBs. 1.1.97 Penalty Claim: Any Claim (i) for any fine, penalty, collection fee, or forfeiture, or for multiple, exemplary, or punitive damages to the extent that such fine, penalty, forfeiture, or damages are not compensation for actual pecuniary loss suffered by the holder of such Claim, but not any such Claim to the extent that any of the Debtors has agreed to treat such Claim under the Plan as an Unsecured Claim, or (ii) that, pursuant to an order of the Bankruptcy Court, is subordinated for purposes of distribution to all Allowed Unsecured Claims. 1.1.98 Per Share Value: An amount equal to the Equity Value divided by ten million (10,000,000). 1.1.99 Petition Date: January 7, 1991. 1.1.100 PI Protected Party: Any of the following parties: 1.1.100.1 the Debtors; 1.1.100.2 the Reorganized Debtors; 1.1.100.3 an Affiliate; 1.1.100.4 any Entity that, pursuant to the Plan or after the Effective Date, becomes a direct or indirect transferee of, or successor to, any assets of any of the Debtors, the Reorganized Debtors, or the PI Trust (but only to the extent that liability is asserted to exist by reason of it becoming such a transferee or successor); 1.1.100.5 any Entity that, pursuant to the Plan or after the Effective Date, makes a loan to any of the Reorganized Debtors or the PI Trust or to a successor to, or transferee of, any assets of any of the Debtors, the Reorganized Debtors, or the PI Trust (but only to the extent that liability is asserted to exist by reason of such Entity becoming such a lender or to the extent any pledge of assets made in connection with such a loan is sought to be upset or impaired); or A-13 1.1.100.6 any Entity to the extent he, she, or it is alleged to be directly or indirectly liable for the conduct of, Claims against, or Demands on any of the Debtors, the Reorganized Debtors, or the PI Trust on account of Asbestos Personal Injury Claims or Lead Personal Injury Claims by reason of one or more of the following: 1.1.100.6.1 such Entity's ownership of a financial interest in any of the Debtors or the Reorganized Debtors, a past or present affiliate of any of the Debtors or the Reorganized Debtors, or predecessor in interest of any of the Debtors or the Reorganized Debtors; 1.1.100.6.2 such Entity's involvement in the management of any of the Debtors or the Reorganized Debtors or any predecessor in interest of any of the Debtors or the Reorganized Debtors; 1.1.100.6.3 such Entity's service as an officer, director, or employee of any of the Debtors, the Reorganized Debtors, or Related Parties; 1.1.100.6.4 such Entity's provision of insurance to any of the Debtors, the Reorganized Debtors, or Related Parties; or 1.1.100.6.5 such Entity's involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of any of the Debtors, the Reorganized Debtors, or any of the Related Parties. 1.1.101 PI Trust: The trust established in accordance with the Asbestos and Lead PI Trust Agreement. 1.1.102 PI Trust Share: Two Billion and 00/100 Dollars ($2,000,000,000). 1.1.103 Plan: This plan of reorganization, either in its present form or as it may be amended, supplemented, or otherwise modified from time to time, and the exhibits and schedules to the foregoing, as the same may be in effect at the time such reference becomes operative. 1.1.104 Priority Claim: Any Claim to the extent such claim is entitled to priority in right of payment under section 507(a) of the Bankruptcy Code, other than an Administrative Expense, DIP Credit Facility Claim, or Tax Claim. 1.1.105 Pro Rata Share: Amount obtained by dividing the Allowed Amount of an Allowed Claim, or, in the case of the Distribution to the PI Trust or the Asbestos PD Trust, the PI Trust Share or the Asbestos PD Trust Share, respectively, by the sum of (a) the PI Trust Share, the Asbestos PD Trust Share, and all Allowed Unsecured Claims (other than Allowed Convenience Claims), and Allowed Environmental Claims, and (b) the Disputed Claim Amount of all Disputed Unsecured Claims (other than Disputed Convenience Claims). 1.1.106 Product Liability Tort Claim: Any right to payment, claim, remedy, liability, or Demand, now existing or hereafter arising, whether or not such right, claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability, or Demand are known or unknown, A-14 for, under any theory of law, equity, admiralty, or otherwise, death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to any products or byproducts that were manufactured, sold, supplied, produced, released, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, including, without express or implied limitation, any right, claim, remedy, liability, or Demand for compensatory damages (such as loss of consortium, wrongful death, survivorship, proximate, consequential, general, and special damages), including punitive damages, and including, without express or implied limitation, any Asbestos Personal Injury Claim or Lead Personal Injury Claim. 1.1.107 Record Date: The first Business Day that is five (5) days from and after the Confirmation Date. 1.1.108 Registered Unsecured Debt Securities: (a) The 9.5% Sinking Fund Debentures Due March 1, 2017, issued by Eagle-Picher, and (b) such of the Henry County IRBs, Mansfield IRBs, and the Houston IRBs that are not Bearer Unsecured Debt Securities. 1.1.109 Related Parties: (a) Any past or present affiliate of any of the Debtors or the Reorganized Debtors, (b) any predecessor in interest of any of the Debtors or the Reorganized Debtors, or (c) any Entity that owned a financial interest in any of the Debtors or the Reorganized Debtors, any past or present affiliate of any of the Debtors or the Reorganized Debtors, or any predecessor in interest of any of the Debtors or the Reorganized Debtors. 1.1.110 Reorganized Debtors: The Debtors, or any successors in interest thereto, from and after the Effective Date. 1.1.111 Reorganized Eagle-Picher: Eagle-Picher, or any successor in interest thereto, from and after the Effective Date. 1.1.112 Retention Period: Five (5) years from and after the Effective Date, or such shorter period as the Bankruptcy Court may set. 1.1.113 Schedules: The schedules of assets and liabilities and the statements of financial affairs filed by the Debtors in Possession with the Bankruptcy Court, as required by section 521 of the Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules, as such schedules and statements may be amended by the Debtors in Possession from time to time in accordance with Bankruptcy Rule 1009. 1.1.114 Senior Unsecured Sinking Fund Debentures: Those certain Senior Unsecured Sinking Fund Debentures in the aggregate principal amount of Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00), bearing interest at a rate determined by McDonald & Company Securities, Inc. on the Effective Date as the rate such Senior Unsecured Sinking Fund Debentures should bear in order to have a market value of one hundred percent (100%) of their principal amount on the Effective Date, and substantially in the form set forth in Exhibit "1.1.114" to the Plan. 1.1.115 Secured Claim: Any Claim against any of the Debtors to the extent of the value of any interest in property of the estate of such Debtor securing such Claim, except for the DIP Credit Facility Claim. 1.1.116 Specified Treatment Claims: The Kalkaska Claim, the TLG Associates Claim, and any other Unsecured Claim that is (a) Allowed in connection with a settlement A-15 with one or more of the Debtors and (b) for which a minimum and maximum distribution under the Plan are specified. 1.1.117 Supplemental Severance Program: The Supplemental Severance Program approved by the Bankruptcy Court pursuant to its "Order on Motion Re Key Employee Retention, Etc.," entered on May 13, 1991. 1.1.118 Tax Claim: A Claim against any of the Debtors that is of a kind specified in section 507(a)(8) of the Bankruptcy Code. 1.1.119 Tax Refund Notes: Those certain Senior Unsecured Notes in an aggregate principal amount equal to the federal income tax refund estimated by Eagle-Picher to be due and owing to the Debtors as of the Effective Date, bearing interest at a rate determined by McDonald & Company Securities, Inc. on the Effective Date as the rate such Senior Unsecured Notes should bear in order to have a market value of one hundred percent (100%) of their principal amount on the Effective Date, and in substantially the form of Exhibit "1.1.119" to the Plan. 1.1.120 TLG Associates Claim: Allowed Unsecured Claim in the amount of Two Hundred Fifteen Thousand Eight Hundred Thirty-Five and 00/100 ($215,835.00) pursuant to a settlement approved by an order of the Bankruptcy Court dated December 29, 1995. 1.1.121 Trustees: Collectively, the persons serving as trustees of the PI Trust, pursuant to the terms of the Asbestos and Lead PI Trust Agreement. 1.1.122 Unliquidated Claim: Any Claim, the amount of liability for which has not been fixed, whether pursuant to agreement, applicable law, or otherwise, as of the date on which such Claim is sought to be estimated. 1.1.123 Unsecured Claim: Any Claim that is not an Administrative Expense, Tax Claim, Priority Claim, Asbestos Personal Injury Claim, Asbestos Property Damage Claim, Lead Personal Injury Claim, Environmental Claim, Other Product Liability Tort Claim, Designated Real Property Tax Claim, Affiliate Claims and Interests, Penalty Claim, or Secured Claim. 1.1.124 Unsecured Creditors' Committee: The Official Unsecured Creditors' Committee, consisting of Entities appointed as members in the Chapter 11 Cases in accordance with section 1102(a) of the Bankruptcy Code and their duly appointed successors, if any, as the same may be reconstituted from time to time. 1.1.125 Unsecured Debt Securities: Collectively, the Bearer Unsecured Debt Securities and the Registered Unsecured Debt Securities. 1.1.126 Unsecured Debt Securities Indenture: The respective indenture and any other agreements, documents, and instruments governing an issue of Unsecured Debt Securities, as amended, supplemented, or modified as of the date hereof. 1.1.127 Unsecured Debt Securities Trustee: The respective trustee acting pursuant to an Unsecured Debt Securities Indenture. 1.1.128 Vale EDBs: Those certain Ten Million and 00/100 Dollars ($10,000,000.00) in original principal amount of Economic Development Bonds, Series XCVI, issued A-16 by the State of Oregon Economic Development Commission to finance the construction in the Harney and Malheur Counties of Oregon of certain facilities of Eagle-Picher Minerals, Inc. 1.1.129 Vale EDBs Claims: Claims with respect to the Vale EDBs. 1.1.130 Voting Procedures Order: An order of the Bankruptcy Court approving procedures relating to the solicitation and tabulation of votes with respect to the Plan. 1.2 OTHER TERMS. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, the feminine, and the neuter. The words "herein," "hereof," "hereto," "hereunder," and others of similar import refer to the Plan as a whole and not to any particular section, subsection, or clause contained in the Plan. An initially capitalized term used herein that is not defined herein shall have the meaning ascribed to such term, if any, in the Bankruptcy Code, unless the context shall otherwise require. 1.3 EXHIBITS. All Exhibits to the Plan shall be contained in a separate Exhibit Volume, which shall be filed with the Clerk of the Bankruptcy Court not less than twenty (20) days prior to the commencement of the hearing on confirmation of the Plan. Such Exhibits may be inspected in the office of the Clerk of the Bankruptcy Court during normal hours of operation of the Bankruptcy Court. Holders of Claims and Equity Interests may obtain a copy of such Exhibit Volume, once filed, from Eagle-Picher by a written request sent to the following address: Eagle-Picher Industries, Inc. P.O. Box 1847 Cincinnati, OH 45202 A-17 ARTICLE 2 PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSES AND TAX CLAIMS 2.1 PAYMENT OF ALLOWED ADMINISTRATIVE EXPENSES. The Allowed Amount of each Allowed Administrative Expense shall be paid in full, in cash, on the Effective Date; provided, however, that (i) Administrative Expenses representing (a) liabilities incurred in the ordinary course of business by any of the Debtors in Possession or (b) liabilities arising under loans or advances to the Debtors in Possession, whether or not incurred in the ordinary course of business, shall be assumed and paid by the respective Reorganized Debtors in accordance with the terms and conditions of the particular transactions and any agreements relating thereto, (ii) the Bankruptcy Court shall fix in the Confirmation Order a date for the filing of and a date to hear and determine all applications for final allowances of compensation or reimbursement of expenses under section 330 of the Bankruptcy Code, and (iii) if an Administrative Expense, other than a trade payable incurred in the ordinary course of business by any of the Debtors in Possession and other than a DIP Credit Facility Claim, is a Contingent Claim or Unliquidated Claim as of the Effective Date, the Debtors may request the Bankruptcy Court to estimate such Administrative Expense pursuant to section 502(c) of the Bankruptcy Code, in which case the Allowed Amount of such Administrative Expense shall be paid in full, in cash, on the date that an order estimating such Administrative Expense becomes a Final Order. 2.2 COMPENSATION AND REIMBURSEMENT. The Allowed Amount of all Administrative Expenses arising under section 503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy Code shall be paid in full, in cash, (a) upon the later of (i) the Effective Date and (ii) the date upon which the order with respect to the allowance or disallowance of any such Administrative Expense becomes a Final Order, or (b) upon such other terms as may be mutually agreed upon between each Administrative Expense Creditor and the Reorganized Debtors. 2.3 DIP CREDIT FACILITY CLAIM. On the Effective Date, the DIP Credit Facility Claim shall be paid, in full, in cash. Unless otherwise agreed by the DIP Lenders, to the extent that any letters of credit issued pursuant to the DIP Credit Facility remain outstanding on the Effective Date, the Debtors will pay to the Agent Bank, for the ratable benefit of the DIP Lenders, cash in an amount equal to the face amount of such letters of credit, which shall be held by the Agent Bank for the repayment of all amounts due in respect of such letters of credit. 2.4 TAX CLAIMS. Each holder of an Allowed Tax Claim shall be paid the Allowed Amount of its Allowed Tax Claim, at the option of the Reorganized Debtors, either (a) in full, in cash, on the Effective Date or (b) upon such other terms as may be mutually agreed upon between each holder of a Tax Claim and the Reorganized Debtors. A-18 ARTICLE 3 CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS 3.1 SUMMARY. Claims and Equity Interests are classified for all purposes, including, without express or implied limitation, voting, confirmation, and distribution pursuant to the Plan, as follows:
CLASS STATUS Class 1: Priority Claims Unimpaired - not entitled to vote. Class 2: Amplicon Lease Secured Unimpaired - not entitled to vote. Claim Class 3: Connecticut Mutual Note Impaired - entitled to vote Secured Claim Class 4: Designated Real Property Impaired - entitled to vote. Tax Claims Class 5: First Fidelity Lease Unimpaired - not entitled to vote. Secured Claim Class 6: Fleet Credit Secured Claim Unimpaired - not entitled to vote. Class 7: GE Capital Secured Claim Unimpaired - not entitled to vote. Class 8: Grove IRB Secured Claim Unimpaired - not entitled to vote. Class 9: IBM Credit Corporation Unimpaired - not entitled to vote. Secured Claim Class 10: Inter-Market Note Impaired - entitled to vote. Secured Claim Class 11: Leesburg Secured Claim Unimpaired - not entitled to vote. Class 12: Northwestern Group Secured Impaired - entitled to vote. Claims Class 13: Vale EDBs Claims Unimpaired - not entitled to vote. Class 14: Other Secured Claims Unimpaired - not entitled to vote. Class 15: Convenience Claims Unimpaired - not entitled to vote. Class 16: Asbestos Property Damage Impaired - entitled to vote. Claims
A-19
CLASS STATUS Class 17: Asbestos Personal Injury Impaired - entitled to vote. Claims and Lead Personal Injury Claims Class 18: Other Product Liability Impaired - entitled to vote. Tort Claims Class 19: Environmental Claims Impaired - entitled to vote. Class 20: Unsecured Claims Impaired - entitled to vote. other than Convenience Claims and Specified Treatment Claims Class 21: Specified Treatment Claims Impaired - entitled to vote. Class 22: Affiliate Claims and Unimpaired - not entitled to vote. Interests Class 23: Penalty Claims Impaired - deemed to reject the Plan. Class 24: Equity Interests Impaired - deemed to reject the Plan. 3.2 CLASSIFICATION AND TREATMENT. 3.2.1 CLASS 1. PRIORITY CLAIMS. 1. Classification: Class 1 consists of all Allowed Priority Claims. 2. Treatment: Each holder of an Allowed Priority Claim shall be paid the Allowed Amount of its Allowed Priority Claim, in full, in cash, on the Effective Date. 3. Status: Class 1 is not impaired. The holders of the Claims in Class 1 are deemed to accept the Plan and, accordingly, are not entitled to vote to accept or reject the Plan. 3.2.2 CLASS 2. AMPLICON LEASE SECURED CLAIM. 1. Classification: Class 2 consists of the Amplicon Lease Secured Claim. 2. Treatment: At the option of the Debtors and in accordance with section 1124 of the Bankruptcy Code, the Amplicon Lease Secured Claim shall be treated in one of the following ways: a. The legal, equitable and contractual rights to which the Amplicon Lease Secured Claim entitles the holder thereof shall be unaltered. or A-20 b. Notwithstanding any contractual provision or applicable law that entitles the holder of the Amplicon Lease Secured Claim to demand or receive payment of such Claim prior to the stated maturity of such Claim from and after the occurrence of a default under the agreements governing or instruments evidencing the Amplicon Lease Secured Claim, the Amplicon Lease Secured Claim shall be reinstated, and the Debtors shall (i) cure all defaults that occurred before or from and after the Petition Date (other than defaults of a kind specified in section 365(b)(2) of the Bankruptcy Code), (ii) reinstate the maturity of the Amplicon Lease Secured Claim as such maturity existed prior to the occurrence of such default, (iii) compensate the holder of such Claim for any damages incurred as a consequence of any reasonable reliance by such holder on such contractual provision or such applicable law, and (iv) not otherwise alter the legal, equitable, or contractual rights to which the holder of the Amplicon Lease Secured Claim is entitled. or c. On the Effective Date, the holder of the Amplicon Lease Secured Claim shall be paid the Allowed Amount of the Amplicon Lease Secured Claim, in full, in cash. 3. Status: Class 2 is not impaired. The holder of the Claim in Class 2 is deemed to accept the Plan and, accordingly, is not entitled to vote to accept or reject the Plan. 3.2.3 CLASS 3. CONNECTICUT MUTUAL NOTE SECURED CLAIM. 1. Classification: Class 3 consists of the Connecticut Mutual Note Secured Claim. 2. Treatment: The holder of the Connecticut Mutual Note Secured Claim will retain the liens securing the Connecticut Mutual Note Secured Claim and, on the Effective Date, will receive a note, substantially in the form of Exhibit "1.1.38" to the Plan, which shall (i) have a maturity date of June 1, 2001, (ii) bear interest at the rate of 10.0% per annum, (iii) have a principal amount equal to the amount of the Connecticut Mutual Note Secured Claim, and (iv) provide for equal monthly payments of principal and interest in an amount sufficient to fully amortize the principal amount of such note over the term of such note. 3. Status: Class 3 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holder of the Claim in Class 3 is entitled to vote to accept or reject the Plan. 3.2.4 CLASS 4. DESIGNATED REAL PROPERTY TAX CLAIM. 1. Classification: Class 4 consists of the Designated Real Property Tax Claim. 2. Treatment: On the Effective Date, the property securing the Designated Real Property Tax Claim shall be transferred to the holder of the Designated Real Property Tax Claim in full and complete satisfaction of the Designated Real Property Tax Claim. Notwithstanding the foregoing, if the property securing the Designated Real Property Tax Claim is A-21 sold prior to the Effective Date, the Designated Real Property Tax Claim shall be paid in full, in cash, on the date on which such sale is consummated. 3. Status: Class 4 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holder of the Claim in Class 4 is entitled to vote to accept or reject the Plan. 3.2.5 CLASS 5. FIRST FIDELITY LEASE SECURED CLAIM. 1. Classification: Class 5 consists of the First Fidelity Lease Secured Claim. 2. Treatment: On the Effective Date, the holder of the First Fidelity Lease Secured Claim shall be paid the Allowed Amount of the First Fidelity Lease Secured Claim, in full, in cash. 3. Status: Class 5 is unimpaired. The holder of the Claim in Class 5 is deemed to accept the Plan and, accordingly, is not entitled to vote to accept or reject the Plan. 3.2.6 CLASS 6. FLEET CREDIT SECURED CLAIM. 1. Classification: Class 6 consists of the Fleet Credit Secured Claim. 2. Treatment: On the Effective Date, the holder of the Fleet Credit Secured Claim shall be paid the Allowed Amount of the Fleet Credit Secured Claim, in full, in cash. 3. Status: Class 6 is unimpaired. The holder of the Claim in Class 6 is deemed to accept the Plan and, accordingly, is not entitled to vote to accept or reject the Plan. 3.2.7 CLASS 7. GE CAPITAL SECURED CLAIM. 1. Classification: Class 7 consists of the GE Capital Secured Claim. 2. Treatment: On the Effective Date, the holder of the E Capital Secured Claim shall be paid the Allowed Amount of the GE Capital Secured Claim, in full, in cash. 3. Status: Class 7 is not impaired. The holder of the Claim in Class 7 is deemed to accept the Plan and, accordingly, is not entitled to vote to accept or reject the Plan. 3.2.8 CLASS 8. GROVE IRB SECURED CLAIM. 1. Classification: Class 8 consists of the Grove IRB Secured Claim. A-22 2. Treatment: On the Effective Date, the holder of the Grove IRB Secured Claim shall be paid the Allowed Amount of the Grove IRB Secured Claim, in full, in cash. 3. Status: Class 8 is not impaired. The holder of the Claim in Class 8 is deemed to accept the Plan and, accordingly, is not entitled to vote to accept or reject the Plan. 3.2.9 CLASS 9. IBM CREDIT CORPORATION SECURED CLAIM. 1. Classification: Class 9 consists of the IBM Credit Corporation Secured Claim. 2. Treatment: On the Effective Date, the holder of the IBM Credit Corporation Secured Claim shall be paid the Allowed Amount of the IBM Credit Corporation Secured Claim, in full, in cash. 3. Status: Class 9 is not impaired. The holder of the Claim in Class 9 is deemed to accept the Plan, and, accordingly, is not entitled to vote to accept or reject the Plan. 3.2.10 CLASS 10. INTER-MARKET NOTE SECURED CLAIM. 1. Classification: Class 10 consists of the Inter-Market Note Secured Claim. 2. Treatment: The holder of the Inter-Market Note Secured Claim will retain the liens securing the Inter-Market Note Secured Claim and, on the Effective Date, will receive a note, substantially in the form of Exhibit "1.1.82" to the Plan, which shall (i) have a maturity date of June 1, 2001, (ii) bear interest at the rate of 10.0% per annum, (iii) have a principal amount equal to the amount of the Inter-Market Note Secured Claim, and (iv) provide for equal monthly payments of principal and interest in an amount sufficient to fully amortize the principal amount of such note over the term of such note. 3. Status: Class 10 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holder of the Claim in Class 10 is entitled to vote to accept or reject the Plan. 3.2.11 CLASS 11. LEESBURG SECURED CLAIM. 1. Classification: Class 11 consists of the Leesburg Secured Claim. 2. Treatment: On the Effective Date, the holder of the Leesburg Secured Claim shall be paid the Allowed Amount of the Leesburg Secured Claim, in full, in cash. 3. Status: Class 11 is not impaired. The holder of the Claim in Class 11 is deemed to accept the Plan and, accordingly, is not entitled to vote to accept or reject the Plan. A-23 3.2.12 CLASS 12. NORTHWESTERN GROUP SECURED CLAIMS. 1. Classification: Class 12 consists of the Northwestern Group Secured Claims. 2. Treatment: The holders of the Northwestern Group Secured Claims will retain the liens securing the Northwestern Group Secured Claims and, on the Effective Date, will each receive a note, substantially in the form of Exhibit "1.1.94" to the Plan, which shall (i) have a maturity date of May 1, 2001, (ii) bear interest at the rate of 10.0% per annum, (iii) have a principal amount equal to the amount of such holder's share of the Northwestern Group Secured Claims, and (iv) provide for equal monthly payments of principal and interest in an amount sufficient to fully amortize the principal amount of such note over the term of such note. 3. Status: Class 12 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holders of the Claims in Class 12 are entitled to vote to accept or reject the Plan. 3.2.13 CLASS 13. VALE EDBS CLAIMS. 1. Classification: Class 13 consists of the Vale EDBs Claims. 2. Treatment: Notwithstanding any contractual provision or applicable law that entitles the holders of the Vale EDBs Claims to demand or receive payment of such Claims prior to the stated maturity of such Claims from and after the occurrence of a default under the agreements or instruments evidencing the Vale EDBs Claims, the Vale EDBs shall be reinstated, and the Debtors shall (i) cure all defaults that occurred before or from and after the Petition Date (other than defaults of a kind specified in section 365(b)(2) of the Bankruptcy Code), (ii) reinstate the maturity of the Vale EDBs as such maturity existed prior to the occurrence of such default, (iii) compensate the holders of the Vale EDBs Claims for any damages incurred as a consequence of any reasonable reliance by such holders on such contractual provision or such applicable law, and (iv) not otherwise alter the legal, equitable, or contractual rights to which the holders of the Vale EDBs Claims are entitled. Entry of the Confirmation Order shall constitute a finding that no amounts are payable and owing under subsections (i) and (iii) hereof. 3. Status: Class 13 is not impaired. The holders of the Claims in Class 13 are deemed to accept the Plan and, accordingly, are not entitled to vote to accept or reject the Plan. 3.2.14 CLASS 14. OTHER SECURED CLAIMS. 1. Classification: Class 14 consists of all Allowed Other Secured Claims. Although placed in one class for purposes of convenience, each Allowed Other Secured Claim shall be treated as though in a separate class for all purposes under the Plan. 2. Treatment: At the option of the Debtors and in accordance with section 1124 of the Bankruptcy Code, each Allowed Other Secured Claim shall be treated in one of the following ways: a. The legal, equitable and contractual rights to which such Allowed Other Secured Claim entitles the holder of such Claim shall be unaltered. A-24 or b. Notwithstanding any contractual provision or applicable law that entitles the holder of an Allowed Other Secured Claim to demand or receive payment of such Claim prior to the stated maturity of such Claim from and after the occurrence of a default under the agreements governing or instruments evidencing such Claim, such Claim shall be reinstated, and the Debtors shall (i) cure all defaults that occurred before or from and after the Petition Date (other than defaults of a kind specified in section 365(b)(2) of the Bankruptcy Code), (ii) reinstate the maturity of such Claim as such maturity existed prior to the occurrence of such default, (iii) compensate the holder of such Claim for any damages incurred as a consequence of any reasonable reliance by such holder on such contractual provision or such applicable law, and (iv) not otherwise alter the legal, equitable, or contractual rights to which the holder of such Claim is entitled. or c. On the later of the Effective Date or the date on which an Other Secured Claim becomes Allowed, the holder of such Allowed Other Secured Claim shall be paid the Allowed Amount of such Claim, in full, in cash. Interest accruing on any Allowed Other Secured Claim after the Petition Date shall be accrued at the rate of eight percent (8%) per annum. 3. Status: Class 14 is not impaired. The holders of the Claims in Class 14 are deemed to accept the Plan and, accordingly, are not entitled to vote to accept or reject the Plan. 3.2.15 CLASS 15. CONVENIENCE CLAIMS. 1. Classification: Class 15 consists of all Allowed Convenience Claims. 2. Treatment: Each holder of an Allowed Convenience Claim shall be paid the Allowed Amount of its Allowed Convenience Claim, in full, in cash on the Effective Date. 3. Election: Any holder of an Unsecured Claim that desires treatment of such Claim as a Convenience Claim shall make such election on the Ballot to be provided to holders of Unsecured Claims and return such Ballot to the address specified therein on or before the Ballot Date. Any election made after the Ballot Date shall not be binding on the Debtors unless the Ballot Date is expressly waived in writing by the Debtors with respect to any such Claim. 4. Status: Class 15 is not impaired. The holders of the Claims in Class 15 are deemed to accept the Plan and, accordingly, are not entitled to vote to accept or reject the Plan. 3.2.16 CLASS 16. ASBESTOS PROPERTY DAMAGE CLAIMS. 1. Classification: Class 16 consists of all Asbestos Property Damage Claims. A-25 2. Treatment: All Asbestos Property Damage Claims shall be determined and paid pursuant to the terms, provisions, and procedures of the Asbestos PD Trust and the Asbestos PD Trust Agreement and the claims resolution procedures adopted pursuant thereto and referred to in subsection 4. of this section . The Asbestos PD Trust will be funded in accordance with the provisions of section of the Plan. The sole recourse of the holder of an Asbestos Property Damage Claim shall be the Asbestos PD Trust, and such holder shall have no right whatsoever at any time to assert its Asbestos Property Damage Claim against the Reorganized Debtors. Without limiting the foregoing, on the Effective Date, all entities shall be permanently and forever stayed, restrained, and enjoined from taking any of the following actions for the purpose of, directly or indirectly, collecting, recovering, or receiving payment of, on, or with respect to any Asbestos Property Damage Claims (other than actions brought to enforce any right or obligation under the Plan, any Exhibits to the Plan, or any other agreement or instrument between any of the Debtors or the Reorganized Debtors and the Asbestos PD Trust, which actions shall be in conformity and compliance with the provisions hereof): a. commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding (including, without express or implied limitation, a judicial, arbitral, administrative, or other proceeding) in any forum against or affecting any of the Reorganized Debtors or any property or interests in property of any of the Reorganized Debtors; b. enforcing, levying, attaching (including, without express or implied limitation, any prejudgment attachment), collecting, or otherwise recovering by any means or in any manner, whether directly or indirectly, any judgment, award, decree, or other order against any of the Reorganized Debtors or any property or interests in property of any of the Reorganized Debtors; c. creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any Encumbrance against any of the Reorganized Debtors or any property or interests in property of any of the Reorganized Debtors; d. setting off, seeking reimbursement of, contribution from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability owed to any of the Reorganized Debtors or any property or interests in property of any of the Reorganized Debtors; and e. proceeding in any manner in any place with regard to any matter that is subject to resolution pursuant to the Asbestos PD Trust, except in conformity and compliance therewith. 3. Selection of Trustees for Asbestos PD Trust: If Class 16 votes to accept the Plan, then the trustees for the Asbestos PD Trust will be selected by the representatives of each group for which a class proof of claim asserting Asbestos Property Damage Claims was timely filed in the Chapter 11 Cases. If Class 16 votes to reject the Plan, Eagle-Picher will select one or more trustees for the Asbestos PD Trust, by notice filed with the Bankruptcy Court on or before ten (10) days prior to the Confirmation Hearing. Eagle-Picher reserves the right to select Reorganized Eagle-Picher as the sole trustee of the Asbestos PD Trust if Class 16 votes to reject the Plan. 4. Claims Resolution Procedures: If Class 16 votes to accept the Plan, then the trustees for the Asbestos PD Trust will establish procedures for the allowance and A-26 payment of Asbestos Property Damage Claims. If Class 16 votes to reject the Plan, then the claims resolution procedures attached to the Plan as Exhibit "1.1.6.5" will govern and control in all respects the allowance and payment of Asbestos Property Damage Claims. 5. Status: Class 16 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holders of the Claims in Class 16 are entitled to vote to accept or reject the Plan. 3.2.17 CLASS 17. ASBESTOS PERSONAL INJURY CLAIMS AND LEAD PERSONAL INJURY CLAIMS. 1. Classification: Class 17 consists of all Asbestos Personal Injury Claims and Lead Personal Injury Claims. 2. Treatment: All Asbestos Personal Injury Claims and Lead Personal Injury Claims shall be determined and paid pursuant to the terms, provisions, and procedures of the PI Trust and the Asbestos and Lead PI Trust Agreement. The PI Trust will be funded in accordance with the provisions of section of the Plan. The sole recourse of the holder of an Asbestos Personal Injury Claim or Lead Personal Injury Claim shall be the PI Trust, and such holder shall have no right whatsoever at any time to assert its Asbestos Personal Injury Claim or Lead Personal Injury Claim, as the case may be, against any PI Protected Party. Without limiting the foregoing, on the Effective Date, all Entities shall be permanently and forever stayed, restrained, and enjoined from taking any of the following actions for the purpose of, directly or indirectly, collecting, recovering, or receiving payment of, on, or with respect to any Asbestos Personal Injury Claims or Lead Personal Injury Claims (other than actions brought to enforce any right or obligation under the Plan, any Exhibits to the Plan or any other agreement or instrument between any of the Debtors, or the Reorganized Debtors and the PI Trust, which actions shall be in conformity and compliance with the provisions hereof): a. commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding (including, without express or implied limitation, a judicial, arbitral, administrative, or other proceeding) in any forum against or affecting any PI Protected Party or any property or interests in property of any PI Protected Party; b. enforcing, levying, attaching (including, without express or implied limitation, any prejudgment attachment), collecting, or otherwise recovering by any means or in any manner, whether directly or indirectly, any judgment, award, decree, or other order against any PI Protected Party or any property or interests in property of any PI Protected Party; c. creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any Encumbrance against any PI Protected Party or any property or interests in property of any PI Protected Party; d. setting off, seeking reimbursement of, contribution from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability owed to any PI Protected Party or any property or interests in property of any PI Protected Party; and A-27 e. proceeding in any manner in any place with regard to any matter that is subject to resolution pursuant to the PI Trust, except in conformity and compliance therewith. Nothing contained herein shall constitute or be deemed a waiver of any claim, right, or cause of action that the Debtors, the Reorganized Debtors, or the PI Trust may have against any Entity in connection with or arising out of an Asbestos Personal Injury Claim or Lead Personal Injury Claim. 3. Discounted Payment Election: The Ballot to be distributed to holders of Asbestos Personal Injury Claims will permit such holders to elect to have their Asbestos Personal Injury Claims processed and paid pursuant to the discounted payment procedure set forth in the Asbestos and Lead PI Trust Agreement and the claims resolution procedures adopted pursuant thereto. 4. Status: Class 17 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holders of the Claims in Class 17 are entitled to vote to accept or reject the Plan. 3.2.18 CLASS 18. OTHER PRODUCT LIABILITY TORT CLAIMS. 1. Classification: Class 18 consists of all Other Product Liability Tort Claims. 2. Treatment: Each holder of an Allowed Other Product Liability Tort Claim shall receive consideration having a value, determined by Reorganized Eagle-Picher in good faith, equal to the value that would have been distributed to such holder if such Allowed Other Product Liability Tort Claim had been an Allowed Unsecured Claim on the Final Distribution Date; provided, however, that, in determining the Pro Rata Share that would have been payable if such Allowed Other Product Liability Tort Claim had been an Allowed Unsecured Claim, no adjustments shall be made to the denominator of the equation specified in section ; provided further, that, if any Other Product Liability Tort Claim becomes known prior to the Final Distribution Date, the Other Product Liability Tort Claim shall be treated as an Unsecured Claim for all purposes. The treatment provided herein is not, and shall not be deemed to constitute, a waiver of any of the Debtors' applicable non-bankruptcy defenses, including statute of limitations. 3. Status: Class 18 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holders of the Claims in Class 18 are entitled to vote to accept or reject the Plan. 3.2.19 CLASS 19. ENVIRONMENTAL CLAIMS. 1. Classification: Class 19 consists of all Environmental Claims. 2. Treatment: Each holder of an Environmental Claim shall be entitled to treatment of its Environmental Claim and receive such consideration as is provided in the settlement agreement applicable to such Environmental Claim. Without limiting the provisions of such settlement agreement, each holder of an Environmental Claim, to the extent any portion of such Environmental Claim becomes Allowed prior to any Distribution, shall receive on the Initial Distribution Date and the Final Distribution Date its Pro Rata Share of the Distribution Value less the aggregate value of consideration (computed as provided herein) previously distributed on account A-28 of such Allowed portion of the Environmental Claim in any Distribution made prior thereto. The sole recourse of the holders of Environmental Claims against the Debtors, the Reorganized Debtors, or any property or interests in property of the Debtors or the Reorganized Debtors shall be in accordance with the rights of such holders set forth in such settlement agreement. Nothing contained herein or in any settlement agreement relating to an Environmental Claim shall constitute or be deemed a waiver of any claim, right, or cause of action that the Debtors or the Reorganized Debtors may have against any Entity that is not a party to such settlement agreement. As to any portion of an Environmental Claim that becomes Allowed prior to the Initial Distribution Date or the Final Distribution Date, the holder of such Environmental Claim shall receive its Distribution Amount in consideration consisting of Available Cash in an amount equal to one-half (1/2) of the Distribution Amount and Divestiture Notes having an aggregate principal amount equal to one-half (1/2) of the Distribution Amount. 3. Status: Class 19 is impaired. The holders of the Claims in Class 19 are entitled to vote to accept or reject the Plan. 3.2.20 CLASS 20. UNSECURED CLAIMS OTHER THAN CONVENIENCE CLAIMS AND THE SPECIFIED TREATMENT CLAIMS. 1. Classification: Class 20 consists of Unsecured Claims other than Convenience Claims and Specified Treatment Claims. 2. Treatment: Each holder of an Allowed Unsecured Claim in Class 20 shall receive on the Initial Distribution Date and the Final Distribution Date its Pro Rata Share of the Distribution Value less the aggregate value of consideration (computed as provided herein) previously distributed on account of such Allowed Unsecured Claim in any Distribution made prior thereto. On the Initial Distribution Date and the Final Distribution Date, each such holder's Distribution Amount shall be paid in consideration consisting of Available Cash in an amount equal to one-half (1/2) of the Distribution Amount and Divestiture Notes having an aggregate principal amount equal to one-half (1/2) of the Distribution Amount. 3. Cancellation of Unsecured Debt Securities: As of the Effective Date, all notes, agreements, and securities evidencing Unsecured Claims and the rights of the holders thereof thereunder, including, without express or implied limitation, the Unsecured Debt Securities and each Unsecured Debt Securities Indenture, shall be cancelled and deemed null and void and of no further force and effect, and the holders thereof shall have no rights, and such instruments shall evidence no rights, except the right to receive the Distributions provided herein. Notwithstanding the foregoing, such cancellation shall not impair the rights and duties under each Unsecured Debt Securities Indenture as between the Unsecured Debt Securities Trustee and the beneficiaries of the trust created thereby. 4. Surrender of Bearer Unsecured Debt Securities: Distributions with respect to the Bearer Unsecured Debt Securities shall be made to the Unsecured Debt Securities Trustee for payment to the individual holders of Bearer Unsecured Debt Securities. No holder of Bearer Unsecured Debt Securities shall be entitled to any Distribution unless and until such holder shall have first surrendered or caused to be surrendered to the Unsecured Debt Securities Trustee the original Bearer Unsecured Debt Securities held by it or, in the event that such Unsecured Debt Securities have been lost, destroyed, stolen, or mutilated, executed and delivered an affidavit of loss and indemnity with respect thereto in the form customarily utilized for such purposes that is reasonably satisfactory to the Debtors and the Unsecured Debt Securities Trustee and, in the event either the Debtors or the Unsecured Debt Securities Trustee requests, furnished a bond in form and A-29 substance (including, without express or implied limitation, amount) reasonably satisfactory to the Debtors or the Unsecured Debt Securities Trustee, as the case may be. Promptly upon the surrender of any Bearer Unsecured Debt Securities, the Unsecured Debt Securities Trustee shall cancel such securities and deliver such cancelled securities to the Reorganized Debtors or otherwise dispose of such securities in such manner as the Reorganized Debtors may request. In accordance with section 1143 of the Bankruptcy Code, any holder of Bearer Unsecured Debt Securities that fails to surrender its Bearer Unsecured Debt Securities or deliver an affidavit of loss and indemnity as provided herein within the Retention Period shall be deemed to have forfeited all rights and claims against the Debtors and the Reorganized Debtors and shall not participate in any Distribution on account of the Bearer Unsecured Debt Securities. As soon as practicable after the receipt of the foregoing from the holder of Bearer Unsecured Debt Securities, the Unsecured Debt Securities Trustee shall make the Distribution provided hereunder. Thereafter, the Unsecured Debt Securities Trustee shall maintain a register of the holders of Bearer Unsecured Debt Securities that have complied with the foregoing provisions of this paragraph and the amount of Bearer Unsecured Debt Securities held by each such holder, and any further Distribution made shall be made by the Unsecured Debt Securities Trustee to the holders reflected on such register. 5. Record Date for Registered Unsecured Debt Securities: As at the close of business on the Record Date, the transfer ledgers for the Registered Unsecured Debt Securities shall be closed, and there shall be no further changes in the record holders of any Registered Unsecured Debt Securities. Distributions with respect to the Registered Unsecured Debt Securities shall be made to the Unsecured Debt Securities Trustee for payment to the record holders of any Registered Unsecured Debt Securities as reflected on the transfer ledgers for the Registered Unsecured Debt Securities as at the close of business on the Record Date. The Debtors or the Reorganized Debtors, as the case may be, and the Unsecured Debt Securities Trustee shall have no obligation to recognize any transfer of the Registered Unsecured Debt Securities that is not recorded on the transfer ledgers for the Registered Unsecured Debt Securities as of the close of business on the Record Date. The Debtors or the Reorganized Debtors, as the case may be, and the Unsecured Debt Securities Trustee shall be entitled instead to recognize and deal with, for all purposes hereunder, only those record holders stated on the transfer ledgers of the Registered Unsecured Debt Securities Trustee as of the close of business on the Record Date. 6. Expiration of the Retention Period: Upon the expiration of the Retention Period, all monies or other property held for distribution by the Unsecured Debt Securities Trustee shall be returned to the Reorganized Debtors by the Unsecured Debt Securities Trustee, free and clear of any claim or interest of any nature whatsoever, including, without express or implied limitation, escheat rights of any governmental unit under applicable law. 7. Compensation of the Unsecured Debt Securities Trustee: The Unsecured Debt Securities Trustee shall be compensated by the Reorganized Debtors for services rendered from and after the Effective Date, including the reasonable compensation, disbursements, and expenses of the agents and legal counsel of the Unsecured Debt Securities Trustee in connection with the performance of its duties under this section and shall be indemnified by the Reorganized Debtors for any loss, liability, or expense incurred by it in connection with the performance of such duties to the same extent and in the same manner as provided in the Unsecured Debt Securities Indenture. 8. Interest: Interest shall neither accrue nor be payable with respect to Allowed Unsecured Claims. A-30 9. Status: Class 20 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holders of the Claims in Class 20 are entitled to vote to accept or reject the Plan. 3.2.21 CLASS 21. SPECIFIED TREATMENT CLAIMS. 1. Classification: Class 21 consists of the Specified Treatment Claims. 2. Treatment: Each holder of a Specified Treatment Claim shall receive on the Initial Distribution Date and the Final Distribution Date its Pro Rata Share of the Distribution Value less the aggregate value of consideration (computed as provided herein) previously distributed on account of such Specified Treatment Claim in any Distribution made prior thereto. On the Initial Distribution Date and the Final Distribution Date, each such holder's Distribution Amount shall be paid in consideration consisting of Available Cash in an amount equal to one-half (1/2) of the Distribution Amount and Divestiture Notes having an aggregate principal amount equal to one-half (1/2) of the Distribution Amount. Notwithstanding the foregoing, the aggregate value of the Distributions on account of such Specified Treatment Claim shall be no less than the amount set forth in the settlement agreement pursuant to which such Specified Treatment Claim became Allowed and shall not exceed the amount set forth in such settlement agreement. 3. Status: Class 21 is impaired. To the extent and in the manner provided in the Voting Procedures Order, the holders of the Claims in Class 21 are entitled to vote to accept or reject the Plan. 3.2.22 CLASS 22. AFFILIATE CLAIMS AND INTERESTS. 1. Classification: Class 22 consists of Affiliate Claims and Interests. 2. Treatment: At the option of the Debtors and in accordance with section 1124 of the Bankruptcy Code, the Allowed Affiliate Claims and Interests shall be treated in one of the following ways: a. The legal, equitable and contractual rights to which such Allowed Affiliate Claims and Interests entitle the holder of any such Claims and Interests shall be unaltered. or b. Notwithstanding any contractual provision or applicable law that entitles the holder of Allowed Affiliate Claims and Interests to demand or receive payment thereof prior to the stated maturity thereof from and after the occurrence of a default under the agreements governing or instruments evidencing such Allowed Affiliate Claims and Interests, such Affiliate Claims and Interests shall be reinstated, and the Debtors shall (i) cure all defaults that occurred before or from and after the Petition Date (other than defaults of a kind specified in section 365(b)(2) of the Bankruptcy Code), (ii) reinstate the maturity of such Affiliate Claims and Interests as such maturity existed prior to the occurrence of such default, (iii) compensate the holders of such Affiliate Claims and Interests for any damages incurred as a consequence of any reasonable reliance by such holder on such A-31 contractual provision or such applicable law, and (iv) not otherwise alter the legal, equitable, or contractual rights to which the holders of such Affiliate Claims and Interests are entitled. or c. On the later of the Effective Date or the date on which any Affiliate Claims and Interests become Allowed, the holder of such Allowed Affiliate Claims and Interests shall be paid the Allowed Amount of such Affiliate Claims and Interests, in full, in cash. 3. Status: Class 22 is not impaired. The holders of Claims and Interests in Class 22 are deemed to accept the Plan and, accordingly, are not entitled to vote to accept or reject the Plan. 3.2.23 CLASS 23. PENALTY CLAIMS. 1. Classification: Class 23 consists of Penalty Claims. 2. Treatment: The holders of Penalty Claims will not receive or retain any interest or property under the Plan. 3. Status: Class 23 is impaired. The holders of Claims in Class 23 are deemed to reject the Plan and, accordingly, are not entitled to vote to accept or reject the Plan. 3.2.24 CLASS 24. EQUITY INTERESTS. 1. Classification: Class 24 consists of Equity Interests. 2. Treatment: The holders of Equity Interests will not receive or retain any interest or property under the Plan. On the Effective Date, the certificates that previously evidenced ownership of Existing Eagle-Picher Common Stock shall be cancelled and shall be null and void, and the holders thereof shall have no rights, and such certificates shall evidence no rights. 3. Status: Class 24 is impaired. The holders of Equity Interests are deemed to reject the Plan and, accordingly, are not entitled to vote to accept or reject the Plan. 3.3 COMPROMISE AND SETTLEMENT RELATING TO THE AMOUNT OF THE PI TRUST SHARE. The use of the amount of Two Billion and 00/100 Dollars ($2,000,000,000.00) as the PI Trust Share under the Plan represents a compromise and settlement between the Plan Proponents and the Unsecured Creditors' Committee regarding the issues raised in the appeal by the Unsecured Creditors' Committee of the Bankruptcy Court's Decision and Order on 1) Debtors' Motion to Estimate Liability and 2) Motion of UCC for Information Gathering, dated December 4, 1995, and as amended on December 14, 1995, which appeal shall be deemed dismissed with prejudice on the Effective Date. The Unsecured Creditors' Committee will take whatever actions are reasonably necessary to effectuate such dismissal. A-32 3.4 CONTROVERSY CONCERNING IMPAIRMENT. In the event of a controversy as to whether any class of Claims or Equity Interests is impaired under the Plan, the Bankruptcy Court shall, after notice and a hearing, determine such controversy prior to the Confirmation Date. A-33 ARTICLE 4 MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN 4.1 MODIFICATION OF THE PLAN. The Plan Proponents may, upon the unanimous written consent of all Plan Proponents, alter, amend, or modify the Plan under section 1127(a) of the Bankruptcy Code at any time prior to the Confirmation Date so long as the Plan, as modified, meets the requirements of sections 1122 and 1123 of the Bankruptcy Code. After the Confirmation Date and prior to the Effective Date, the Plan Proponents, upon the unanimous written consent of all Plan Proponents, may alter, amend, or modify the Plan in accordance with section 1127(b) of the Bankruptcy Code. 4.2 REVOCATION OR WITHDRAWAL. 4.2.1 Right to Revoke. The Plan may be revoked or withdrawn prior to the Confirmation Date by either (a) after the Confirmation Deadline, any of the Plan Proponents or (b) upon the unanimous written consent of all Plan Proponents, the Plan Proponents. 4.2.2 Effect of Withdrawal or Revocation. If the Plan is revoked or withdrawn prior to the Confirmation Date, then the Plan shall be deemed null and void. In such event, nothing contained herein shall be deemed to constitute a waiver or release of any claims by the Debtors or any other Entity or to prejudice in any manner the rights of the Debtors or any Entity in any further proceedings involving the Debtors. 4.3 AMENDMENT OF PLAN DOCUMENTS. From and after the Effective Date, the authority to amend, modify, or supplement the Exhibits to the Plan and any documents attached to such Exhibits shall be as provided in such Exhibits and their respective attachments. A-34 ARTICLE 5 PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS 5.1 OBJECTIONS TO CLAIMS; PROSECUTION OF DISPUTED CLAIMS. The Reorganized Debtors shall object to the allowance of Claims filed with the Bankruptcy Court (other than Asbestos Personal Injury Claims, Lead Personal Injury Claims, and Asbestos Property Damage Claims) with respect to which the Reorganized Debtors dispute liability in whole or in part. Notwithstanding the foregoing, the Reorganized Debtors, at their option, may continue to prosecute objections to Lead Personal Injury Claims and Asbestos Property Damage Claims if such objections are pending as of the Effective Date. To the extent that objections to Lead Personal Injury Claims are not pending as of the Effective Date or the Reorganized Debtors elect not to prosecute pending objections to Lead Personal Injury Claims, the PI Trust shall be vested with the complete power and authority to file and prosecute any such objections. To the extent that objections to Asbestos Property Damage Claims are not pending as of the Effective Date or the Reorganized Debtors elect not to prosecute pending objections to Asbestos Property Damage Claims, the Asbestos PD Trust shall be vested with the complete power and authority to file and prosecute any such objections. All objections that are filed and prosecuted by the Reorganized Debtors as provided herein shall be litigated to Final Order by the Reorganized Debtors or compromised and settled in accordance with the Claims Settlement Guidelines. Unless otherwise provided herein or ordered by the Bankruptcy Court, all objections by the Reorganized Debtors to Claims shall be served and filed no later than one week after the Effective Date. 5.2 AMENDMENT OF CLAIMS SETTLEMENT GUIDELINES. On the Effective Date, the Claims Settlement Guidelines shall be amended as set forth on Exhibit "5.2" to the Plan. 5.3 DISTRIBUTIONS ON ACCOUNT OF DISPUTED CLAIMS. Notwithstanding Section 3.2 hereof, a Distribution shall only be made by the Reorganized Debtors to the holder of a Disputed Claim when, and to the extent that, such Disputed Claim becomes Allowed. No interest shall be paid on account of Disputed Claims that later become Allowed except to the extent that payment of interest is required under section 506(b) of the Bankruptcy Code. No Distribution shall be made with respect to all or any portion of any Disputed Claim pending the entire resolution thereof in the manner prescribed by section hereof. A-35 ARTICLE 6 ACCEPTANCE OR REJECTION OF THE PLAN 6.1 IMPAIRED CLASSES TO VOTE. Each holder of a Claim in an impaired class of Claims shall be entitled to vote to accept or reject the Plan to the extent and in the manner provided by the Voting Procedures Order. 6.2 ACCEPTANCE BY CLASS OF CLAIMS. Acceptance of the Plan by any impaired class of Claims shall be determined in accordance with the Voting Procedures Order. 6.3 NONCONSENSUAL CONFIRMATION. Because Classes 23 and 24 are deemed to have rejected the Plan, the Plan Proponents intend to request that the Bankruptcy Court confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code with respect to Classes 23 and 24. In the event that any impaired class of Claims shall fail to accept the Plan in accordance with section 1129(a) of the Bankruptcy Code, the Plan Proponents reserve the right to (a) request that the Bankruptcy Court confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code with respect to such non-accepting class, in which case the Plan shall constitute a motion for such relief, or (b) amend the Plan in accordance with section 4.1 hereof. A-36 ARTICLE 7 IMPLEMENTATION OF THE PLAN 7.1 AMENDMENT OF ARTICLES OF INCORPORATION. The Articles of Incorporation shall be amended and restated as of the Effective Date in substantially the form of the Amended and Restated Articles of Incorporation, inter alia, (a) to prohibit the issuance of nonvoting equity securities as required by section 1123(a)(6) of the Bankruptcy Code, subject to further amendment of such Amended and Restated Articles of Incorporation as permitted by applicable law, (b) to authorize the cancellation of the Existing Eagle-Picher Common Stock and the creation of twenty million (20,000,000) shares of New Eagle-Picher Common Stock, (i) of which ten million (10,000,000) shares shall be issued to the PI Trust and the holders of Allowed Claims pursuant to the provisions of the Plan, and (ii) of which ten million (10,000,000) shares shall be reserved for future issuance, (c) to restrict the transfer of New Eagle-Picher Common Stock and any other interests that would be treated as "stock" of Reorganized Eagle-Picher under Section 382 of the Internal Revenue Code in order to permit the continued utilization of the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax carryovers, foreign tax credit carryovers, and any net unrealized built-in losses to which Reorganized Eagle-Picher, or any other member of the consolidated group of which Reorganized Eagle-Picher is the common parent, is or may be entitled, and (d) to effectuate the provisions of the Plan. 7.2 AMENDMENT OF CODE OF REGULATIONS. The Code of Regulations of Eagle-Picher shall be amended and restated as of the Effective Date in substantially the form of the Amended and Restated Code of Regulations. 7.3 DISTRIBUTIONS UNDER THE PLAN. Whenever any Distribution to be made under this Plan shall be due on a day other than a Business Day, such Distribution shall instead be made, without interest, on the immediately succeeding Business Day, but shall be deemed to have been made on the date due. For federal income tax purposes, a Distribution will be allocated to the principal amount of a Claim first and then, to the extent the Distribution exceeds the principal amount of the Claim, to accrued but unpaid interest. 7.4 TIMING OF DISTRIBUTIONS UNDER THE PLAN. Any Distribution to be made by the Debtors or the Reorganized Debtors pursuant to the Plan shall be deemed to have been timely made if made within ten (10) days after the time therefor specified in the Plan. Distributions with respect to Classes 19, 20, and 21, and to the PI Trust shall only be made on the Initial Distribution Date and the Final Distribution Date; provided, however, that, if a Claim in any of Classes 19, 20, or 21 becomes Allowed subsequent to the Initial Distribution Date, the Reorganized Debtors may, in their sole discretion, make a Distribution with respect to such Claim prior to the Final Distribution Date. If Class 16 votes to accept the Plan, the Distribution of the Asbestos PD Trust Funding Obligation will be made on the Effective Date. If Class 16 votes to reject the Plan, the Distribution of the Asbestos PD Trust Funding Obligation will be made on the Initial Distribution Date and, to the extent not distributed on the Initial Distribution Date, the Final Distribution Date. 7.5 MANNER OF PAYMENT UNDER THE PLAN. Unless the Entity receiving a payment agrees otherwise, any payment in cash to be made by the Debtors or the Reorganized Debtors shall be made, at the election of the Debtors or the Reorganized Debtors (as the case may be), by check drawn on a domestic bank or by wire transfer from a domestic bank. A-37 7.6 HART-SCOTT-RODINO COMPLIANCE. Any shares of New Eagle-Picher Common Stock to be distributed under the Plan to any Entity required to file a Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, shall not be distributed until the notification and waiting periods applicable under such Act to such Entity shall have expired or been terminated. 7.7 FRACTIONAL SHARES OR OTHER DISTRIBUTIONS. Notwithstanding anything to the contrary contained herein, no fractional shares of New Eagle-Picher Common Stock shall be distributed, no New Debt Securities will be issued in an amount equal to fractional cents, and no cash payments of fractions of cents will be made. Fractional cents shall be rounded to the nearest whole cent (with .5 cent or less to be rounded down). Fractional shares shall be rounded to the nearest whole share (with .5 share or less to be rounded down). 7.8 OCCURRENCE OF THE CONFIRMATION DATE. The following shall constitute conditions to confirmation of the Plan: 7.8.0.1 The Bankruptcy Court makes the following findings, each of which shall be contained in the Confirmation Order: 7.8.0.1.1 The Asbestos and Lead PI Permanent Channeling Injunction is to be implemented in connection with the PI Trust. 7.8.0.1.2 At the time of the order for relief with respect to Eagle-Picher, Eagle-Picher had been named as a defendant in personal injury, wrongful death, and property damage actions seeking recovery for damages allegedly caused by the presence of, or exposure to, asbestos or asbestos-containing products. 7.8.0.1.3 At the time of the order for relief with respect to Eagle-Picher, Eagle-Picher had been named as a defendant in personal injury, wrongful death, and property damage actions seeking recovery for damages allegedly caused by the presence of, or exposure to, lead-containing chemicals. 7.8.0.1.4 The PI Trust, as of the Effective Date, will assume the liabilities of the Debtors with respect to Asbestos Personal Injury Claims and Lead Personal Injury Claims. 7.8.0.1.5 The PI Trust is to be funded in whole or in part by securities of one or more of the Debtors and by the obligations of such Debtors to make future payments, including dividends. 7.8.0.1.6 The PI Trust is to own, or by the exercise of rights granted under the Plan would be entitled to own if specified contingencies occur, a majority of the voting shares of Eagle-Picher, the direct or indirect parent corporation of each of the Debtors. 7.8.0.1.7 The Debtors are likely to be subject to substantial future Demands for payment arising out of the same or similar conduct or events that gave rise to the Claims that are addressed by the Asbestos and Lead PI Permanent Channeling Injunction. A-38 7.8.0.1.8 The actual amounts, numbers, and timing of the future Demands referenced in section cannot be determined. 7.8.0.1.9 Pursuit of the Demands referenced in section outside the procedures prescribed by the Plan is likely to threaten the Plan's purpose to deal equitably with Claims and future Demands. 7.8.0.1.10 The terms of the Asbestos and Lead PI Permanent Channeling Injunction, including any provisions barring actions against third parties pursuant to section 524(g)(4)(A), are set out in the Plan and in any disclosure statement supporting the Plan. 7.8.0.1.11 The Plan establishes, in Class 17 (Asbestos Personal Injury Claims and Lead Personal Injury Claims), a separate class of the claimants whose Claims are to be addressed by the PI Trust. 7.8.0.1.12 Class 17 (Asbestos Personal Injury Claims and Lead Personal Injury Claims) has voted, by at least 75 percent (75%) of those voting, in favor of the Plan. 7.8.0.1.13 Pursuant to court orders or otherwise, the PI Trust will operate through mechanisms such as structured, periodic, or supplemental payments, pro rata distributions, matrices, or periodic review of estimates of the numbers and values of present Claims and future Demands, or other comparable mechanisms, that provide reasonable assurance that the PI Trust will value, and be in a financial position to pay, present Claims and future Demands that involve similar Claims in the same manner. 7.8.0.1.14 The Future Claimants' Representative was appointed as part of the proceedings leading to issuance of the Asbestos and Lead PI Permanent Channeling Injunction for the purpose of protecting the rights of persons that might subsequently assert Demands that are addressed in the Asbestos and Lead PI Permanent Channeling Injunction and transferred to the PI Trust. 7.8.0.1.15 Identifying each PI Protected Party in the Asbestos and Lead PI Permanent Channeling Injunction is fair and equitable with respect to persons that might subsequently assert Demands against each such PI Protected Party, in light of the benefits provided, or to be provided, to the PI Trust by or on behalf of any such PI Protected Party. 7.8.0.2 Class 17 (Asbestos Personal Injury Claims and Lead Personal Injury Claims) votes, by at least 75 percent (75%) of those voting, in favor of the Plan. 7.8.0.3 The Bankruptcy Court has entered an order approving the Environmental Settlement Agreement, which shall be reasonably acceptable to the Plan Proponents, and such order has become a Final Order. 7.8.0.4 The Confirmation Order shall be, in form and substance, acceptable to the Plan Proponents. A-39 The Plan shall not be confirmed and the Confirmation Order shall not be entered until and unless each of the foregoing conditions to confirmation is either satisfied or waived by the unanimous vote of the Plan Proponents. 7.9 OCCURRENCE OF THE EFFECTIVE DATE. The "effective date of the plan," as used in section 1129 of the Bankruptcy Code, shall not occur, and the Plan shall be of no force and effect, until the Effective Date. The occurrence of the Effective Date is subject to satisfaction of the following conditions precedent: 7.9.0.1 The Confirmation Order has become a Final Order, or, if not, then at least thirty (30) days have elapsed since the Confirmation Date. 7.9.0.2 The Bankruptcy Court and/or the District Court, as required, shall have entered the Asbestos and Lead PI Permanent Channeling Injunction, which shall contain terms satisfactory to the Plan Proponents. 7.9.0.3 The Confirmation Order and the Asbestos and Lead PI Permanent Channeling Injunction shall be in full force and effect. 7.9.0.4 No proceedings to estimate any Claims are pending. 7.9.0.5 If Class 16 votes to accept the Plan, the trustees for the Asbestos PD Trust have been selected and have executed the Asbestos PD Trust Agreement. 7.9.0.6 All Trustees have been selected in accordance with that certain letter, dated November 9, 1993, from Eagle-Picher to the Injury Claimants' Committee and the Future Claimants' Representative. 7.9.0.7 All Trustees have executed the Asbestos and Lead PI Trust Agreement. 7.9.0.8 Certain favorable rulings have been obtained from the IRS with respect to the qualification of the PI Trust as a "qualified settlement fund" within the meaning of Treasury Regulation section 1.468B-1. 7.9.0.9 Certain favorable rulings have been obtained from the IRS with respect to the application of section 382 of the Internal Revenue Code. 7.9.0.10 The Reorganized Debtors shall have entered into and shall have credit availability under a credit facility to provide the Reorganized Debtors with working capital (including letters of credit) in an amount sufficient to meet the needs of the Reorganized Debtors, as determined by the Reorganized Debtors. 7.9.0.11 The Asbestos PD Trust Share has been determined to be no greater than Fifteen Million and 00/100 Dollars ($15,000,000.00). Notwithstanding the foregoing, the Plan Proponents reserve, in their sole discretion, the right, upon unanimous agreement of the Plan Proponents, to waive the occurrence of any of the foregoing conditions precedent to the Effective Date or to modify any of such conditions precedent; provided, however, that the waiver or modification of condition set forth in section 7.9.0.11 hereof may only be made upon the unanimous agreement of the Plan Proponents and the Unsecured Creditors' A-40 Committee. Any such waiver of a condition precedent hereof may be effected at any time, without notice, without leave or order of the Bankruptcy Court, and without any formal action other than proceeding to consummate the Plan. Any actions required to be taken on the Effective Date shall take place and shall be deemed to have occurred simultaneously, and no such action shall be deemed to have occurred prior to the taking of any other such action. If the Plan Proponents unanimously decide that one of the foregoing conditions cannot be satisfied and the occurrence of such condition is not waived by the Plan Proponents (or, in the case of section 7.9.0.11, the Plan Proponents and the Unsecured Creditors' Committee), then the Plan Proponents shall file a notice of the failure of the Effective Date with the Bankruptcy Court, at which time the Plan and the Confirmation Order shall be deemed null and void. 7.10 DISTRIBUTION OF UNCLAIMED PROPERTY. Any Distribution under the Plan that is unclaimed after one hundred eighty (180) days following the date such property is distributed shall be deemed not to have been made and shall be transferred to the Reorganized Debtors, free and clear of any claims or interests of any Entities, including, without express or implied limitation, any claims or interests of any governmental unit under escheat principles. Nothing contained herein shall affect the discharge of the Claim with respect to which such Distribution was made, and the holder of such Claim shall be forever barred from enforcing such Claim against the Reorganized Debtors or the Reorganized Debtors' assets, estates, properties, or interests in property. 7.11 MANAGEMENT OF THE REORGANIZED DEBTORS. On the Effective Date, the employment contracts substantially in the form of Exhibit "" to the Plan automatically shall become effective. On the Effective Date, the Board of Directors shall consist of the same individuals who sit on the Board of Directors on the day immediately preceding the Effective Date. Each of the members of such Board of Directors shall serve until the first annual meeting of stockholders of Reorganized Eagle-Picher or his or her earlier resignation or removal in accordance with the Amended and Restated Articles of Incorporation or the Amended and Restated Code of Regulations. The composition of the board of directors of each of the Reorganized Debtors, other than Reorganized Eagle-Picher, shall remain unchanged, subject to the rights of Reorganized Eagle-Picher and the other shareholders of any such Reorganized Debtor to elect directors in accordance with the articles of incorporation or bylaws of such Reorganized Debtor. The officers of the respective Debtors immediately prior to the Effective Date shall serve as the officers of the respective Reorganized Debtors on and after the Effective Date in accordance with any employment agreement with the Reorganized Debtors and applicable nonbankruptcy law. 7.12 SUPPLEMENTAL SEVERANCE PROGRAM. The Supplemental Severance Program shall be modified as provided in Exhibit "" to the Plan. The Supplemental Severance Program, as so modified, shall remain in effect subsequent to the Effective Date, and all benefits shall be payable thereunder in accordance with the terms thereof, as modified. 7.13 CORPORATE ACTION. On the Effective Date, the adoption of the Amended and Restated Articles of Incorporation, the filing by Reorganized Eagle-Picher of the Amended and Restated Articles of Incorporation, and the adoption of the Amended and Restated Code of Regulations, as contemplated by section hereof, shall be authorized and approved in all respects, in each case without further action under applicable law, regulation, order, or rule, including, without express or implied limitation, any action by the stockholders or directors of the Debtors, the Debtors in Possession, or the Reorganized Debtors. On the Effective Date or as soon thereafter as is practicable, Eagle-Picher shall file with the Secretary of State of the State of Ohio, in accordance with Ohio Revised Code section 1701.73, the Amended and Restated Articles of Incorporation. On the Effective Date, the cancellation of the Existing Eagle-Picher Common Stock, the issuance of the New Eagle-Picher Common Stock, the issuance of the New Debt Securities, the approval and effectiveness A-41 of the employment agreements, severance, and other benefits described in sections 7.11, 7.12, 8.7 and hereof, and other matters provided under the Plan involving the corporate structure of the Reorganized Debtors or corporate action by the Reorganized Debtors shall be deemed to have occurred, be authorized, and shall be in effect from and after the Effective Date without requiring further action under applicable law, regulation, order, or rule, including, without express or implied limitation, any action by the stockholders or directors of the Debtors, the Debtors in Possession, or the Reorganized Debtors. The Reorganized Debtors shall be authorized to enter into the reorganized credit facility referenced in section 7.9.0.10 hereof without any further order of the Bankruptcy Court. 7.14 EFFECTUATING DOCUMENTS AND FURTHER TRANSACTIONS. Each of the officers of the Debtors and the Reorganized Debtors is authorized, in accordance with his or her authority under the resolutions of the Board of Directors, to execute, deliver, file, or record such contracts, instruments, releases, indentures, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan and any notes or securities issued pursuant to the Plan. 7.15 DISSOLUTION OF EDI, INC. On or as of the Effective Date, EDI, Inc. will be dissolved, and such dissolution shall be effective as of the Effective Date pursuant to the Confirmation Order without any further action by the stockholder or directors of EDI, Inc. 7.16 ALLOCATION OF PLAN DISTRIBUTIONS BETWEEN PRINCIPAL AND INTEREST. To the extent that any Allowed Claim entitled to a Distribution under the Plan is comprised of indebtedness and accrued but unpaid interest thereon, such Distribution shall, for federal income tax purposes, be allocated to the principal amount of the Claim first and then, to the extent the consideration exceeds the principal amount of the Claim, to accrued but unpaid interest. 7.17 DISTRICT COURT APPROVAL OF THE CONFIRMATION ORDER. The Plan Proponents may seek to have the Confirmation Order and the Asbestos and Lead PI Permanent Channeling Injunction either entered or affirmed by the District Court. A-42 ARTICLE 8 EXECUTORY CONTRACTS AND UNEXPIRED LEASES 8.1 ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES. Any executory contracts or unexpired leases listed on Exhibit "8.1" to the Plan shall be deemed to have been assumed by the Reorganized Debtors on the Effective Date, and the Plan shall constitute a motion to assume such executory contracts and unexpired leases. Subject to the occurrence of the Effective Date, entry of the Confirmation Order by the Clerk of the Bankruptcy Court shall constitute approval of such assumptions pursuant to section 365(a) of the Bankruptcy Code and a finding by the Bankruptcy Court that each such assumption is in the best interest of the Debtors, their estates, and all parties in interest in the Chapter 11 Cases. With respect to each such executory contract or unexpired lease assumed by the Reorganized Debtors, unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, the dollar amount required to cure any defaults of the Debtors existing as of the Confirmation Date shall be conclusively presumed to be the amount set forth in Exhibit "8.1" with respect to such executory contract or unexpired lease. Subject to the occurrence of the Effective Date, any such cure amount shall be treated as an Allowed Administrative Expense under the Plan, and, upon payment of such Allowed Administrative Expense, all defaults of the Debtors existing as of the Confirmation Date with respect to such executory contract or unexpired lease shall be deemed cured. 8.2 REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES. Any executory contracts or unexpired leases of any of the Debtors that (i) are not listed on Exhibit "8.1" to the Plan, (ii) have not been assumed by any of the Debtors with the approval of the Bankruptcy Court, and (iii) are not the subject of pending motions to assume at the Confirmation Date shall be deemed to have been rejected by the Debtors, the Plan shall constitute a motion to reject such executory contracts and unexpired leases, and the Reorganized Debtors shall have no liability thereunder except as is specifically provided in the Plan. Entry of the Confirmation Order by the Clerk of the Bankruptcy Court shall constitute approval of such rejections pursuant to section 365(a) of the Bankruptcy Code and a finding by the Bankruptcy Court that each such rejected executory contract or unexpired lease is burdensome and that the rejection thereof is in the best interest of the Debtors, their estates, and all parties in interest in the Chapter 11 Cases. 8.3 CLAIMS ARISING FROM REJECTION OR TERMINATION. Claims created by the rejection of executory contracts or unexpired leases (including, without limitation, the rejection provided in Section of the Plan) or the expiration or termination of any executory contract or unexpired lease prior to the Confirmation Date must be filed with the Bankruptcy Court and served on the Debtors no later than thirty (30) days after (i) in the case of an executory contract or unexpired lease that was terminated or expired by its terms prior to the Confirmation Date, the Confirmation Date, (ii) in the case of an executory contract or unexpired lease rejected by the Debtors, the entry of the order of the Bankruptcy Court authorizing such rejection, or (iii) in the case of an executory contract or unexpired lease that is deemed rejected pursuant to section 8.2 of the Plan, the Confirmation Date. Any Claims for which a proof of claim is not filed and served within such time will be forever barred from assertion and shall not be enforceable against the Debtors, their estates, assets, properties, or interests in property, or the Reorganized Debtors or their estates, assets, properties, or interests in property. Unless otherwise ordered by the Bankruptcy Court, all such Claims that are timely filed as provided herein shall be treated as Unsecured Claims under the Plan. A-43 8.4 PREVIOUSLY SCHEDULED CONTRACTS. Exhibit "8.4" to the Plan sets forth a list of agreements that were listed on the Schedules as executory contracts, but which the Debtors believe should not be considered executory contracts. If any such agreements are determined to be executory contracts, the Debtors or the Reorganized Debtors, as the case may be, reserve the right to seek the assumption or rejection of any such contracts, and the time within which the Debtors or the Reorganized Debtors, as the case may be, may seek to assume or reject any such agreements shall be tolled until ten (10) Business Days after the date on which an order determining that any such agreement is an executory contract becomes a Final Order. Set forth on Exhibit "8.4" is the amount that the Debtors intend to treat as an Allowed Unsecured Claim for each such agreement. Such amount and the treatment of each such agreement shall be binding unless, on or before ten (10) days after the Confirmation Date, the other party to any such agreement either (i) files a proof of claim (which proof of claim shall be deemed timely filed) or (ii) files a motion seeking to compel assumption or rejection of such agreement. 8.5 INSURANCE POLICIES. 8.5.1 Assumed Insurance Policies. To the extent that any or all of the insurance policies set forth on Exhibit "8.5.1" to the Plan are considered to be executory contracts, then, notwithstanding anything contained in sections 8.1 and 8.2 of the Plan to the contrary, the Plan shall constitute a motion to assume the insurance policies set forth on Exhibit "8.5.1" to the Plan, and, subject to the occurrence of the Effective Date, the entry of the Confirmation Order by the Clerk of the Bankruptcy Court shall constitute approval of such assumption pursuant to section 365(a) of the Bankruptcy Code and a finding by the Bankruptcy Court that each such assumption is in the best interest of the Debtors, their estates, and all parties in interest in the Chapter 11 Cases. Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, no payments are required to cure any defaults of the Debtors existing as of the Confirmation Date with respect to each such insurance policy set forth on Exhibit "8.5.1" to the Plan. To the extent that the Bankruptcy Court determines otherwise as to any such insurance policy, the Debtors reserve the right to seek rejection of such insurance policy or other available relief. 8.5.2 Rejected Insurance Agreements. To the extent that any or all of the insurance agreements set forth on Exhibit "8.5.2" to the Plan are considered to be executory contracts, then, notwithstanding anything contained in sections 8.1 and 8.2 of the Plan to the contrary, the Plan shall constitute a motion to reject the insurance agreements set forth on Exhibit "8.5.2" to the Plan, and the entry of the Confirmation Order by the Clerk of the Bankruptcy Court shall constitute approval of such rejection pursuant to section 365(a) of the Bankruptcy Code and a finding by the Bankruptcy Court that each such rejected insurance agreement set forth on Exhibit "8.5.2" to the Plan is burdensome and that the rejection thereof is in the best interest of the Debtors, their estates, and all parties in interest in the Chapter 11 Cases. 8.5.3 Reservation of Rights. Nothing contained in the Plan, including this section , shall constitute a waiver of any claim, right, or cause of action that the Debtors or the Reorganized Debtors, as the case may be, may hold against the insurer under any policy of insurance. 8.6 INDEMNIFICATION AND REIMBURSEMENT OBLIGATIONS. For purposes of the Plan, the obligations of the Debtors to indemnify and reimburse their directors or officers that were directors or officers, respectively, as at the Petition Date or who became directors or officers after the Petition Date against and for any obligations pursuant to articles of incorporation, codes of regulations, bylaws, applicable state law, or specific agreement, or any combination of the foregoing A-44 shall survive confirmation of the Plan, remain unaffected thereby, and not be discharged in accordance with section 1141 of the Bankruptcy Code, irrespective of whether indemnification or reimbursement is owed in connection with an event occurring before, on, or after the Petition Date. 8.7 COMPENSATION AND BENEFIT PROGRAMS. All employment and severance policies (including, without limitation, the Supplemental Severance Program, as modified pursuant to section hereof), and all compensation and benefit plans, policies and programs of the Debtors applicable to their present and former employees, officers, and directors, including, without express or implied limitation, all savings plans, retirement plans, health care plans, disability plans, severance benefit plans, incentive plans, and life, accidental death, and dismemberment insurance plans, shall be deemed to be, and shall be treated as though they are, executory contracts that are deemed assumed under the Plan, and the Debtors' obligations under such plans, policies, and programs shall be deemed assumed pursuant to section 365(a) of the Bankruptcy Code, survive confirmation of the Plan, remain unaffected thereby, and not be discharged in accordance with section 1141 of the Bankruptcy Code. Any defaults existing under any of such plans, policies, and programs shall be cured promptly after they become known by the Debtors. Notwithstanding the foregoing, on the Effective Date, the Eagle-Picher Automatic Dividend Reinvestment and Voluntary Cash Payment Plan, the Eagle-Picher Industries, Inc. Stock Option Plan of 1983, as amended, and the Eagle-Picher Industries, Inc. Stock Option Plan of 1990 will be deemed terminated, cancelled, and of no further force and effect, and the participants thereunder shall have no further rights thereunder. A-45 ARTICLE 9 RETENTION OF JURISDICTION Pursuant to sections 105(a) and 1142 of the Bankruptcy Code, the Bankruptcy Court shall retain and shall have exclusive jurisdiction over any matter (a) arising under the Bankruptcy Code, (b) arising in or related to the Chapter 11 Cases or the Plan, or (c) that relates to the following: 9.1 To interpret, enforce, and administer the terms of the Asbestos and Lead PI Trust Agreement (including all annexes and exhibits thereto), the Asbestos PD Trust Agreement (including all annexes and exhibits thereto), and the restrictions on transfer of New Eagle-Picher Common Stock, Asbestos Personal Injury Claims, Asbestos Property Damage Claims, and Lead Personal Injury Claims contained in the Amended and Restated Articles of Incorporation and the Confirmation Order. 9.2 To hear and determine any and all motions or applications pending on the Confirmation Date for the assumption and/or assignment or rejection of executory contracts or unexpired leases to which any of the Debtors is a party or with respect to which any of the Debtors may be liable, and to hear and determine any and all Claims resulting therefrom or from the expiration or termination of any executory contract or unexpired lease prior to the Confirmation Date; 9.3 To determine any and all adversary proceedings, applications, motions, and contested or litigated matters that may be pending on the Effective Date or that, pursuant to the Plan, may be instituted by any of the Reorganized Debtors after the Effective Date, including, without express or implied limitation, any claims to avoid any preferences, fraudulent transfers, or other voidable transfers, or otherwise to recover assets for the benefit of the Debtors' estates; 9.4 To hear and determine any objections to the allowance of Claims arising prior to the Effective Date, whether filed, asserted, or made before or after the Effective Date, including, without express or implied limitation, to hear and determine any objections to the classification of any Claim and to allow or disallow any Disputed Claim in whole or in part; 9.5 To issue such orders in aid of execution of the Plan to the extent authorized or contemplated by section 1142 of the Bankruptcy Code; 9.6 To consider any modifications of the Plan, remedy any defect or omission, or reconcile any inconsistency in any order of the Bankruptcy Court, including, without express or implied limitation, the Confirmation Order; 9.7 To hear and determine all applications for allowances of compensation and reimbursement of expenses of professionals under sections 330 and 331 of the Bankruptcy Code and any other fees and expenses authorized to be paid or reimbursed under the Plan; 9.8 To hear and determine all controversies, suits, and disputes that may relate to, impact upon, or arise in connection with the Plan (and all Exhibits to the Plan) or its interpretation, implementation, enforcement, or consummation; A-46 9.9 To the extent that Bankruptcy Court approval is required, to consider and act on the compromise and settlement of any Claim or cause of action by or against the Debtors' estates; 9.10 To determine such other matters that may be set forth in the Plan, the Confirmation Order, the Claims Trading Injunction, or the Asbestos and Lead PI Permanent Channeling Injunction, or that may arise in connection with the Plan, the Confirmation Order, the Claims Trading Injunction, or the Asbestos and Lead PI Permanent Channeling Injunction; 9.11 To hear and determine any proceeding that involves the validity, application, construction, enforceability, or modification of the Claims Trading Injunction or the Asbestos and Lead PI Permanent Channeling Injunction or of the application of section 524(g) of the Bankruptcy Code to the Asbestos and Lead PI Permanent Channeling Injunction. 9.12 To hear and determine matters concerning state, local, and federal taxes, fines, penalties, or additions to taxes for which the Debtors or Debtors in Possession may be liable, directly or indirectly, in accordance with sections 346, 505, and 1146 of the Bankruptcy Code; and 9.13 To enter an order or final decree closing the Chapter 11 Cases. To the extent that the Bankruptcy Court is not permitted under applicable law to preside over any of the foregoing matters, the reference to the "Bankruptcy Court" in this Article 9 shall be deemed to be replaced by the "District Court." Notwithstanding anything in this Article 9 to the contrary, the allowance of Asbestos Personal Injury Claims and Lead Personal Injury Claims (other than any such Claims as to which the Reorganized Debtors prosecute objections pursuant to section hereof) and the forum in which such allowance will be determined will be governed by and in accordance with the procedures established by the Asbestos and Lead PI Trust Agreement and the Trustees, and the allowance of Asbestos Property Damage Claims (other than any such Claims as to which the Reorganized Debtors prosecute objections pursuant to section 5.1 hereof) and the forum in which such allowance will be determined will be governed by and in accordance with the procedures established by the Asbestos PD Trust Agreement and the trustees for the Asbestos PD Trust. A-47 ARTICLE 10 TRANSFERS OF PROPERTY TO AND ASSUMPTION OF CERTAIN LIABILITIES BY THE PI TRUST 10.1 TRANSFER OF CERTAIN PROPERTY TO THE PI TRUST. 10.1.1 Transfer of Books and Records. On the Effective Date or as soon thereafter as is practicable, the Reorganized Debtors shall transfer and assign, or cause to be transferred and assigned, to the PI Trust the books and records of the Debtors that pertain directly to Asbestos Personal Injury Claims or Lead Personal Injury Claims that have been asserted against the Debtors (except, in the case of Lead Personal Injury Claims, to the extent that any such Lead Personal Injury Claims are the subject of an objection brought by any of the Debtors and which the Reorganized Debtors prosecute in accordance with section 5.1 hereof, in which case the books and records pertaining to such Lead Personal Injury Claims will be transferred to the PI Trust as soon as practicable after such objection has been resolved by a Final Order). The Plan Proponents will request that the Bankruptcy Court, in the Confirmation Order, rule that such transfer does not result in the destruction or waiver of any applicable privileges pertaining to such books and records. If the Bankruptcy Court does not so rule, at the option of the Plan Proponents, the Reorganized Debtors will retain the books and records and enter into arrangements to permit the PI Trust to have access to such books and records. 10.1.2 Transfer of Certain Insurance Rights. Certain rights to insurance, to be agreed upon by the Plan Proponents (each in its sole discretion), also will be transferred to the PI Trust on the Effective Date. 10.1.3 Transfer of Plan Consideration. On the Initial Distribution Date, the Reorganized Debtors shall transfer and assign, or cause to be transferred and assigned, to the PI Trust all right, title, and interest in and to the Pro Rata Share with respect to the PI Trust Share of the Distribution Value. Such Pro Rata Share shall be payable to the PI Trust in the following consideration: (i) first, the Tax Refund Notes; (ii) second, ten million (10,000,000) shares of New Eagle-Picher Common Stock, (iii) third, to the extent that the value of consideration paid under (i) and (ii) of this section 10.1.3 is less than such Pro Rata Share, the amount of Available Cash remaining after making all Distributions required to be made to the holders of Claims in Classes 19, 20, and 21 of the Plan on the Initial Distribution Date less the amount of Available Cash that may be required to be paid to the holders of Claims in Classes 19, 20, and 21 of the Plan if all Disputed Claims become Allowed in the full Disputed Amount; (iv) fourth, if the value of consideration paid under (i), (ii), and (iii) of this section 10.1.3 is less than such Pro Rata Share, Senior Unsecured Sinking Fund Debentures in an aggregate principal amount equal to the lesser of (a) the remaining amount of such Pro Rata Share after payment of the consideration under (i), (ii), and (iii) of this section 10.1.3 and (b) the aggregate principal amount of Senior Unsecured Sinking Fund Debentures remaining after making any Distribution required to be made to the Asbestos PD Trust on the Initial Distribution Date less the aggregate amount of Senior Unsecured Sinking Fund Debentures that may be required to be distributed to the Asbestos PD Trust if all Disputed Claims are disallowed; and (v) fifth, to the extent that the value of consideration paid under (i), (ii), (iii), and (iv) of this section 10.1.3 is less than such Pro Rata Share, Divestiture Notes in an aggregate principal amount equal to the lesser of (x) the remaining amount of such Pro Rata Share after payment of the consideration under (i), (ii), (iii), and (iv) of this section 10.1.3 and (y) the aggregate principal amount of Divestiture Notes remaining after making all Distributions required to be made to the holders of Claims in Classes 19, 20, and 21 of the Plan on the Initial Distribution Date less the aggregate A-48 amount of Divesture Notes that may be required to be paid to the holders of Claims in Classes 19, 20, and 21 of the Plan if all Disputed Claims become Allowed in the full Disputed Amount. On the Final Distribution Date, the Reorganized Debtors shall transfer and assign, or cause to be transferred and assigned, to the PI Trust all right, title, and interest in and to the Available Cash, Senior Unsecured Sinking Fund Debentures, Divestiture Notes, and shares of New Eagle-Picher Common Stock remaining after making all other Distributions required to be made under the Plan on the Final Distribution Date. 10.2 ASSUMPTION OF CERTAIN LIABILITIES BY THE PI TRUST. In consideration for the property transferred to the PI Trust pursuant to section 10.1 hereof and in furtherance of the purposes of the PI Trust and the Plan, the PI Trust shall assume all liability and responsibility for all Asbestos Personal Injury Claims and Lead Personal Injury Claims, and the Reorganized Debtors shall have no further financial or other responsibility or liability therefor. 10.3 CERTAIN PROPERTY HELD IN TRUST BY THE REORGANIZED DEBTORS. If and to the extent that any property of the Reorganized Debtors specified in section 10.1 hereof, under applicable law or any binding contractual provision, cannot be effectively transferred and assigned to the PI Trust pursuant to section 10.1 hereof, or if for any reason after the Effective Date the Reorganized Debtors shall retain or receive any property that is owned by the Reorganized Debtors or the Debtors (as the case may be) and is to be transferred to the PI Trust pursuant to section 10.1 hereof, then the Reorganized Debtors shall hold such property (and any proceeds thereof) in trust for the benefit of the PI Trust and shall take such actions with respect to such property (and any proceeds thereof) as the Trustees shall direct in writing. The Reorganized Debtors shall provide to the Trustees reasonable access to the relevant books and records of the Debtors and the Reorganized Debtors during normal business hours for the purpose of assisting the Trustees in defending against the Asbestos Personal Injury Claims and Lead Personal Injury Claims and otherwise administering the PI Trust. 10.4 AUTHORITY OF THE DEBTORS. On the Confirmation Date, the Debtors shall be empowered and authorized to take or cause to be taken, prior to the Effective Date, all actions necessary to enable them to implement effectively the provisions of the Plan and the PI Trust Agreement. A-49 ARTICLE 11 TRANSFERS OF PROPERTY TO AND ASSUMPTION OF CERTAIN LIABILITIES BY THE ASBESTOS PD TRUST 11.1 TRANSFER OF CERTAIN PROPERTY TO THE ASBESTOS PD TRUST. On the Effective Date or as soon thereafter as is practicable, the Reorganized Debtors shall transfer and assign, or cause to be transferred and assigned, to the Asbestos PD Trust the books and records of the Debtors that pertain directly to Asbestos Property Damage Claims that have been asserted against the Debtors (except to the extent that any Asbestos Property Damage Claims are the subject of an objection brought by any of the Debtors and which the Reorganized Debtors prosecute in accordance with section 5.1 hereof, in which case the books and records pertaining to such Asbestos Property Damage Claims will be transferred to the Asbestos PD Trust as soon as practicable after such objection has been resolved by a Final Order). The Plan Proponents will request that the Bankruptcy Court, in the Confirmation Order, rule that such transfer does not result in the destruction or waiver of any applicable privileges pertaining to such books and records. If the Bankruptcy Court does not so rule, at the option of the Plan Proponents, the Reorganized Debtors will retain the books and records and enter into arrangements to permit the Asbestos PD Trust to have access to such books and records. If Class 16 votes to accept the Plan, then, on the Effective Date, the Reorganized Debtors shall transfer and assign, or cause to be transferred and assigned, to the Asbestos PD Trust the Asbestos PD Trust Funding Obligation. If Class 16 votes to reject the Plan, then, on the Initial Distribution Date and the Final Distribution Date, the Reorganized Debtors shall transfer and assign, or cause to be transferred and assigned, to the Asbestos PD Trust all right, title, and interest in and to the Pro Rata Share of the Asbestos PD Trust of the Distribution Value by the transfer to the Asbestos PD Trust of Senior Unsecured Sinking Fund Debentures in the aggregate principal amount equal to such Pro Rata Share of the Distribution Value less the aggregate principal amount of Senior Unsecured Sinking Fund Debentures previously transferred to the Asbestos PD Trust in any Distribution made prior thereto. 11.2 ASSUMPTION OF CERTAIN LIABILITIES BY THE ASBESTOS PD TRUST. In consideration for the property transferred to the Asbestos PD Trust pursuant to section 11.1 hereof and in furtherance of the purposes of the Asbestos PD Trust and the Plan, the Asbestos PD Trust shall assume all liability and responsibility for all Asbestos Property Damage Claims, and the Reorganized Debtors shall have no further financial or other responsibility or liability therefor. 11.3 CERTAIN PROPERTY HELD IN TRUST BY THE REORGANIZED DEBTORS. If and to the extent that any property of the Reorganized Debtors specified in section 11.1 hereof, under applicable law or any binding contractual provision, cannot be effectively transferred and assigned to the Asbestos PD Trust pursuant to section hereof, or if for any reason after the Effective Date the Reorganized Debtors shall retain or receive any property that is owned by the Reorganized Debtors or the Debtors (as the case may be) and is to be transferred to the Asbestos PD Trust pursuant to section 11.1 hereof, then the Reorganized Debtors shall hold such property (and any proceeds thereof) in trust for the benefit of the Asbestos PD Trust and shall take such actions with respect to such property (and any proceeds thereof) as the trustees of the Asbestos PD Trust shall direct in writing. The Reorganized Debtors shall provide to the trustees of the Asbestos PD Trust reasonable access to the relevant books and records of the Debtors and the Reorganized Debtors during normal business hours for the purpose of assisting the trustees of the Asbestos PD Trust in defending against the Asbestos Property Damage Claims and otherwise administering the Asbestos PD Trust. A-50 11.4 AUTHORITY OF THE DEBTORS. On the Confirmation Date, the Debtors shall be empowered and authorized to take or cause to be taken, prior to the Effective Date, all actions necessary to enable them to implement effectively the provisions of the Plan and the Asbestos PD Trust Agreement. A-51 ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1 PAYMENT OF STATUTORY FEES. All fees payable pursuant to section 1930 of title 28 of the United States Code, as determined by the Bankruptcy Court at the hearing on confirmation of the Plan, shall be paid by the Debtors on or before the Effective Date. 12.2 DISCHARGE OF THE DEBTORS. The rights afforded in the Plan and the treatment of all Claims and Equity Interests herein shall be in exchange for and in complete satisfaction, discharge, and release of all Claims and Equity Interests of any nature whatsoever, including any interest accrued thereon from and after the Petition Date, against the Debtors and the Debtors in Possession, or any of their estates, assets, properties, or interests in property. Except as otherwise provided herein, on the Effective Date, all Claims against and Equity Interests in the Debtors and the Debtors in Possession shall be satisfied, discharged, and released in full. The Reorganized Debtors shall not be responsible for any obligations of the Debtors or the Debtors in Possession except those expressly assumed by the Reorganized Debtors in the Plan. All Entities shall be precluded and forever barred from asserting against the Debtors, the Reorganized Debtors, their respective successors or assigns, or their assets, properties, or interests in property any other or further Claims based upon any act or omission, transaction, or other activity of any kind or nature that occurred prior to the Effective Date, whether or not the facts of or legal bases therefor were known or existed prior to the Effective Date. 12.3 RIGHTS OF ACTION. Any rights, claims, or causes of action accruing to the Debtors or Debtors in Possession pursuant to the Bankruptcy Code or pursuant to any statute or legal theory, including, without express or implied limitation, any avoidance or recovery actions under sections 544, 545, 547, 548, 549, 550, 551, and 553 of the Bankruptcy Code and any rights to, claims, or causes of action for recovery under any policies of insurance issued to or on behalf of any of the Debtors or Debtors in Possession shall remain assets of the Debtors' estates and, on the Effective Date, shall be transferred to the Reorganized Debtors. The Reorganized Debtors shall be deemed the appointed representative to, and may, pursue, litigate, and compromise and settle any such rights, claims, or causes of action, as appropriate, in accordance with what is in the best interests of and for the benefit of the Reorganized Debtors. 12.4 THIRD PARTY AGREEMENTS. The Distributions to the various classes of Claims hereunder shall not affect the right of any Entity to levy, garnish, attach, or employ any other legal process with respect to such Distributions by reason of any claimed subordination rights or otherwise. All of such rights and any agreements relating thereto shall remain in full force and effect. 12.5 DISSOLUTION OF COMMITTEES. On the Effective Date, the Future Claimants' Representative, the Injury Claimants' Committee, the Unsecured Creditors' Committee, and the Equity Security Holders' Committee shall thereupon be released and discharged of and from all further authority, duties, responsibilities, and obligations relating to and arising from and in connection with the Chapter 11 Cases, and all such committees shall be deemed dissolved and the Future Claimants' Representative's appointment terminated; provided, however, that, in the event that the Effective Date occurs prior to the Confirmation Order becoming a Final Order, the Unsecured Creditors' Committee, Future Claimants' Representative, and the Injury Claimants' Committee may, at their option, continue to serve and function for the sole purpose of participating in any appeal of the Confirmation Order until such time as the Confirmation Order becomes a Final Order. A-52 12.6 EXCULPATION. None of the Reorganized Debtors, any of the Plan Proponents, or any of their officers, directors, employees, or agents shall have or incur any liability to any Entity for any act or omission in connection with or arising out of the pursuit of confirmation of the Plan, the consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for gross negligence or willful misconduct, and in all respects shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan. 12.7 TITLE TO ASSETS; DISCHARGE OF LIABILITIES. Except as otherwise provided in the Plan, on the Effective Date, title to all assets and properties and interests in property dealt with by the Plan shall vest in the Reorganized Debtors free and clear of all Claims, Equity Interests, Encumbrances, and other interests, and the Confirmation Order shall be a judicial determination of discharge of the liabilities of the Debtors, except as provided in the Plan. 12.8 SURRENDER AND CANCELLATION OF INSTRUMENTS. In addition to the provisions of section hereof, each holder of a promissory note or other instrument evidencing a Claim shall surrender such promissory note or instrument to the Reorganized Debtors, and the Reorganized Debtors shall distribute or cause to be distributed to the holder thereof the appropriate Distribution hereunder. At the option of the Reorganized Debtors (in their sole and absolute discretion), no Distribution hereunder shall be made to or on behalf of any holder of such Claim unless and until such promissory note or instrument is received or the unavailability of such note or instrument is reasonably established to the satisfaction of the Reorganized Debtors. In accordance with section 1143 of the Bankruptcy Code, any such holder of such a Claim that fails to surrender or cause to be surrendered such promissory note or instrument or to execute and deliver an affidavit of loss and indemnity reasonably satisfactory to the Reorganized Debtors and, in the event that the Reorganized Debtors request, furnish a bond in form and substance (including, without limitation, amount) reasonably satisfactory to the Reorganized Debtors within the Retention Period shall be deemed to have forfeited all rights, claims, and interests and shall not participate in any Distribution hereunder. 12.9 NOTICES. Any notices, requests, and demands required or permitted to be provided under the Plan, in order to be effective, shall be in writing (including, without express or implied limitation, by facsimile transmission), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows: If to the Debtors: Eagle-Picher Industries, Inc. Attention: General Counsel IF BY HAND OR OVERNIGHT DELIVERY: 580 Building 580 Walnut Street Suite 1300 Cincinnati, Ohio 45202 A-53 IF BY MAIL: Post Office Box 779 Cincinnati, Ohio 45201 Telecopier: (513) 721-3404 Telephone Confirmation: (513) 629-2400 and Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Stephen Karotkin, Esq. Telecopier: (212) 310-8007 Telephone Confirmation: (212) 310-8888 and Frost & Jacobs 2500 PNC Center 201 East Fifth Street Cincinnati, Ohio 45202-4182 Attention: Edmund J. Adams, Esq. Telecopier: (513) 651-6981 Telephone Confirmation: (513) 651-6800 If to the Injury Claimants' Committee: Robert E. Sweeney, Esq. Robert E. Sweeney Co., L.P.A. Suite 1500, Illuminating Building 55 Public Square Cleveland, Ohio 44113 Telecopier: (216) 696-0732 Telephone Confirmation: (216) 696-0606 and Keating, Muething & Klekamp 1800 Provident Tower One East Fourth Street Cincinnati, Ohio 45202 Attention: Kevin E. Irwin, Esq. Telecopier: (513) 579-6457 Telephone Confirmation: (513) 579-6400 A-54 If to the Future Representative: James J. G. McMonagle, Esq. 24 Walnut Chagrin Falls, Ohio 44022 Telecopier: (216) 696-1210 Telephone Confirmation: (216) 696-1422 and McCarthy, Lebit, Crystal & Haiman Co., LPA 1800 Midland Building 101 Prospect Avenue, West Cleveland, Ohio 44115 Attention: Robert S. Balantzow, Esq. Telecopier: (216) 696-1210 Telephone Confirmation: (216) 696-1422 12.10 HEADINGS. The headings used in the Plan are inserted for convenience only and neither constitute a portion of the Plan nor in any manner affect the construction of the provisions of the Plan. 12.11 SEVERABILITY. At the unanimous option of the Plan Proponents acting in their sole discretion, any provision of the Plan, the Claims Trading Injunction, the Confirmation Order, the Asbestos and Lead PI Permanent Channeling Injunction, or any of the Exhibits to the Plan that is prohibited, unenforceable, or invalid shall, as to any jurisdiction in which such provision is prohibited, unenforceable, or invalidated, be ineffective to the extent of such prohibition, unenforceability, or invalidation without invalidating the remaining provisions of the Plan, the Claims Trading Injunction, the Confirmation Order, the Asbestos and Lead PI Permanent Channeling Injunction, and the Exhibits to the Plan or affecting the validity or enforceability of such provisions in any other jurisdiction. 12.12 GOVERNING LAW. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of Ohio, without giving effect to the conflicts of laws principles thereof, shall govern the construction of the Plan and any agreements, documents, and instruments executed in connection with the Plan, except as otherwise expressly provided in such instruments, agreements or documents. 12.13 FILING OF ADDITIONAL DOCUMENTS. On or before the Effective Date, the Debtors shall file with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. 12.14 COMPLIANCE WITH TAX REQUIREMENTS. In connection with the Plan, the Debtors will comply with all withholding and reporting requirements imposed by federal, state and local taxing authorities, and all distributions hereunder shall be subject to such withholding and reporting requirements. A-55 12.15 EXEMPTION FROM TRANSFER TAXES. Pursuant to section 1146(c) of the Bankruptcy Code, the issuance, transfer, or exchange of notes or equity securities under the Plan, the creation of any mortgage, deed of trust, or other security interest, the making or assignment of any lease or sublease, or the making or delivery of any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan, including, without express or implied limitation, the liens and security interests provided under the reorganized credit facility referenced in section 7.9.0.10 hereof, shall not be subject to any stamp, real estate transfer, mortgage recording, or other similar tax. Dated: Cincinnati, Ohio August 28, 1996 Respectfully submitted, EAGLE-PICHER INDUSTRIES, INC. By: /s/ THOMAS E. PETRY ----------------------------------------- Name: Thomas E. Petry Title: Chairman of the Board and Chief Executive Officer DAISY PARTS, INC. By: /s/ JAMES A. RALSTON ----------------------------------------- Name: James A. Ralston Title: Secretary TRANSICOIL INC. By: /s/ JAMES A. RALSTON ----------------------------------------- Name: James A. Ralston Title: Assistant Secretary MICHIGAN AUTOMOTIVE RESEARCH CORPORATION By: /s/ JAMES A. RALSTON ----------------------------------------- Name: James A. Ralston Title: Assistant Secretary A-56 EDI, INC. By: /s/ JAMES A. RALSTON ----------------------------------------- Name: James A. Ralston Title: Assistant Secretary EAGLE-PICHER MINERALS, INC. By: /s/ JAMES A. RALSTON ----------------------------------------- Name: James A. Ralston Title: Secretary HILLSDALE TOOL & MANUFACTURING CO. By: /s/ JAMES A. RALSTON ----------------------------------------- Name: James A. Ralston Title: Secretary WEIL, GOTSHAL & MANGES LLP Co-Attorneys for Eagle-Picher Industries, Inc., et al. Chapter 11 Debtors in Possession 767 Fifth Avenue New York, New York 10153 (212) 310-8000 and FROST & JACOBS Co-Attorneys for Eagle-Picher Industries, Inc., et al. Chapter 11 Debtors in Possession 2500 PNC Center 201 East Fifth Street Cincinnati, Ohio 45202-4182 (513) 651-6800 A-57 JAMES J.G. McMONAGLE, THE FUTURE CLAIMANTS' REPRESENTATIVE /s/ JAMES J.G. McMONAGLE -------------------------------------------- McCarthy, Lebit, Crystal & Haiman Co., LPA Attorneys for the Future Claimants' Representative 1800 Midland Building 101 Prospect Avenue, West Cleveland, Ohio 44115 (216) 696-1422 THE INJURY CLAIMANTS' COMMITTEE By: /s/ ROBERT E. SWEENEY ----------------------------------------- Name: Robert E. Sweeney Title: Chairperson Keating, Muething & Klekamp Attorneys for the Injury Claimants' Committee 1800 Provident Tower One East Fourth Street P.O. Box 1800 Cincinnati, Ohio 45202 (513) 579-6400
EX-2.2 3 EXHIBIT 2.2 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - ------------------------------------) Exhibit "1.1.6.5" FORM OF ASBESTOS PROPERTY DAMAGE CLAIMS RESOLUTION PROCEDURES [THIS PAGE LEFT BLANK INTENTIONALLY] ASBESTOS PROPERTY DAMAGE CLAIMS RESOLUTION PROCEDURES 1. DEFINITIONS AND INTERPRETATION 1.1. The following terms and phrases shall have the following meanings: "ACBM" shall mean asbestos-containing building materials that the Claimant alleges constitute One-Cote or Super "66." "Accredited Inspector" shall mean a person accredited for the purposes of inspecting for ACBM pursuant to section 206 of title II of the Toxic Substances Control Act, 15 U.S.C. 'SS' 2646. "Accredited Inspector Report" shall mean a signed, written report of an Accredited Inspector, which states (i) the name, address, state of accreditation, accreditation number, and the date of the inspection; (ii) separately, for each Homogeneous Area of ACBM for which a Claim is made, (a) its location, (b) the application of the ACBM, (c) the total quantity of ACBM (stating in the case of pipe fittings, the number and diameter, in the case of pipe covering, the length and diameter, and in the case of other applications, the area), (d) whether the ACBM is in need of repair, and (e) whether the ACBM is in a position where it is likely to be disturbed; (iii) the total number of decontamination areas that it would be necessary to construct; (iv) for each decontamination area, (a) the total floor area (in square feet) and (b) the total circumference (in linear feet); and (v) if an Approved Laboratory Report is submitted with a Claim Information Form, certification by the Accredited Inspector that the Accredited Inspector has taken two bulk samples from each Homogeneous Area listed in (ii) in accordance with the procedures described in the Protocols and an inventory of the locations of the Homogeneous Areas where samples are collected, the exact location from which each sample is collected, and the date of such collection. "Adjusted Nominal Value" shall mean the nominal value of a Claim assessed by reference to the Compensation Model and adjusted by reference to the Evaluation Criteria in accordance with sections 4.3 and 4.4. "Applicable Jurisdiction" shall mean the jurisdiction of the state in which the buildings that are the subject of the Claim are situated. "Approved Laboratory" shall mean a laboratory conducting constituent analysis listed in Exhibit "1" or any laboratory that is a successful participant in the National Institute of Standards and Technology National Voluntary Laboratory Accreditation Program for both Asbestos Bulk Sample Analysis by Method in 40 C.F.R. 763, Appendix A, Subpart F, and Airborne Fiber Analysis by Transmission Electron Microscopy by the method in 40 C.F.R. 763, Appendix A, Subpart E. A.1.1.6.5-1 "Approved Laboratory Report" shall mean a signed, written report by an Approved Laboratory, pursuant to which the Approved Laboratory (i) certifies (a) that it has received the bulk samples referenced in the related Accredited Inspector Report and (b) that it has analyzed such bulk samples in accordance with some or all of the procedures described in the Protocols, and (ii) makes one or more of the certification(s) set forth in section 4.4.2 hereof. The Approved Laboratory Report shall contain such other details of the results and the procedures used to adequately explain the analyses of the bulk samples referenced therein. "Arbitration" shall mean the binding dispute resolution procedure set forth in section 7. "Asbestos Abatement Program" shall mean a program for the removal and disposal of ACBM carried out pursuant to applicable federal and state regulations and otherwise than in connection with the renovation or demolition of a building. "Asbestos PD Trust" shall mean the trust established in accordance with the Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust Agreement, substantially in the form of Exhibit "1.1.16" to the Plan. "Bankruptcy Court" shall mean the United States Bankruptcy Court for the Southern District of Ohio, Western Division. "Claim" shall mean any "Asbestos Property Damage Claim," as such term is defined in a confirmed plan of reorganization in the Chapter 11 Cases. "Claim Information Form" shall mean the Claim Information Form in the form annexed hereto as Exhibit "2." "Claimant" shall mean an entity asserting a Claim. "Claims Information Deadline" shall mean the date that is one hundred eighty (180) days after the Effective Date. "Chapter 11 Cases" shall mean the cases of Eagle-Picher and its affiliates under chapter 11 of title 11 of the United States Code, pending in the Bankruptcy Court under the consolidated case number 1-91-00100. "Compensation Model" shall mean the table of compensation values set forth in Exhibit "3." "Eagle-Picher" shall mean Eagle-Picher Industries, Inc. "Effective Date" shall have the same meaning as provided in the Plan. "Evaluation Criteria" shall mean those criteria for evaluating the Adjusted Nominal Value of a Claim set forth in section 4.4.2. "Homogeneous Area" shall mean an area of ACBM that is uniform in color and texture. "Nominal Value" shall mean the nominal value of a Claim assessed in accordance with section 4.3. "Notice of Arbitration" shall mean a notice of arbitration served by a Claimant on the Asbestos PD Trust pursuant to section 7.1. "Notice of Decision" shall mean a notice of decision served by the Asbestos PD Trust on a Claimant pursuant to section 5 in the form annexed hereto as Exhibit "4." A.1.1.6.5-2 "Notice of Reconsideration" shall mean a notice of reconsideration served by a Claimant on the Asbestos PD Trust pursuant to section 6.1 in the form annexed hereto as Exhibit "5." "One-Cote" shall mean the product sold under the trade name "One-Cote Insulating and Finishing Cement." "Plan" shall mean the Second Amended Consolidated Plan of Reorganization of the debtors in the Chapter 11 Cases, or such other plan that may be confirmed with respect to Eagle-Picher in the Chapter 11 Cases. "Protocols" shall mean the product identification protocols for One-Cote and Super "66" set forth in Exhibits "6" and "7," respectively. "Qualification Criteria" shall mean the criteria set forth in section 4.2, which must be satisfied before a claim may be allowed. "Super '66'" shall mean the product sold under the trade name "Super '66' Insulating Cement." "Trustee" shall mean, collectively, the trustee(s) of the Asbestos PD Trust. 1.2. The headings and title of this document are for convenience only and are not to be construed as part of the operative provisions of this document or as defining or limiting in any way the scope or intent of the provisions of this document. 1.3. References in this document to any section shall include all sections in such section. 1.4. All references in this document to the singular shall include the plural, where applicable. 1.5. Exhibits referred to in this document are hereby incorporated into and made a part of this document. 1.6. The terms and provisions of this document shall be interpreted in accordance with and governed by applicable federal law and the laws of the State of Ohio without giving effect to the doctrine of conflict of laws. 2. ORGANIZATION 2.1. These procedures shall be the exclusive method for the evaluation and settlement of Claims. 2.2. The Asbestos PD Trust may at any time following the Claims Information Deadline, and at the sole discretion of the Trustee, by written notice to each Claimant that has filed a Claim Information Form, extend any of the dates established in these procedures within which a Claimant may or shall take an action. The Asbestos PD Trust may only shorten any of the dates within which a Claimant may or shall take an action or extend the time within which the Asbestos PD Trust may or shall take an action by consent of the Claimant(s) affected or by order of the Bankruptcy Court. 3. CLAIM INFORMATION FORM 3.1. On or before the date that is ninety (90) days after the Effective Date, the Asbestos PD Trust shall mail to each holder of a Claim that has filed a proof of claim in the Chapter 11 Cases and that has not previously been disallowed or withdrawn, a copy of these Asbestos Property Damage Claims Resolution Procedures and a Claim Information Form. The Asbestos PD Trust shall provide one copy of these Asbestos Property A.1.1.6.5-3 Damage Claims Resolution Procedures and a Claim Information Form to the representative of each class that has filed a class proof of claim in the Chapter 11 Cases so long as such class proof of claim has not been disallowed as of the Effective Date, which representative shall be responsible for distributing these Asbestos Property Damage Claims Resolution Procedures and the Claim Information Form to each of the members of such class; provided, however, that the Asbestos PD Trust shall either (i) furnish any such class representative with copies of these Asbestos Property Damage Claims Resolution Procedures and the Claim Information Form, if within sixty (60) days after the Effective Date, such class representative notifies the Asbestos PD Trust of the number of copies needed for distribution to class members, or (ii) distribute these Asbestos Property Damage Claims Resolution Procedures and the Claim Information Form to each member of a class if, on or before sixty (60) days after the Effective Date, the class representative furnishes the Asbestos PD Trust with the names and addresses of the class members in a format acceptable to the Asbestos PD Trust that will permit the automated distribution of the Asbestos Property Damage Claims Resolution Procedures and the Claim Information Form. 3.2. Each Claimant shall complete and serve the Claim Information Form so that it is RECEIVED at the address specified on the Claim Information Form on or before the Claims Information Deadline. EACH MEMBER OF A CLASS THAT HAS FILED A CLASS PROOF OF CLAIM MUST FILE A SEPARATE CLAIM INFORMATION FORM. IF A CLASS MEMBER DOES NOT TIMELY FILE A SEPARATE CLAIM INFORMATION FORM, SUCH MEMBER WILL HAVE NO RIGHT TO ANY DISTRIBUTION FROM THE ASBESTOS PD TRUST. 3.3. The Claimant shall complete a separate Claim Information Form for each building with respect to which the Claim is made. Each Claim Information Form shall state separately for each building the following information: 3.3.1. the name, location, and use of the building; 3.3.2. the date on which the Claimant first became aware of the presence of the ACBM that are the subject of the Claim; 3.3.3. the date on which each Eagle-Picher product was installed; 3.3.4. separately for each Homogeneous Area, the Eagle-Picher brand-name, location, and application of each product with respect to which the Claim is made; 3.3.5. separately for each Homogeneous Area of ACBM, whether the ACBM for which the Claim is made remains in place, whether it has been abated pursuant to an Asbestos Abatement Program, or any other disposition of the ACBM; 3.3.6. separately for each Homogeneous Area of ACBM, whether the ACBM has been removed pursuant to a renovation or demolition, or otherwise than in connection with an Asbestos Abatement Program and, if so, the date of removal and actual abatement costs; 3.3.7. separately for each Homogeneous Area, whether the ACBM is in need of repair and whether the ACBM is in a position in which it is likely to be disturbed; A.1.1.6.5-4 3.3.8. the total number rooms or areas for which it would be necessary to construct an enclosure and decontamination area if the ACBM were to be removed; and 3.3.9. separately for each Homogeneous Area, the quantity of the ACBM with respect to which the Claim is made, stating in the case of fittings the number and diameter of each fitting, in the case of pipe the diameter and length, and in other cases the area. 3.4. The Claimant shall attach to the Claim Information Form the following documentary evidence: 3.4.1. a copy of all documentary evidence (if any) evidencing the date of installation of ACBM; 3.4.2. a copy of all documentary evidence (if any) evidencing the date on which the Claimant first became aware of the presence of ACBM; 3.4.3. an Approved Laboratory Report; 3.4.4. with respect to a building in which ACBM remains in place, an Accredited Inspector Report; and 3.4.5. with respect to a building in which ACBM was removed pursuant to an Asbestos Abatement Program, evidence (if any) that such ACBM was removed pursuant to such program and copies of bid specifications and contracts for the abatement work, together with copies of the receipted bills or other proof of payment. 4. ASSESSMENT OF CLAIMS 4.1. Each Claim shall be assessed solely by reference to the Qualification Criteria, Evaluation Criteria, and Compensation Model. 4.2. QUALIFICATION CRITERIA 4.2.1. In order to be allowed, a Claim must satisfy each of the following Qualification Criteria: 4.2.1.1. The Claimant properly filed a proof of claim corresponding to the ACBM for which the Claim is made in the Chapter 11 Cases on or before September 30, 1992, except to the extent that (i) the Bankruptcy Court has ordered, on or before the Effective Date, that the Claimant be permitted to file such proof of claim untimely, and the Claimant has, in fact, filed its proof of claim within the time specified by the Bankruptcy Court or (ii) Eagle-Picher has expressly consented to the untimely filing of such proof of claim, and such proof of claim is filed in accordance with any conditions attached by Eagle-Picher to such consent. 4.2.1.2. The Claim has not previously been disallowed by an order of the Bankruptcy Court or withdrawn. 4.2.1.3. The Claim is not factually time-barred under the statute of limitations or statute of repose of the Applicable Jurisdiction. 4.2.1.4. The Claim is not otherwise barred by the law of the Applicable Jurisdiction. A.1.1.6.5-5 4.2.1.5. The Claimant timely served a Claim Information Form containing the information required by section 3.3 hereof; provided, however, that a Claimant that has timely served a Claim Information Form but that has failed to supply all of the information required by section 3.3 hereof may supplement its Claim Information Form with such information within thirty (30) days after receipt of notice by the Asbestos PD Trust that information is missing from the Claim Information Form. 4.2.1.6. The ACBM with respect to which the Claim is being made was not removed from the building as part of a renovation or demolition otherwise than in connection with an Asbestos Abatement Program. 4.2.1.7. The Claimant has not previously received compensation with respect to the ACBM for which Claim is made in excess of the Claim's Adjusted Nominal Value from another party or trust. 4.2.2. Disallowance of Claims based upon their failure to meet any of the Qualification Criteria shall be made by the Bankruptcy Court, after notice to the Claimants affected and a hearing thereon. 4.3. COMPENSATION MODEL; NOMINAL VALUE 4.3.1. The Nominal Value of each Claim will be calculated by the Asbestos PD Trust with reference to the quantity, application, condition and location of the ACBM with respect to each Homogeneous Area in respect of which the Claim is made, and the number of enclosure and decontamination areas necessary if that ACBM were to be removed, applying the removal costs and the appropriate proportion of the work area costs set forth in the Compensation Model. 4.3.2. Where the ACBM with respect to which the Claim is made has been abated as part of an Asbestos Abatement Program, the Nominal Value of the Claim shall be the lesser of (i) the Nominal Value calculated by reference to the Compensation Model in accordance with section 4.3.1 and (ii) the actual abatement costs incurred by the Claimant. 4.4. EVALUATION CRITERIA; ADJUSTED NOMINAL VALUE 4.4.1. The Nominal Value of the Claim for each Homogenous Area shall be adjusted in accordance with the provisions set forth herein in order to take into account the weight and sufficiency of the evidence provided by the Claimant showing that One-Cote or Super "66" was installed and has not previously been removed or replaced otherwise than pursuant to an Asbestos Abatement Program. 4.4.2. Proof of the installation of One-Cote or Super "66" for each Homogenous Area may be established by the Claimant by the following analytical and/or documentary evidence: 4.4.2.1. A Claim will be awarded 40 proof points if the Claimant submits an Approved Laboratory Report that contains the following certification: "Based upon the PLM tests specified in the Protocols, the bulk samples referenced herein are consistent with [One-Cote] [Super '66']." A.1.1.6.5-6 4.4.2.2. A Claim will be awarded 30 proof points if the Claimant submits an Approved Laboratory Report that contains the following certification: "Based upon the qualitative scanning electron microscopy and/or transmission electron microscopy tests specified in the Protocols, the bulk samples referenced herein are consistent with [One-Cote] [Super '66']." 4.4.2.3. A Claim will be awarded 30 proof points if the Claimant submits an Approved Laboratory Report that contains the following certification: "Based upon quantitative x-ray diffraction and chemical analysis tests specified in the Protocols, the bulk samples referenced herein are consistent with [One-Cote] [Super '66']." 4.5. The proof points awarded with respect to a Claim shall be totaled. The Adjusted Nominal Value of a Claim with respect to each Homogenous Area shall be calculated based upon the following formula: Adjusted Proof Points Nominal = Nominal x ------------ Value Value 100 The Adjusted Nominal Value of a Claim shall be the sum of the Adjusted Nominal Values for each Homogenous Area for which a Claim is made. 4.6. For each Homogenous Area of ACBM that the Accredited Inspector has determined is not in need of repair and which is not in a position in which it is likely to be disturbed, the Adjusted Nominal Value calculated pursuant to the preceding subsection shall be further adjusted downward by 75%. 5. NOTICE OF DECISION 5.1. The Asbestos PD Trust shall, within the later of (i) if either Eagle-Picher or the Asbestos PD Trust moves to disallow a Claim and the Bankruptcy Court enters an order denying such motion as to such Claim, thirty (30) days after entry of such order, or (ii) one hundred eighty (180) days after the Claims Information Deadline serve on each Claimant a Notice of Decision with respect to each Claim stating the extent to which the Claim has been accepted. 5.2. The Notice of Decision shall state the Nominal Value and the Adjusted Nominal Value of the Claim and explain the application of the Evaluation Criteria and the Compensation Model in the assessment and valuation of the Claim. 5.3. The Notice of Decision will specify the date by which a Notice of Reconsideration must be filed in accordance with the provisions of section 6.1. 6. RECONSIDERATION 6.1. Any Claimant that is dissatisfied with the decision in the Notice of Decision may serve on the Asbestos PD Trust a Notice of Reconsideration within thirty (30) days after service of the Notice of Decision. Failure to timely serve on the Asbestos PD Trust a Notice of Reconsideration shall be deemed a consent to the Notice of Decision and the Adjusted Nominal Value stated therein, and the Claimant shall be deemed to have waived any right to seek further review of its Claim. A.1.1.6.5-7 6.2. The Notice of Reconsideration must identify specifically which of the Evaluation Criteria and Compensation Model the Claimant contends were improperly applied by the Asbestos PD Trust, stating the reason(s) for seeking reconsideration and including any supporting documentation. A Claimant may seek reconsideration of the Notice of Decision solely on the basis that the Evaluation Criteria or Compensation Model formulae have been improperly applied by the Asbestos PD Trust. 6.3. The Asbestos PD Trust shall confer with the Claimant or the Claimant's designated representative in an effort to reach agreement on the Adjusted Nominal Value of the Claim. The Asbestos PD Trust may agree upon an Adjusted Nominal Value of a Claim in the discretion of the Trustee, but the Asbestos PD Trust shall have no obligation to base its assessment of the Adjusted Nominal Value of a Claim on anything other than application of the Evaluation Criteria and the Compensation Model. 7. ARBITRATION 7.1. At any time within twenty (20) days following the service of the response of the Asbestos PD Trust to the Notice of Reconsideration, the Claimant may serve a Notice of Arbitration on the Asbestos PD Trust. If a Notice of Arbitration is not timely served by a Claimant, then the Claimant shall be deemed to have waived any right to seek Arbitration or any further review of its Claim, and the Adjusted Nominal Value of the Claim set forth in the Notice of Decision, or otherwise agreed to in writing by the Asbestos PD Trust within the time period for seeking Arbitration, shall be binding on the Claimant. 7.2. The Asbestos PD Trust shall maintain a list of a minimum of ten independent arbitrators who are available to hear disputes hereunder. The Asbestos PD Trust shall, within ten (10) days after receipt of a Notice of Arbitration, send to the Claimant the names and addresses of the ten independent arbitrators. The Claimant shall have fifteen (15) days from the date the list is served to strike five arbitrators and to return the list to the Asbestos PD Trust. The Asbestos PD Trust shall select one of the five arbitrators not stricken by the Claimant to arrange a date on which the Arbitration can be conducted, such date to be mutually convenient to the Asbestos PD Trust, the Claimant, and the arbitrator. Unless otherwise agreed to by the Asbestos PD Trust, in its sole discretion, all Arbitration proceedings will be conducted in Cincinnati, Ohio. Upon confirmation of the date on which Arbitration will commence, the Asbestos PD Trust shall notify the Claimant in writing of its date and location. 7.3. The arbitrator shall conduct a de novo review of the Claim. In assessing the extent to which the Claim should be allowed, the arbitrator shall apply only the Evaluation Criteria and the Compensation Model in accordance with the procedures set forth herein. The Asbestos PD Trust shall pay the fees and expenses of the arbitrator; provided, however, that in the event Claimant fails to obtain an award equal to or greater than 120 percent (120%) of the Adjusted Nominal Value of such Claim set forth in the Notice of Decision, such fees shall be borne by the Claimant. The Claimant may, but need not, be represented by counsel in the arbitration proceeding. The Claimant shall be solely responsible for all fees and expenses incurred by the Claimant and its representatives in connection with the Arbitration or otherwise pursuant to these Asbestos Property Damage Claims Resolution Procedures. 8. NOTICES 8.1. All notices and other communications made or served under these Asbestos Property Damage Claims Resolution Procedures shall be in writing and shall be deemed to have been duly served on the date of delivery, if delivered by hand or by express delivery service, or on the third business day after the deposit into an authorized United States mail depository, if mailed by First Class Mail, postage prepaid. Notices to the Asbestos PD Trust shall be addressed as follows: A.1.1.6.5-8 Eagle-Picher Industries, Inc. Asbestos Property Damage Claims Facility P.O. Box 1847 Cincinnati, Ohio 45201 Notices to a Claimant shall be addressed as specified in the Claim Information Form. A.1.1.6.5-9 EXHIBIT "1" APPROVED LABORATORIES RJ Lee Group, Inc. 350 Hochberg Road Monroeville, PA 15146 Contact: Dr. Richard J. Lee (412) 325-1776 Capabilities: PLM, SEM, CCSEM, XRD McCrone Environmental Services, Inc. 850 Pasquinelli Drive Westmont, IL 60559 (708) 887-7100 Capabilities: PLM, SEM, CCSEM, XRD Clayton Environmental Consultants, Inc. 400 Chastain Center Boulevard, N.W. Suite 490 Kennesaw, GA 30144 Contact: Owen S. Crankshaw (404) 499-7500 Capabilities: PLM, SEM, XRD Millette, Vanderwood & Associates 5500 Oakbrook Parkway, Suite 200 Norcross, GA 30093 Contact: James Millette (404) 662-8509 Capabilities: PLM, SEM, CCSEM Materials Analytical Services, Inc. 3597 Parkaway Lane, Suite 250 Norcross, GA 30092 Contact: William E. Longo (404) 448-3200 Capabilities: PLM, SEM, XRD EMSL of California, Inc. 17620 South Amphlett Boulevard Suite 130 San Mateo, CA 94402 Contact: Peter Frasca (609) 858-4800 Capabilities: PLM, SEM, XRD EMS Laboratories 117 West Bellevue Drive Pasadena, CA 91105-2503 Contact: Bernadine Kolk (818) 568-4065 Capabilities: PLM, SEM, XRD Particle Diagnostics, Inc. 106-A White Horse Pike Haddon Heights, NJ 8035 Contact: James J. Weitzman (609) 547-0491 Capabilities: PLM, XRD Miero Analytical Laboratories, Inc. 3618 N.W. 97th Boulevard Gainesville, FL 32606 Contact: Nancy Dehgan (904) 332-1701 Capabilities: PLM, SEM Forensic Analytical Specialties, Inc. 3777 Depot Road, Suite 406 Hayward, CA 94545-2756 (510) 887-8828 Capabilities: PLM, SEM, XRD A.1.1.6.5-1-1 EXHIBIT "2" IN THE UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) ) EAGLE-PICHER INDUSTRIES, INC. ) ) CONSOLIDATED CASE NO. et al., ) 1-91-00100 ) Chapter 11 - Judge Perlman Debtors. ) - -------------------------------------------------------------------------------- CLAIM INFORMATION FORM FOR ASBESTOS-RELATED PROPERTY DAMAGE CLAIMS - -------------------------------------------------------------------------------- NOTE: A SEPARATE CLAIM INFORMATION FORM MUST BE FILED FOR EACH BUILDING INCLUDED IN A CLAIMANT'S CLAIM CLAIMANT INFORMATION Claim Number: [Eagle-Picher #]-- ----------------------------------------------------------- (Consecutively number claims for each building, using the preassigned claim number as a prefix) Claimant Name: ----------------------------------------------------------- Claimant Address: ----------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- Claimant Type (check one): Owner Operator Attorney in Fact [ ] [ ] [ ] A1.1.6.5-2-1 BUILDING INFORMATION Building Name: _______________________________________________________ (Include any ceremonial name for the building. If the building is part of a complex, the building's designation should appear here, and the complex name should appear under Location.) Division or Agency Operating Building: _______________________________________________________ (If a division or agency of a governmental entity or corporation is operating the building, the name of the agency or division operating the building should appear here.) Site Identification: _______________________________________________________ (If claimant routinely uses a unique numerical identification for its buildings, this should be inserted to aid in uniquely defining the claim.) Building Address or Location: _______________________________________________________ _______________________________________________________ (If the building is part of a complex, such as a group of hospital buildings, this should be indicated. If the complex has a single street address, usually of the administration building, then this should be included with that fact so indicated.) Construction Date: Original _________ Addition 1 _________ Addition 2 _________ Addition 3 _________ Addition 4 _________ (The approximate year(s) of construction of the original building and any additions should be indicated, whether or not they are the dates of installation of asbestos-containing materials.) Building Type/Purpose: _______________________________________________________ _______________________________________________________ _______________________________________________________ (short description of the routine building uses, e.g. school, hospital, office building, library, convention center, manufacturing plant, museum, etc.) Dates of Any Consultants' Reports Received Relating to Asbestos-Containing Materials in Building: ________________________________________________________ Date Claimant First Became Aware of Presence of Asbestos-Containing Materials in Building: ____________________________________________________________________ A1.1.6.5-2-2 PRODUCT INFORMATION (COMPLETE CHART FOR EACH HOMOGENEOUS AREA - AN AREA OF ASBESTOS-CONTAINING MATERIALS THAT IS UNIFORM IN TEXTURE AND COLOR. ATTACH ADDITIONAL PAGES, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------------------- ASBESTOS-CONTAINING CONDITION HOMOGENEOUS MATERIALS (CHECK ANY THAT AREA # _____ PRODUCT I.D. (CHECK ONE) APPLY) - ---------------------------------------------------------------------------------------------------------------------------------- Location (i.e., boiler room, Brand Name: [ ] remain in place Asbestos-containing materials cafeteria, office): in this homogeneous area are [ ] abated pursuant to Asbestos Abatement Program Installation date: Attached Approved Laboratory Report Date:_____________________________ [ ] in need of repair based upon the following (check all Abatement Costs: that apply): Application (check one and complete pertinent information): $_________________________________ [ ] likely to be disturbed [ ] Fittings [ ] PLM tests [ ] removed in other renovation or demolition Number: ____________________ [ ] qualitative Diameter:___________________ scanning electron Date:_____________________________ miscroscopy and/or transmission electron Removal Costs: microscopy [ ] Pipes $_________________________________ Number: ____________________ Length:_____________________ [ ] quantitative x-ray [ ] Other (please attach explanation) diffraction and chemical analysis [ ] Other Area:_______________________ - ----------------------------------------------------------------------------------------------------------------------------------
A1.1.6.5-2-3 OTHER CLAIMS AND ACTIONS (LIST ALL OTHER ACTIONS OR PROCEEDINGS IN WHICH A CLAIM HAS BEEN ASSERTED FOR ASBESTOS-RELATED PROPERTY DAMAGE ON ACCOUNT OF THIS BUILDING, STATE WHETHER THE STATUS OF ACTION AS IT PERTAINS TO SUCH CLAIM, AND, IF A RECOVERY WAS RECEIVED, THE AMOUNT OF SUCH RECOVERY. ATTACH ADDITIONAL PAGES, IF NECESSARY.)
================================================================================ AMOUNT OF CASE NAME CASE NUMBER STATUS OF CASE RECOVERY, IF ANY - -------------------------------------------------------------------------------- [ ] pending $_________________ [ ] settled [ ] dismissed without prejudice [ ] dismissed with If claimant is a prejudice member of a class that has received [ ] judgment in favor of a classwide claimant on some or all recovery, then counts check this box and do not list an [ ] judgment in favor of amount defendant on all counts [ ] Class recovery - -------------------------------------------------------------------------------- [ ] pending $_________________ [ ] settled [ ] dismissed without prejudice [ ] dismissed with If claimant is a prejudice member of a class that has received [ ] judgment in favor of a classwide claimant on some or all recovery, then counts check this box and do not list an [ ] judgment in favor of amount defendant on all counts [ ] Class recovery - --------------------------------------------------------------------------------
A1.1.6.5-2-4
================================================================================ AMOUNT OF CASE NAME CASE NUMBER STATUS OF CASE RECOVERY, IF ANY - -------------------------------------------------------------------------------- [ ] pending $_________________ [ ] settled [ ] dismissed without prejudice [ ] dismissed with If claimant is a prejudice member of a class that has received [ ] judgment in favor of a classwide claimant on some or all recovery, then counts check this box and do not list an [ ] judgment in favor of amount defendant on all counts [ ] Class recovery - -------------------------------------------------------------------------------- [ ] pending $_________________ [ ] settled [ ] dismissed without prejudice [ ] dismissed with If claimant is a prejudice member of a class that has received [ ] judgment in favor of a classwide claimant on some or all recovery, then counts check this box and do not list an [ ] judgment in favor of amount defendant on all counts [ ] Class recovery - --------------------------------------------------------------------------------
A1.1.6.5-2-5
================================================================================ AMOUNT OF CASE NAME CASE NUMBER STATUS OF CASE RECOVERY, IF ANY - -------------------------------------------------------------------------------- [ ] pending $_________________ [ ] settled [ ] dismissed without prejudice [ ] dismissed with If claimant is a prejudice member of a class that has received [ ] judgment in favor of a classwide claimant on some or all recovery, then counts check this box and do not list an [ ] judgment in favor of amount defendant on all counts [ ] Class recovery ================================================================================
A1.1.6.5-2-6 ATTACHMENTS (ALL DOCUMENTATION SUBMITTED MUST BE IN READABLE FORM. ILLEGIBLE DOCUMENTATION WILL BE DISREGARDED, OR THE ASBESTOS PD TRUST MAY SEEK TO HAVE THE CLAIMANT SUPPLY A LEGIBLE COPY. ALL DOCUMENTATION MUST BE CONSECUTIVELY NUMBERED TO CORRESPOND TO THE CLAIM NUMBER. FOR EXAMPLE, IF TEN DOCUMENTS ARE SUBMITTED RELATING TO CLAIM NO. 11111-5 (I.E., IN SUPPORT OF THE FIFTH BUILDING COVERED UNDER CLAIM NO. 11111), EACH DOCUMENT MUST BE NUMBERED 11111-5-1 THROUGH 11111-5-10.) The following documents are attached to this Claim Information Form (check all that apply) [ ] Documents that show the date of installation of asbestos-containing materials [ ] Documents that show the date on which Claimant first became aware of the presence of asbestos-containing materials in the building [ ] Approved Laboratory Report [ ] Accredited Inspector Report (required if asbestos-containing materials remain in place in the building) [ ] Documents that show that asbestos-containing materials were removed pursuant to an Asbestos Abatement Program, including bid specifications, contracts for the abatement work, and proof of payment A1.1.6.5-2-7 CERTIFICATION The undersigned certifies to the best of his [her] knowledge under penalty of perjury that the information contained and submitted with this Claim Information Form is true and correct. - ------------ ------------------------------- --------------------- Date (Print Name and Title, if any) (Signature) SUBMISSION REQUIREMENT This Claim Information Form must be submitted and received no later than _____________, 1996 to the address below, or returned in the enclosed pre-addressed envelope: EAGLE-PICHER INDUSTRIES, INC. ASBESTOS PROPERTY DAMAGE CLAIMS FACILITY P.O. Box 1847 Cincinnati, Ohio 45202 A1.1.6.5-2-8 EXHIBIT "3" COMPENSATION MODEL WORK AREA COST Isolation barrier $2.50 per linear foot Floor cover $0.30 per square foot Decontamination enclosure $100.00 each work area REMOVAL COST 1/2" - 1 1/2" pipe $3.75 per linear foot 2" - 3" pipe $4.15 per linear foot 4" - 5" pipe $5.00 per linear foot 6" - 10" pipe $8.50 per linear foot LENGTH OF COVERING 1/2" - 1 1/2" fitting $3.75 per fitting 2" - 3" fitting $4.15 per fitting 4" - 5" fitting $5.00 per fitting 6" - 10" fitting $8.50 per fitting Boilers, breaching and ducting $9.00 per square foot A1.1.6.5-3-1 EXHIBIT "4" FORM OF NOTICE OF DECISION [TO BE PROVIDED BY THE ASBESTOS PD TRUST AFTER THE EFFECTIVE DATE OF THE PLAN] A1.1.6.5-4-1 EXHIBIT "5" FORM OF NOTICE OF RECONSIDERATION [TO BE PROVIDED BY THE ASBESTOS PD TRUST AFTER THE EFFECTIVE DATE OF THE PLAN] A1.1.6.5-5-1 EXHIBIT "6" PROTOCOLS FOR ONE-COTE [TO BE PROVIDED BY THE ASBESTOS PD TRUST AFTER THE EFFECTIVE DATE OF THE PLAN] A1.1.6.5-6-1 EXHIBIT "7" PROTOCOLS FOR SUPER "66" [TO BE PROVIDED BY THE ASBESTOS PD TRUST AFTER THE EFFECTIVE DATE OF THE PLAN] A1.1.6.5-7-1 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - --------------------------------) EXHIBIT "1.1.8" FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION [THIS PAGE LEFT BLANK INTENTIONALLY] CERTIFICATE OF REORGANIZATION OF EAGLE-PICHER INDUSTRIES, INC. The undersigned, Andries Ruijssenaars, President and Chief Operating Officer, and James A. Ralston, Vice President, General Counsel and Secretary, of Eagle-Picher Industries, Inc. (the "Corporation"), do hereby certify that: (1) the Corporation is the Debtor in that certain Chapter 11 case identified as Consolidated Case No. 1-91-00100 in the United States Bankruptcy Court for the Southern District of Ohio, Western Division (the "Case"), (2) in the Case, the Corporation has filed a Consolidated Plan of Reorganization that provides for the adoption of Amended and Restated Articles of Incorporation for the Corporation in the form set forth as Exhibit A to this Certificate, (3) the Consolidated Plan of Reorganization, including the Amended and Restated Articles of Incorporation that are Exhibit A hereto, was confirmed by the order of the United States District Court for the Southern District of Ohio, Western Division, on November __, 1996, and (4) such order remains in full force and effect at the date hereof. The Amended and Restated Articles of Incorporation annexed hereto may be certified by the office of the Secretary of State of Ohio separately from this Certificate of Reorganization. IN WITNESS WHEREOF, the undersigned President and Secretary of Eagle-Picher Industries, Inc., have executed this Certificate of Reorganization this ___ day of November, 1996. ----------------------------------- Name: Andries Ruijssenaars Title: President and Chief Operating Officer ----------------------------------- Name: James A. Ralston Title: Vice President, General Counsel and Secretary CERTIFICATE OF AMENDED AND RESTATED ARTICLES OF INCORPORATION OF EAGLE-PICHER INDUSTRIES, INC. The undersigned, Andries Ruijssenaars, President and Chief Operating Officer and James A. Ralston, Vice President, General Counsel and Secretary, of Eagle-Picher Industries, Inc. (the "Corporation"), do hereby certify that in connection with a Plan of Reorganization confirmed by the United States District Court for the Southern District of Ohio, Western Division, in the chapter 11 case of the Corporation, the Articles of the Corporation were amended and restated, pursuant to such Plan and the authority granted by Section 1701.75 of the Ohio Revised Code ("O.R.C."), to read as follows: FIRST: The name of the Corporation is Eagle-Picher Industries, Inc. SECOND: The place in Ohio where the principal office of the Corporation is to be located is Cincinnati, Hamilton County, Ohio. THIRD: The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be formed under Sections 1701.01 to 1701.98 inclusive, of the O.R.C. FOURTH: (a) All shares of the Corporation that are authorized for issuance immediately prior to the time as of which these Amended and Restated Articles of Incorporation become effective (the "Effective Time") are hereby canceled. As of the Effective Time, the number of shares that the Corporation is authorized to have outstanding is 20,000,000 common shares, without par value (the "Common Stock"). (b) Pursuant to the requirements of Section 1123(a)(6) of the Bankruptcy Code, the Corporation shall not issue nonvoting equity securities, subject, however, to further amendment of these Amended and Restated Articles of Incorporation as and to the extent permitted by applicable law. FIFTH: The Corporation, by action of its board of directors, may purchase its own shares at any time and from time-to-time to the extent permitted by law. SIXTH: The shares of the Corporation's Common Stock, other rights or options to purchase shares of the Corporation's Common 2 Stock and any other interests that would be treated as "stock" of the Corporation under Section 382 of the Internal Revenue Code (collectively, the "Corporate Securities") are subject to the following restrictions: 1. During the period beginning on the Effective Time and ending twenty-five (25) months thereafter, any attempted sale, purchase, transfer, assignment, conveyance, pledge or other disposition of any share or shares of Corporate Securities ("Transfer") to any person or entity or to any group of persons or entities acting in concert ("Transferee") who directly or indirectly owns, or is treated as owning (within the meaning of the attribution rules applicable under Section 382 of the Internal Revenue Code ("Own")), 4.75% or more of any class of Corporate Securities, or after giving effect to the Transfer, would directly or indirectly Own more than 4.75% of the outstanding shares of any class of Corporate Securities, shall be void AB INITIO and shall not be effective to Transfer any of such shares to the extent the Transfer increases the Transferee's direct or indirect ownership of the Corporate Securities above 4.75% of the total outstanding shares of such class of Corporate Securities. Similarly, any Transfer by a transferor who directly or indirectly Owns 5% or more of the outstanding shares of any class of Corporate Securities shall be void AB INITIO and shall not be effective to Transfer any of such shares to the purported Transferee. 2. (a) If the Board of Directors of the Corporation determines that a Transfer of Corporate Securities constitutes a Transfer prohibited by Section 1 hereof (a "Prohibited Transfer"), then upon written demand made by any officer of the Corporation, the purported Transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of Corporate Securities that are the subject of the Prohibited Transfer ("Prohibited Securities"), together with any dividends or other distributions that were received by the Transferee from the Corporation with respect to such Prohibited Securities ("Prohibited Distributions"), to an agent designated by the Board of Directors of the Corporation (the "Agent"). The Agent shall then sell to a buyer or buyers the Prohibited Securities so transferred to it. If, before receiving the demand of the Corporation to transfer the Prohibited Securities to the Agent, the purported Transferee has resold the Prohibited Securities, the purported Transferee shall be deemed to have sold the Prohibited Securities for and on behalf of the Agent and, in lieu of transferring the Prohibited Securities to the Agent, shall transfer to the Agent any Prohibited Distributions and the proceeds of such sale. If the purported Transferee fails to surrender the Prohibited Securities or the proceeds of a sale thereof, together with any Prohibited Distributions, to the Agent within thirty (30) business days from the date on which the Corporation makes its demand for surrender hereunder, the Corporation shall institute legal proceedings to compel the surrender. The costs of any such proceeding in which the court 3 shall compel such surrender or award damages shall be borne by the purported Transferee. (b) Upon the receipt of the proceeds of any sale of Prohibited Securities by the Agent or, upon the receipt from the purported Transferee thereof of the proceeds from any previous sale of such Prohibited Securities by such Transferee, the amount so received shall be applied by the Agent as follows: (i) first, to the payment of the reasonable expenses of the Agent incurred in connection with the performance of its duties hereunder; (ii) second, to the purported Transferee up to the amount paid by the purported Transferee for the Prohibited Securities, which amount shall be determined by the Board of Directors of the Corporation in its sole discretion; and (iii) third, to one or more organizations that shall then be qualified under Section 501(c)(3) of the Internal Revenue Code as selected by the Board of Directors of the Corporation. 3. Neither the Corporation nor any transfer agent or other person on its behalf shall effect a Prohibited Transfer on the stock record books of the Corporation and the purported Transferee thereof shall not be recognized as a shareholder of the Corporation for any purpose whatsoever in respect of the Prohibited Securities. Until the Prohibited Securities are acquired by another person in a Transfer that is not a Prohibited Transfer, the purported Transferee shall not be entitled with respect to such Prohibited Securities to any rights of shareholders of the Corporation, including, without limitation, the right to vote such Prohibited Securities and to receive dividend distributions, whether liquidating or otherwise, in respect thereof, if any. Once the Prohibited Securities have been acquired in a Transfer that is not a Prohibited Transfer, the Corporate Securities shall cease to be Prohibited Securities. 4. All certificates evidencing any Corporate Securities issued by the Corporation after the Effective Time, shall bear a conspicuous legend reading substantially as follows: THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO RESTRICTION PURSUANT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF REORGANIZED EAGLE-PICHER, WHICH RESTRICTION IS REPRINTED IN ITS ENTIRETY ON THE BACK OF THIS CERTIFICATE. With respect to any Corporate Securities that are not evidenced by a certificate, but are uncertificated securities, the foregoing legend shall be set forth in the initial transaction statement required for restrictions on transfer by Section 1308.11 of the O.R.C. 5. Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or the Regulations of the 4 Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, these Amended and Restated Articles or the Code of Regulations), the affirmative vote of the holders of 80% or more of the outstanding shares, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with this Article Sixth; provided, however, that shareholder action without a meeting shall require the unanimous written consent of all shareholders entitled to vote thereon. SEVENTH: All certificates evidencing any shares of the Corporation's Common Stock issued by the Corporation after the Effective Time, shall bear a conspicuous legend reading substantially as follows: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. EIGHTH: These Amended and Restated Articles of Incorporation supersede and take the place of all prior Articles of Incorporation of the Corporation. IN WITNESS WHEREOF, the undersigned President and Chief Operating Officer and Vice President, General Counsel and Secretary of Eagle-Picher Industries, Inc. have executed this Certificate this _____ day of November, 1996. EAGLE-PICHER INDUSTRIES, INC. By ----------------------------- Name: Andries Ruijssenaars Title: President and Chief Operating Officer ------------------------------- Name: James A. Ralston Title: Vice President, General Counsel and Secretary 5 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - ---------------------------------) EXHIBIT "1.1.9" FORM OF AMENDED AND RESTATED CODE OF REGULATIONS [THIS PAGE LEFT BLANK INTENTIONALLY] Eagle-Picher Industries, Inc. CODE OF REGULATIONS -------- ARTICLE I Seal SECTION 1. Form. The seal of the Corporation shall have upon it the name and words "Eagle-Picher Industries, Inc. Incorporated 1867 - Seal" and shall be circular in form. ARTICLE II Shareholders SECTION 1. Place of Meetings. Meetings of shareholders shall be held at the office of the Corporation in Cincinnati, Ohio, or at such other place in Cincinnati as may be designated by the Board of Directors. SECTION 2. (a) Annual Meeting. The annual meeting of shareholders shall be held at 2 o'clock P.M. on the fourth Tuesday in March of each year, if not a legal holiday, but, if a legal holiday, then, at the same hour, on the next succeeding business day which is not a legal holiday, at which time there shall be elected, by ballot, in accordance with the laws of the State of Ohio and these regulations, members of the Board of Directors to serve and hold office as provided in Article III hereof. (b) Shareholder Action. Any action required to be taken at a meeting of shareholders shall be taken at an annual or special meeting thereof, or without a meeting upon the unanimous written consent of all shareholders entitled to vote thereon. (c) Shareholder Nominations. Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors may be made by the Board of Directors or by any shareholder entitled to vote in the election of directors generally. However, any shareholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors, at an annual meeting or at a special meeting called in whole or in part to vote on the election of directors, only if written notice of such shareholder's intent to make such nomination or nominations has been delivered to or mailed and received by the Secretary of the Corporation not less than 60 days nor more than 90 days in advance of such meeting; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder must be so received not later than the close of business on the 10th day following the date on which such notice of the date of the meeting was first mailed or such public disclosure was made. Each such shareholder's notice shall set forth: (a) the name and address, as they appear on the Corporation's books, of the shareholder who intends to make the nomination and the name, age, business address and residence address of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) the principal occupation or employment of the person or persons to be nominated; (e) the class and number of shares of the Corporation which are beneficially owned by the shareholder intending to make the nomination and by the person or persons to be nominated; (f) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (g) the written consent of each nominee to being named in the proxy statement and serving as a director of the Corporation if so elected. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder's notice of nomination which pertains to such nominee. No person to be nominated by a shareholder shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.(c). The chairman of the meeting shall, if the facts warrant, refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (d) Notice of Shareholder Business. At an annual meeting of shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, busi- 2 ness must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a shareholder. For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the shareholder, and (d) any material interest of the shareholder in such business. Notwithstanding anything in these regulations to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2.(d), Article II. The chairman of the annual meeting shall, if the facts warrant, determine that business was not properly brought before the meeting and in accordance with the provisions of this Section 2.(d), Article II, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. (e) Notwithstanding anything in these regulations to the contrary, the affirmative vote of the holders of 80% of the voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal these subsections (b), (c), (d) and (e) of Section 2, Article II; provided, however, shareholder action without a meeting shall require the unanimous written consent of all shareholders entitled to vote thereon pursuant to Section 2.(b) hereof. SECTION 3. Special Meetings of Shareholders. Subject to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, special meetings of shareholders may be called by the Chairman of the Board of Directors, the President, or the directors by action at a meeting or a majority of the directors 3 acting without a meeting, persons who hold fifty percent of all shares outstanding and entitled to vote thereat, the Secretary or an Assistant Secretary. Any shareholder or shareholders entitled to call a special meeting pursuant to this Section 3, Article II, must, in order properly to call such meeting, deliver a written notice to the Secretary of the Corporation requesting that a special meeting be called. Such meeting shall be held on a date fixed by the Board of Directors of the Corporation, which date shall be not less than 60 days nor more than 90 days after the date of receipt of such notice by the Secretary of the Corporation. Any such notice shall set forth as to each matter proposed to be brought before the special meeting (a) a brief description of the business desired to be brought before the meeting, (b) the name and address, as they appear on the Corporation's books, of the shareholder or shareholders proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the shareholder, and (d) any material interest of the shareholder in such business. Notwithstanding anything in these regulations to the contrary, the Secretary shall not call a special meeting upon the request of any shareholder if such shareholder has failed to comply with this Section 3, Article II, with respect to all matters proposed to be brought before such meeting and, subject to Section 2.(c) of this Article II with respect to shareholder nominations for election of directors, no business shall be conducted at a special meeting except business proposed in accordance with the procedures set forth in this Section 3, Article II. The Chairman of the special meeting shall, if the facts warrant, determine that business was not properly brought before the meeting and in accordance with the provisions of this Section 3, Article II, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding anything in these regulations to the contrary, the affirmative vote of the holders of 80% of the voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this Section 3 of Article II; provided, however, shareholder action without a meeting shall require the unanimous written consent of all shareholders entitled to vote thereon pursuant to Section 2.(b) hereof. SECTION 4. Notice of Meetings. A notice, as required by law, of each regular or special meeting of shareholders shall be given in writing by the Chairman of the Board of Directors, the President, the Secretary, or an Assistant Secretary, not less than ten (10) days before the meeting. SECTION 5. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of shareholders for the transaction of business, except as otherwise provided by law. by the articles of incorporation, or by these regulations, if, however, 4 such majority shall not be present or represented at any meeting of shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting, from time to time, without notice other than announcement at the meeting, until the requisite amount of voting stock shall be present or represented. At such adjourned meeting, at which the requisite amount of voting stock shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 6. Proxies. Any shareholder entitled to vote at a meeting of shareholders may be represented and vote thereat by proxy, appointed by an instrument in writing, subscribed by the shareholder or his duly authorized agent, and submitted to the Secretary of the Corporation not less than forty-eight hours before such meeting; provided, any such proxy, other than for a corporation, shall himself be a shareholder. SECTION 7. Organization. The Chairman of the Board of Directors, or the President, shall preside at all meetings of shareholders. In the absence of both, the Board of Directors shall designate a presiding officer, who shall have all the powers herein conferred upon the presiding officer of the meeting. The Secretary of the Corporation shall act as secretary of all meetings but, in the absence of the Secretary, the presiding officer of shareholders may appoint any person to act as secretary of the meeting. SECTION 8. Order of Business. At all shareholders' meetings the order of business shall be as follows: 1. Proof of notice of meeting. 2. Presentation and examination of proxies. 3. Reading of minutes of previous meeting and acting thereon. 4. Report of Directors or Committees. 5. Reports of Officers. 6. Unfinished business 7. Election of Directors. 8. New or miscellaneous business. 9. Adjournment. This order may be changed by affirmative vote of the holders of a majority of the outstanding shares, present in person or represented by proxy. 5 ARTICLE III Board of Directors SECTION 1. (a) Number, Election and Terms. Except as otherwise fixed by or pursuant to the provisions of Article Fourth, Division A of the Articles of Incorporation relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect additional directors under specified circumstances, the Board of Directors of the Corporation shall consist of eleven (11) members or such other number as may be determined from time to time by action of the Board of Directors. The directors, other than those who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, as determined by the Board of Directors of the Corporation, one class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1986, another class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1987, and another class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1988, with each class to hold office until its successor is elected and qualified. At each annual meeting of shareholders of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election. (b) Newly Created Directorships and Vacancies. Newly created directorships resulting from any increase in the number of directors shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any vacancies on the Board of Directors shall be filled as provided by law. Any director so elected shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. (c) Removal. Any director may be removed from office as provided by law; provided, however, the removal of directors by shareholders shall require an affirmative vote of the holders of 80% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class; provided, however, shareholder action without a meeting shall require the unanimous written consent of all shareholders entitled to vote thereon pursuant to Article II, Section 2.(b) hereof. 6 (d) Amendment, Repeal, Inconsistent Provisions. Notwithstanding anything in these regulations to the contrary, the affirmative vote of the holders of 80% of the voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting as a single class, shall be required to alter, amend, adopt any provisions inconsistent with or repeal these Subsections (a), (b), (c) and (d) of Section 1, Article III; provided, however, shareholder action without a meeting shall require the unanimous written consent of all shareholders entitled to vote thereon pursuant to Article II, Section 2.(b) hereof. SECTION 2. Time and Place of Meetings. A meeting of the Board of Directors shall be held immediately following each meeting of shareholders at which directors are elected, and notice of such meeting need not be given. Other meetings of the Board may be held at such times and places, either within or without the State of Ohio, as may be fixed by resolution of the Board or as may be specified in the call and notice of meetings; and shall be held at least quarterly. SECTION 3. Call and Notice of Meetings. Meetings may be called at any time by the Chairman of the Board, the President, the Secretary, or by a majority of the Board. The Board shall decide what notice of meetings shall be given and the length of time prior to the meeting that such notice shall be given. Any meeting at which all directors are present shall be a valid meeting, whether notice thereof was given or not, and any business may be transacted at such meeting. Notice for call of any meeting may be waived by any one or all of the directors. SECTION 4. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business and, if at any meeting of the Board there be less than a quorum present, a majority of those present may adjourn the meeting from time to time. SECTION 5. Compensation of Directors and Members of the Executive Committee. The directors are authorized to fix, from time to time, their own compensation for attendance at meetings of the Board and the compensation of members of the Executive Committee for attendance at meetings of such Committee, which may include expenses of attendance when meetings are not held at the place of residence of any director or member. SECTION 6. General Powers. The powers of the Corporation shall be exercised, its business and affairs conducted, and its property controlled by the Board of Directors, except as otherwise provided in the General Corporation Law of Ohio or in the articles of incorporation of the Corporation and amendments thereto. The Board of Directors shall have power to fix, define and limit the powers and duties of all officers. 7 SECTION 7. Indemnification of Directors and Officers. Each director and each officer now, heretofore, or hereafter in office, shall be indemnified by the Corporation against all costs imposed upon, and/or expenses reasonably incurred by him in connection with or arising out of any action, suit or proceeding of whatever nature (whether the same be settled or proceed to judgement) in which he may be or become involved by reason of his being or having been a director or officer of the Corporation, any subsidiary of the Corporation, or any company or corporation which he serves as a director or officer at the request of the Corporation (whether or not he continues to be a director or officer at the time of the imposition of such costs and/or expenses), except in respect to matters as to which he shall be finally adjudged in such action, suit or proceeding to be liable for gross negligence or wilful misconduct in the performance of his duty as such director or officer. The foregoing right of indemnification shall be in addition to and not exclusive of any and all other rights to which he may be entitled as a matter of law. ARTICLE IV Executive Committee SECTION 1. Executive Committee. The Board of Directors may, by resolution, designate not less than three (3) of its number to constitute an Executive Committee, but may repeal said resolution and dispense with said Committee at any time. SECTION 2. Powers of Executive Committee. The Executive Committee shall have charge of the management of the business and affairs of the Corporation in the interim between meetings of the Board of Directors, and generally shall have all of the authority of the Board, in the transaction of such business of the Corporation as, in the judgement of the Committee, may require action between meetings of the Board. SECTION 3. Limitation of Powers of Executive Committee. The Board of Directors shall have authority to limit or quality the powers of the Executive Committee at any time, and may rescind any action of the Committee to the extent that no rights of third persons shall have intervened. SECTION 4. Record of Executive Committee. The Executive Committee shall keep a record of its proceedings and make a report of its acts and transactions to the Board of Directors, all of which shall form part of the records of the Corporation. ARTICLE V Officers SECTION 1. Number. The officers of the Corporation shall be a President, one or more Vice-Presidents, a Secretary, one or more Assistant Secretaries, 8 a Treasurer and one or more Assistant Treasurers. Any two or more of the offices may be held by the same person, but no officer shall execute, acknowledge, or verify any instrument in more than one capacity if such instrument is required to be executed, acknowledged, or verified by two or more officers. SECTION 2. Other Officers. The Board of Directors is authorized in its discretion to establish the office of Chairman of the Board, and shall have the further power to provide for such other offices and agencies as it shall deem necessary from time to time and to dispense with any of said offices and agencies at any time. SECTION 3. Election, Term and Removal. At the meeting of the Board of Directors immediately following each meeting of shareholders at which directors are elected, the Board shall select one of its members to be President of the Corporation. It shall also select all other officers of the Corporation, none of whom shall be required to be a member of the Board, except the Chairman of the Board if that office be established. All officers of the Corporation shall hold office during the pleasure of the Board, or until their successors shall have been elected and qualified, and the Board may remove or suspend any officer at any time, without notice, by the affirmative vote of a majority of the entire Board. SECTION 4. Vacancies and Absence. If any office shall become vacant by reason of the death, resignation, disqualification, or removal of the incumbent thereof, or other cause, the Board of Directors may select a successor to hold office for the unexpired term in respect to which such vacancy occurred or was created. In case of the absence of any officer of the Corporation or for any reason that the Board of Directors may determine as sufficient, the Board may for the time being delegate the powers and duties of such officer to any other officer, or to any director, except where otherwise provided by these regulations or by statute. SECTION 5. Salaries. The Board of Directors or the Executive Committee shall fix the salaries of all officers; and shall supervise the salaries of all other employees of the Corporation. ARTICLE VI Duties of Officers SECTION 1. Chairman of the Board. The Chairman of the Board of Directors (if the Board establishes such office) shall preside at all meetings of the Board, appoint all special or other committees (unless otherwise ordered by the Board) and shall confer with and advise all other officers of the Corporation. He shall have such executive and managerial powers and authority and shall perform such duties as may, from time to time, be delegated to him by the Board of Directors or the Executive Committee. 9 SECTION 2. President. The President shall, unless otherwise prescribed by the Board of Directors or the Executive Committee, be the chief executive officer and active head of the Corporation and, in the recesses of the Board of Directors and the Executive Committee, shall have general control and management of all of its business affairs. He shall make annual reports to the Board of Directors, showing the condition of the affairs of the Corporation, making such recommendations as he thinks proper, and from time to time shall bring before the Board of Directors, or the Executive Committee, such information as may be required touching upon the business and property of the Corporation. He shall perform such other duties as may, from time to time, be assigned to him by the Board of Directors. If there be no Chairman of the Board, or in his absence, the President shall preside at all meetings of the Board and appoint all special or other committees (unless otherwise ordered by the Board). SECTION 3. Vice-Presidents. The Vice-Presidents shall perform such duties as may be delegated to them by the Board of Directors, or assigned to them from time to time by the Board of Directors, the Executive Committee, the Chairman of the Board, or the President. In the absence of the Chairman of the Board and the President, the Board of Directors shall designate one of the Vice-Presidents, or some other person, to perform the duties and have the powers of the Chairman of the Board and the President, and, during such absence, such person shall be authorized to exercise all of the functions of the Chairman of the Board and the President. SECTION 4. Secretary. The Secretary shall keep a record of all proceedings of the Board of Directors and of all meetings of shareholders, and shall perform such other duties as may be assigned to him by the shareholders, the Board of Directors, the Executive Committee, the Chairman of the Board, or the President. SECTION 5. Assistant Secretaries. The Assistant Secretaries shall perform such duties as may be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board, the President or the Secretary. The Board of Directors shall designate one of the Assistant Secretaries to be acting Secretary during the absence or disability of the Secretary. SECTION 6. Treasurer. The Treasurer shall have charge of the funds of the Corporation. He shall keep proper books of account showing all transactions entered into by, for and on behalf of the Corporation, with vouchers in support thereof. He shall also, from time to time as required, make reports and statements to the Board of Directors and the Executive Committee as to the financial condition of the Corporation, and submit detailed statements of receipts and disbursements; and shall perform such other duties as may be assigned to him from time to time by the Board of Directors, the Executive Committee, the Chairman of the Board, or the President. 10 SECTION 7. Assistant Treasurers. The Assistant Treasurers shall perform such duties as may be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board, the President or the Treasurer. The Board of Directors shall designate one of the Assistant Treasurers to be acting Treasurer during the absence or disability of the Treasurer. SECTION 8. Bonds of Officers. The Board of Directors or the Executive Committee shall determine which officers of the Corporation shall give bond, and the amount thereof, the expense to be paid by the Corporation. ARTICLE VII Certificates for Shares of Stock SECTION 1. Certificates. Certificates evidencing the ownership of shares of the Corporation shall be issued to those entitled to them by transfer or otherwise. Each certificate for shares shall bear the signature of the Chairman of the Board, or the President or one of the Vice-Presidents, and of the Secretary or an Assistant Secretary, the seal of the Corporation (but failure to affix the seal shall not invalidate the certificate if properly signed) and such recitals as may be required by law. SECTION 2. Mutilated and Lost Certificates. If any certificate for shares of the Corporation becomes worn, defaced or mutilated, the Board of Directors, upon surrender thereof, may order the same cancelled and a new certificate issued in lieu thereof. If any certificate for shares be lost or destroyed, a new certificate may be issued upon such terms and under such regulations as may be adopted by the Board of Directors. ARTICLE VIII Committees SECTION 1. Committees. The Board of Directors shall have power to create from time to time such committees, standing or special, as it shall deem best, and to revoke their appointment or restrict or modify their powers. ARTICLE IX Closing Stock Transfer Books SECTION 1. Closing Stock Transfer Books. The Board of Directors may fix a time, not exceeding forty-five (45) days preceding the date of any meeting of shareholders or any dividend payment date or any date for the allotment of rights, as a record date for the determination of the shareholders entitled to notice of such meeting or to vote thereat or to receive such dividends or rights as the case may be and/or the Board of Directors may close the books of the Corporation against transfer of shares of stock during the whole or any part of such period. 11 ARTICLE X Amendments SECTION 1. Amendments. These regulations, or any of them, may be altered, amended, added to or repealed as may be provided by law. ARTICLE XI Assent of Shareholders SECTION 1. Assent of Shareholders. Any person becoming a shareholder in this Corporation shall be deemed to assent to these regulations, and any alterations, amendments, or additions thereto, lawfully adopted, and shall designate to the Secretary or appointed Transfer Agents of the Corporation, the address to which he desires that notices herein required to be given may be sent, and all notices mailed to such address, with postage prepaid, shall be considered as duly given at the date of mailing; provided, however, that, in the event any shareholder shall have failed to so designate an address to which notices shall be sent, said notices shall be sent to any address where the Secretary believes he may be reached, otherwise to "General Delivery, Cincinnati, Ohio." The mailing or any notice to "General Delivery, Cincinnati, Ohio," shall be conclusive evidence that the Secretary knows of no address where he believes said shareholder may be reached. 12 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - --------------------------------) EXHIBIT "1.1.13" FORM OF EAGLE-PICHER INDUSTRIES, INC. PERSONAL INJURY SETTLEMENT TRUST AGREEMENT [THIS PAGE LEFT BLANK INTENTIONALLY] EAGLE-PICHER INDUSTRIES, INC. PERSONAL INJURY SETTLEMENT TRUST AGREEMENT This Trust Agreement is among Eagle-Picher Industries, Inc., an Ohio corporation and debtor in possession ("EAGLE-PICHER"), and its affiliates, Daisy Parts, Inc., Transicoil, Inc., Michigan Automotive Research Corp., EDI, Inc., Eagle-Picher Minerals, Inc., Eagle-Picher Europe, Inc., and Hillsdale Tool & Manufacturing Co. ("SETTLORS"), and Darius W. Gaskins, Jr., Kevin O'Donnell, Daniel M. Phillips, William J. Williams and Marshall Wright, as Trustees ("TRUSTEES"), pursuant to the Second Amended Consolidated Joint Plan of Reorganization of Eagle-Picher and its affiliated debtors, dated July 15, 1996 (the "PLAN"). WHEREAS, at the time of the entry of the order for relief in the Chapter 11 Cases, Eagle-Picher was named as a defendant in personal injury, wrongful death, and property damage actions seeking recovery for damages allegedly caused by the presence of, or exposure to, asbestos or asbestos-containing products; and WHEREAS, Eagle-Picher and its affiliated debtors (collectively, the "DEBTORS") have reorganized under the provisions of Chapter 11 of the Bankruptcy Code in cases pending in the United States Bankruptcy Court for the Southern District of Ohio known as In re Eagle-Picher Industries, Inc., et al., Consolidated Case No. 1-91-00100 ("CHAPTER 11 CASES"); and WHEREAS, the Plan, filed by the Debtors, the Legal Representative for Future Claimants appointed by the Bankruptcy Court pursuant to its order of October 31, 1991 ("FUTURE REPRESENTATIVE") and the Bankruptcy Court-appointed committee composed of the representatives of certain tort claimants of the Debtors ("INJURY CLAIMANTS' COMMITTEE") has been confirmed by the Bankruptcy Court; and WHEREAS, the Plan provides, inter alia, for the creation of the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust ("PI TRUST"); and WHEREAS, pursuant to the Plan, the PI Trust is to be funded in whole or in part by the securities of the Debtors and by the obligation of the Debtors to make future payments, including dividends; and WHEREAS, pursuant to the Plan, the PI Trust is to own a majority of the voting shares of the Eagle-Picher; and WHEREAS, pursuant to the Plan, the PI Trust is to use its assets or income to pay Claims and Demands, as defined in Sections 101(5) and 524(g)(5) of the Bankruptcy Code respectively, against the Debtors; and WHEREAS, the Plan provides, among other things, for the complete settlement and satisfaction of all liabilities and obligations of the Debtors with respect to Asbestos Personal Injury Claims and Lead Personal Injury Claims (hereinafter Asbestos Personal Injury Claims and Lead Personal Injury Claims are sometimes jointly referred to as "TOXIC PERSONAL INJURY CLAIMS"); and WHEREAS, pursuant to the Plan, the PI Trust is intended to qualify as a "Qualified Settlement Fund" within the meaning of Section 1.468B-1 of the Treasury Regulations promulgated under Section 468B of the Internal Revenue Code; and A1.1.13-1 [THIS PAGE LEFT BLANK INTENTIONALLY] WHEREAS, the Bankruptcy Court has determined that the PI Trust and the Plan satisfy all the prerequisites for a supplemental injunction pursuant to Section 524(g) of the Bankruptcy Code, which Asbestos and Lead PI Permanent Channeling Injunction has been entered in connection with the Confirmation Order; NOW, THEREFORE, it is hereby agreed as follows: ARTICLE 1 DEFINITIONS As used herein, the following terms shall have the meanings specified below: 1.1 Affiliate: Any Entity that is an "affiliate" of any of the Debtors within the meaning of Section 101(2) of the Bankruptcy Code except (i) American Imaging Services, Inc., (ii) Tri Sigma Corporation, and (iii) the PI Trust. 1.2 Asbestos and Lead PI Permanent Channeling Injunction: An order or orders of the Bankruptcy Court or the District Court permanently and forever staying, restraining, and enjoining any Entity from taking any of the following actions for the purpose of, directly or indirectly, collecting, recovering, or receiving payment of, on, or with respect to any Asbestos Personal Injury Claims or Lead Personal Injury Claims (other than actions brought to enforce any right or obligation under the Plan, any Exhibits to the Plan, or any other agreement or instrument between any of the Debtors or the Reorganized Debtors and the PI Trust, which actions shall be in conformity and compliance with the provisions hereof): (a) commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding (including, without express or implied limitation, a judicial, arbitral, administrative, or other proceeding) in any forum against or affecting any PI Protected Party or any property or interests in property of any PI Protected Party; (b) enforcing, levying, attaching (including, without express or implied limitation, any prejudgment attachment), collecting, or otherwise recovering by any means or in any manner, whether directly or indirectly, any judgment, award, decree, or other order against any PI Protected Party or any property or interests in property of any PI Protected Party; (c) creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any Encumbrance against any PI Protected Party or any property or interests in property of any PI Protected Party; (d) setting off, seeking reimbursement of, contribution from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability owed to any PI Protected Party or any property or interests in property of any PI Protected Party; and (e) proceeding in any manner in any place with regard to any matter that is subject to resolution pursuant to the PI Trust, except in conformity and compliance therewith. 1.3 Asbestos or Lead Contribution Claim: Any right to payment, claim, remedy, liability, or Demand now existing or hereafter arising, whether or not such right, claim, remedy, liability or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability or Demand are known or unknown, that is (i) held by (A) any Entity (other than a director or officer A1.1.13-2 entitled to indemnification pursuant to Section 8.6 of the Plan) who has been, is, or may be a defendant in an action seeking damages for death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to (x) asbestos or asbestos-containing products or (y) products that contain lead chemicals, or (B) any assignee or transferee of such Entity, and (ii) on account of alleged liability of any of the Debtors for reimbursement or contribution of any portion of any damages such Entity has paid or may pay to the plaintiff in such action. 1.4 Asbestos Personal Injury Claim: Any right to payment, claim, remedy, liability, or Demand now existing or hereafter arising, whether or not such right, claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability, or Demand are known or unknown, for, under any theory of law, equity, admiralty, or otherwise, death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to asbestos or asbestos-containing products that were manufactured, sold, supplied, produced, distributed, released, or in any way marketed by any of the Debtors prior to the Petition Date, including, without express or implied limitation, any right, claim, remedy, liability, or Demand for compensatory damages (such as loss of consortium, wrongful death, survivorship, proximate, consequential, general, and special damages) and including punitive damages and any Asbestos or Lead Contribution Claim. 1.5 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended, and as codified in Title 11 of the United States Code, as applicable to the Chapter 11 Cases. 1.6 Bankruptcy Court: The United States District Court for the Southern District of Ohio, Western Division, having jurisdiction over the Chapter 11 Cases and, to the extent of any reference made pursuant to section 157 of title 28 of the United States Code, the unit of such District Court constituted pursuant to section 151 of title 28 of the United States Code. 1.7 Business Day: Any day on which commercial banks are required to be open for business in Cincinnati, Ohio. 1.8 Claim: (a) A "claim," as defined in Section 101(5) of the Bankruptcy Code, against any of the Debtors or Debtors in Possession, whether or not asserted, whether or not the facts of or legal bases therefor are known or unknown, and specifically including, without express or implied limitation, any rights under Sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, any claim of a derivative nature, any potential or unmatured contract claims, and any other Contingent Claim, and (b) any Environmental Claim or Product Liability Tort Claim, whether or not it constitutes a "claim," as defined in Section 101(5) of the Bankruptcy Code. 1.9 Confirmation Order: The order or orders of the Bankruptcy Court confirming the Plan in accordance with the provisions of Chapter 11 of the Bankruptcy Code, which will contain, inter alia, the Asbestos and Lead PI Permanent Channeling Injunction, the Asbestos Property Damage Permanent Channeling Injunction, and the Claims Trading Injunction. 1.10 Contingent Claim: Any Claim, the liability for which attaches or is dependent upon the occurrence or happening, or is triggered by, an event, which event has not yet occurred, happened, or been triggered, as of the date on which such Claim is sought to be estimated or an objection to such Claim is filed, whether or not such event is within the actual or presumed contemplation of the holder of such Claim and whether or not a relationship between the holder of such Claim and any of the Debtors now or hereafter exists or previously existed. A1.1.13-3 1.11 Demand: A demand for payment, present or future, that (i) was not a Claim during the Chapter 11 Cases; (ii) arises out of the same or similar conduct or events that gave rise to the Claims addressed by the Asbestos and Lead PI Permanent Channeling Injunction; and (iii) pursuant to the Plan, is to be paid by the PI Trust. 1.12 Divestiture Notes: Those certain Senior Unsecured Notes in the aggregate principal amount of Fifty Million and 00/100 Dollars ($50,000,000.00), bearing interest at a rate determined by McDonald & Company Securities, Inc. on the Effective Date as the rate such Senior Unsecured Notes should bear in order to have a market value of one hundred percent (100%) of their principal amount on the Effective Date, and substantially in the form of Exhibit "1.1.55" to the Plan. 1.13 Effective Date: The first Business Day after the date on which all of the conditions precedent to the effectiveness of the Plan specified in Section 7.10 of the Plan have been satisfied or waived or, if a stay of the Confirmation Order is in effect on such date, the first Business Day after the expiration, dissolution, or lifting of such stay. 1.14 Encumbrance: With respect to any asset, any mortgage, lien, pledge, charge, security interest, assignment, or encumbrance of any kind or nature in respect of such asset (including, without express or implied limitation, any conditional sale or other title retention agreement, any security agreement, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction). 1.15 Entity: An individual, corporation, partnership, association, joint stock company, joint venture, estate, trust, unincorporated organization, or government or any political subdivision thereof, or other person or entity. 1.16 Environmental Claim: Any Claim as to which the treatment thereof is set forth in (a) the Environmental Settlement Agreement or (b) an agreement by and between any of the Debtors and any party asserting a Claim against any of the Debtors relating to alleged contamination under the federal or state environmental laws or regulations, pursuant to which agreement all or a portion of such Claim (to the extent and subject to the limitations imposed by such agreement) may be asserted by the holder thereof after the Effective Date, to the extent that such agreement is approved and authorized by a Final Order of the Bankruptcy Court or otherwise in accordance with the Claims Settlement Guidelines. 1.17 Environmental Settlement Agreement: That certain Settlement Agreement, lodged with the Bankruptcy Court on March 23, 1995, by and between the Debtors and the parties listed on the signatory pages thereof, to the extent that such Settlement Agreement is approved and authorized by the Bankruptcy Court by a Final Order of the Bankruptcy Court. 1.18 Final Order: An order as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for reargument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue, or rehear shall have been waived in writing in form and substance satisfactory to the Debtors or the Reorganized Debtors, as the case may be, and their counsel or, in the event that an appeal, writ of certiorari, or reargument or rehearing thereof has been sought, such order shall have been affirmed by the highest court to which such order was appealed, or certiorari has been denied or from which reargument or rehearing was sought, and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired. A1.1.13-4 1.19 Lead Personal Injury Claim: Any right to payment, claim, remedy, liability, or Demand, now existing or hereafter arising, whether or not such right, claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability, or Demand are known or unknown, for, under any theory of law, equity, admiralty, or otherwise, death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to products that contained lead chemicals that were manufactured, sold, supplied, produced, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, including, without express or implied limitation, any right, claim, remedy, liability, or Demand for compensatory damages (such as loss of consortium, wrongful death, survivorship, proximate, consequential, general, and special damages) and including punitive damages and any Asbestos or Lead Contribution Claim. 1.20 New Eagle-Picher Common Stock: Voting common stock, with no par value, of Reorganized Eagle-Picher from and after the Effective Date after giving effect to the Amended and Restated Articles of Incorporation. 1.21 Petition Date: January 7, 1991 1.22 PI Protected Party: Any of the following parties: (a) the Debtors; (b) the Reorganized Debtors; (c) an Affiliate; (d) any Entity that, pursuant to the Plan or after the Effective Date becomes a direct or indirect transferee of, or successor to any assets of any of the Debtors, the Reorganized Debtors, or the PI Trust (but only to the extent that liability is asserted to exist by reason of it becoming such a transferee or successor); (e) any Entity that, pursuant to the Plan or after the Effective Date, makes a loan to any of the Reorganized Debtors or the PI Trust or to a successor to, or transferee of, any assets of any of the Debtors, the Reorganized Debtors, or the PI Trust (but only to the extent that liability is asserted to exist by reason of such Entity becoming such a lender or to the extent any pledge of assets made in connection with such a loan is sought to be upset or impaired); or (f) any Entity to the extent he, she, or it is alleged to be directly or indirectly liable for the conduct of, Claims against, or Demands on any of the Debtors, the Reorganized Debtors, or the PI Trust on account of Asbestos Personal Injury Claims or Lead Personal Injury Claims by reason of one or more of the following: (i) such Entity's ownership of a financial interest in any of the Debtors or the Reorganized Debtors, a past or present affiliate of any of the Debtors or the Reorganized Debtors, or predecessor in interest of any of the Debtors or the Reorganized Debtors; (ii) such Entity's involvement in the management of any of the Debtors or the Reorganized Debtors or any predecessor in interest of any of the Debtors or the Reorganized Debtors; A1.1.13-5 (iii) such Entity's service as an officer, director, or employee of any of the Debtors, the Reorganized Debtors, or Related Parties; (iv) such Entity's provision of insurance to any of the Debtors, the Reorganized Debtors, or Related Parties; or (v) such Entity's involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of any of the Debtors, the Reorganized Debtors, or any of the Related Parties. 1.23 Product Liability Tort Claim: Any right to payment, claim, remedy, liability, or Demand, now existing or hereafter arising, whether or not such right, claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such right, claim, remedy, liability, or Demand are known or unknown, for, under any theory of law, equity, admiralty, or otherwise, death, bodily injury, or other personal damages (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to any products or byproducts that were manufactured, sold, supplied, produced, released, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, including, without express or implied limitation, any right, claim, remedy, liability, or Demand for compensatory damages (such as loss of consortium, wrongful death, survivorship, proximate, consequential, general, and special damages), including punitive damages, and including, without express or implied limitation, any Asbestos Personal Injury Claim or Lead Personal Injury Claim. 1.24 Related Parties: (a) Any past or present affiliate of any of the Debtors or the Reorganized Debtors, (b) any predecessor in interest of any of the Debtors or the Reorganized Debtors, or (c) any Entity that owned a financial interest in any of the Debtors or the Reorganized Debtors, any past or present affiliate of any of the Debtors or the Reorganized Debtors, or any predecessor in interest of any of the Debtors or the Reorganized Debtors. 1.25 Reorganized Debtors: The Debtors, or any successors in interest thereto, from and after the Effective Date. 1.26 Reorganized Eagle-Picher: Eagle-Picher, or any successor in interest thereto, from and after the Effective Date. 1.27 Senior Unsecured Sinking Fund Debentures: Those certain Senior Unsecured Sinking Fund Debentures in the aggregate principal amount of Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00), bearing interest at a rate determined by McDonald & Company Securities, Inc. on the Effective Date as the rate such Senior Unsecured Sinking Fund Debentures should bear in order to have a market value of one hundred percent (100%) of their principal amount on the Effective Date, and substantially in the form set forth in Exhibit "1.1.114" to the Plan. All capitalized terms used herein and not defined in this Article 1 or in another provision of this Trust Agreement shall have the meanings assigned to them in the Plan and/or the Bankruptcy Code, which definitions are incorporated by reference herein. A1.1.13-6 ARTICLE 2 AGREEMENT OF TRUST 2.1 Creation and Name. The Settlor hereby creates a trust known as the "Eagle-Picher Industries, Inc. Personal Injury Settlement Trust", which is the PI Trust provided for and referred to in the Plan. The Trustees of the PI Trust may transact the business and affairs of the PI Trust in the name, "Eagle-Picher Industries Personal Injury Settlement Trust". 2.2 Purpose. The purpose of the PI Trust is to assume any and all liabilities of the Debtors, their successors in interest or their affiliates, with respect to any and all Toxic Personal Injury Claims; to use the PI Trust's assets and income to promptly pay holders of valid Toxic Personal Injury Claims in such a way that holders of similar Toxic Personal Injury Claims are paid in substantially the same manner; and to otherwise comply in all respects with the requirements of a trust set forth in Section 524(g)(2)(B)(i) of the Bankruptcy Code. This purpose shall be fulfilled through the provisions of this Trust Agreement, the Eagle-Picher Industries, Inc. Asbestos Injury Claims Resolution Procedures attached hereto as Annex B ("EPI ASBESTOS CLAIMS PROCEDURES"), and any Lead Personal Injury Claims procedures adopted pursuant to the Trust Agreement ("EPI LEAD CLAIMS PROCEDURES"). 2.3 Transfer of Assets. The Settlors hereby transfer and assign to the PI Trust the property set forth in Article 10 of the Plan ( herein the "ASSETS"). 2.4 Acceptance of Assets and Assumption of Liabilities. (a) In furtherance of the purposes of the PI Trust, the Trustees, on behalf of the PI Trust, hereby expressly accept the transfer and assignment to the PI Trust of the Assets. (b) In furtherance of the purposes of the PI Trust, and subject to Article 5.4, the Trustees, on behalf of the PI Trust, expressly assume all liability for all Toxic Personal Injury Claims as provided for in Article 10 of the Plan. Except as otherwise provided in the EPI Asbestos Claims Procedures, the PI Trust shall have all defenses, cross-claims, offsets, and recoupments regarding Toxic Personal Injury Claims that Eagle-Picher has or would have had under applicable law. (c) Neither the Debtors nor their successors in interest or their affiliates shall be entitled to any indemnification from the PI Trust for any expenses, costs, and fees (including attorneys' fees), judgments, settlements, or other liabilities arising from or incurred in connection with, any action related to a Toxic Personal Injury Claim, including, but not limited to, indemnification or contribution for Toxic Personal Injury Claims prosecuted against Reorganized Eagle-Picher. Nothing in this section or any other section of this Trust Agreement shall be construed in any way to limit the scope, enforceability, or effectiveness of the Asbestos and Lead PI Permanent Channeling Injunction issued in connection with the Plan or the PI Trust's assumption of all liability with respect to Toxic Personal Injury Claims. A1.1.13-7 ARTICLE 3 POWERS AND TRUST ADMINISTRATION 3.1 Powers. (a) Subject to the limitations set forth in this Trust Agreement, the Trustees shall have the power to take any and all actions that, in the judgment of the Trustees, are necessary or proper to fulfill the purposes of the PI Trust, including, without limitation, each power expressly granted in this Article 3.1, any power reasonably incidental thereto, and any trust power now or hereafter permitted under the laws of the State of Ohio. (b) Except as otherwise specified herein, the Trustees need not obtain the order or approval of any court in the exercise of any power or discretion conferred hereunder. (c) Without limiting the generality of Article 3.1(a) above, the Trustees shall have the power to: (i) receive and hold the Assets, vote the New Eagle-Picher Common Stock, exercise all rights with respect to, and sell any securities issued by Reorganized Eagle-Picher that are included in the Assets, subject to any restrictions set forth in the articles of incorporation of Reorganized Eagle-Picher; (ii) invest the monies held from time to time by the PI Trust; (iii) sell, transfer or exchange any or all of the Assets at such prices and upon such terms as they may consider proper, consistent with the other terms of this Trust Agreement; (iv) pay liabilities and expenses of the PI Trust; (v) change the state of domicile of the PI Trust; (vi) establish such funds, reserves and accounts within the PI Trust estate, as deemed by the Trustees to be useful in carrying out the purposes of the PI Trust; (vii) sue and be sued and participate, as a party or otherwise, in any judicial, administrative, arbitrative or other proceeding; (viii) amend the Bylaws, a copy of which is annexed hereto as Annex A (the "BYLAWS"); (ix) appoint such officers and hire such employees and engage such legal, financial, accounting, investment and other advisors, alternative dispute resolution panelists, and agents as the business of the PI Trust requires, and to delegate to such persons such powers and authorities as the fiduciary duties of the Trustees permit and as the Trustees, in their discretion, deem advisable or necessary in order to carry out the terms of this PI Trust; (x) pay employees, legal, financial, accounting, investment and other advisors and agents reasonable compensation, including without limitation, compensation at rates approved by the Trustees for services rendered prior to the execution hereof; A1.1.13-8 (xi) reimburse the Trustees, subject to Article 5.5, and reimburse such officers, employees, legal, financial, accounting, investment and other advisors and agents all reasonable out-of-pocket costs and expenses incurred by such persons in connection with the performance of their duties hereunder, including without limitation, costs and expenses incurred prior to the execution hereof; (xii) execute and deliver such deeds, leases and other instruments as the Trustees consider proper in administering the PI Trust; (xiii) enter into such other arrangements with third parties as are deemed by the Trustees to be useful in carrying out the purposes of the PI Trust, provided such arrangements do not conflict with any other provision of this Trust Agreement; (xiv) in accordance with Article 5.6, indemnify (and purchase insurance indemnifying) Trustees and TAC members, and officers, employees, agents, advisers and representatives of the PI Trust or the TAC to the fullest extent that a corporation or trust organized under the law of the PI Trust's domicile is from time to time entitled to indemnify and/or insure its directors, trustees, officers, employees, agents, advisers and representatives; (xv) indemnify (and purchase insurance indemnifying) the Additional Indemnitees as defined in Article 5.6 hereof; (xvi) delegate any or all of the authority herein conferred with respect to the investment of all or any portion of the Assets to any one or more reputable individuals or recognized institutional investment advisers or investment managers without liability for any action taken or omission made because of any such delegation, except as provided in Article 5.4; (xvii) consult with Reorganized Eagle-Picher at such times and with respect to such issues relating to the conduct of the PI Trust as the Trustees consider desirable; (xviii) make, pursue (by litigation or otherwise), collect, compromise or settle any claim, right, action or cause of action included in the Assets; and (xix) merge or contract with other claims resolution facilities that are not specifically created by this Agreement or the EPI Asbestos Claims Procedures, subject to Article 3.2(e) of this Agreement; provided that such merger or contract shall not (a) alter the EPI Asbestos Claims Procedures; (b) subject the Reorganized Debtors or any successor in interest to any risk of having any Toxic Personal Injury Claim asserted against it or them; or (c) otherwise jeopardize the validity or enforceability of the Asbestos and Lead PI Permanent Channeling Injunction. (d) The Trustees shall promptly educate and inform themselves as to Lead Personal Injury Claims that may be asserted against the PI Trust. To do so, the Trustees shall expend no more than $2.5 million of PI Trust funds, in total, for medical, scientific, and other research into diseases and conditions allegedly caused by exposure to lead pigment-containing products. This research shall also be used to determine what products cause such diseases and conditions. The nature of the research conducted shall be in the Trustees' sole discretion. This subsection shall in no way limit the Trustees' authority to expend money as they otherwise are permitted or required by other sections of this Trust Agreement, including, without limitation, Article 3.3 herein. (e) The Trustees shall not have the power to guaranty any debt of other persons. A1.1.13-9 3.2 General Administration. (a) The Trustees shall act in accordance with the Bylaws. To the extent not inconsistent with the terms of this Trust Agreement, the Bylaws govern the affairs of the PI Trust. (b) The Trustees shall timely file such income tax and other returns and statements and comply with all withholding obligations, as required under the applicable provisions of the Internal Revenue Code and of any state law and the regulations promulgated thereunder. (c) (i) The Trustees shall cause to be prepared and filed with the Bankruptcy Court, as soon as available, and in any event within ninety (90) days following the end of each fiscal year, an annual report containing financial statements of the PI Trust (including, without limitation, a balance sheet of the PI Trust as of the end of such fiscal year and a statement of operations for such fiscal year) audited by a firm of independent certified public accountants selected by the Trustees and accompanied by an opinion of such firm as to the fairness of the financial statements' presentation of the cash and investments available for the payment of claims and as to the conformity of the financial statements with generally accepted accounting principles. The Trustees shall provide a copy of such report to the TAC and to Reorganized Eagle-Picher. (ii) Simultaneously with delivery of each set of financial statements referred to in Article 3.2(c)(i) above, the Trustees shall cause to be prepared and filed with the Bankruptcy Court a report containing a summary regarding the number and type of claims disposed of during the period covered by the financial statements. (iii) All materials required to be filed with the Bankruptcy Court by this Article 3.2 shall be available for inspection by the public in accordance with procedures established by the Bankruptcy Court. (d) The Trustees shall cause to be prepared and submitted to the TAC as soon as practicable prior to the commencement of each fiscal year a budget and cash flow projections covering such fiscal year and the succeeding four fiscal years. (e) The Trustees shall consult with the TAC (as hereinafter defined) on the appointment of successor Trustees, the implementation and administration of the EPI Asbestos Claims Procedures, the expenditure of funds for research as described in Article 3.1 (d), and the adoption and administration of the EPI Lead Claims Procedures (herein the EPI Asbestos Claims Procedures and the EPI Lead Claims Procedures are some times jointly referred to as the "PROCEDURES"). The Trustees shall be required to obtain the consent of a majority of the members of the TAC in order: (i) to amend materially the Procedures, unless such amendment relates to the specific amounts or percentages to be paid to holders of Toxic Personal Injury Claims who have not elected discounted payment, in which case, TAC consent is not required; or (ii) to merge or participate with any claims resolution facility that was not specifically created under this Trust Agreement or the Procedures; or (iii) to amend any provision of Article 6 herein; or (iv) to terminate the PI Trust pursuant to Article 7.2(a)(iii) herein. A1.1.13-10 The TAC shall not unreasonably withhold any consent required hereunder, and if ever the TAC shall withhold any consent required hereunder, at the election of the Trustees, the dispute between the Trustees and the TAC shall be resolved through the implementation of binding alternative dispute resolution procedures mutually agreed to by the Trustees and the TAC. 3.3 Claims Administration. (a) General Principles. The Trustees shall proceed quickly to implement the EPI Asbestos Claims Procedures, and they shall proceed quickly to adopt the EPI Lead Claims Procedures when, and if, Lead Personal Injury Claims become eligible for processing by the PI Trust. The PI Trust shall pay holders of valid Toxic Personal Injury Claims in accordance with the provisions hereof as promptly as funds become available. In their administration of the Procedures, the Trustees shall favor settlement over arbitration, arbitration over resort to the tort system, and fair and efficient resolution of claims in all cases, while endeavoring to preserve and enhance the PI Trust estate. (b) Asbestos Personal Injury Claims. (i) The Trustees shall employ mechanisms such as the review of estimates of the numbers and values of Asbestos Personal Injury Claims, or other comparable mechanisms, that provide reasonable assurance the PI Trust will value, and be in a financial position to pay, similar present asbestos personal injury Claims and future asbestos personal injury Demands in substantially the same manner. (ii) The Trustees shall administer the processing and payment of Asbestos Personal Injury Claims in accordance with the EPI Asbestos Claims Procedures, a copy of which is annexed hereto as Annex B, as the same may be amended from time to time, in accordance with the provisions hereof and thereof. (c) Lead Personal Injury Claims. (i) The Trustees shall employ mechanisms such as the review of estimates of the numbers and values of Lead Personal Injury Claims, or other comparable mechanisms, that provide reasonable assurance the PI Trust will value, and be in a financial position to pay, similar present lead personal injury Claims and future lead personal injury Demands in substantially the same manner. Notwithstanding the foregoing, due to (x) the present absence of any court judgment imposing personal injury liability upon any lead pigment manufacturer like Eagle-Picher, and (y) the difficult, expensive, and inherently uncertain task of estimating the amount of valid Lead Personal Injury Claims, if any, that the PI Trust may be required to pay some time in the future, the Trustees shall not be required to estimate the PI Trust's possible liability for, or decide whether to reserve funds or otherwise maintain sufficient resources for the payment of, Lead Personal Injury Claims until the latest of the following events: (A) four years have passed after the Effective Date; (B) the PI Trust has paid One Million Dollars ($1,000,000) in indemnity costs, as opposed to claim defense costs, for Lead Personal Injury Claims in any one calendar year; or A1.1.13-11 (C) holders of Lead Personal Injury Claims obtain final, nonappealable liability judgments against lead pigment manufacturers in more than one state. (ii) The Trustees shall administer the processing and payment of Lead Personal Injury Claims pursuant to the EPI Lead Claims Procedures to be adopted by the Trustees. The EPI Lead Claims Procedures shall be similar to the EPI Asbestos Claims Procedures. For example, like the EPI Asbestos Claims Procedures, the EPI Lead Claims Procedures shall provide that the holders of Lead Personal Injury Claims shall be prevented from suing the PI Trust in the tort system until they have exhausted their remedies against the PI Trust under the EPI Lead Claims Procedures. However, due to (x) the present absence of any court judgment imposing personal injury liability upon any lead pigment manufacturer like Eagle-Picher, and (y) the difficult, expensive, and inherently uncertain task of estimating the amount of valid Lead Personal Injury Claims, if any, that the PI Trust may be required to pay some time in the future, the EPI Lead Claims Procedures shall differ from the EPI Asbestos Claims Procedures in at least the following respect: (A) no Lead Personal Injury Claim or any claim for contribution, indemnification, or reimbursement of liability for a Lead Personal Injury Claim shall be eligible for processing by the PI Trust unless the holder can demonstrate that either the holder or a similarly situated lead personal injury claimant has obtained a final, nonappealable judgment against a lead pigment manufacturer under the state law applicable to the holder's claim; The PI Trust's determination under (A) above as to whether a claim is eligible for processing (i) shall be final and nonappealable and (ii) shall not be deemed to be an exhaustion of the claim holder's remedies against the PI Trust, so that any claims the PI Trust determines to be ineligible for processing may be refiled against the PI Trust at such time as eligibility can be established under (A) above. (d) Bankruptcy Court Claims Bar Date Orders. (i) As provided herein, the Trustees shall enforce the Bankruptcy Court's claims' bar date orders that are applicable to Toxic Personal Injury Claims. (ii) The Trustees shall disallow any Toxic Personal Injury Claim if they determine the claimant inexcusably failed to comply with an applicable claims bar date order entered by the Bankruptcy Court, and any such decision shall be final and non-appealable. Notwithstanding the foregoing, the Trustees shall not disallow a Toxic Personal Injury Claim for failure to comply with an applicable claims bar date order if the holder of such Toxic Personal Injury Claim demonstrates that the asbestos or lead related disease complained of first manifested itself after the applicable claims bar date order. For example, an asbestos disease victim (A) who first manifested any asbestos related disease after the applicable claims' bar date or (B) who suffered from a less serious asbestos related disease, such as pleural thickening, at the time of the applicable bar date and who later developed a more serious asbestos related disease, such as cancer, shall not have his claim disallowed for failure to comply with the applicable claims bar date order. (iii) The Trustees shall have complete discretion to determine whether a claimant inexcusably failed to comply with an applicable claims bar date order. In making this determination, the Trustees may be guided by the "excusable neglect" standard developed under federal bankruptcy law in connection with the adjudication of late filed proofs of claim in bankruptcy cases. A1.1.13-12 ARTICLE 4 ACCOUNTS, INVESTMENTS, AND PAYMENTS 4.1 Accounts. The Trustees may, from time to time, create such accounts and reserves within the PI Trust estate as they may deem necessary, prudent or useful in order to provide for the payment of expenses and valid Toxic Personal Injury Claims and may, with respect to any such account or reserve, restrict the use of monies therein. 4.2 Separate Reserve For Future Claims. The first Fifty Million ($50,000,000) paid on the Divestiture Notes and the Senior Unsecured Sinking Fund Debentures held by the PI Trust shall be segregated and held in a separate account as a reserve for the payment of valid Toxic Personal Injury Claims whose holders first manifest a disease after the Effective Date. The segregation and holding of such funds, however, shall not in any way alter the duties of the Trustees to pay similar present and future Toxic Personal Injury Claims in substantially the same manner. 4.3 Investments. Investment of monies held in the PI Trust shall be administered in the manner in which individuals of ordinary prudence, discretion and judgment would act in the management of their own affairs, subject to the following limitations and provisions: (a) The PI Trust may acquire and hold any stock or securities issued by Reorganized Eagle-Picher and included in the Assets and any New Eagle-Picher Common Stock issuable on the exercise or conversion thereof, without regard to any of the limitations set forth in the other parts of this Article 4. (b) Except with respect to entities owned and controlled by the PI Trust for purposes of carrying out provisions of this Trust Agreement, the PI Trust shall not acquire or hold any equity in any Person or business enterprise unless such equity is in the form of securities that are traded on a national securities exchange or major international securities exchange or over the National Association of Securities Dealers Automated Quotation System. (c) The PI Trust shall not acquire or hold any repurchase obligations unless, in the opinion of the Trustees, they are adequately collateralized. 4.4 Source of Payments. All PI Trust expenses, payments and all liabilities with respect to Toxic Personal Injury Claims shall be payable solely out of the PI Trust estate. Neither Eagle-Picher, Reorganized Eagle-Picher, any Debtors, their subsidiaries, any successor in interest or the present or former directors, officers, employees or agents of Eagle-Picher, Reorganized Eagle-Picher, any Debtors or their subsidiaries, nor the Trustees, the TAC, or any of their officers, agents, advisers or employees shall be liable for the payment of any PI Trust expense or Toxic Personal Injury Claim or any other liability of the PI Trust. ARTICLE 5 TRUSTEES 5.1 Number. There initially shall be five (5) Trustees, two of whom shall serve for a period of three (3) years from the effective date of the PI Trust ("THREE YEAR SERVICE PERIOD"). At the end of the Three Year Service Period, the two trustee positions subject to the Three Year Service Period will automatically terminate and the PI Trust will thereafter operate with three Trustees until termination of the PI Trust pursuant to Article 7.2. The initial Trustees shall be those persons named on the signature page hereof. A1.1.13-13 5.2 Term of Service. (a) Pursuant to Article 5.1, two of the initial Trustees shall serve until the earlier of (i) the expiration of the Three Year Service Period, (ii) his or her death, (iii) his or her resignation pursuant to Article 5.2(c), (iv) his or her removal pursuant to Article 5.2(d), or (v) the termination of the PI Trust pursuant to Article 7.2, at which time the term shall terminate automatically. (b) Trustees whose terms do not terminate upon the expiration of the Three Year Service Period shall serve until the earlier of (i) the termination of the PI Trust pursuant to Article 7.2 below, (ii) his or her death, (iii) his or her resignation pursuant to Article 5.2(c) below, or (iv) his or her removal pursuant to Article 5.2(d) below, at which time his or her term shall terminate automatically. (c) Any Trustee may resign at any time by written notice to each of the remaining Trustees and the TAC. Such notice shall specify a date when such resignation shall take effect, which shall not be less than 90 days after the date such notice is given, where practicable. (d) Any Trustee may be removed in the event that such Trustee becomes unable to discharge his or her duties hereunder due to accident or physical or mental deterioration, or for other good cause. Good cause shall be deemed to include, without limitation, any failure to comply with Article 5.9, a consistent pattern of neglect and failure to perform or participate in performing the duties of the Trustees hereunder, or repeated nonattendance at scheduled meetings. Such removal shall require the unanimous decision of the other Trustees. Such removal shall take effect at such time as the other Trustees shall determine. 5.3 Appointment of Successor Trustee. (a) In the event of a vacancy in the position of a Trustee, the vacancy shall be filled by majority vote of the remaining Trustees who shall refrain from making any appointment that may result in the appearance of impropriety; provided, however, that during the Three Year Service Period the remaining Trustees, in their discretion, may decide not to appoint a successor Trustee to fill such a vacancy so long as the remaining Trustees number no less than three (3). (b) Immediately upon the appointment of any successor Trustee, all rights, titles, duties, powers and authority of the predecessor Trustee hereunder shall be vested in, and undertaken by, the successor Trustee without any further act. No successor Trustee shall be liable personally for any act or omission of his or her predecessor Trustee. 5.4 Liability of Trustees. No Trustee, officer, or employee of the PI Trust shall be liable to the PI Trust, to any person holding a Toxic Personal Injury Claim, or to any other Person except for such Trustee's, officer's or employee's own breach of trust committed in bad faith or for willful misappropriation. No Trustee, officer, or employee of the PI Trust shall be liable for any act or omission of any other officer, agent, or employee of the PI Trust, unless the Trustee acted with bad faith or willful misconduct in the selection or retention of such officer, agent, or employee. 5.5 Compensation and Expenses of Trustees. (a) Each of the Trustees shall receive compensation from the PI Trust for his or her services as Trustee in the amount of $ 35,000 per annum, plus a per diem allowance for meetings attended in the amount of $1,000, or some other amount as determined by the Trustees, payable as determined by the Trustees. The Trustees shall determine the scope and duration of activities that constitute a meeting and may A1.1.13-14 provide for partial payment of per diem amounts for activities of less than a full day's duration. The per annum compensation payable to the Trustees hereunder may only be increased annually by the Trustees proportionately with any increase in the Consumer Price Index -- All Cities (or any successor index) for the corresponding annual period. Any increase in excess of that amount may be made only with the approval of the Bankruptcy Court. (b) The PI Trust will promptly reimburse the Trustees for all reasonable out-of-pocket costs and expenses incurred by the Trustees in connection with the performance of their duties hereunder. 5.6 Indemnification of Trustees and Others. (a) The PI Trust shall indemnify and defend the Trustees, the PI Trust's officers, agents, advisers or employees, to the fullest extent that a corporation or trust organized under the laws of the PI Trust's domicile is from time to time entitled to indemnify and defend its directors, trustees, officers, employees, agents or advisers against any and all liabilities, expenses, claims, damages or losses incurred by them in the performance of their duties hereunder. Notwithstanding the foregoing, the Trustees shall not be indemnified or defended in any way for any liability, expense, claim, damage or loss for which they are liable under Article 5.4. Additionally, each member of the Injury Claimants' Committee and its professionals, the Future Representative and his professionals, and each member of the TAC (collectively, "ADDITIONAL INDEMNITEES") who was or is a party, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding of any kind, whether civil, administrative or arbitrative, by reason of any act or omission of such Additional Indemnitees with respect to (i) the Chapter 11 Cases, (ii) the liquidation of any Toxic Personal Injury Claims, or (iii) the administration of the PI Trust and the implementation of the Procedures, shall be indemnified and defended by the PI Trust against expenses, costs and fees (including attorneys' fees), judgments, awards, costs, amounts paid in settlement, and liabilities of all kinds incurred by each Additional Indemnitee in connection with or resulting from such action, suit, or proceeding, if he or she acted in good faith and in a manner such Additional Indemnitee reasonably believed to be in, or not opposed to, the best interests of the holders of Toxic Personal Injury Claims. (b) Reasonable expenses, costs and fees (including attorneys' fees) incurred by or on behalf of a Trustee or Additional Indemnitee in connection with any action, suit, or proceeding, whether civil, administrative or arbitrative from which they are indemnified by the PI Trust pursuant to this Article 5.6, may be paid by the PI Trust in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such Trustee or Additional Indemnitee to repay such amount unless it shall be determined ultimately that such Trustee or Additional Indemnitee is entitled to be indemnified by the PI Trust. (c) The Trustees shall have the power, generally or in specific cases, to cause the PI Trust to indemnify the employees and agents of the PI Trust to the same extent as provided in this Article 5.6 with respect to the Trustees. (d) Any indemnification under Article 5.6(c) of this Agreement shall be made by the PI Trust upon a determination that indemnification of such Person is proper in the circumstances. Such determination shall be made by a majority vote of the Trustees who were not parties to such action, suit, or proceeding, if at least two such Trustees were not parties; otherwise the determination will be made by legal counsel to the PI Trust. (e) The Trustees may purchase and maintain reasonable amounts and types of insurance on behalf of an individual who is or was a Trustee, officer, employee, agent or representative of the PI Trust or Additional Indemnitee against liability asserted against or incurred by such individual in that capacity or arising from his or her status as a Trustee, officer, employee, agent or representative. A1.1.13-15 5.7 Trustees' Lien. The Trustees shall have a prior lien upon the PI Trust corpus to secure the payment of any amounts payable to them pursuant to Articles 5.5 and 5.6. 5.8 Trustees' Employment of Experts. The Trustees may, but shall not be required to, consult with counsel, accountants, appraisers and other parties deemed by the Trustees to be qualified as experts on the matters submitted to them (regardless of whether any such party is affiliated with any of the Trustees in any manner, except as otherwise expressly provided in this Trust Agreement), and the opinion of any such parties on any matters submitted to them by the Trustees shall be full and complete authorization and protection in respect of any action taken or not taken by the Trustees hereunder in good faith and in accordance with the written opinion of any such party. 5.9 Trustees' Independence. No Trustee shall, during the term of his service, hold a financial interest in Reorganized Eagle-Picher or act as attorney for Reorganized Eagle-Picher or as an attorney or advisor for any person who holds a Toxic Personal Injury Claim. 5.10 Trustees' Service as Officers or Consultants to the Trust. The Trustees may, but are not required to, select any Trustee to serve as an officer or manager of the Trust or as a consultant to the Trust. In the event any Trustee serves the Trust in such a capacity, the Trust shall compensate the Trustee in an amount determined by the Trustees. Compensation for a Trustee's service as an officer or manager of the Trust or as a consultant to the Trust shall be in addition to compensation paid pursuant to Article 5.5. 5.11 Trustees' Service as Directors of Reorganized Eagle-Picher. Notwithstanding the provisions of Article 5.9 above, the Trustees are not prohibited from serving as directors of Reorganized Eagle-Picher. If any Trustee serves as a director of Reorganized Eagle-Picher, he shall not receive for such service compensation over and above the compensation received as Trustee under Article 5.5, but he shall receive from the PI Trust a per diem allowance in the amount that Reorganized Eagle-Picher pays its directors for their attendance at meetings. 5.12 Bond. The Trustees shall not be required to post any bond or other form of surety or security unless otherwise ordered by the Bankruptcy Court. ARTICLE 6 TRUSTEES' ADVISORY COMMITTEE 6.1 Formation; Duties. A Trustees' Advisory Committee (the "TAC") shall be formed. The Trustees shall consult with the TAC on the appointment of successor Trustees and the implementation and administration of the Procedures. The Trustees may consult with the TAC on any matter affecting the PI Trust, and certain actions by the Trustees are subject to the prior consent of the TAC as provided in Article 3.2(e) hereof. The TAC shall endeavor to act in the best interests of the holders of all Toxic Personal Injury Claims. 6.2 Number; Chairperson. (a) There shall be three members of the TAC. One of the initial TAC members shall be the Future Representative; the two other initial TAC members shall be Robert E. Sweeney and Robert B. Steinberg. The TAC shall act in all cases by majority vote. (b) There shall be a Chairperson of the TAC. The Chairperson shall act as the TAC's liaison, he shall coordinate and schedule meetings of the TAC, and he shall handle all administrative matters A1.1.13-16 that come before the TAC. The Future Representative shall serve as Chairperson of the TAC for as long as he is a member of the TAC. 6.3 Term of Office. (a) Each member of the TAC shall serve for the duration of the PI Trust, subject to the earlier of his or her death, resignation, or removal. (b) Subject to Article 6.4(b) hereof, any member of the TAC may resign at any time by written notice to each of the remaining members specifying the date when such resignation shall take place. (c) Any member of the TAC may be removed in the event such member becomes unable to discharge his or her duties hereunder due to accident, physical deterioration, mental incompetence, or a consistent pattern of neglect and failure to perform or to participate in performing the duties of such member hereunder, such as repeated nonattendance at scheduled meetings. Such removal shall be made by the unanimous decision of the other members of the TAC, and it shall be effective at such time as all other members of the TAC determine. 6.4 Appointment of Successor. (a) A vacancy in the TAC caused by the resignation of a TAC member shall be filled with an individual nominated by the resigning TAC member and approved by the unanimous vote of all TAC members. The resigning TAC member's resignation shall not be effective until such approval is obtained and the successor TAC member has accepted the appointment. (b) In the event of a vacancy in the membership of the TAC other than one caused by resignation, the vacancy shall be filled by the unanimous vote of the remaining member(s) of the TAC; provided, however, that the Future Representative shall have the exclusive right to predesignate his successor, subject only to the unanimous approval of the remaining member(s) of the TAC. 6.5 Compensation and Expenses of TAC Members. (a) Each member of the TAC shall receive compensation from the PI Trust for his or her services in the amount of $2,500.00 per diem for meetings attended by such member, payable as determined by the Trustees, but not less frequently than quarterly. Such per diem amount shall be increased or decreased annually pro rata with the amount that the per diem for meetings paid to the Trustees is increased or decreased pursuant to Article 5.5(a). For purposes of determining the per diem amount hereunder, the same definition of "meeting" shall apply to the TAC as is adopted by the Trustees for meetings of the Trustees. (b) In the discretion of the Trustees, the Future Representative may receive compensation from the PI Trust in addition to the per diem meeting allowance paid to each member of the TAC, if they deem it appropriate to compensate him for the additional duties imposed upon him as Chairperson of the TAC. Such additional compensation shall be paid at the hourly rate previously approved for the Future Representative by the Bankruptcy Court in the Chapter 11 Cases. (c) All reasonable out-of-pocket costs and expenses incurred by TAC members in connection with the performance of their duties hereunder will be promptly reimbursed to such members by the PI Trust. A1.1.13-17 6.6 Procedure for Obtaining Consent of TAC. In the event a matter is subject to the consent of the TAC pursuant to the terms hereof, the Trustees shall provide the TAC with the appropriate information regarding the matter in question. Upon receipt of such information, the TAC shall be given a period of twenty (20) days to respond to the Trustees' request for consent. This twenty (20) day period may be extended with the consent of the Trustees. In the event that the TAC does not respond to the Trustees within such twenty (20) day period, or any extension thereof, as to their approval or non-approval to such matter, then approval by the TAC shall be deemed to have been granted. The members of the TAC must consider in good faith any request by the Trustees prior to any non-approval thereof, and no member of the TAC may withhold his consent unreasonably. ARTICLE 7 GENERAL PROVISIONS 7.1 Irrevocability. The PI Trust is irrevocable, but is subject to amendment as provided in Article 7.3. 7.2 Termination. (a) The PI Trust shall automatically terminate on the date (the "TERMINATION DATE") 90 days after the first occurrence of any of the following events: (i) the Trustees in their sole discretion decide to terminate the PI Trust because (A) they deem it unlikely that new Toxic Personal Injury Claims will be filed against the PI Trust and (B) all Toxic Personal Injury Claims duly filed with the PI Trust have been liquidated and satisfied and twelve consecutive months have elapsed during which no new Toxic Personal Injury Claim has been filed with the PI Trust; (ii) if the Trustees have procured and have in place irrevocable insurance policies and have established claims handling agreements and other necessary arrangements with suitable third parties adequate to discharge all expected remaining obligations and expenses of the PI Trust in a manner consistent with this Trust Agreement and the Procedures, the date on which the Bankruptcy Court enters an order approving such insurance and other arrangements and such order becomes final; (iii) if in the judgment of two/thirds of the Trustees, with the consent of the TAC (which consent shall not be unreasonably withheld), the continued administration of the PI Trust is uneconomic or inimical to the best interests of the persons holding Toxic Personal Injury Claims and the termination of the PI Trust will not expose or subject Reorganized Eagle-Picher or any other Reorganized Debtor or any successor in interest to any increased or undue risk of having any Toxic Personal Injury Claims asserted against it or them or in any way jeopardize the validity or enforceability of the Asbestos and Lead PI Permanent Channeling Injunction; or (iv) 21 years less 91 days pass after the death of the last survivor of all the descendants of Joseph P. Kennedy, Sr. of Massachusetts living on the date hereof. (b) On the Termination Date, after payment of all the PI Trust's liabilities have been provided for, all monies remaining in the PI Trust estate shall be transferred to charitable organization(s) exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, which tax-exempt organization(s) shall be selected by the Trustees using their reasonable discretion; provided, however, that (i) A1.1.13-18 if practicable, the tax-exempt organization(s) shall be related to the treatment of, research, or the relief of suffering of individuals suffering from asbestos or lead caused disorders, and (ii) the tax-exempt organization(s) shall not bear any relationship to Reorganized Eagle-Picher within the meaning of Section 468(d)(3) of the Internal Revenue Code. 7.3 Amendments. The Trustees, after consultation with the TAC, and subject to the TAC's consent when so provided herein, may modify or amend this Trust Agreement or any document annexed to it, including, without limitation, the Bylaws, or the Procedures, except that Articles 2.2 (Purpose), 2.4 (Acceptance of Assets and Assumption of Liabilities), 3.1(e) (precluding guaranty of others' debt), 3.2(e) (Trustees' consultation with TAC), 3.3(a)-(c) (claims administration), 5.1 (Number of Trustees), 5.2 (Term of Service), 5.3 (Appointment of Successor Trustees), 5.5 (Compensation and Expenses of Trustees), 5.6 (Indemnification of Trustees and Others), 5.9 (Trustees' Disinterestedness), 6.1 (TAC Formation and Duties), 6.2 (TAC Number and Chairperson), 6.4 (Appointment of Successor (TAC)), 7.1 (Irrevocability), 7.2 (Termination) and 7.3 (Amendments) herein shall not be modified or amended in any respect. No consent from the Settlors shall be required to modify or amend this Trust Agreement or any document annexed to it. Any modification or amendment made pursuant to this section must be done in writing. Notwithstanding anything contained herein to the contrary, neither this Trust Agreement nor the Procedures shall be modified or amended in any way that would jeopardize the efficacy or enforceability of the Asbestos and Lead PI Permanent Channeling Injunction. 7.4 Meetings. For purposes of Articles 5.5 and 6.5 of this Trust Agreement, a TAC member or a Trustee shall be deemed to have attended a meeting in the event such person spends a substantial portion of the day conferring, by phone or in person, on PI Trust matters with TAC members or Trustees. The Trustees shall have complete discretion to determine whether a meeting, as described herein, occurred for purposes of Articles 5.5 and 6.5. 7.5 Severability. Should any provision in this Trust Agreement be determined to be unenforceable, such determination shall in no way limit or affect the enforceability and operative effect of any and all other provisions of this Trust Agreement. 7.6 Notices. Notices to persons asserting claims shall be given at the address of such person, or, where applicable, such person's legal representative, in each case as provided on such person's claim form submitted to the PI Trust with respect to his or her Toxic Personal Injury Claim. Any notices or other communications required or permitted hereunder shall be in writing and delivered at the addresses designated below, or sent by telecopy pursuant to the instructions listed below, or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as follows, or to such other address or addresses as may hereafter be furnished by any of Reorganized Eagle-Picher, the Trustees or the TAC to the others in compliance with the terms hereof. To the PI Trust or the Trustees: _______________________________ _______________________________ _______________________________ A1.1.13-19 To the TAC: Robert E. Sweeney, Esq. Robert E. Sweeney Co., L.P.A. Suite 1500, Illuminating Building 55 Public Square Cleveland, Ohio 44113 Telecopier: (216) 696-0732 Telephone Confirmation: (216) 696-0606 and Robert B. Steinberg, Esq. Rose, Klein & Marias 18th Floor 801 South Grand Avenue Los Angeles, California 90017-4645 Telecopier: (213) 623-7755 Telephone Confirmation: (213) 626-0571 and James J. McMonagle 24 Walnut Street Chagrin Falls, Ohio 44022 Telecopier: (216) 844-5010 Telephone Confirmation: (216) 844-3817 To Reorganized Eagle-Picher: Eagle-Picher Industries, Inc. Attention: General Counsel IF BY HAND OR OVERNIGHT DELIVERY: Suite 1300, 580 Building 580 Walnut Street Cincinnati, Ohio 45202 IF BY MAIL: Post Office Box 779 Cincinnati, Ohio 45201 Telecopier: (513) 721-3404 Telephone Confirmation: (513) 629-2400 and A1.1.13-20 Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Stephen Karotkin, Esq. Telecopier: (212) 310-8007 Telephone Confirmation: (212) 310-8888 and Frost & Jacobs 2500 PNC Center 201 East Fifth Street Cincinnati, Ohio 45202-4182 Attention: Edmund J. Adams, Esq. Telecopier: (513) 651-6981 Telephone Confirmation: (513) 651-6800 All such notices and communications shall be effective when delivered at the designated addresses or when the telecopy communication is received at the designated addresses and confirmed by the recipient by return telecopy in conformity with the provisions hereof. 7.7 Counterparts. This Trust Agreement may be executed in any number of counterparts, each of which shall constitute an original, but such counterparts shall together constitute but one and the same instrument. 7.8 Successors and Assigns. The provisions of this Trust Agreement shall be binding upon and inure to the benefit of the Settlors, the PI Trust, and the Trustees and their respective successors and assigns, except that neither the Settlors nor the PI Trust nor any Trustee may assign or otherwise transfer any of its, or his or her rights or obligations under this Trust Agreement except, in the case of the PI Trust and the Trustees, as contemplated by Article 3.1. 7.9 Limitation on Claim Interests for Securities Laws Purposes. Toxic Personal Injury Claims, and any interests therein, (a) shall not be assigned, conveyed, hypothecated, pledged or otherwise transferred, voluntarily or involuntarily, directly or indirectly, except by will or under the laws of descent and distribution; (b) shall not be evidenced by a certificate or other instrument; (c) shall not possess any voting rights; and (d) shall not be entitled to receive any dividends or interest; provided, however, that the foregoing shall not apply to the holder of an Asbestos or Lead Contribution Claim that is subrogated to an Asbestos Personal Injury Claim or Lead Personal Injury Claim as a result of its satisfaction of such Asbestos Personal Injury Claim or Lead Personal Injury Claim. 7.10 Entire Agreement; No Waiver. The entire agreement of the parties relating to the subject matter of this Trust Agreement is contained herein and in the documents referred to herein, and this Trust Agreement and such documents supersede any prior oral or written agreements concerning the subject matter hereof. No failure to exercise or delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of rights under law or in equity. A1.1.13-21 7.11 Headings. The headings used in this Trust Agreement are inserted for convenience only and neither constitute a portion of this Trust Agreement nor in any manner affect the construction of the provisions of this Trust Agreement. 7.12 Governing Law. This Trust Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio. 7.13 Settlors' Representative. Eagle-Picher is hereby irrevocably designated as the representative of the Settlors, and it is hereby authorized to take any action required of the Settlors in connection with the Trust Agreement. 7.14 Dispute Resolution. Any disputes that arise under this Agreement or under the annexes hereto shall be resolved by the Bankruptcy Court pursuant to Article 9 of the Plan, except as otherwise provided herein or in the annexes hereto. Notwithstanding anything else herein contained, to the extent any provision of this Trust Agreement is inconsistent with any provision of the Plan, the Plan shall control. 7.15 Enforcement and Administration. The parties hereby acknowledge the Bankruptcy Court's continuing exclusive jurisdiction to interpret and enforce the terms of this Trust Agreement and the annexes hereto, pursuant to Article 9 of the Plan. 7.16 Effectiveness. This Trust Agreement shall not become effective until it has been executed and delivered by all the parties hereto and until the Effective Date. IN WITNESS WHEREOF, the parties have executed this Trust Agreement this ____ day of __________________, 1996. SETTLORS: EAGLE-PICHER INDUSTRIES, INC. BY: ---------------------------- Name: -------------------------- Title: ------------------------- DAISY PARTS, INC. BY: ---------------------------- Name: -------------------------- Title: ------------------------- TRANSICOIL, INC. BY: ---------------------------- Name: -------------------------- Title: ------------------------- A1.1.13-22 MICHIGAN AUTOMOTIVE RESEARCH CORP. BY: ---------------------------- Name: -------------------------- Title: ------------------------- EDI, INC. BY: ---------------------------- Name: -------------------------- Title: ------------------------- EAGLE-PICHER MINERALS, INC. BY: ---------------------------- Name: -------------------------- Title: ------------------------- HILLSDALE TOOL & MANUFACTURING CO. BY: ---------------------------- Name: -------------------------- Title: ------------------------- A1.1.13-23 TRUSTEES: ------------------------------- Name: Darius W. Gaskins, Jr. ------------------------------- Name: Kevin O'Donnell ------------------------------- Name: William J. Williams ------------------------------- Name: Daniel M. Phillips (3 Year Term) ------------------------------- Name: Marshall Wright (3 Year Term) A1.1.13-24 ANNEX A EPI PERSONAL INJURY SETTLEMENT TRUST BYLAWS ARTICLE I OFFICES SECTION 1. Principal Office. The initial principal office of the EPI Personal Injury Settlement Trust (the "PI Trust") shall be in ____________________ or at such other place as the Trustees shall from time to time select. SECTION 2. Other Offices. The PI Trust may have such other offices at such other places as the Trustees may from time to time determine to be necessary for the efficient and cost-effective administration of the PI Trust. ARTICLE II TRUSTEES SECTION 1. Control of Property, Business and Affairs. The property, business and affairs of the PI Trust shall be managed by or under the direction of the Trustees, provided that certain decisions of the Trustees shall be subject to the consent of the Trustees' Advisory Committee (the "TAC") as provided in the Trust Agreement to which these Bylaws are attached as Annex A. SECTION 2. Number, Resignation and Removal. The number of Trustees and the provisions governing the resignation and removal of a Trustee and the appointment of a successor Trustee shall be governed by the provisions of Article 5 of the Trust Agreement. SECTION 3. Quorum and Manner of Acting. During the Three Year Service Period described in Article 5.1 of the Trust Agreement, the presence of 3 Trustees shall constitute a quorum for the transaction of business; after the Three Year Service Period described in Article 5.1 of the Trust Agreement, two (2) Trustees shall constitute a quorum for the transaction of business. In the absence of a quorum, the Trustee[s] present may adjourn the meeting from time to time until a quorum shall be present. During the Three Year Service Period described in Article 5.1 of the Trust Agreement, the vote, at a meeting at which a quorum is present of at least three (3) Trustees shall be an act of the Trustees; after the Three Year Service Period described in Article 5.1 of the Trust Agreement, the vote, at a meeting at which a quorum is present of at least two (2) Trustees shall be an act of the Trustees. SECTION 4. Regular Meetings. Regular meetings of the Trustees may be held at such time and place as shall from time to time be determined by the Trustees provided that the Trustees shall meet at least once per calendar quarter. After there has been such determination, and a notice thereof has been once given to each Trustee, regular meetings may be held without further notice being given. A1.1.13A-1 SECTION 5. Special Meeting Notice. Special meetings of the Trustees shall be held whenever called by one or more of the Trustees. Notice of each such meeting shall be delivered by overnight courier to each Trustee, addressed to him or her at his or her residence or usual place of business, at least three days before the date on which the meeting is to be held, or shall be sent to him or her at such place by personal delivery or by telephone or telecopy not later than two (2) days before the day of which such meeting is to be held. Such notice shall state the place, date and hour of the meeting and the purposes for which it is called. In lieu of the notice to be given as set forth above, a waiver thereof in writing, signed by the Trustee or Trustees entitled to receive such notice, whether before or after the meeting, shall be deemed equivalent thereto for purposes of this Section 5. No notice to or waiver by any Trustee with respect to any special meeting shall be required if such Trustee shall be present at said meeting. SECTION 6. Action Without a Meeting; Meeting by Conference Call. Any action required or permitted to be taken at any meeting of the Trustees may be taken without a meeting if all Trustees consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Trustees. The Trustees also may take any action required or permitted to be taken at any meeting by means of conference telephone or similar communication equipment provided that all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this paragraph shall constitute presence in person at such meeting. ARTICLE III OFFICERS SECTION 1. Principal Officers. The principal officer of the PI Trust shall be an Executive Director. The PI Trust may also have such other principal officers, including one or more Assistant Directors, a Secretary-Treasurer and a Controller, as the Trustees may in their discretion appoint after determining that such appointment will promote the efficient and cost-effective administration of the PI Trust. SECTION 2. Election and Term of Office. The principal officer(s) of the PI Trust shall be chosen by the Trustees. Each such officer shall hold office until his successor shall have been duly chosen and qualified or until his earlier death, resignation or removal. SECTION 3. Subordinate Officers. In addition to the principal officers enumerated in Section 1 of this Article III, the PI Trust may have such other subordinate officers, agents and employees as the Trustees may deem necessary for the efficient and cost-effective administration of the PI Trust, each of whom shall hold office for such period, have such authority, and perform such duties as the Trustees may from time to time determine. The Trustees may delegate to any principal officer the power to appoint and to remove any such subordinate officers, agents or employees. SECTION 4. Removal. The Executive Director or any other officer may be removed with or without cause, at any time, by resolution adopted by the Trustees at any regular meeting of the Trustees or at any special meeting of the Trustees called for that purpose at which a quorum is present. SECTION 5. Resignations. Any officer may resign at any time by giving written notice to the Trustees. The resignation of any officer shall take effect upon receipt of notice thereof or at such later A1.1.13A-2 time as shall be specified in such notice and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6. Powers and Duties. The officers of the PI Trust shall have such powers and perform such duties as may be conferred upon or assigned to them by the Trustees. ARTICLE IV TRUSTEES' ADVISORY COMMITTEE SECTION 1. Regular Meetings. Regular meetings of the TAC may be held at such time and place as shall from time to time be determined by the TAC, provided that the TAC shall meet as often as is necessary to respond promptly to matters referred to it for consultation or consent by the Trustees. After a schedule for regular meetings has been determined, and a notice thereof has been once given to each TAC member, regular meetings may be held without further notice being given. SECTION 2. Special Meeting; Notice. Special meetings of the TAC shall be held whenever called by one or more of the TAC members. Notice of each such meeting shall be delivered by overnight courier to each TAC member, addressed to him or her at his or her residence or usual place of business, at least three days before the date on which the meeting is to be held, or shall be sent to him or her at such place by personal delivery or by telephone or telecopy, not later than two (2) days before the day on which such meeting is to be held. Such notice shall state the place, date and hour of the meeting and the purposes for which it is called. In lieu of the notice to be given as set forth above, a waiver thereof in writing, signed by the TAC members entitled to receive such notice, whether before or after the meeting, shall be deemed equivalent thereto for purposes of this Section 2. No notice to or waiver by any TAC member with respect to any special meeting shall be required if such TAC member shall be present at such meeting. SECTION 3. Action Without a Meeting; Meeting by Conference Call. Any action required or permitted to be taken at any meeting of the TAC may be taken without a meeting if all members of the TAC consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the TAC. The TAC may take any action required or permitted to be taken at any meeting by means of conference telephone or similar communication equipment provided that all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this paragraph shall constitute presence in person at such meeting. SECTION 4. Reimbursement of Expenses. All reasonable out-of-pocket expenses incurred by each member of the TAC in connection with the performance of his duties hereunder will be reimbursed promptly to such member by the PI Trust upon presentation of appropriate documentation. ARTICLE V AMENDMENTS The Bylaws of the PI Trust, other than Article II, Article IV and this Article V, may be amended by the Trustees at any meeting of the Trustees, provided that notice of the proposed amendment is A1.1.13A-3 contained in the notice of such meeting. The Bylaws contained in Article IV may be amended by the Trustees only after receipt of the consent of the TAC to the proposed amendment. A1.1.13A-4 ANNEX B EAGLE-PICHER INDUSTRIES, INC. ASBESTOS INJURY CLAIMS RESOLUTION PROCEDURES These Eagle-Picher Industries Asbestos Personal Injury Claims Resolution Procedures (the "EPI ASBESTOS CLAIMS PROCEDURES") have been prepared in connection with the First Amended Consolidated Joint Plan of Reorganization of Eagle-Picher Industries, Inc. ("EAGLE-PICHER") and its affiliated Debtors (the "PLAN") confirmed by order of the United States Bankruptcy Court for the Southern District of Ohio, dated __________________, 1996 ("BANKRUPTCY COURT") in In re Eagle-Picher Industries, Inc., et al., Consolidated Case No. 1-91-00100 ("CHAPTER 11 CASES") and the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust Agreement (the "TRUST AGREEMENT") filed in connection with the Plan. These EPI Asbestos Claims Procedures provide for processing, liquidating, paying, and satisfying all Asbestos Personal Injury Claims as provided in and required by the Plan and the Trust Agreement. The trustees of the PI Trust (the "TRUSTEES") shall implement and administer these EPI Asbestos Claims Procedures in accordance with the Trust Agreement. SECTION I Definitions Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Trust Agreement. SECTION II Purpose and Interpretation 2.1 Purpose. These EPI Asbestos Claims Procedures are adopted pursuant to the Trust Agreement. They are designed to provide prompt payment to holders of similar, valid Asbestos Personal Injury Claims in substantially the same manner. 2.2 Interpretation. Nothing in these EPI Asbestos Claims Procedures shall be deemed to create a substantive right for any claimant. Without limiting the foregoing, these EPI Asbestos Claims Procedures specifically shall not create any substantive right for any claimant to be afforded now, or in the future, a discounted cash payment election, as described in Section 5.2 herein, in any amount. These EPI Asbestos Claims Procedures are procedural, and they may be amended, deleted, or added to pursuant to the terms of the Trust Agreement and the terms of these EPI Asbestos Claims Procedures. SECTION III Trustees' Advisory Committee The Trustees shall consult with the Trustees' Advisory Committee ("TAC"), appointed pursuant to the Trust Agreement, on the implementation and administration of these EPI Asbestos Claims Procedures, A1.1.13.B-1 including, but not limited to, implementation of procedures under various claimant payment programs, including any future programs offering discounted payments; development of Asbestos Personal Injury Claims categories and values of claims, as set forth in Section 5.3; auditing and monitoring claims; alternative dispute resolution forms and procedures; releases; and interpretation of these EPI Asbestos Claims Procedures. When consultation is required under the Trust Agreement or these EPI Asbestos Claims Procedures, the Trustees need only seek advice and counsel from the TAC and are free to accept or reject any recommendation of the TAC. The Trustees shall be subject to the consent of the TAC on the issues enumerated in Article 3.2(e) of the Trust Agreement, consistent with the provisions of that Section. SECTION IV Payment Percentage; Periodic Estimates There is inherent uncertainty regarding Eagle-Picher's total liability to holders of Asbestos Personal Injury Claims as well as the total value of the assets available to pay valid Asbestos Personal Injury Claims. Consequently, there is inherent uncertainty regarding the amounts that claimants will receive. To ensure substantially equivalent treatment of all present and future valid Asbestos Personal Injury Claims, prior to making distributions to claimants, other than those who have elected the discounted cash payment described in Section 5.2, the Trustees must determine the percentage of full liquidated value that valid Asbestos Personal Injury Claims would be likely to receive ("PAYMENT PERCENTAGE"). No claimant shall receive payments under the individualized review process that exceed the PI Trust's most recent determination of the Payment Percentage. The Trustees must base this determination, on the one hand, on estimates of the number, types, and values of present and future Asbestos Personal Injury Claims and, on the other hand, on the value of the PI Trust's assets, the liquidity of those assets, the PI Trust's expected future expenses for administration and legal defense, and other material matters that are reasonable and likely to affect the sufficiency of funds to pay a comparable percentage of full value to all holders of Asbestos Personal Injury Claims. Periodically, but no less frequently than once every two (2) years, the Trustees shall reconsider their determination of the Payment Percentage to assure that it is based on accurate, current information and may, after such reconsideration, change the Payment Percentage, if necessary. When making these determinations, the Trustees shall exercise common sense and flexibly evaluate all relevant factors. SECTION V Claims Types; Processing and Payment 5.1 Prepetition Liquidated Claims. (a) Processing and Payment. Unless not feasible after every reasonable effort, no later than 60 days after the Effective Date the Trustees shall pay Asbestos Personal Injury Claims that were liquidated by settlement agreement entered into prior to January 7, 1991 or by judgment that became final and nonappealable prior to January 7, 1991 ("PREPETITION LIQUIDATED CLAIMS"). These claims shall be paid in an order to be determined by the Trustees based on a first-in first-out ("FIFO") principle. These claims may require no processing other than verification of the holder's identity, payment, and release of the PI Trust. The liquidated value of a Prepetition Liquidated Claim shall be the amount awarded in the prepetition judgment or settlement agreement, and holders of Prepetition Liquidated Claims shall be paid the appropriate Payment Percentage based upon that liquidated value. (b) Marshalling. Prepetition Liquidated Claims that are secured by letters of credit, appeal bonds, or other security or sureties shall first exhaust their rights against any applicable security or surety before making a claim against the PI Trust. In the event that such security or surety is insufficient to A1.1.13.B-2 pay the Prepetition Liquidated Claim in full, the deficiency shall be processed and paid as a Prepetition Liquidated Claim. 5.2 Discounted Cash Payment Election. (a) Rationale. The Plan provides for a discounted cash payment election that may be made at the time the eligible holders of Asbestos Personal Injury Claims vote to accept or reject the Plan. Those holders of valid Asbestos Personal Injury Claims who so elect shall make a full and final settlement with the PI Trust (except as provided in Section 5.2(c) herein) in exchange for a single cash payment in the amounts shown below for each disease category: Mesothelioma $6,500 Lung Cancer $2,000 Other Cancer $1,000 Non-malignancy $ 400 This discounted cash payment election is designed, in part, for claimants who easily can be determined by the PI Trust to have valid Asbestos Personal Injury Claims and who desire to have a fixed and certain payment made expeditiously rather than wait for payment after individualized review. This discounted cash payment election further is designed, in part, for claimants who easily can be determined by the PI Trust to have valid Asbestos Personal Injury Claims for non-malignant injuries and who wish to have a fixed payment now and the right to receive a further payment if they should subsequently be diagnosed as having an asbestos-related malignancy. (b) Processing and Payment. Unless not feasible after every reasonable effort, no later than 60 days after the Effective Date the Trustees shall process and pay the holders of Asbestos Personal Injury Claims who elect to receive a discounted cash payment in an order to be determined by the Trustees based on a FIFO principle. The Trustees shall determine appropriate procedures for ensuring that only holders of valid Asbestos Personal Injury Claims are paid under the discounted cash payment election. These procedures for ensuring payment only to holders of valid Asbestos Personal Injury Claims under the discount ed cash payment election shall be based upon the guidelines set forth in Section 7.1 herein. (c) Subsequent Malignancy. The holder of a valid Asbestos Personal Injury Claim based upon a non-malignant asbestos injury or condition who elects to receive a discounted cash payment as provided herein may file a new Asbestos Personal Injury Claim for an asbestos-related malignancy that is subsequently diagnosed, and any additional payments to which such claimant may be entitled shall not be reduced by the amount of the discounted cash payment. (d) No Review. The Trustees' decision that the holder of an Asbestos Personal Injury Claim should not receive a discounted cash payment is not reviewable. However, the holder of an Asbestos Personal Injury Claim whose claim is denied discounted cash payment may then elect individualized review as set forth in Section 5.3. (e) Future Discounted Payment Elections. In the future, the Trustees, in their complete discretion, may, or may not, offer claimants discounted cash payments for valid Asbestos Personal Injury Claims. In the event they decide to offer claimants discounted cash payments in the future, they shall have complete discretion to determine the amounts and procedures for such future discounted cash payments and under no circumstances shall they be obligated in the future to pay the same amounts set forth in Section 5.2(a) herein for discounted cash payments. A1.1.13.B-3 5.3 Individually Reviewed Claims; Claims Categories. (a) Rationale. A claimant (i) who initially elects individualized review, or (ii) whose Asbestos Personal Injury Claim was rejected by the Trustees for discounted cash payment and who then elects individualized review, shall have his or her Asbestos Personal Injury Claim reviewed, based upon an evaluation of exposure, loss, damages, injury, and other factors determinative of claim value according to applicable tort law. The detailed examination and individualized valuation of Asbestos Personal Injury Claims is designed for claimants with serious or fatal asbestos-related injuries whose Asbestos Personal Injury Claims require the added expense of individualized examination. (b) Categories and Values. The PI Trust will categorize Asbestos Personal Injury Claims by injury, and it may subcategorize Asbestos Personal Injury Claims by occupation, medical criteria, or any other factor related to the value of Asbestos Personal Injury Claims within each injury category. The PI Trust shall use these categories and subcategories to resolve Asbestos Personal Injury Claims as expeditiously and economically as possible. For each category or subcategory, the PI Trust shall determine a limited range of liquidated values representing average historical payments by Eagle-Picher to resolve similar Asbestos Personal Injury Claims. Offers of payments to claimants shall be determined by assigning to their valid Asbestos Personal Injury Claim an appropriate value within the applicable range and multiplying that value by the Payment Percentage. Because discounted cash payment elections are a more cost effective means for determining the liquidated value of less serious, non-fatal Asbestos Personal Injury Claims, the PI Trust shall reduce the range of values for categories and subcategories of such Asbestos Personal Injury Claims to reflect the cost for providing such review to those holders of less serious, non-fatal Asbestos Personal Injury Claims who did not elect discounted cash payment under either the Plan or any subsequent discounted cash payment program made available to them by the PI Trust. When a claimant's economic damages are exceptionally larger than the normal range, that claimant's Asbestos Personal Injury Claim may be classified as an extraordinary Asbestos Personal Injury Claim and such Asbestos Personal Injury Claim may be liquidated in an amount that exceeds the limited range of liquidated values for any given injury category or subcategory, but such a classification shall not increase the Payment Percentage. The Trustees shall determine the nature of the Asbestos Personal Injury Claims that they will classify as extraordinary Asbestos Personal Injury Claims. (c) Processing and Liquidation. Individually reviewed claims shall be processed and liquidated pursuant to the following schedule: (i) substantially all the claims whose holders had filed lawsuits against Eagle-Picher prior to January 7, 1991, shall be processed and liquidated no later than 18 months after the Effective Date; (ii) substantially all the claims whose holders had not filed lawsuits against Eagle-Picher prior to January 7, 1991 but whose holders had filed timely proofs of claim in the Chapter 11 Cases, shall be processed and liquidated no later than 36 months after the Effective Date; (iii) substantially all the claims whose holders had not filed lawsuits against Eagle-Picher prior to January 7, 1991 and whose holders had not filed timely proofs of claim in the Chapter 11 Cases, but whose holders at any time prior to the date of the Confirmation Order (A) had filed lawsuits in the tort system against asbestos manufacturers other than Eagle-Picher, or (B) had filed a proof of claim with any other asbestos victims' trust or claims processing facility, or (C) had filed a registration of any asbestos claim on any inactive docket or similar asbestos claims registry, shall be processed and liquidated no later than 48 months after the Effective Date; and A1.1.13.B-4 (iv) claims not described in subsections (i) through (iii) above, shall be processed and liquidated as soon as possible but not before the claims described in subsections (i) through (iii) above. (d) Payment. While payments to holders of valid Asbestos Personal Injury Claims generally should be made in the same order in which claims are liquidated, provided they act consistently with Section 524(g)(2)(B)(ii)(V) of the Bankruptcy Code, the Trustees shall have complete discretion to determine the timing and the appropriate method for making payments. Such methods may include, in the discretion of the Trustees, a method for the payment on an installment basis, in which case any installment payment shall be subject to the Payment Percentage in effect at the time such installment payment is made. (e) Disputes Over Individualized Review. Claimants who reject the Trustees' offer after individualized review and who wish to dispute their eligibility for payment, their categorization, or the amount of the Trustees' offer under individualized review, must initiate one of the alternative dispute resolution procedures established by the Trustees pursuant to Section 7.6. After such alternative dispute resolution procedures have been exhausted, claimants who still reject the PI Trust's offer must initiate arbitration pursuant to procedures like those set forth in Section 7.8. Only after claimants have rejected any non-binding arbitration award pursuant to procedures like those set forth in Section 7.8, may they file suit against the PI Trust. (f) Full Releases. Holders of Asbestos Personal Injury Claims who receive an individualized payment shall execute and deliver to the Trustees a general release in a form satisfactory to the Trustees and may not thereafter file a new Asbestos Personal Injury Claim. 5.4 Exigent Health Claims; Extreme Hardship Claims. At any time the Trustees may individually evaluate and pay Exigent Health Claims and Extreme Hardship Claims, as defined in this Section 5.4. These claims may be considered separately no matter what the order of processing otherwise would have been under this Section V. A claim qualifies as an Exigent Health Claim if the claimant provides: (i) documentation that a physician has diagnosed the claimant as having an asbestos-related illness and (ii) a declaration or affidavit made under penalty of perjury by a physician who has examined the claimant within one hundred twenty (120) days of the date of the declaration or affidavit in which the physician states there is substantial medical doubt that the claimant will survive beyond six (6) months from the date of the declaration or affidavit. A claim qualifies for payment as an Extreme Hardship Claim if the Trustees, in their complete discretion, determine the claimant needs financial assistance on an immediate basis based on the claimant's expenses and all sources of available income. 5.5 Asbestos Contribution Claims. Asbestos Personal Injury Claims asserted against the PI Trust that fall within the Trust Agreement's definition of Asbestos or Lead Contribution Claims, and which have not been disallowed, discharged, or otherwise resolved, shall be processed, allowed or disallowed, liquidated, paid, and satisfied in accordance with procedures to be developed and implemented by the Trustees, which procedures (a) shall determine the validity and allowance of such claims consistent with Section 502(e) of the Bankruptcy Code; (b) shall require binding arbitration for the resolution of all disputes and thereby foreclose resort to the tort system for dispute resolution; and (c) shall otherwise provide the same processing and payment to the holders of such claims that are allowed as the PI Trust would have afforded the holders of any underlying valid Asbestos Personal Injury Claims under this Section V. A1.1.13.B-5 SECTION VI Claims Materials As soon as reasonably practicable, but not later than six months following the Effective Date, the PI Trust shall mail claims materials ("CLAIMS MATERIALS") to each person with an Asbestos Personal Injury Claim who has filed a proof of claim in the Bankruptcy Court or has pending a lawsuit against Eagle-Picher or otherwise has been identified to the Trustees as holding an Asbestos Personal Injury Claim that is neither a Prepetition Liquidated Claim defined in Section 5.1 nor an Asbestos Personal Injury Claim for which a discounted cash payment election has been made as set forth in Section 5.2. For any person holding an Asbestos Personal Injury Claim who is first identified to Eagle-Picher or the Trustees any time subsequent to the Effective Date, the PI Trust shall mail the Claims Materials no later than six months following such identification. The PI Trust may send Claims Materials to a claimant care of an attorney representing the claimant. The Claims Materials will include descriptions of these EPI Asbestos Claims Procedures, instructions, and a claim form. If feasible, the forms used by the PI Trust to obtain claims information shall be the same or substantially similar to those used by other asbestos claims resolution facilities. Instead of collecting some or all claims information from a claimant or the claimant's attorney, the PI Trust may obtain such information from electronic data bases maintained by any other asbestos claims resolution organization, provided that the PI Trust informs the claimant that it plans to obtain information as available from such other organizations unless the claimant objects in writing or provides such information directly to the PI Trust. In order to be eligible for payment under these EPI Asbestos Claims Procedures, a claimant must return all claims' information requested by the PI Trust within the six month period following his or her receipt of the Claims Materials. An Asbestos Personal Injury Claim shall be disallowed automatically if a claimant required to provide claims information fails to provide all such information within this period, unless the claimant demonstrates to the satisfaction of the Trustees that such a failure should be excused. SECTION VII General Guidelines for Liquidating and Paying Individually Reviewed Claims 7.1 Showing Required. In order to establish a valid Asbestos Personal Injury Claim, a claimant must (a) make a conclusive demonstration of exposure to an Eagle-Picher asbestos-containing product and (b) submit a medical report from a qualified physician that (i) results from a physical examination by that physician and (ii) contains a diagnosis of an asbestos-related injury. The PI Trust may require the submission of evidence of exposure to an Eagle-Picher asbestos-containing product, x-rays, laboratory tests, medical examinations or reviews, other medical evidence, or any other evidence to support such Asbestos Personal Injury Claims and require that medical evidence submitted comply with recognized medical standards regarding equipment, testing methods, and procedures to assure that such evidence is reliable. 7.2 Discretion To Alter Order Of Processing Or Suspend Payments. Provided it is consistent with Section 524(g)(2)(B)(ii)(V) of the Bankruptcy Code, in order to reduce transaction costs the Trustees may process, liquidate, and pay valid Asbestos Personal Injury Claims in groups of claims or otherwise no matter what the order of processing otherwise would have been under Section V. In the event that the Trustees determine it advisable, they may suspend their normal order of processing or payment in favor of claimants who elect discounted cash payment under any future discounted cash payment election programs A1.1.13.B-6 offered by the PI Trust. Also, in the event that the PI Trust faces temporary periods of limited liquidity, the Trustees may temporarily limit or suspend payments altogether. 7.3 Costs Considered. Notwithstanding any provision of these EPI Asbestos Claims Procedures to the contrary, the Trustees shall always give appropriate consideration to the cost of investigating and uncovering invalid Asbestos Personal Injury Claims so that the payment of valid Asbestos Personal Injury Claims is not further impaired by such processes. In issues related to the validity of Asbestos Personal Injury Claims, e.g., exposure and medical evidence of injury, the Trustees shall have the latitude to make judgments regarding the amount of transaction costs to be expended by the PI Trust so that valid Asbestos Personal Injury Claims are not further impaired by the costs of additional investigation. Nothing herein shall prevent the Trustees, in appropriate circumstances, from contesting the validity of any Asbestos Personal Injury Claim whatever the costs. 7.4 Discretion to Vary Payments. Consistent with the provisions hereof, the Trustees shall proceed as quickly as possible to liquidate claims, and they shall make payments to holders of valid Asbestos Personal Injury Claims promptly as funds become available and as Asbestos Personal Injury Claims are liquidated, while maintaining sufficient resources to pay future valid Asbestos Personal Injury Claims in substantially the same manner. Because decisions about payments must be based on estimates and cannot be done precisely, they may have to be revised in light of experience over time, and a claimant who receives payment early in the life of the PI Trust may receive a smaller or larger percentage of the value of his Asbestos Personal Injury Claim than a claimant who receives payment in the middle of or late in the life of the PI Trust. Therefore, there can be no guarantee of any specific level of payment to claimants. However, the Trustees shall use their best efforts to treat similar, valid Asbestos Personal Injury Claims in substantially the same manner, consistent with their duties as Trustees in these circumstances, the purposes of the PI Trust, and given the practical limitations imposed by the inability to predict the future with precision. 7.5 Punitive Damages. In determining the value of any Asbestos Personal Injury Claim, punitive damages shall not be considered or allowed, notwithstanding their availability in the tort system. Pre-judgment interest, post-judgment interest, interest on deferred payments, or any other type of interest, delay damages, or similar damages associated with Asbestos Personal Injury Claims, shall not be paid or allowed. 7.6 Alternative Dispute Resolution. The Trustees shall establish an appropriate alternative dispute resolution process so that the claimants and the PI Trust shall have a full range of alternative dispute resolution devices available for their use in the individualized review process, including reviews by specialized panels, mediation and arbitration. If compensation of an alternative dispute resolution provider becomes necessary, each side shall equally share the obligation to pay such compensation and shall otherwise bear its own costs. 7.7 Settlement Favored. Settlements shall be favored over all other forms of Asbestos Personal Injury Claim resolution, and the lowest feasible transaction costs for the PI Trust shall be incurred in order to conserve resources and ensure funds to pay all valid Asbestos Personal Injury Claims. 7.8 Arbitration; Jury Trials. Holders of Asbestos Personal Injury Claims may elect to submit their Asbestos Personal Injury Claims to binding or non-binding arbitration only after other alternative dispute resolution procedures established by the Trustees have been exhausted. If arbitration becomes necessary, arbitrators shall (i) return awards within the range of injury category value limits set by the PI Trust for the injury category in which the Asbestos Personal Injury Claim properly falls, (ii) determine that the Asbestos Personal Injury Claim falls in a higher or lower category and determine an appropriate award within the range of value limits for that category, or (iii) in cases involving an extraordinary Asbestos Personal Injury Claim, return awards in excess of category limits. Arbitrators shall A1.1.13.B-7 not consider the Payment Percentage in determining the value of any Asbestos Personal Injury Claim. If a claimant submits to binding arbitration or accepts an award after non-binding arbitration, the award will establish the liquidated value of the Asbestos Personal Injury Claim, which will be multiplied by the then current Payment Percentage in order to determine the amount that the claimant will receive. The claimant will then receive payments and execute and deliver a general release in the same manner as a claimant who had accepted a valuation of his Asbestos Personal Injury Claim by the PI Trust. Only claimants who opt for non-binding arbitration and then reject their arbitration awards retain the right to a jury trial to determine the liquidated value of their Asbestos Personal Injury Claims against the PI Trust. All other claimants shall and shall be deemed to have irrevocably waived any right to a jury trial and any and all notices with respect to the filing or liquidation of Asbestos Personal Injury Claims shall contain a provision that clearly and conspicuously explains such jury trial waiver. A holder of an Asbestos Personal Injury Claim desiring to file suit against the PI Trust may do so only after the rejection of a non-binding arbitration award. In all cases, the statute of limitations will be tolled as of the earlier of the date the Asbestos Personal Injury Claim was filed with the PI Trust or the date the claimant filed his/her complaint against Eagle-Picher, and the right to a jury trial shall be preserved with the defendant being solely the PI Trust. To the extent the statute of limitations has been tolled, it shall commence running 30 days after entry of a non-binding arbitration award. The Chapter 11 Cases and the EPI Asbestos Claims Procedures shall have no effect on trial venue or choice of laws. All claims and defenses (including, with respect to the PI Trust, all claims and defenses which could have been asserted by Eagle-Picher) that exist under applicable law shall be available to both sides at trial; provided, however, that the death of claimant while his/her Asbestos Personal Injury Claim is pending against the PI Trust shall not reduce the value of the deceased claimant's Asbestos Personal Injury Claim, notwithstanding applicable state law to the contrary. The PI Trust may waive any defense or concede any issue of fact or law. The award of an arbitrator or the recommendation of a mediator and the positions and admissions of the parties during compliance with alternative dispute resolution procedures shall not be admissible for any purpose at trial by any party or third party and they are expressly determined not to be admissions by either party. If necessary, the Trustees may obtain an order from the U.S. District Court for the Southern District of Ohio, Western Division ("DISTRICT COURT") incorporating an offer of judgment to liquidate the amount of the claim, scheduling discovery and trials in such a fashion as not to create an undue burden on the PI Trust, or containing any other provisions, in order to ensure that the PI Trust fulfills its obligations in accordance with the principles set forth in the Trust Agreement. A claimant who, in accordance with the EPI Asbestos Claims Procedures, elects to resort to the legal system and obtains a judgment for money damages shall have an Asbestos Personal Injury Claim with a liquidated value equal to the judgment amount, less the amount of any prejudgment interest or punitive damages contained therein, and no post-judgment interest shall accrue on such judgment amount. A judgment creditor with a final, nonappealable judgment in excess of the highest amount in the range of values for his/her injury category or subcategory as determined by the Trustees will be paid, when funds are reasonably available, the appropriate Payment Percentage of the highest amount in the range for that injury category or subcategory; provided, however, that a holder of an extraordinary Asbestos Personal Injury Claim who obtains a final, nonappealable judgment in excess of the PI Trust's last offer or the arbitrator's award will be paid, when funds are reasonably available, the appropriate Payment Percentage of the PI Trust's last offer or the arbitrator's award, whichever is greater. The appropriate Payment Percentage for the excess of the judgment above the foregoing amounts will be paid no later than five (5) years after the date the judgment is entered in the trial court, unless the Trustees determine that such payment will adversely affect payment to other claimants, in which event such payment shall be made in five (5) equal annual installments beginning five (5) years after the date the judgment becomes final and nonappealable. A1.1.13.B-8 7.9 Releases. The Trustees shall have the discretion to determine the form and nature of the releases given to the PI Trust in order to maximize recovery for claimants against other tort-feasors without increasing the risk or amount of claims for indemnification or contribution from the PI Trust. As a condition to making any payment to a claimant, the PI Trust shall obtain a general, partial, or limited release as appropriate in accordance with the applicable state or other law, consistent with the payment selection by the claimant. If allowed by state law, the endorsing of a check or draft for payment by or on behalf of a claimant shall constitute such a release. In addition, and as a prerequisite, the claimant shall execute any documents necessary (i) for the PI Trust to perfect its claims, if any, against Eagle-Picher's insurers to receive indemnity for payments, (ii) to release any Asbestos Personal Injury Claim the claimant may have against the insurer, and (iii) for the PI Trust to receive and keep any and all payments made by such insurer for payment of such claim. 7.10 Auditing, Monitoring and Verifying. The Trustees shall conduct random or other audits to verify information submitted in connection with these EPI Asbestos Claims Procedures. In the event that an audit reveals that invalid information has been provided to the PI Trust, the Trustees may penalize any claimant or claimant's attorney by disallowing the Asbestos Personal Injury Claims or seeking sanctions from the District Court including, but not limited to, requiring the offending source to pay the costs associated with the audit and any future audit or audits, reordering the priority of payment of the affected claimants' Asbestos Personal Injury Claims, raising the level of scrutiny of additional information submitted from the same source or sources, or prosecuting the claimant or claimant's attorney for presenting a fraudulent Asbestos Personal Injury Claim in violation of 18 U.S.C. 'SS' 152. The PI Trust may develop methods for auditing the reliability of medical evidence, including independent reading of x-rays. If its audits show an unacceptable level of reliability for medical evidence submitted by specific doctors or medical facilities, the PI Trust may refuse to accept medical evidence from such doctors or facilities. 7.11 Claims' Bar Date. Notwithstanding anything to the contrary contained herein, including, without limitation, Section 5.3(c) herein, in order to be eligible for payment under these EPI Asbestos Claims Procedures, a claimant must have complied with any applicable claims' bar date order issued by the Bankruptcy Court or must have been excused from such compliance by the Trustees pursuant to their discretion under Article 3.3(d) of the Trust Agreement. 7.12 Statute of Limitations. For purposes of determining the validity of an Asbestos Personal Injury Claim, any applicable statute of limitations shall be deemed to have been extended for a period of sixty (60) days beyond its normal limit. This extension shall have no application, however, to any applicable claims bar date set by an order of the Bankruptcy Court. SECTION VIII Miscellaneous 8.1 Amendments. The Trustees may amend, modify, delete, or add to any of these EPI Asbestos Claims Procedures (including, without limitation, amendments to conform these procedures to advances in scientific or medical knowledge or other changes in circumstances) by a majority vote of the Trustees, provided they first obtain any advice and consent of the TAC required by Article 3.2(e) of the Trust Agreement. Notwithstanding anything contained herein to the contrary, these EPI Asbestos Claims Procedures shall not be modified or amended in any way that would jeopardize the validity or enforceability of the Asbestos and Lead PI Permanent Channeling Injunction. 8.2 Severability. Should any provision contained in the EPI Asbestos Claims Procedures be determined to be unenforceable, such determination shall in no way limit or affect the enforceability and operative effect of any and all other provisions of the EPI Asbestos Claims Procedures. A1.1.13.B-9 8.3 Governing Law. The EPI Asbestos Claims Procedures shall be governed by, and construed in accordance with, the laws of the State of Ohio. A1.1.13.B-10 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "1.1.16" FORM OF ASBESTOS PD TRUST AGREEMENT [THIS PAGE LEFT BLANK INTENTIONALLY] EAGLE-PICHER INDUSTRIES, INC. ASBESTOS PROPERTY DAMAGE SETTLEMENT TRUST AGREEMENT --------------------------------------------------- This Trust Agreement is among Eagle-Picher Industries, Inc., an Ohio corporation and debtor in possession ("EAGLE-PICHER"), and its affiliates, Daisy Parts, Inc., Transicoil Inc., Michigan Automotive Research Corp., EDI, Inc., Eagle-Picher Minerals, Inc., and Hillsdale Tool & Manufacturing Co. (the "SETTLORS" or "DEBTORS"), and ______________, as Trustees ("TRUSTEES"), pursuant to the Third Amended Consolidated Joint Plan of Reorganization of Eagle-Picher and its affiliated debtors, dated August 28, 1996 (the "PLAN"). WHEREAS, at the time of the entry of the order for relief in the Chapter 11 Cases (as such term is hereinafter defined), Eagle-Picher was named as a defendant in property damage actions seeking recovery for damages allegedly caused by the presence of asbestos or asbestos-containing products in buildings 2 and other facilities; and WHEREAS, the Settlors have reorganized under the provisions of chapter 11 of the Bankruptcy Code (as hereinafter defined) in cases pending in the Bankruptcy Court (as hereinafter defined) known as In re Eagle-Picher Industries, Inc., et al., Consolidated Case No. 1-91-00100 (the "CHAPTER 11 CASES"); and WHEREAS, the Plan, filed by the Debtors, the Legal Representative for Future Claimants appointed by the Bankruptcy Court pursuant to its order of October 31, 1991 ("FUTURE REPRESENTATIVE") and the Bankruptcy Court-appointed committee composed of the representatives of certain tort claimants of the Debtors (the "INJURY CLAIMANTS' COMMITTEE") has been confirmed; and WHEREAS, the Plan provides, inter alia, for the creation of the Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust (the "ASBESTOS PD TRUST"); and WHEREAS, pursuant to the Plan, the Asbestos PD Trust is to be funded in whole in either debentures of Eagle-Picher or cash, depending upon whether Class 16 votes to accept the Plan; and WHEREAS, the Plan provides, among other things, for the complete settlement and satisfaction of all liabilities and obligations of the Debtors with respect to Asbestos Property Damage Claims (as such term is hereinafter defined); and WHEREAS, the Asbestos PD Trust is intended to qualify as a "Qualified Settlement Fund" within the meaning of Section 1.468B-1 of the Treasury Regulations promulgated under Section 468B of the Internal Revenue Code; NOW, THEREFORE, it is hereby agreed as follows: ARTICLE 1 DEFINITIONS ----------- 3 As used herein, the following terms shall have the meanings specified below: 1.1 Asbestos Property Damage Claim: Any Claim against any of the Debtors under any theory of law, equity, admiralty, or otherwise, for damages arising from the presence in buildings or other structures of asbestos or asbestos-containing products that was or were manufactured, sold, supplied, produced, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, or for which any of the Debtors is otherwise liable due to the acts or omissions of any of the Debtors, including, without express or implied limitation, all such Claims for compensatory damages (such as proximate, consequential, general, and special damages) and punitive damages, but excluding Asbestos Property Damage Contribution Claims. 1.2 Asbestos Property Damage Contribution Claim: Any Claim against any of the Debtors that is (i) held by (A) any Entity (other than a director or officer entitled to indemnification pursuant to section 8.6 of the Plan) who has been, is, or may be a defendant in an action seeking damages arising from the presence in buildings or other structures of asbestos or asbestos-containing products that was or were manufactured, sold, supplied, produced, distributed, or in any way marketed by any of the Debtors prior to the Petition Date, or for which any of the Debtors is otherwise liable due to the acts or omissions of any of the Debtors or (B) any assignee or transferee of such Entity, and (ii) on account of alleged liability by any of the Debtors for reimbursement or contribution of any portion of any damages such Entity has paid or may pay to the plaintiff in such action. 1.3 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended, and as codified in title 11 of the United States Code, as applicable to the Chapter 11 Cases. 1.4 Bankruptcy Court: The United States District Court for the Southern District of Ohio, Western Division, having jurisdiction over the Chapter 11 Cases and, to the extent of any reference made pursuant to section 157 of title 28 of the United States Code, the unit of such District Court constituted pursuant to section 151 of title 28 of the United States Code. 1.5 Business Day: Any day on which commercial banks are required to be open for business in Cincinnati, Ohio. 1.6 Claim: (a) A "claim," as defined in section 101(5) of the Bankruptcy Code, against any of the Debtors or Debtors in Possession, whether or not asserted, whether or not the facts of or legal bases therefor are known or unknown, and specifically including, without express or implied limitation, any 4 rights under sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, any claim of a derivative nature, any potential or unmatured contract claims, and any other Contingent Claim, and (b) any Environmental Claim or Product Liability Tort Claim, whether or not it constitutes a "claim," as defined in section 101(5) of the Bankruptcy Code. 1.7 Confirmation Order: The order or orders of the Bankruptcy Court confirming the Plan in accordance with the provisions of chapter 11 of the Bankruptcy Code, which will contain, inter alia, the Asbestos and Lead PI Permanent Channeling Injunction and the Claims Trading Injunction. 1.8 Debtors in Possession: The Debtors, each in its respective capacity as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 1.9 Effective Date: The first Business Day after the date on which all of the conditions precedent to the effectiveness of the Plan specified in section 7.10 of the Plan have been satisfied or waived or, if a stay of the Confirmation Order is in effect on such date, the first Business Day after the expiration, dissolution, or lifting of such stay. 1.10 Entity: An individual, corporation, partnership, association, joint stock company, joint venture, estate, trust, unincorporated organization, or government or any political subdivision thereof, or other person or entity. 1.11 Petition Date: January 7, 1991. 1.12 Reorganized Debtors: The Debtors, or any successors in interest thereto, from and after the Effective Date. 1.13 Reorganized Eagle-Picher: Eagle-Picher, or any successor in interest thereto, from and after the Effective Date. All capitalized terms used herein and not defined in this Article 1 or in another provision of this Trust Agreement shall have the meanings assigned to them in the Plan and/or the Bankruptcy Code, which definitions are incorporated 5 by reference herein. ARTICLE 2 AGREEMENT OF TRUST ------------------ 2.1 CREATION AND NAME. The Settlors hereby create a trust known as the "Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust," which is the Asbestos PD Trust provided for and referred to in the Plan. The Trustees of the Asbestos PD Trust may transact the business and affairs of the Asbestos PD Trust in the name, "Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust." 2.2 PURPOSE. The purpose of the Asbestos PD Trust is to assume any and all liabilities of the Debtors, their successors in interest, or their affiliates, with respect to any and all Asbestos Property Damage Claims and to use the Asbestos PD Trust's assets and income to pay holders of valid Asbestos Property Damage Claims in such a way that holders of similar Asbestos Property Damage Claims are paid in substantially the same manner. This purpose shall be fulfilled through the provisions of this Trust Agreement and either the Asbestos Property Damage Claims Resolution Procedures annexed as Exhibit 1.1.6.5 to the Plan (if Class 16 votes to reject the Plan) or such other claims resolution procedures as may be adopted by the Trustees (if and only if Class 16 votes to accept the Plan) (the "ASBESTOS PD CLAIMS PROCEDURES"). 2.3 TRANSFER OF ASSETS. The Settlors hereby transfer and assign to the Asbestos PD Trust the property set forth in Article 11 of the Plan (the "ASSETS"). 2.4 ACCEPTANCE OF ASSETS AND ASSUMPTION OF LIABILITIES. (a) In furtherance of the purposes of the Asbestos PD Trust, the Trustees, on behalf of the Asbestos PD Trust, hereby expressly accept the transfer and assignment to the Asbestos PD Trust of the Assets. (b) In furtherance of the purposes of the Asbestos PD Trust, and 6 subject to section 5.4 hereof, the Trustees, on behalf of the Asbestos PD Trust, expressly assume all liability for all Asbestos Property Damage Claims as provided for in Article 11 of the Plan. Except as otherwise provided in the Asbestos PD Claims Procedures, the Asbestos PD Trust shall have all defenses, cross-claims, offsets, and recoupments regarding Asbestos Property Damage Claims that Eagle-Picher has or would have had under applicable law. (c) Neither the Debtors nor their successors in interest or their affiliates shall be entitled to any indemnification from the Asbestos PD Trust for any expenses, costs, and fees (including attorneys' fees), judgments, settlements, or other liabilities arising from or incurred in connection with, any action related to an Asbestos Property Damage Claim, including, but not limited to, indemnification or contribution for Asbestos Property Damage Claims prosecuted against Reorganized Eagle-Picher. Nothing in this section or any other section of this Trust Agreement shall be construed in any way to limit the scope, enforceability, or effectiveness of the discharge and injunction arising in favor of the Reorganized Debtors upon the Effective Date or the Asbestos PD Trust's assumption of all liability with respect to Asbestos Property Damage Claims. ARTICLE 3 POWERS AND TRUST ADMINISTRATION ------------------------------- 3.1 POWERS. (a) Subject to the limitations set forth in this Trust Agreement, the Trustees shall have the power to take any and all actions that, in the judgment of the Trustees, are necessary or proper to fulfill the purposes of the Asbestos PD Trust, including, without limitation, each power expressly granted in this section 3.1, any power reasonably incidental thereto, and any trust power now or hereafter permitted under the laws of the State of Ohio. (b) Except as otherwise specified herein, the Trustees need not obtain the order or approval of any court in the exercise of any power or discretion conferred hereunder. 7 (c) Without limiting the generality of Article 3.1(a) above, the Trustees shall have the power to: (i) receive and hold the Assets, exercise all rights with respect to, and sell any debentures issued by Reorganized Eagle-Picher that are included in the Assets, subject to any restrictions set forth in the articles of incorporation of Reorganized Eagle-Picher; (ii) invest the monies held from time to time by the Asbestos PD Trust; (iii) sell, transfer or exchange any or all of the Assets at such prices and upon such terms as they may consider proper, consistent with the other terms of this Trust Agreement; (iv) pay liabilities and expenses of the Asbestos PD Trust; (v) change the state of domicile of the Asbestos PD Trust; (vi) establish such funds, reserves and accounts within the Asbestos PD Trust estate, as deemed by the Trustees to be useful in carrying out the purposes of the Asbestos PD Trust; (vii) sue and be sued and participate, as a party or otherwise, in any judicial, administrative, arbitrative or other proceeding; (viii) amend the Bylaws, a copy of which is annexed hereto as Annex A (the "BYLAWS"); (ix) appoint such officers and hire such employees and engage such legal, financial, accounting, investment and other advisers, alternative dispute resolution panelists, and agents as the business of the Asbestos PD Trust requires, and to delegate to such persons such powers and authorities as the fiduciary duties of the Trustees permit and as the Trustees, in their discretion, deem advisable or necessary in order to carry out the terms of this Asbestos PD Trust; 8 (x) pay employees, legal, financial, accounting, investment and other advisers and agents reasonable compensation, including, without limitation, compensation at rates approved by the Trustees for services rendered prior to the execution hereof; (xi) reimburse the Trustees, subject to section 5.5 hereof, and reimburse such officers, employees, legal, financial, accounting, investment and other advisers and agents all reasonable out-of-pocket costs and expenses incurred by such persons in connection with the performance of their duties hereunder, including, without limitation, costs and expenses incurred prior to the execution hereof; (xii) execute and deliver such deeds, leases and other instruments as the Trustees consider proper in administering the Asbestos PD Trust; (xiii) enter into such other arrangements with third parties as are deemed by the Trustees to be useful in carrying out the purposes of the Asbestos PD Trust, provided such arrangements do not conflict with any other provision of this Trust Agreement; (xiv) in accordance with section 5.6 hereof, indemnify (and purchase insurance indemnifying) the Trustees and officers, employees, agents, advisers and representatives of the Asbestos PD Trust to the fullest extent that a corporation or trust organized under the law of the Asbestos PD Trust's domicile is from time to time entitled to indemnify and/or insure its directors, trustees, officers, employees, agents, advisers and representatives; (xv) delegate any or all of the authority herein conferred with respect to the investment of all or any portion of the Assets to any one or more reputable individuals or recognized institutional investment advisers or investment managers without liability for any action taken or omission made because of any such delegation, except as provided in section 5.4 hereof; (xvi) consult with Reorganized Eagle-Picher at such times and with respect to such issues relating to the conduct of the Asbestos PD Trust as the Trustees consider desirable; 9 (xvii) make, pursue (by litigation or otherwise), collect, compromise or settle any claim, right, action or cause of action included in the Assets; and (xviii) merge or contract with other claims resolution facilities that are not specifically created by this Trust Agreement or the Asbestos PD Claims Procedures; provided that such merger or contract shall not (a) subject the Reorganized Debtors or any successor in interest to any risk of having any Asbestos Property Damage Claim asserted against it or them; or (b) otherwise jeopardize the validity or enforceability of the discharge and injunction arising in favor of the Reorganized Debtors on the Effective Date. (d) The Trustees shall not have the power to guaranty any debt of other persons. 3.2 GENERAL ADMINISTRATION. (a) The Trustees shall act in accordance with the Bylaws. To the extent not inconsistent with the terms of this Trust Agreement, the Bylaws govern the affairs of the Asbestos PD Trust. (b) The Trustees shall timely file such income tax and other returns and statements and comply with all withholding obligations, as required under the applicable provisions of the Internal Revenue Code and of any state law and the regulations promulgated thereunder. (c)(i) The Trustees shall cause to be prepared and filed with the Bankruptcy Court, as soon as available, and in any event within ninety (90) days following the end of each fiscal year, an annual report containing financial statements of the Asbestos PD Trust (including, without limitation, a balance sheet of the Asbestos PD Trust as of the end of such fiscal year and a statement of operations for such fiscal year) audited by a firm of independent certified public accountants selected by the Trustees and accompanied by an opinion of such firm as to the fairness of the financial statements' presentation of the cash and investments available for the payment of claims and as to the conformity of the financial statements with generally accepted accounting principles. The Trustees shall provide a copy of such report to Reorganized Eagle-Picher. (ii) Simultaneously with delivery of each set of financial statements referred to in Article 3.2(c)(i) above, the Trustees shall 10 cause to be prepared and filed with the Bankruptcy Court a report containing a summary regarding the number and type of claims disposed of during the period covered by the financial statements. (iii) All materials required to be filed with the Bankruptcy Court by this Article 3.2 shall be available for inspection by the public in accordance with procedures established by the Bankruptcy Court. 3.3 CLAIMS ADMINISTRATION. (a) General Principles. The Trustees shall proceed quickly to implement (and, if Class 16 votes to accept the Plan, develop) the Asbestos PD Claims Procedures. The Asbestos PD Trust shall pay holders of valid Asbestos Property Damage Claims in accordance with procedures developed by the Trustees that are consistent with the Asbestos PD Claims Procedures and the terms of this Trust Agreement. (b) Payment of Asbestos Property Damage Claims. The Trustees shall employ mechanisms such as the review of estimates of the numbers and values of Asbestos Property Damage Claims, or other comparable mechanisms, that provide reasonable assurance the Asbestos PD Trust will value, and be in a financial position to pay, similar Asbestos Property Damage Claims in substantially the same manner. (c) Bankruptcy Court Claims Bar Date Orders. The Trustees shall enforce the Bankruptcy Court's claims' bar date orders that are applicable to Asbestos Property Damage Claims. ARTICLE 4 ACCOUNTS, INVESTMENTS, AND PAYMENTS ----------------------------------- 4.1 ACCOUNTS. The Trustees may, from time to time, create such accounts and reserves within the Asbestos PD Trust estate as they may deem necessary, prudent or useful in order to provide for the payment of expenses and valid Asbestos Property Damage Claims and may, with respect to any such account or reserve, 11 restrict the use of monies therein. 4.2 INVESTMENTS. Investment of monies held in the Asbestos PD Trust shall be administered in the manner in which individuals of ordinary prudence, discretion and judgment would act in the management of their own affairs, subject to the following limitations and provisions: (a) The Asbestos PD Trust may acquire and hold any debentures issued by Reorganized Eagle-Picher and included in the Assets without regard to any of the limitations set forth in the other parts of this Article 4. (b) Except with respect to entities owned and controlled by the Asbestos PD Trust for purposes of carrying out provisions of this Trust Agreement, the Asbestos PD Trust shall not acquire or hold any equity in any Entity or business enterprise unless such equity is in the form of securities that are traded on a national securities exchange or major international securities exchange or over the National Association of Securities Dealers Automated Quotation System. (c) The Asbestos PD Trust shall not acquire or hold any repurchase obligations unless, in the opinion of the Trustees, they are adequately collateralized. 4.3 SOURCE OF PAYMENTS. All Asbestos PD Trust expenses, payments and all liabilities with respect to Asbestos Property Damage Claims shall be payable solely out of the Asbestos PD Trust estate. Neither Eagle-Picher, Reorganized Eagle-Picher, any Debtors, their subsidiaries, any successor in interest or the present or former directors, officers, employees or agents of Eagle-Picher, Reorganized Eagle-Picher, any Debtors or their subsidiaries, nor the Trustees, or any of their officers, agents, advisers or employees shall be liable for the payment of any Asbestos PD Trust expense or Asbestos Property Damage Claim or any other liability of the Asbestos PD Trust. ARTICLE 5 TRUSTEES -------- 12 5.1 NUMBER. There initially shall be between one (1) and four (4) Trustees, the number being determined (a) by Reorganized Eagle-Picher if Class 16 votes to reject the Plan or (b) pursuant to the Plan if Class 16 votes to accept the Plan. 5.2 TERM OF SERVICE. (a) Each of the initial Trustees shall serve until the earlier of (i) his or her death, (ii) his, her, or its resignation pursuant to section 5.2(b) hereof, (iii) his or her removal pursuant to section 5.2(c) hereof, or (iv) the termination of the Asbestos PD Trust pursuant to section 6.2 hereof, at which time the term shall terminate automatically. (b) Any Trustee may resign at any time by written notice to each of the remaining Trustees. Such notice shall specify a date when such resignation shall take effect, which shall not be less than ninety (90) days after the date such notice is given, where practicable. (c) Any Trustee may be removed in the event that such Trustee becomes unable to discharge his or her duties hereunder due to accident or physical or mental deterioration, or for other good cause. Good cause shall be deemed to include, without limitation, a consistent pattern of neglect and failure to perform or participate in performing the duties of the Trustees hereunder, or repeated nonattendance at scheduled meetings. Such removal shall require the unanimous decision of the other Trustees. Such removal shall take effect at such time as the other Trustees shall determine. 5.3 APPOINTMENT OF SUCCESSOR TRUSTEE. (a) In the event of a vacancy in the position of a Trustee, the vacancy shall be filled by majority vote of the remaining Trustees who shall refrain from making any appointment that may result in the appearance of impropriety. (b) Immediately upon the appointment of any successor Trustee, all rights, titles, duties, powers and authority of the predecessor Trustee hereunder shall be vested in, and undertaken by, the successor Trustee without any further act. No successor Trustee shall be liable personally for any act or 13 omission of his or her predecessor Trustee. 5.4 LIABILITY OF TRUSTEES. No Trustee, officer, or employee of the Asbestos PD Trust shall be liable to the Asbestos PD Trust, to any person holding an Asbestos Property Damage Claim, or to any other Entity except for such Trustee's, officer's or employee's own breach of trust committed in bad faith or for willful misappropriation. No Trustee, officer, or employee of the Asbestos PD Trust shall be liable for any act or omission of any other officer, agent, or employee of the Asbestos PD Trust, unless the Trustee acted with bad faith or willful misconduct in the selection or retention of such officer, agent, or employee. 5.5 COMPENSATION AND EXPENSES OF TRUSTEES. (a) Each of the Trustees, other than Reorganized Eagle-Picher if Reorganized Eagle-Picher serves as a Trustee, shall receive compensation from the Asbestos PD Trust for his or her services as Trustee in the amount of $35,000 per annum, plus a per diem allowance for meetings attended in the amount of $1,000, or some other amount as determined by the Trustees, payable as determined by the Trustees. The Trustees shall determine the scope and duration of activities that constitute a meeting and may provide for partial payment of per diem amounts for activities of less than a full day's duration. The per annum compensation payable to the Trustees hereunder shall be increased annually by the Trustees proportionately with any increase in the Consumer Price Index -- All Cities (or any successor index) for the corresponding annual period. Any increase in excess of that amount may be made only with the approval of the Bankruptcy Court. (b) The Asbestos PD Trust will promptly reimburse the Trustees for all reasonable out-of-pocket costs and expenses incurred by the Trustees in connection with the performance of their duties hereunder. 5.6 INDEMNIFICATION OF TRUSTEES AND OTHERS. (a) The Asbestos PD Trust shall indemnify and defend the Trustees and the Asbestos PD Trust's officers, agents, advisers, or employees, to the fullest extent that a corporation or trust organized under the laws of the Asbestos PD Trust's domicile is from time to time entitled to indemnify and defend its directors, trustees, officers, employees, agents or 14 advisers against any and all liabilities, expenses, claims, damages or losses incurred by them in the performance of their duties hereunder. Notwithstanding the foregoing, the Trustees shall not be indemnified or defended in any way for any liability, expense, claim, damage or loss for which they are liable under section 5.4 hereof. (b) Reasonable expenses, costs and fees (including attorneys' fees) incurred by or on behalf of a Trustee in connection with any action, suit, or proceeding, whether civil, administrative or arbitrative, from which they are indemnified by the Asbestos PD Trust pursuant to this section 5.6, may be paid by the Asbestos PD Trust in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such Trustee to repay such amount unless it shall be determined ultimately that such Trustee is entitled to be indemnified by the Asbestos PD Trust. (c) The Trustees shall have the power, generally or in specific cases, to cause the Asbestos PD Trust to indemnify the employees and agents of the Asbestos PD Trust to the same extent as provided in this section 5.6 with respect to the Trustees. (d) Any indemnification under section 5.6(c) of this Trust Agreement shall be made by the Asbestos PD Trust upon a determination that indemnification of such Entity is proper in the circumstances. Such determination shall be made by a majority vote of the Trustees who were not parties to such action, suit, or proceeding, if at least two such Trustees were not parties; otherwise the determination will be made by legal counsel to the Asbestos PD Trust. (e) The Trustees may purchase and maintain reasonable amounts and types of insurance on behalf of an individual who is or was a Trustee, officer, employee, agent or representative of the Asbestos PD Trust against liability asserted against or incurred by such individual in that capacity or arising from his or her status as a Trustee, officer, employee, agent or representative. 5.7 TRUSTEES' LIEN. The Trustees shall have a prior lien upon the Asbestos PD Trust corpus to secure the payment of any amounts payable to them pursuant to sections 5.5 and 5.6. 5.8 TRUSTEES' EMPLOYMENT OF EXPERTS. The Trustees may, but shall not be required to, consult with counsel, accountants, appraisers and other parties deemed by the Trustees to be qualified as experts on the matters submitted to them (regardless of whether any such party is affiliated with any of the Trustees in any manner, except as otherwise expressly provided in this Trust Agreement), and the opinion of any such parties on any matters submitted to them by the Trustees shall be full and complete authorization and protection in 15 respect of any action taken or not taken by the Trustees hereunder in good faith and in accordance with the written opinion of any such party. 5.9 TRUSTEES' SERVICE AS OFFICERS OR CONSULTANTS TO THE ASBESTOS PD TRUST. The Trustees may, but are not required to, select any Trustee to serve as an officer or manager of the Asbestos PD Trust or as a consultant to the Asbestos PD Trust. In the event any Trustee serves the Asbestos PD Trust in such a capacity, the Asbestos PD Trust shall compensate the Trustee in an amount determined by the Trustees. Compensation for a Trustee's service as an officer or manager of the Asbestos PD Trust or as a consultant to the Asbestos PD Trust shall be in addition to compensation paid pursuant to section 5.5 hereof. 5.10 TRUSTEES' SERVICE AS DIRECTORS OF REORGANIZED EAGLE-PICHER. The Trustees are not prohibited from serving as directors of Reorganized Eagle-Picher. If any Trustee serves as a director of Reorganized Eagle-Picher, he or she shall not receive for such service compensation over and above the compensation received as Trustee under section 5.5 hereof, but he may receive from Reorganized Eagle-Picher a per diem allowance in the amount that Reorganized Eagle-Picher pays its directors for their attendance at meetings. 5.11 BOND. The Trustees shall not be required to post any bond or other form of surety or security unless otherwise ordered by the Bankruptcy Court. ARTICLE 6 GENERAL PROVISIONS ------------------ 6.1 IRREVOCABILITY. The Asbestos PD Trust is irrevocable, but is subject to amendment as provided in section 6.3 hereof. 6.2 TERMINATION. (a) The Asbestos PD Trust shall automatically terminate on the date (the "TERMINATION DATE") ninety (90) days after the first occurrence of any of 16 the following events: (i) the Trustees in their sole discretion decide to terminate the Asbestos PD Trust because all Asbestos Property Damage Claims duly filed with the Asbestos PD Trust have been liquidated and satisfied; (ii) if the Trustees have procured and have in place irrevocable insurance policies and have established claims handling agreements and other necessary arrangements with suitable third parties adequate to discharge all expected remaining obligations and expenses of the Asbestos PD Trust in a manner consistent with this Trust Agreement and the Asbestos PD Claims Procedures, the date on which the Bankruptcy Court enters an order approving such insurance and other arrangements and such order becomes final; (iii) if in the judgment of two-thirds of the Trustees, the continued administration of the Asbestos PD Trust is uneconomic or inimical to the best interests of the persons holding Asbestos Property Damage Claims, and the termination of the Asbestos PD Trust will not expose or subject Reorganized Eagle-Picher or any other Reorganized Debtor or any successor in interest to any increased or undue risk of having any Asbestos Property Damage Claims asserted against it or them or in any way jeopardize the validity or enforceability of the discharge and injunction arising in favor of the Reorganized Debtors upon the Effective Date; or (iv) 21 years less 91 days pass after the death of the last survivor of all the descendants of Joseph P. Kennedy, Sr. of Massachusetts living on the date hereof. (b) On the Termination Date, after payment of all the Asbestos PD Trust's liabilities have been provided for, all monies remaining in the Asbestos PD Trust estate shall be transferred to charitable organization(s) exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, which tax-exempt organization(s) shall be selected by the Trustees using their reasonable discretion; provided, however, that the tax-exempt organization(s) shall not bear any relationship to Reorganized Eagle-Picher within the meaning of Section 468(d)(3) of the Internal Revenue Code. 17 6.3 AMENDMENTS. The Trustees may modify or amend this Trust Agreement or any document annexed to it, including, without limitation, the Bylaws, except that Articles 2.2 (Purpose), 2.4 (Acceptance of Assets and Assumption of Liabilities), 3.1(d) (precluding guaranty of others' debt), 3.3(a)-(c) (claims administration), 5.2 (Term of Service), 5.3 (Appointment of Successor Trustees), 5.5 (Compensation and Expenses of Trustees), 5.6 (Indemnification of Trustees and Others), 6.1 (Irrevocability), 6.2 (Termination) and 6.3 (Amendments) herein, and, if Class 16 votes to reject the Plan, the Asbestos PD Claims Resolution Procedures shall not be modified or amended in any respect. No consent from the Settlors shall be required to make the modifications or amendments permitted by the foregoing sentence. Any modification or amendment made pursuant to this section must be done in writing. 6.4 MEETINGS. For purposes of section 5.5 of this Trust Agreement, a Trustee shall be deemed to have attended a meeting in the event such person spends a substantial portion of the day conferring, by phone or in person, on Asbestos PD Trust matters with Trustees. The Trustees shall have complete discretion to determine whether a meeting, as described herein, occurred for purposes of section 5.5 hereof. 6.5 SEVERABILITY. Should any provision in this Trust Agreement be determined to be unenforceable, such determination shall in no way limit or affect the enforceability and operative effect of any and all other provisions of this Trust Agreement. 6.6 NOTICES. Notices to persons asserting claims shall be given at the address of such person, or, where applicable, such person's legal representative, in each case as provided on such person's claim form submitted to the Asbestos PD Trust with respect to his, her, or its Asbestos Property Damage Claim. Any notices or other communications required or permitted hereunder shall be in writing and delivered at the addresses designated below, or sent by telecopy pursuant to the instructions listed below, or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as follows, or to such other address or addresses as may hereafter be furnished by any of Reorganized Eagle-Picher, or the Trustees to the others in compliance with the terms hereof. 18 To the Asbestos PD Trust or the Trustees: --------------------------------------- --------------------------------------- --------------------------------------- To Reorganized Eagle-Picher: Eagle-Picher Industries, Inc. Attention: General Counsel IF BY HAND OR OVERNIGHT DELIVERY: Suite 1300, 580 Building 580 Walnut Street Cincinnati, Ohio 45202 IF BY MAIL: Post Office Box 779 Cincinnati, Ohio 45201 Telecopier: (513) 721-3404 Telephone Confirmation: (513) 629-2400 and Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Stephen Karotkin, Esq. Telecopier: (212) 310-8007 Telephone Confirmation: (212) 310-8888 and 19 Frost & Jacobs 2500 PNC Center 201 East Fifth Street Cincinnati, Ohio 45202-4182 Attention: Edmund J. Adams, Esq. Telecopier: (513) 651-6981 Telephone Confirmation: (513) 651-6800 All such notices and communications shall be effective when delivered at the designated addresses or when the telecopy communication is received at the designated addresses and confirmed by the recipient by return telecopy in conformity with the provisions hereof. 6.7 COUNTERPARTS. This Trust Agreement may be executed in any number of counterparts, each of which shall constitute an original, but such counterparts shall together constitute but one and the same instrument. 6.8 SUCCESSORS AND ASSIGNS. The provisions of this Trust Agreement shall be binding upon and inure to the benefit of the Settlors, the Asbestos PD Trust, and the Trustees and their respective successors and assigns, except that neither the Settlors nor the Asbestos PD Trust nor any Trustee may assign or otherwise transfer any of its, or his or her rights or obligations under this Trust Agreement except, in the case of the Asbestos PD Trust and the Trustees, as contemplated by section 3.1. 6.9 LIMITATION ON CLAIM INTERESTS FOR SECURITIES LAWS PURPOSES. Asbestos Property Damage Claims, and any interests therein, (a) shall not be assigned, conveyed, hypothecated, pledged or otherwise transferred, voluntarily or involuntarily, directly or indirectly, except by will or under the laws of descent and distribution; (b) shall not be evidenced by a certificate or other instrument; (c) shall not possess any voting rights; and (d) shall not be entitled to receive any dividends or interest. 6.10 ENTIRE AGREEMENT; NO WAIVER. The entire agreement of the parties relating to the subject matter of this Trust Agreement is contained herein and in the documents referred to herein, and this Trust Agreement and such documents supersede any prior oral or written agreements concerning the subject matter hereof. No failure to exercise or delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of rights under 20 law or in equity. 6.11 HEADINGS. The headings used in this Trust Agreement are inserted for convenience only and neither constitute a portion of this Trust Agreement nor in any manner affect the construction of the provisions of this Trust Agreement. 6.12 GOVERNING LAW. This Trust Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio. 6.13 SETTLORS' REPRESENTATIVE. Reorganized Eagle-Picher is hereby irrevocably designated as the representative of the Settlors, and it is hereby authorized to take any action required of the Settlors in connection with the Trust Agreement. 6.14 DISPUTE RESOLUTION. Any disputes that arise under this Trust Agreement or under the annexes hereto shall be resolved by the Bankruptcy Court pursuant to Article 9 of the Plan, except as otherwise provided herein or in the annexes hereto. Notwithstanding anything else herein contained, to the extent any provision of this Trust Agreement is inconsistent with any provision of the Plan, the Plan shall control. 6.15 ENFORCEMENT AND ADMINISTRATION. The parties hereby acknowledge the Bankruptcy Court's continuing exclusive jurisdiction to interpret and enforce the terms of this Trust Agreement and the annexes hereto, pursuant to Article 9 of the Plan. 6.16 EFFECTIVENESS. This Trust Agreement shall not become effective until it has been executed and delivered by all the parties hereto and until the Effective Date. IN WITNESS WHEREOF, the parties have executed this Trust Agreement this ____ day of __________________, 1996. SETTLORS: EAGLE-PICHER INDUSTRIES, INC. 21 BY: -------------------------------- Name: ------------------------------ Title: ----------------------------- DAISY PARTS, INC. BY: -------------------------------- Name: ------------------------------ Title: ----------------------------- TRANSICOIL INC. BY: -------------------------------- Name: ------------------------------ Title: ----------------------------- MICHIGAN AUTOMOTIVE RESEARCH CORP. BY: -------------------------------- Name: ------------------------------ Title: ----------------------------- EDI, INC. BY: -------------------------------- Name: ------------------------------ Title: ----------------------------- EAGLE-PICHER MINERALS, INC. BY: -------------------------------- Name: ------------------------------ Title: ----------------------------- 22 HILLSDALE TOOL & MANUFACTURING CO. BY: -------------------------------- Name: ------------------------------ Title: ----------------------------- TRUSTEES: ANNEX A EAGLE-PICHER INDUSTRIES, INC. ASBESTOS PROPERTY DAMAGE SETTLEMENT TRUST BYLAWS ------------------------------------------------ ARTICLE I OFFICES ------- SECTION 1. PRINCIPAL OFFICE. The initial principal office of the Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust (the "Asbestos PD Trust") shall be in ____________________ or at such other place as the Trustees shall from time to time select. SECTION 2. OTHER OFFICES. The Asbestos PD Trust may have such other offices at such other places as the Trustees may from time to time determine to be necessary for the efficient and cost-effective administration of the Asbestos PD Trust. ARTICLE II TRUSTEES -------- 23 SECTION 1. CONTROL OF PROPERTY, BUSINESS AND AFFAIRS. The property, business and affairs of the Asbestos PD Trust shall be managed by or under the direction of the Trustees. SECTION 2. NUMBER, RESIGNATION AND REMOVAL. The number of Trustees and the provisions governing the resignation and removal of a Trustee and the appointment of a successor Trustee shall be governed by the provisions of Article 5 of the Trust Agreement. SECTION 3. QUORUM AND MANNER OF ACTING. The presence of a majority of the Trustees shall constitute a quorum for the transaction of business. In the absence of a quorum, the Trustee[s] present may adjourn the meeting from time to time until a quorum shall be present. The vote, at a meeting at which a quorum is present, of the majority of the Trustees present shall be an act of the Trustees. SECTION 4. REGULAR MEETINGS. Regular meetings of the Trustees may be held at such time and place as shall from time to time be determined by the Trustees. SECTION 5. SPECIAL MEETING NOTICE. Special meetings of the Trustees shall be held whenever called by one or more of the Trustees. Notice of each such meeting shall be delivered by overnight courier to each Trustee, addressed to him, her, or it at his, her, or its residence or usual place of business, at least three (3) days before the date on which the meeting is to be held, or shall be sent to him, her, or it at such place by personal delivery or by telephone or telecopy not later than two (2) days before the day of which such meeting is to be held. Such notice shall state the place, date and hour of the meeting and the purposes for which it is called. In lieu of the notice to be given as set forth above, a waiver thereof in writing, signed by the Trustee or Trustees entitled to receive such notice, whether before or after the meeting, shall be deemed equivalent thereto for purposes of this Section 5. No notice to or waiver by any Trustee with respect to any special meeting shall be required if such Trustee shall be present at said meeting. 24 SECTION 6. ACTION WITHOUT A MEETING; MEETING BY CONFERENCE CALL. Any action required or permitted to be taken at any meeting of the Trustees may be taken without a meeting if all Trustees consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Trustees. The Trustees also may take any action required or permitted to be taken at any meeting by means of conference telephone or similar communication equipment provided that all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this paragraph shall constitute presence in person at such meeting. ARTICLE III OFFICERS -------- SECTION 1. PRINCIPAL OFFICERS. The principal officer of the Asbestos PD Trust shall be an Executive Director. The Asbestos PD Trust may also have such other principal officers, including one or more Assistant Directors, a Secretary-Treasurer and a Controller, as the Trustees may in their discretion appoint after determining that such appointment will promote the efficient and cost-effective administration of the Asbestos PD Trust. SECTION 2. ELECTION AND TERM OF OFFICE. The principal officer(s) of the Asbestos PD Trust shall be chosen by the Trustees. Each such officer shall hold office until his successor shall have been duly chosen and qualified or until his earlier death, resignation or removal. SECTION 3. SUBORDINATE OFFICERS. In addition to the principal officers enumerated in Section 1 of this Article III, the Asbestos PD Trust may have such other subordinate officers, agents and employees as the Trustees may deem necessary for the efficient and cost-effective administration of the Asbestos PD Trust, each of whom shall hold office for such period, have such authority, and perform such duties as the Trustees may from time to time determine. The Trustees may delegate to any principal officer the power to appoint and to remove any such subordinate officers, agents, or employees. SECTION 4. REMOVAL. The Executive Director or any other officer may be removed with or without cause, at any time, by resolution adopted by the Trustees at any regular meeting of the Trustees or at any special meeting of the Trustees called for that purpose at which a quorum is present. 25 SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving written notice to the Trustees. The resignation of any officer shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6. POWERS AND DUTIES. The officers of the Asbestos PD Trust shall have such powers and perform such duties as may be conferred upon or assigned to them by the Trustees. ARTICLE IV AMENDMENTS ---------- The Bylaws of the Asbestos PD Trust, other than Article II and this Article IV, may be amended by the Trustees at any meeting of the Trustees, provided that notice of the proposed amendment is contained in the notice of such meeting. 26 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- EXHIBIT "1.1.38" FORM OF CONNECTICUT MUTUAL NOTE [THIS PAGE LEFT BLANK INTENTIONALLY] [CONNECTICUT MUTUAL NOTE SECURED CLAIM] SECURED NOTE AND SECURITY AGREEMENT THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN VIOLATION OF SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER. 10% Secured Installment Note HILLSDALE TOOL & MANUFACTURING CO., a Michigan corporation ("Hillsdale"), and EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company") (Hillsdale and the Company are sometimes referred to herein individually as an "Obligor" and collectively as the "Obligors"), for value received, hereby promise jointly and severally to pay to MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, or registered assigns (the "Payee"), on or before June 1, 2001 (the "Maturity Date"), as hereinafter provided, the principal sum of [____________________________________ (____________)] and to pay interest on the unpaid principal amount thereof from the date hereof to maturity at the rate of 10% per annum computed as if each year consisted of 360 days and each month consisted of 30 days. Such principal and interest shall be payable without presentation of this Note, by bank wire transfer of Federal or other immediately available funds (identifying each payment as Hillsdale Tool & Manufacturing Co. and Eagle-Picher Industries, Inc. 10% Secured Installment Note due 2001, principal or interest) to the Payee pursuant to instructions provided by the Payee to the Company from time to time, in ___________ consecutive payments of principal and interest, in the respective amounts of and payable on the dates indicated in the schedule annexed hereto as Schedule A (collectively, the "Installment Payments"). The first of the Installment Payments will be made on [the first Business Day of the second month following the date of the issuance of the Note]. Whenever any Installment Payment is not made when due and such default shall continue for more than ten (10) days, the Obligors shall pay interest on such amount at a rate equal to the lesser of (a) 12% per annum or (b) the maximum rate allowed by law. Each Installment Payment, when paid, shall be applied first to the payment of all interest accrued and unpaid on this Note and then to payment on account of the principal hereof. SECTION 1. The following terms have the following meanings when used in this Note: "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Cincinnati, Ohio are authorized or required by law to close. "Collateral" shall have the meaning set forth in Section 3 hereof. "MATURITY DATE" shall have the meaning set forth in the opening paragraph of this Note. "NOTES" shall have the meaning set forth in Section 18 hereof. "Payee" shall have the meaning set forth in the opening paragraph of this Note. SECTION 2. PRINCIPAL PAYMENTS. (a) SCHEDULED PAYMENT. On the Maturity Date, the Obligors shall pay to the Payee, in cash or other immediately available funds, the entire unpaid principal amount of this Note plus all accrued and unpaid interest thereon. (b) MANDATORY PREPAYMENT. In the event of condemnation or of destruction by fire or other casualty of substantially all of the Collateral, the Note shall be prepaid in full (but not in part) at a price equal to 100% of the then outstanding principal amount of the Note, together with all interest then accrued and unpaid thereon, but without any prepayment penalty or premium. (c) Optional Prepayment. The Obligors may, at any time and from time to time, without premium or penalty, prepay (in multiples of $1,000) 2 all or a portion of the unpaid principal amount of this Note or all or a portion of accrued and unpaid interest, together with unpaid accrued interest on the amount so prepaid to the date chosen for prepayment, payable in cash or other immediately available funds. The Obligors shall give written notice of prepayment of this Note or any portion hereof not less than 10 but not more than 30 days prior to the date chosen for prepayment, which notice shall specify the amount thereof to be prepaid and the date fixed for prepayment. SECTION 3. Security. This Note is secured by the following property (collectively, the "Collateral"): (a) The equipment described in Schedule B hereto (whether or not constituting fixtures) and all additions and accessions thereto and substitutions therefor; (b) All books and records of the Obligors relating to any of the foregoing; and (c) All proceeds and products of any of the foregoing, including insurance payable by reason of loss or damage. The Obligors herewith confirm the grant of a security interest in the Collateral to the Payee. SECTION 4. AFFIRMATIVE COVENANTS. For as long as any principal or interest remains unpaid under this Note: (a) Financial Statements. The Company shall deliver to the Payee: (i) a balance sheet and income statement of the Company within 45 days after the close of each fiscal quarter other than the last fiscal quarter for the fiscal year and (ii) a balance sheet and income statement of the Company within 90 days after the close of each fiscal year. All such financial statements will be prepared in accordance with generally accepted accounting principles consistently applied. All statements will be in the same form as those provided to creditors and shareholders of the Company generally. The Company will also furnish to the Payee promptly copies of any Forms 10-Q, 10-K and 8-K that are filed with the Securities and Exchange Commission as well as copies of any other special mailings to shareholders. 3 (b) Reporting Requirements. The Company or Hillsdale, as the case may be, shall furnish to the Payee: (i) as soon as possible and in any event within 10 days after becoming aware of the occurrence of any event of default as defined in Section 10 hereof or any event that with notice or passage of time or both would, if unremedied, constitute an event of default, a written statement of the chief executive officer or chief financial officer of the Company or Hillsdale, as the case may be, setting forth details of such event of default or event, stating whether or not the same is continuing and, if so, the action that the Company or Hillsdale, as the case may be, proposes to take with respect thereto; (ii) immediately after receiving knowledge thereof, notice in writing of all actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that directly affect or affects Hillsdale based on financial exposure to Hillsdale of $10 million or that directly affect or affects the Company based on financial exposure to the Company of $25 million or more or that directly affect or affects the Collateral or that seek or seeks injunctive relief that will materially adversely affect the operations of either of the Obligors or the Collateral; (iii) as soon as possible and in any event within 5 days after the Obligors become aware of the occurrence of a material adverse change in the business, properties or the operations and condition (financial or otherwise) of either of the Obligors, a statement by the chief executive officer or chief financial officer of the Company or Hillsdale, as the case may be, setting forth details of such material adverse change and the action that the Company or Hillsdale, as the case may be, proposes to take with respect thereto, except as otherwise disclosed in public announcements of the Obligors issued in the ordinary course of business; and (iv) such other information respecting the business, properties, condition and operations (financial or otherwise) of the Obligors as the Payee may from time to time reasonably request be 4 furnished to the Payee. (c) FURTHER ASSURANCES. (i) The Obligors agree that from time to time, at their expense, they will promptly execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary or desirable, or that the Payee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby and the priority thereof or to enable the Payee to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, the Obligors will execute and file such financing or continuation statements or amendments thereto and such other instruments or notices as may be necessary or desirable or as the Payee may request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (ii) The Obligors hereby authorize the Payee to file one or more financing or continuation statements and amendments thereto relative to all or any part of the Collateral without the signature of the Obligors where permitted by law. A carbon, photographic or other reproduction of this Note or any part thereof shall be sufficient as a financing statement where permitted by law. (iii) The Obligors will furnish to the Payee from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Payee may reasonably request, all in reasonable detail. (d) INSURANCE. The Obligors shall, at their own expense, maintain liability and property insurance with respect to their respective businesses and property, including the Collateral, with responsible and reputable insurance companies or associations satisfactory to the Payee in such amounts and covering such risks as are acceptable to or specified by the Payee, taking into account, among other factors, such amounts and risks as are usually carried by persons engaged in similar 5 businesses and owning similar properties in the same general areas in which the Obligors operate. Each policy for liability insurance and property damage insurance shall provide for payment to or on behalf of the Obligors and the Payee as their interests may appear. Each policy of property damage insurance shall in addition (i) name the Payee as an insured party thereunder (without any representation or warranty by or obligation upon the Payee), (ii) contain an agreement by the insurer that any loss thereunder shall be payable to, or on behalf of the Obligors or the Payee as their interests may appear, (iii) provide that there shall be no recourse against the Payee for payment of premiums or other amounts with respect thereto, and (iv) provide that at least 30 days' prior written notice of cancellation or of lapse shall be given to the Payee by the insurer. The Obligors shall deliver to the Payee certificates evidencing the insurance maintained pursuant hereto. (e) CERTAIN COVENANTS AS TO THE COLLATERAL. The Obligors shall: (i) Keep the Collateral at the places identified therefor on Schedule B hereto or, upon 15 days' prior written notice to the Payee, at such other places as shall be identified in such notice (such notice to identify the record owner of the new location) and which are in jurisdictions where all actions required by subparagraph (c) above shall have been taken with respect to such Collateral. (ii) Cause the Collateral to be maintained and preserved in the same condition, repair, and working order as when new, ordinary wear and tear excepted, and, in the case of any loss or damage to the Collateral, as quickly as practicable after the occurrence thereof make or cause to be made all repairs, replacements, and other improvements in connection therewith which are necessary or desirable to such end, provided, however, that in the event of condemnation or of the destruction by fire or other casualty of substantially all the Collateral, have the option to repay the Note in full (but not in part) as provided in Section 2(b) hereof. (iii) Pay promptly when due all property and other taxes, assessments, and governmental charges or levies imposed upon it, and all claims (including claims for labor, materials and supplies) against the Collateral. (iv) After the occurrence and during the continuance of an Event of Default (as defined in Section 10 hereof) receive in trust for the benefit of the Payee hereunder all amounts and proceeds 6 received or collected by the Obligors in respect of the Collateral, segregate such amounts and proceeds from other funds of Debtor, and forthwith pay such amounts and proceeds over to the Payee in the same form as so received (with any necessary endorsement) to be held as cash collateral and applied as provided in Section 10(c) hereof. SECTION 5. Substitution of Collateral; Liens. During the term of the Note: (a) The Obligors may substitute other collateral for the Collateral identified in Schedule B hereto, provided, however, that the value of the Collateral, including any substituted Collateral, shall at the time of such substitution be equal to or greater than the value of the Collateral identified in Schedule B hereto, such value to be determined by an independent appraisal provided at the Obligors' expense and satisfactory to the Payee. (b) The Obligors shall not create or suffer to exist any lien, security interest, or other charge or encumbrance upon or with respect to any of the Collateral. SECTION 6. Appointed Attorney-in-Fact. The Obligors hereby irrevocably appoint Payee as their attorney-in-fact, with full authority in the place and stead of the Obligors and in the name of the Obligors, the Payee, or otherwise, to from time to time take any action which may be reasonably necessary to protect the Payee's interest under this Note, including, without limitation: (a) to sign in the name and on behalf of the Obligors any financing statements or other papers required under Section 4(c) hereof; (b) to obtain and adjust insurance required to be paid to the Payee pursuant to Section 4(d) hereof; (c) to ask, demand, collect, sue for, recover, compound, receive, and give acquittance and receipts for moneys due and to become due in respect of any of the Collateral; (d) to receive, endorse, and collect any drafts or other 7 instruments in connection with subsection (b) or (c) above; and (e) to file any claims or take any action or institute any proceedings which the Payee may deem necessary or desirable to enforce the rights of the Payee with respect to any of the Collateral. The Obligors hereby ratify and approve all acts of the Payee as such attorney-in-fact. The Payee shall not, in its capacity as such attorney-in-fact, be liable for any acts or omissions, nor for any error of judgment or mistake of fact or law, but only for gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until the Note shall have been fully satisfied. Any amounts received or collected by the Payee in its capacity as such attorney-in-fact shall be held as cash collateral and applied as provided in Section 10(c) hereof. SECTION 7. THE PAYEE MAY PERFORM. If the Obligors fail to perform any agreement contained herein, the Payee may itself perform, or cause performance of, such agreement, and the expenses of the Payee incurred in connection therewith shall be payable by the Obligors under Section 17(b) hereof. SECTION 8. THE PAYEE'S DUTIES. The powers conferred on the Payee hereunder are solely to protect its interest in the Collateral and shall not impose any duty to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Payee shall not have any duty as to any Collateral or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. SECTION 9. INSPECTION RIGHTS. The Payee, upon 24 hours' notice and during normal business hours, shall have access to inspect, audit, and make extracts from all of the Obligors' records, files, and books of account relating to the Collateral, and the Obligors shall deliver any document or instrument necessary for the Payee to obtain records from any service bureau maintaining records for the Obligors. The Payee may also, at all reasonable times, examine and inspect the Collateral. The Obligors shall, at the Payee's request, take all steps necessary to facilitate such inspection. SECTION 10. EVENTS OF DEFAULT. (a) Each of the following shall be an Event of Default: 8 (i) If default shall be made in the payment of any installment of principal and interest due from the Obligors under the Note when and as the same shall become due and payable, whether at maturity or by acceleration or prepayment or otherwise, and such default shall continue for more than ten (10) days; (ii) If there shall be default in the due observance or performance of any other provision of this Note and such default shall continue for more than thirty (30) days after written notice thereof shall have been given by the Payee to the Company and Hillsdale, as the case may be; (iii) If an event of default shall occur and continue with respect to any borrowing in excess of $5,000,000 by the Company or Hillsdale, exclusive of any alleged event of default that is being contested in good faith by the Company or Hillsdale; (iv) If at any time prior to payment in full of the Note there are unsatisfied judgments against the Company and Hillsdale which aggregate in excess of $5,000,000, exclusive of judgments as to which the Company or Hillsdale has filed or is preparing to file and is actively prosecuting timely appeals; (v) If any representation or warranty of the Company or Hillsdale made in this Note or in any writing delivered pursuant hereto shall prove to be incorrect in any material respect as of the time when the same shall have been made; (vi) If either the Company or Hillsdale shall make an assignment for the benefit of its creditors or file a petition in bankruptcy or for reorganization or for an arrangement or any composition, readjustment, liquidation, dissolution or similar relief pursuant to the Bankruptcy Code or under any similar present or future federal or state law or shall be adjudicated a bankrupt; (vii) If a petition or answer shall be filed proposing the adjudication of the Company or Hillsdale as a bankrupt or the reorganization or arrangement of either of them or any composition, readjustment, liquidation, dissolution or similar relief 9 with respect to either of them pursuant to the Bankruptcy Code or any similar present or future federal or state law, and the Company or Hillsdale, as the case may be, shall consent to the filing thereof, or such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof; or (viii) If a receiver, trustee or liquidator (or other similar official) of the Company or Hillsdale or of all or substantially all of the assets of the Company or Hillsdale or any portion thereof shall be appointed and shall not be discharged within sixty (60) days thereafter, or if the Company or Hillsdale, as the case may be, shall consent to or acquiesce in such appointment. (b) Upon the occurrence and during the continuance of any Event of Default described in Section 10(a) hereof other than in clause (vi), (vii) or (viii) thereof, the holders of a majority of the outstanding principal amount of the Notes may, by written notice to the Obligors, declare all or any portion of the unpaid principal amount of the Notes and all interest accrued thereon to be immediately due and payable. Upon the occurrence and during the continuance of any Event of Default described in clauses (vi), (vii) or (viii) of Section 10(a) hereof, the unpaid principal amount of the Notes and all interest accrued thereon shall automatically become due and payable, without any action or notice by the Payee. Demand, presentment, protest and notice of non-payment are hereby waived by the Obligors. All payments made following an Event of Default shall be applied first to payment of all accrued and unpaid interest and then to principal. (c) In addition, upon the occurrence and during the continuance of an Event of Default described in Section 10(a), the Payee may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a Secured Party on default under the Uniform Commercial Code (the "Code") and other applicable laws and agreements and also may (i) require the Obligors to, and the Obligors hereby agree that they will at their expense and upon request of the Payee forthwith, assemble the Collateral as directed by the Payee and make it available to the Payee at a place or places to be designated by the Payee, which is or are reasonably convenient to the Payee and the Obligors and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of 10 the Payee's offices or elsewhere, for cash, on credit or for future delivery and upon such other terms as the Payee may deem commercially reasonable. The Obligors agree that, to the extent notice of sale shall be required by law, at least five days' notice to the Obligors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Payee shall not be obligated to make any sale of the Collateral regardless of notice of sale having been given. The Payee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor and such sale may, without further notice, be made at the time and place to which it was so adjourned. All cash proceeds received by the Payee in respect of any sale of, collection from or other realization upon all or any part of the Collateral may, in the discretion of the Payee, be held by the Payee (without interest) as collateral for and/or then or at any time thereafter applied in whole or in part by the Payee against payment of the Note. Any surplus of such cash or cash proceeds held by the Payee and remaining after payment in full of the Note shall be paid over to the Obligors or to whosoever may be lawfully entitled to receive such surplus. SECTION 11. Continuing Security Interest; etc. This Note shall create a continuing security interest in the Collateral. The execution and delivery of this Note shall in no manner impair or affect any other security (by endorsement or otherwise) for the payment or performance of the Note and no security taken hereafter as security for payment or performance of the Note shall impair in any manner or affect this Note or the security interest granted hereby, all such present and future additional security to be considered as one general, continuing security interest. Any of the Collateral may be released from this Note without altering, varying, or diminishing in any way this Note or the security interest granted hereby as to the Collateral not expressly released, and this Note and such security interest shall continue in full force and effect as to all of the Collateral not expressly released. SECTION 12. Entire Agreement; No Oral Change. This Note embodies the entire agreement and understanding between the Payee and the Obligors relating to the subject matter hereof, and supersedes all prior agreements and understandings relating thereto. None of the provisions hereof may be waived, altered or amended, except by a written instrument signed by the holders of a majority of the outstanding principal amount of the Notes and by the Obligors. In the case of any waiver, the Obligors and the holders of a 11 majority of the outstanding principal amount of the Notes shall be restored to their former respective positions and rights hereunder and any Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon except to the extent expressly provided in such waiver. SECTION 13. Remedies Cumulative. No failure to exercise or delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 14. NOTICES. Any notices or other communications required or permitted hereunder shall be given in writing and personally delivered with receipt acknowledged or mailed, postage prepaid, via registered mail, return receipt requested, if to the Payee, at its address notified in writing by the Payee to the Obligors, and if to the Obligors, at the address of the Company, Attention: Treasurer, at P.O. Box 779, Cincinnati, Ohio 45201 (if by mail) or 580 Walnut Street, Suite 1300, Cincinnati, Ohio 45202 (if personally delivered), or any other address notified in writing by the Obligors to the Payee. Any notice given in conformity with the foregoing shall be deemed given when personally delivered or upon the date of delivery specified in the registered mail receipt. SECTION 15. Governing Law. This Note shall be governed by, and construed and enforced in accordance with, the law of the State of Indiana. SECTION 16. Consent To Jurisdiction. The parties hereto irrevocably agree that any legal action or proceeding with respect to this Note shall be brought in the courts of the State of Indiana in the County of Steuben or in the courts of the United States of America sitting in Indiana. By the execution and delivery of this Note, the parties hereto irrevocably submit to the jurisdiction of such courts. The Obligors hereby waive to the fullest extent permitted by law any objection they may now or hereafter have to the laying of venue in any such action or proceeding in any such court as well as any right they may now or 12 hereafter have to remove any such action or proceeding, once commenced, to another court on the grounds of forum non conveniens or otherwise or to remove an action brought in a state court to a court of the United States of America. The Obligors hereby irrevocably agree that service of process in any such action or proceeding may be made either by mailing or delivering a copy of the summons and complaint in any such action or proceeding to the Obligors at the address provided herein by certified mail, return receipt requested. Service of process in any such action or proceeding, effected as aforesaid, shall be deemed personal service upon the Obligors and shall be legal and binding upon the Obligors for all purposes notwithstanding any failure on the part of the Obligors to receive copies of such process mailed directly to the Obligors in accordance with the provisions of this Section. SECTION 17. INDEMNITY AND EXPENSES. (a) The Obligors agree to indemnify the Payee from and against any and all claims, losses, and liabilities growing out of or resulting from and after the date hereof from this Note (including, without limitation, enforcement of this Note), except claims, losses or liabilities resulting from the Payee's gross negligence or willful misconduct. (b) The Obligors will upon demand pay to the Payee the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Payee may incur from and after the date hereof in connection with (i) the administration of this Note, (ii) the custody, preservation, use, or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Payee, or (iv) the failure by the Obligors to perform or observe any of the provisions hereof. SECTION 18. Successors and Assigns; Transferability. This Note shall be binding upon and inure to the benefit of the Payee and the Obligors and their respective transferees, successors and assigns; PROVIDED, HOWEVER, that the Obligors may not transfer or assign any of their rights or obligations hereunder without the prior written consent of the Payee. Within five (5) Business Days after receipt of notice of any assignment by the Payee to any person or entity (an "Assignee") of all or any part of this Note, the Obligors shall execute and deliver to such Assignee, in exchange for the surrendered Note, a new Note to the order of such Assignee in an amount equal to the amount of this Note assigned to it, and if the Payee has retained any amount owing to it hereunder, a new Note to the order of the Payee in an amount equal to the amount retained by it hereunder, which new Note shall be dated the same date as the surrendered Note and be in substantially the form of this Note, and such Assignee will be deemed the Payee 13 under the Note issued to it. References herein to "Notes" shall include all outstanding Notes issued in substitution for or upon any assignment of this Note. SECTION 19. No Set-Off. The obligations of the Obligors under this Note are absolute and not subject to any right of set-off, counterclaim, recoupment or defenses against the Payee of any kind whatsoever. SECTION 20. Miscellaneous. The headings of the sections of this Note have been inserted for convenience and shall not modify, define, limit or expand the express provisions of this Note. IN WITNESS WHEREOF, the Obligors have duly executed this Note this ____ day of __________________, 1996. EAGLE-PICHER INDUSTRIES, INC. By: ------------------------------- HILLSDALE TOOL & MANUFACTURING CO. By: ------------------------------- SCHEDULE A Installment Payment Schedule 14 SCHEDULE B Collateral 15 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- EXHIBIT "1.1.56" FORM OF DIVESTITURE NOTES [THIS PAGE LEFT BLANK INTENTIONALLY] EAGLE-PICHER INDUSTRIES, INC. AND [ ] TRUSTEE -------------------- INDENTURE DATED AS OF -------------------- $50,000,000 [____]% SENIOR UNSECURED DIVESTITURE NOTES DUE __________, _____ CROSS-REFERENCE TABLE TIA SECTION INDENTURE SECTION ----------- ----------------- 310(a)(1) 7.10 (a)(2) 7.10 (a)(3) N.A. (a)(4) N.A. (b) 7.08 (c) N.A. 311(a) 7.11 (b) 7.11 (c) N.A. 312(a) 2.05 (b) 10.03 (c) 10.03 313(a) 7.06 (b)(1) N.A. (b)(2) 7.06 (c) 10.02 (d) 7.06 314(a) 4.02; 10.02 (b) N.A. (c)(1) 10.04 (c)(2) 10.04 (c)(3) N.A. (d) N.A. (e) 10.05 (f) N.A. 315(a) 7.01(b) (b) 7.05; 10.02 (c) 7.01(a) (d) 7.01(c) (e) 6.11 316(a)(last sentence) 2.09 (a)(1)(A) 6.05 (a)(1)(B) 6.04 (a)(2) N.A. (b) 6.07 317(a)(1) 6.08 (a)(2) 6.09 (b) 2.04 318(a) 10.01 N.A. means not applicable. Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture. TABLE OF CONTENTS Article Section Heading Page - ------- ------- ------- ---- 1 DEFINITIONS AND INCORPORATION BY REFERENCE .................. 1 1.01. Definitions ................................................. 1 1.02. Other Definitions ........................................... 4 1.03. Rules of Construction ....................................... 4 2 THE SECURITIES .............................................. 4 2.01. Form and Dating ............................................. 4 2.02. Execution and Authentication ................................ 4 2.03. Registrar, Transfer Agent and Paying Agent .................. 5 2.04. Paying Agent to Hold Money in Trust ......................... 5 2.05. Securityholder Lists ........................................ 5 2.06. Transfer and Exchange ....................................... 6 2.07. Replacement Securities ...................................... 6 2.08. Outstanding Securities ...................................... 6 2.09. Treasury Securities ......................................... 7 2.10. Temporary Securities ........................................ 7 2.11. Cancellation ................................................ 7 2.12. Defaulted Interest .......................................... 7 3 REDEMPTION .................................................. 7 3.01. Notices to Trustee .......................................... 7 3.02. Selection of Securities to be Redeemed ...................... 8 3.03. Notice of Redemption ........................................ 8 3.04. Effect of Notice of Redemption .............................. 8 3.05. Deposit of Redemption Price ................................. 8 3.06. Securities Redeemed in Part ................................. 9 3.07. Mandatory Redemption ........................................ 9 3.08. Investment of Asset Account ................................. 9 4 COVENANTS ................................................... 9 4.01. Payment of Securities ....................................... 9 4.02. SEC Reports ................................................. 9 4.03. Compliance Certificate ..................................... 10 4.04. Asset Sale Account .......................................... 10 5 SUCCESSORS .................................................. 10 5.01. When Company May Merge, etc. ................................ 10 6 DEFAULTS AND REMEDIES ....................................... 10 6.01. Events of Default ........................................... 10 6.02. Acceleration ................................................ 11 6.03. Other Remedies .............................................. 12 6.04. Waiver of Past Defaults ..................................... 12 6.05. Control by Majority ......................................... 12 6.06. Limitation on Suits ......................................... 12 6.07. Rights of Holders to Receive Payment ........................ 13 6.08. Collection Suit by Trustee .................................. 13 6.09. Trustee May File Proofs of Claim ............................ 13 i 6.10. Priorities .................................................. 13 6.11. Undertaking for Costs ....................................... 13 7 TRUSTEE ..................................................... 14 7.01. Duties of Trustee ........................................... 14 7.02. Rights of Trustee ........................................... 15 7.03. Individual Rights of Trustee ................................ 15 7.04. Trustee's Disclaimer ........................................ 15 7.05. Notice of Defaults .......................................... 15 7.06. Reports by Trustee to Holders ............................... 16 7.07. Compensation and Indemnity .................................. 16 7.08. Replacement of Trustee ...................................... 16 7.09. Successor Trustee by Merger, etc ............................ 17 7.10. Eligibility; Disqualification ............................... 18 7.11. Preferential Collection of Claims Against Company ............................................. 18 8 DISCHARGE OF INDENTURE ...................................... 18 8.01. Termination of Company's Obligations ........................ 18 8.02. Application of Trust Money .................................. 19 8.03. Repayment to Company ........................................ 19 9 AMENDMENTS .................................................. 19 9.01. Without Consent of Holders .................................. 19 9.02. With Consent of Holders ..................................... 19 9.03. Compliance with Trust Indenture Act ......................... 20 9.04. Revocation and Effect of Consents ........................... 20 9.05. Notation on or Exchange of Securities ....................... 20 9.06. Trustee Protected ........................................... 20 10 MISCELLANEOUS ............................................... 21 10.01. Trust Indenture Act Controls ................................ 21 10.02. Notices ..................................................... 21 10.03. Communication by Holders and Other Holders .................. 21 10.04. Certificate and Opinion as to Conditions Precedent .......... 22 10.05. Statements Required in Certificate or Opinion. .............. 22 10.06. Rules by Company and Agents ................................. 22 10.07. Legal Holidays .............................................. 22 10.08. No Recourse Against Others .................................. 22 10.09. Duplicate Originals ......................................... 22 10.10. Variable Provisions ......................................... 23 10.11. Governing Law ............................................... 23 INDENTURE, dated as of [ ], between EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation ("Company"), and [ ], a ii _____________ corporation ("Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's [____]% Senior Unsecured Divestiture Notes Due [three years from the Effective Date] ("Securities"). ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Affiliate" means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. "Agent" means any Registrar, Transfer Agent or Paying Agent. "Asset Sale" means any sale or other disposition, or series of related sales or other dispositions, made after the Effective Date by the Company or any Subsidiary to any Person of any divisions, subsidiaries, plants, or product lines or other operating assets in excess of $1,000,000 of the Debtors. "Asset Sale Account" means that trust account (account no. _______________) maintained with, and under the sole dominion and control of, the Trustee. "Board of Directors" means the Board of Directors of the Company or any authorized committee of the Board. "Business Day" means any day other than a Legal Holiday. "Capital Lease" means, at the time any determination thereof is made, any lease of property, real or personal, in respect of which the present value of the minimum rental commitment would be capitalized on a balance sheet of the lessee in accordance with GAAP. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capital Lease that would at such time be so required to be capitalized on the balance sheet in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including, without limitation, partnership interests. "Company" means the party named as such above until a successor replaces it, and thereafter means the successor. "Debtors" means the Debtors as defined in the Plan. "Default" means any event which is, or after notice or passage of time would be, an Event of Default. "Effective Date" means [the Effective Date under the Plan]. 1 "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect on the Issue Date. "Holder" or "Securityholder" means a person in whose name a Security is registered. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit or similar instruments (or reimbursement agreements in respect thereof) or representing the balance deferred and unpaid of the purchase price of any property (including Capital Lease Obligations), except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing Indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, and also includes, to the extent not otherwise included, all Indebtedness of others secured by a Lien on any asset of such Person, whether or not the Indebtedness is assumed by such Person. "Indenture" means this Indenture as amended from time to time. "Issue Date" means the date of first issuance of the Securities hereunder. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement). "Net Proceeds" means the aggregate cash proceeds received by the Company or any Subsidiary in respect of any Asset Sale, including, without limitation, the aggregate cash proceeds from the sale of the real estate of the Company's Orthane Division, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any expenses related to the relocation of assets on personnel incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts applied to the repayment of Indebtedness secured by a Lien on the asset or assets that are the subject of such Asset Sale and any other Indebtedness (other than the Securities) required to be repaid in connection with such transaction and any reserve for adjustment in respect of the sale price or representations, warranties and indemnities, if any, made in connection with the sale, of such asset or assets. Net Proceeds shall exclude any non-cash proceeds received from any Asset Sale until converted by the Company or any Subsidiary to cash. "Officers' Certificate" means a certificate signed by two Officers, one of whom must be the President, the Treasurer or a Vice-President of the Company. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the 2 Company or the Trustee. "Person" means any individual, corporation, partnership, joint venture, entity, association, joint-stock company, trust or unincorporated organization (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Plan" means the Third Amended Consolidated Plan of Reorganization in the Chapter 11 cases of the Company and certain of its affiliates dated August 28, 1996. "SEC" means the Securities and Exchange Commission. "Securities" means the Securities described above issued under this Indenture. "Subsidiary" means any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by the Company or one or more of the other Subsidiaries of the Company or a combination thereof. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date shown above. "Trustee" means the party named as such above until a successor replaces it and thereafter means the successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. SECTION 1.02. OTHER DEFINITIONS. Term Defined in Section ---- ------------------ "Bankruptcy Law" 6.01 "Custodian" 6.01 "Event of Default" 6.01 "Legal Holiday" 10.07 "Officer" 10.10 "Paying Agent" 2.03 "Quoted Price 10.10 "Registrar" 2.03 "Transfer Agent" 2.03 "U.S. Government Obligations" 8.01 SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; 3 (4) All terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings assigned to them by such definition; and (5) words in the singular include the plural, and in the plural include the singular. ARTICLE 2 THE SECURITIES SECTION 2.01. FORM AND DATING. The Securities shall be substantially in the form of Exhibit A, which is part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Security shall be dated the date of its authentication. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Securities. If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid. A Security shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate Securities for original issue up to the aggregate principal amount stated in paragraph 4 of Exhibit A upon a written order of the Company signed by two Officers. The aggregate principal amount of Securities outstanding at any time may not exceed that amount except as provided in Section 2.07 below. SECTION 2.03. REGISTRAR, TRANSFER AGENT AND PAYING AGENT. The Company shall maintain an office or agency where Securities may be authenticated ("Registrar"), where Securities may be presented for registration of transfer or for exchange ("Transfer Agent") and where Securities may be presented for payment ("Paying Agent"). The Transfer Agent shall keep a register of the Securities and of their transfer and exchange. The Company may appoint more than one Registrars, Transfer Agents and Paying Agents. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar, Transfer Agent or Paying Agent, the Trustee shall act as such. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal or interest on the Securities, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it 4 to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent shall have no further liability for the money. The Company shall not serve as Paying Agent. SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Transfer Agent, the Company shall furnish to the Trustee semiannually and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Securityholders. SECTION 2.06. TRANSFER AND EXCHANGE. Where Securities are presented to the Transfer Agent with a request to register the transfer or to exchange them for an equal principal amount of Securities of other denominations, the Transfer Agent shall register the transfer or make the exchange if its requirements for such transactions are met. The Transfer Agent may require a Holder to pay a sum sufficient to cover any taxes imposed on a transfer or exchange. To permit registrations of transfer and exchanges, the Trustee shall authenticate Securities at the Transfer Agent's request. The Company may charge a reasonable fee for any registration of transfer or exchange but not for any exchange pursuant to Section 2.10, 3.06 and 9.05 hereof. SECTION 2.07. REPLACEMENT SECURITIES. If the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, then, in the absence of notice to the Company or the Trustee that the Security has been acquired by a bona fide purchaser, the Company shall issue a replacement Security if the Company and the Trustee receive: (1) evidence satisfactory to them of the loss, destruction or taking; (2) an indemnity bond satisfactory to them; and (3) payment of a sum sufficient to cover their expenses and any taxes for replacing the Security. Every replacement Security is an additional obligation of the Company. SECTION 2.08. OUTSTANDING SECURITIES. The Securities outstanding at any time are all the Securities authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, and those described in this Section as not outstanding. If a Security is replaced pursuant to Section 2.07 above, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If Securities are considered paid under Section 4.01 hereof, they cease to be outstanding and interest on them ceases to accrue. A Security does not cease to be outstanding because the Company or an Affiliate holds the Security. 5 SECTION 2.09. TREASURY SECURITIES. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or an Affiliate shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. SECTION 2.10. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities. SECTION 2.11. CANCELLATION. The Company at any time may deliver Securities to the Registrar for cancellation. The Transfer Agent and Paying Agent shall forward to the Registrar any Securities surrendered to them for registration of transfer, exchange or payment. The Registrar shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and shall dispose of cancelled Securities as the Company directs. The Company may not issue new Securities to replace Securities that it has paid or delivered to the Registrar for cancellation. SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest in any lawful manner. It may pay the defaulted interest, plus any interest payable on the defaulted interest, to the persons who are Securityholders on a subsequent special record date. The Trustee shall fix the record date and payment date. At least 15 days before the record date, the Trustee shall mail to Securityholders a notice that states the record date, payment date and amount of interest to be paid. ARTICLE 3 REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Company wants to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee of the redemption date and the principal amount of Securities to be redeemed. If the Company is required to redeem Securities pursuant to Section 3.07 below and paragraph 6 of the Securities, it shall notify the Trustee of the principal amount of Securities to be redeemed. The Company's notice shall specify the paragraph of the Securities pursuant to which it wants to redeem Securities. The Company shall give each notice provided for in this Section at least 75 days before the redemption date unless a shorter notice is satisfactory to the Trustee. SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed in the inverse order of aggregate principal amount of each 6 Security outstanding. In the event that some but not all Securities of equal principal amount are to redeemed, such redemption shall be pro rata of all such Securities of equal principal amount outstanding. The Trustee shall make the selection not more than 75 days before the redemption date from Securities outstanding not previously called for redemption. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a redemption date, the Trustee shall mail a notice of redemption by first-class mail to each Holder whose Securities are to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; and (5) that interest on Securities called for redemption ceases to accrue on and after the redemption date. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is given, Securities called for redemption become due and payable on the redemption date at the redemption price. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or before the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date. The Paying Agent shall return to the Company any money not required for that purpose. SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a Security that is redeemed in part, the Company shall deliver the Holder a new Security equal in principal amount to the unredeemed portion of the Security surrendered. SECTION 3.07. MANDATORY REDEMPTION. If at any time the cumulative amount on deposit in the Asset Sale Account and not to be used for the redemption of the Securities pursuant to this Section 3.07 as specified in a notice previously filed with the Trustee by the Company pursuant to Section 3.01 above, equals or exceeds $10 million, the Company shall redeem the maximum principal amount of Securities that, together with accrued and unpaid interest thereon, may be redeemed out of such Net Proceeds at an redemption price equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for such redemption. Notice of such redemption will be governed by Section 3.07 hereof. 7 SECTION 3.08. INVESTMENT OF ASSET ACCOUNT. Pending application thereof to the redemption of the Securities, amounts in the Asset Sales Account shall be invested in U.S. government obligations. At such time as there are no Securities outstanding, the Trustee shall pay over to the Company any remaining balances in the Asset Sale Account. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF SECURITIES. The Company shall pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities. Principal and interest shall be considered paid on the date due if the Paying Agent holds on that date money sufficient to pay all principal and interest then due. The Company shall pay a default rate of interest on overdue principal at the rate borne by the Securities plus 3%; it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 4.02. SEC REPORTS. The Company shall file with the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"). The Company shall provide to each Holder within 15 days after it files them with the SEC copies of the annual reports and quarterly reports that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall comply with the other provisions of TIA Section 314(a). SECTION 4.03. COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating whether or not the signers know of any Default that occurred during the fiscal year. If they do, the certificate shall describe the Default and its status. The certificate need not comply with Section 10.05 hereof. SECTION 4.04. ASSET SALE ACCOUNT. The Company shall deposit all Net Proceeds in the Asset Sale Account within five (5) days after receipt of same. In addition, the Company shall transfer to the Asset Sale Account any cash proceeds held in Star Bank Account #19-0170A (if such account does not become the Asset Sale Account) as of the Issue Date. ARTICLE 5 SUCCESSORS SECTION 5.01. WHEN COMPANY MAY MERGE, ETC. The Company shall not consolidate or merge into, or transfer or lease all or substantially all of its assets to, any person unless: (1) the person is a corporation; (2) the person assumes by supplemental indenture all the obligations of the Company under the Securities and this Indenture; 8 and (3) immediately after the transaction no Default exists. The successor shall be substituted for the Company, and thereafter all obligations of the Company under this Indenture and the Securities and shall terminate. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (1) the Company fails to make a deposit for the payment of interest on any Security when the same becomes due and payable and the Default continues for a period of five (5) business days; (2) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at maturity, upon redemption, acceleration or otherwise, or the Company defaults in payment of the Net Proceeds required by Section 4.04 hereof; (3) the Company fails to comply with any of its other agreements in the Securities or this Indenture and the Default continues for 30 days after notice either from the Trustee or the Holders of at least 25% in principal amount of the Securities, which notice must specify the Default, demand that it be remedied, and state that the notice is a "Notice of Default," and which notice, if sent by the Holders, shall also be served on the Trustee; (4) the Company pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or (5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian of the Company or for all or substantially all of its property, or (C) orders the liquidation of the Company, and the order or decree remains unstayed and in effect for 60 days. 9 The term "Bankruptcy Law" means title 11, U.S. Code, or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. SECTION 6.02. ACCELERATION. If an Event of Default occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Securities by notice to the Company and the Trustee, may declare the principal of and accrued interest on all the Securities to be due and payable. Upon such declaration the principal and interest shall be due and payable immediately. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in principal amount of the Securities by notice to the Trustee may waive an existing Default and its consequences, except a Default in the payment of the principal of or interest on any Security or a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or is unduly prejudicial to the rights of other Securityholders. SECTION 6.06. LIMITATION ON SUITS. A Securityholder may pursue a remedy with respect to this Indenture or the Securities only if: (1) the Holder gives to the Trustee notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the Securities make a request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; and 10 (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of principal and interest on the Security, on or after the respective due dates expressed in the Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(1) or (2) above occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest remaining unpaid. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 7.07 below; Second: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and Third: to the Company. The Trustee may fix a record date and payment date for any payment to Securityholders. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a 11 Holder pursuant to Section 6.07 above, or a suit by Holders of more than 10% in principal amount of the Securities. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith and in accordance with a direction received by it pursuant to Section 6.05 above. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) Subject to paragraph (c) of this Section, the Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02. RIGHTS OF TRUSTEE. 12 (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Sections 7.10 and 7.11 below. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Securityholders a notice of the Default within 90 days after it occurs. Except in the case of a Default in payment on any Security, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Any report required by TIA Section 313(a) to be mailed to Securityholders shall be mailed by the Trustee on or before May 31 of each year. The Trustee also shall comply with TIA Section 313(b)(2). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company shall notify the Trustee when the Securities are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and out-of-pocket expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any loss or liability incurred by it. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim, and the Trustee shall cooperate in the defense. The Trustee may have separate counsel, and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent. 13 The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(4) or (5) above occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and the Company. The Company may remove the Trustee if: (1) the Trustee fails to comply with TIA Section 310(a) or Section 310(b) or with Section 7.10 below; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or public officer takes charge of the Trustee or its property; (4) the Trustee becomes incapable of acting; or (5) an event of the kind described in Section 6.01(4) or (5) occurs with respect to the Trustee. The Company also may remove the Trustee with cause if the Company so notifies the Trustee six months in advance and if no Default occurs during the six-month period. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with TIA Section 310(a) or Section 310(b) or with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the 14 resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07 above. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall always have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published report of condition. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed is subject to TIA Section 311(a) to the extent indicated. ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS. The Company may terminate all of its obligations under this Indenture if: (1) the Securities mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption; and (2) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations sufficient to pay principal and interest on the Securities to maturity or redemption, as the case may be. The Company may make the deposit only during the one-year period. However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 7.07, 7.08 and 8.03 hereof shall survive until the Securities are no longer outstanding. Thereafter, the Company's obligations in Sections 7.07 and 8.03 hereof shall survive. After a deposit the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified above. In order to have money available on a payment date to pay principal or interest on the Securities, the U.S. Government Obligations shall be payable as to principal or interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the Company's option. "U.S. Government Obligations" means direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged. 15 SECTION 8.02. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 8.01 above. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Securities. SECTION 8.03. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years. After payment to the Company, Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. ARTICLE 9 AMENDMENTS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may amend this Indenture or the Securities without the consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 5.01 above; (3) to provide for uncertificated Securities in addition to certificated Securities; or (4) to make any change that does not adversely affect the rights of any Securityholder. SECTION 9.02. WITH CONSENT OF HOLDERS. The Company and the Trustee may amend this Indenture or the Securities with the written consent of the Holders of at least a majority in principal amount of the Securities. However, without the consent of each Securityholder affected, an amendment under this Section may not: (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of or change the time for payment of interest on any Security; (3) reduce the principal of or change the fixed maturity of any Security; 16 (4) make any Security payable in money other than that stated in the Security; or (5) make any change in Section 3.02, 3.07, 4.04, 6.04, 6.07 or 9.02 (second sentence) hereof; or (6) create a privilege or priority of any Security over another Security. After an amendment under this Section becomes effective, the Trustee shall mail to Securityholders a notice briefly describing the amendment. Securityholders need not consent to the exact text of a proposed amendment or waiver; it is sufficient if they consent to the substance thereof. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Securities shall be set forth in a supplemental indenture that complies with the TIA as then in effect. If a provision of the TIA requires or permits a provision of this Indenture and the TIA provision is amended, then the Indenture provision shall be automatically amended to like effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment or waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Securityholder. SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. The Trustee may place an appropriate notation about an amendment or waiver on any Security thereafter authenticated. The Company in exchange for all Securities may issue and the Trustee shall authenticate new Securities that reflect the amendment or waiver. SECTION 9.06. TRUSTEE PROTECTED. The Trustee need not sign any supplemental indenture that adversely affects its rights. ARTICLE 10 MISCELLANEOUS SECTION 10.01. TRUST INDENTURE ACT CONTROLS. The provisions of TIA Section Sections 310 through 317 that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. 17 SECTION 10.02. NOTICES. Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person, sent by facsimile transmission and confirmed by mail or mailed by first-class mail to the other's address stated in Section 10.10 below. The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication to a Securityholder shall be mailed by first-class mail to his address shown on the register kept by the Transfer Agent. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time. If in the Company's opinion it is impractical to mail a notice required to be mailed or to publish a notice required to be published, the Company may give such substitute notice as the Trustee approves. Failure to publish a notice as required or any defect in it shall not affect the sufficiency of any mailed notice. All other notices or communications shall be in writing. SECTION 10.03. COMMUNICATION BY HOLDERS AND OTHER HOLDERS. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar, the Transfer Agent and anyone else shall have the protection of TIA Section 312(c) SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 18 (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. SECTION 10.06. RULES BY COMPANY AND AGENTS. The Company may make reasonable rules for action by or a meeting of Securityholders. Any Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 10.07. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions are not required to be open in Cincinnati, Ohio. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 10.08. NO RECOURSE AGAINST OTHERS. All liability described in the Securities of any director, officer, employee or stockholder, as such, of the Company is waived and released. SECTION 10.09. DUPLICATE ORIGINALS. The parties may sign any number of copies of this Indenture. One signed copy is enough to prove this Indenture. SECTION 10.10. VARIABLE PROVISIONS. "Officer" means President, any Vice-President, the Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary of the Company. The Trustee initially appoints [ ] as authenticating agent. The Company initially appoints the Trustee as Paying Agent, Transfer Agent and Registrar. The first certificate pursuant to Section hereof 4.03 shall be for the fiscal year ending on , 19 . The Company's address is: Eagle-Picher Industries, Inc., Attention: Treasurer If by Hand or Overnight Delivery: 580 Building 580 Walnut Street Suite 1300 Cincinnati, Ohio 45202 If by Mail: Post Office Box 779 Cincinnati, Ohio 45201 The Trustee's address is: [ ] [ ] [ ] 19 SECTION 10.11. GOVERNING LAW. The law of the State of New York shall govern this Indenture and the Securities. SIGNATURES Dated: EAGLE-PICHER INDUSTRIES, INC. By Attest: Secretary (SEAL) Dated: By Trust Officer Attest: Assistant Secretary (SEAL) EXHIBIT A (Face of Security) THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. 20 No. $ EAGLE-PICHER INDUSTRIES, INC. promises to pay to , or registered assigns, the principal sum of Dollars on [____]% Senior Unsecured Divestiture Notes Due _____ Interest Payment Dates: Record Dates: Dated: Authenticated: [ ] EAGLE-PICHER INDUSTRIES, INC. as Trustee By By Authorized Officer (Back of Security) EAGLE-PICHER INDUSTRIES, INC. [____]% Senior Unsecured Divestiture Notes Due _____ 1. Interest. Eagle-Picher Industries, Inc. (the "Company"), an Ohio corporation, promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semiannually on and of each year, commencing at least six months after the Effective Date or if any such day is not a Business Day on the next succeeding Business Day (each an "Interest Payment Date") to Holders of record of the Securities at the close of business on the immediately preceding [ ] and [ ], whether or not a Business Day. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from . Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Paying Agent will pay interest on the Securities (except defaulted interest) to the persons who are registered holders of Securities at the close of business on the record date for the next interest payment date even though Securities are cancelled after the record 21 date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Paying Agent will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Paying Agent may pay principal and interest by check payable in such money. It may mail an interest check to a holder's registered address; provided however, the Paying Agent shall make payments to a registered holder of Securities in the aggregate principal amount greater than $500,000.00 by wire transfer if such registered holder has on or before the record date for such payment provided the Paying Agent with wire transfer instructions. 3. Transfer Agent, Paying Agent and Registrar. Initially, [ ] (the "Trustee"), will act as Transfer Agent, Paying Agent and Registrar. The Company may change any Agent without notice. The Company may act as Transfer Agent. 4. Indenture. The Company issued the Securities under an Indenture dated as of [the Effective Date] (the "Indenture") between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Section Sections 77aaa-77bbbb) as in effect on the date of the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of such terms. The Securities are unsecured general obligations of the Company limited to $50,000,000 in aggregate principal amount. 5. Optional Redemption. The Company may redeem all Securities at any time or some of them from time to time upon not less than 30 nor more than 60 days' notice, at par plus accrued and unpaid interest thereon to the applicable redemption date. 6. Mandatory Redemption. If at any time the cumulative amount of Net Proceeds on deposit in the Asset Sale Account and not to be used for the redemption of Securities pursuant to Section 3.07 of the Indenture equals or exceeds $10 million, the Company shall redeem the maximum principal amount of Securities that, together with accrued and unpaid interest thereon, may be redeemed out of such Net Proceeds at 100% of the outstanding principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for such redemption. Unless such Net Proceeds are sufficient to redeem all the outstanding Securities, the aggregate principal amount of Securities to be redeemed shall be selected by the Trustee in the inverse order of aggregate principal amount of each Security outstanding. In the event that some but not all Securities of equal principal amount are to redeemed, such redemption shall be pro rata of all such Securities of equal principal amount outstanding. 7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of Securities to be redeemed at his registered address. On and after the redemption date interest ceases to accrue on Securities or portions of them called for redemption. 8. Transfer, Exchange. The transfer of Securities may be registered, and Securities may be exchanged, as provided in the Indenture. The Transfer Agent may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Transfer Agent need not exchange or 22 register the transfer of any Security or portion of a Security selected for redemption. Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed. 9. Persons Deemed Owners. The registered holder of a Security may be treated as its owner for all purposes. 10. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the holders of at least 51% in principal amount of the Securities, and any existing default may be waived with the consent of the holders of a majority in principal amount of the Securities. Without the consent of any Securityholder, the Indenture or the Securities may be amended to cure any ambiguity, defect or inconsistency, to provide for assumption of Company obligations to Securityholders or to make any change that does not adversely affect the rights of any Securityholder. 11. Defaults and Remedies. An Event of Default is: default for 5 business days in payment of interest on the Securities; default in payment of principal on them or in the payment of Net Proceeds required by Section 4.04 of the Indenture; failure by the Company for 30 days after notice to it to comply with any of its other agreements in the Indenture or the Securities; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 12. Trustee Dealings with Company. [ ], the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 13. No Recourse Against Others. A director, officer, employee or a stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities. 14. Authentication. This Security shall not be valid until authenticated by the manual signature of the Registrar or an authenticating agent. 15. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A 23 (= Uniform Gifts to Minors Act). THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE, WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: SECRETARY, EAGLE-PICHER INDUSTRIES, INC., POST OFFICE BOX 779, CINCINNATI, OHIO 45201. 24 ASSIGNMENT FORM To assign this Security, fill in the form below: I/we assign and transfer this Security to: - ------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint - -------------------------------------------------------- - ------------------------------------------------------------------------------- agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. 25 Date: ____________________________ Your Signature: ------------------------------------------------------------- (Sign exactly as your name appears on the other side of this Security) ================================================================================ 26 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- EXHIBIT "1.1.82" FORM OF INTER-MARKET NOTE [THIS PAGE LEFT BLANK INTENTIONALLY] [INTER-MARKET NOTE SECURED CLAIM] SECURED NOTE AND SECURITY AGREEMENT THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN VIOLATION OF SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER. 10% Secured Installment Note EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company"), for value received, hereby promises to pay to COMAC PARTNERS, L.P. AND COMAC INTERNATIONAL N.V. or registered assigns (collectively, the "Payee"), on or before June 1, 2001 (the "Maturity Date"), as hereinafter provided, the principal sum of [___________________________________ (_____________)] and to pay interest on the unpaid principal amount thereof from the date hereof to maturity at the rate of 10% per annum computed as if each year consisted of 360 days and each month consisted of 30 days. Such principal and interest shall be payable without presentation of this Note, by bank wire transfer of Federal or other immediately available funds (identifying each payment as Eagle-Picher Industries, Inc. 10% Secured Installment Note due 2001, principal or interest) to the Payee pursuant to instructions provided by the Payee to the Company from time to time in _________ (__) consecutive payments of principal and interest, in the respective amounts of and payable on the dates indicated in the schedule annexed hereto as Schedule A (collectively, the "Installment Payments"). The first of the Installment Payments will be made on [the first Business Day of the second month following the date of the issuance of the Note]. Whenever any Installment Payment is not made when due and such default shall continue for more than ten (10) days, the Company shall pay interest on such amount at a rate equal to th e lesser of (a) 12% per annum or (b) the maximum rate allowed by law. Each Installment Payment, when paid, shall be applied first to the payment of all interest accrued and unpaid on this Note and then to payment on account of the principal hereof. SECTION 1. The following terms have the following meanings when used in this Note: "Business Day" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Cincinnati, Ohio are authorized or required by law to close. "COLLATERAL" shall have the meaning set forth in Section 3 hereof. "Company" shall have the meaning set forth in the opening paragraph of this Note. "CONSOLIDATED NET WORTH" of any corporation shall mean, at any date, the sum of the capital stock (excluding treasury stock and capital stock subscribed and unissued) and surplus (including retained earnings, additional paid-in capital and the balance of the current profit and loss account not transferred to surplus) of such corporation and its Subsidiaries, consolidated in accordance with generally accepted accounting principles. "MATURITY DATE" shall have the meaning set forth in the opening paragraph of this Note. "NOTES" shall have the meaning set forth in Section 12 hereof. "Officers' Certificate" shall mean a certificate signed on behalf of the Company by its President or one of its Vice Presidents and its Treasurer or one of its Assistant Treasurers. "Payee" shall have the meaning set forth in the opening paragraph of this Note. "PERSON" shall mean an individual or corporation, a partnership or joint venture, a business, a trust, an unincorporated organization or a government or any agency or political subdivision thereof. "PREPAYMENT OFFER" shall have the meaning specified in Section 2. "Subsidiary" of any corporation shall mean any Person a majority (by number of votes) of the Voting Stock of which is owned by such corporation or by one or more Subsidiaries or by such corporation and one or more Subsidiaries. "Voting Stock", when used with reference to any corporation, shall mean shares (however designated) of such corporation having ordinary voting power for 2 the election of a majority of the members of the board of directors (or other governing body) of such corporation other than shares having such power only by reason of the happening of a contingency. SECTION 2. Principal Payments. (a) Scheduled Payment. On the Maturity Date, the Company shall pay to the Payee, in cash or other immediately available funds, the entire unpaid principal amount of this Note plus all accrued and unpaid interest thereon. (b) Mandatory Prepayment. In the event of condemnation or of destruction by fire or other casualty of substantially all of the Collateral, the Note shall be prepaid in full (but not in part) at a price equal to 100% of the then outstanding principal amount of the Note, together with all interest then accrued and unpaid thereon, but without any prepayment penalty or premium. (c) Optional Prepayment. The Company may, at any time and from time to time, without premium or penalty, prepay (in multiples of $1,000) all or a portion of the unpaid principal amount of this Note or all or a portion of accrued and unpaid interest, together with unpaid accrued interest on the amount so prepaid to the date chosen for prepayment, payable in cash or other immediately available funds. The Company shall give written notice of prepayment of this Note or any portion hereof not less than 10 but not more than 30 days prior to the date chosen for prepayment, which notice shall specify the amount thereof to be prepaid and the date fixed for prepayment. (d) OFFER TO PREPAY IN THE EVENT OF CERTAIN TRANSACTIONS. In the event that: (a) the Company shall take any action looking to any merger, consolidation or other reorganization of the Company or any sale of all or substantially all of its assets; or (b) any Person or any group of Persons acting together, other than the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, shall acquire twenty percent or more of the outstanding Voting Stock of the Company; and the effect of such transaction described in the foregoing clause (a) or (b) either in and of itself or together with any other transactions effected in connection therewith or in response thereto, is or would be to reduce the Consolidated Net Worth of the Company to an amount which is less than 66 2/3% of the amount of the Consolidated Net Worth of the Company as of the end of the 3 fiscal year of the Company next preceding such transaction, as shown on the financial statements for such fiscal year, the Company shall offer to prepay the Note without premium (any such offer being hereinafter referred to as a "Prepayment Offer"). Such Prepayment Offer shall be made in writing to the holder of the Note not less than 30 nor more than 60 days prior to the date of such proposed transaction. In the event that the holder of the Note has not accepted such Prepayment Offer in writing within 20 days after such Prepayment Offer is made, the holder of the Note shall be deemed to have declined such Prepayment Offer. Each prepayment under this section shall be made concurrently with the consummation of such proposed transaction. SECTION 3. Security. This Note is secured by the following property (collectively, the "Collateral"): (a) The equipment described in Schedule B hereto (whether or not constituting fixtures) and all additions and accessions thereto and substitutions therefor; (b) All books and records of the Company relating to any of the foregoing; and (c) All proceeds and products of any of the foregoing, including insurance payable by reason of loss or damage. The Company herewith confirms the grant of a security interest in the Collateral to the Payee. SECTION 4. Affirmative Covenants. For as long as any principal or interest remains unpaid under this Note: (a) FINANCIAL STATEMENTS. The Company shall deliver to the Payee promptly after the same are available, copies of (i) all such notices, proxy statements, financial statements, reports and documents as the Company shall send or make available generally to its stockholders and (ii) all periodic and special reports, documents and registration statements (other than on Form S-8) which the Company may furnish to or file with the Securities and Exchange Commission (or any governmental authority succeeding to any or all of its functions) or any securities exchange; (b) REPORTING REQUIREMENTS. The Company shall deliver to the Payee as promptly as practicable (but in any event not later than 5 days) after any officer of the Company obtains knowledge of the occurrence of any condition or 4 event which (i) in the operation or management of the Company would have a material adverse effect on the business, condition (financial or otherwise), operations, management or prospects of the Company and its Subsidiaries taken as a whole (other than any condition or event described in this paragraph, disclosure regarding which has been made in information previously provided to the Payee pursuant to paragraph (a) above) or (ii) constitutes or, after notice or lapse of time or both, would constitute an Event of Default, an Officers' Certificate specifying the nature of such condition or event, the period of existence thereof, what action the Company has taken and is taking and proposes to take with respect thereto and the date, if any, on which it is estimated the same will be remedied; and (c) such other information relating to the Company and its Subsidiaries as shall be furnished to any other institutional lender or as from time to time may reasonably be requested. (c) Special Covenants of Company. The Company hereby covenants to the Payee that: (i) The Company will not change its principal place of business or the location of the Collateral. The Company will not change its principal place of business or the location of the Collateral from those shown on Schedule B hereto, without at least thirty (30) days' prior written notice to the Payee. (ii) The Company will defend its ownership of the Collateral free from any lien, security interest or encumbrance except for the security interest hereunder against all claims and demands of all persons at any time claiming the same or any interest therein. (iii) The Company will not sell or otherwise dispose of the Collateral or any interest therein nor will the Company create, incur or permit to exist any mortgage, lien, charge, encumbrance or security interest whatsoever with respect to the Collateral. (iv) The Company will keep the Collateral in good order and repair and adequately insured at all times against loss or damage of the kinds customarily insured against by corporations of established reputation engaged in the same or similar business and similarly situated. Each insurance policy pertaining to any of the Collateral shall: (a) name the Payee as insured pursuant to a so-called "standard mortgagee clause"; (b) provide that no action of the Company or any tenant or sub-tenant shall void such policy as to the Payee; and (c) provide that the Payee shall be notified of any 5 proposed cancellation of such policy at least 30 days in advance of such proposed cancellation and will have sufficient time to correct any deficiencies justifying such proposed cancellation. All such policies shall be delivered to the Payee upon request. The Company will pay promptly when due all taxes and assessments on the Collateral or for its use or operation. The Payee may at its option discharge any taxes, liens, security interests or other encumbrances to which any Collateral is at any time subject, and may, upon the failure of the Company so to do, purchase insurance on any Collateral and pay for the repair, maintenance or preservation thereof, and the Company agrees to reimburse the Payee on demand for any payments or expenses incurred by the Payee pursuant to the foregoing authorization, and any unreimbursed amounts shall constitute secured obligations for all purposes hereof. (d) Further Assurances. (i) The Company will promptly execute and deliver to the Payee such financing statements, certificates and other documents or instruments as may be necessary to enable the Payee to perfect or from time to time renew the security interest granted hereby, including, without limitation, such financing statements, certificates and other documents as may be necessary to perfect a security interest in any additional Collateral hereafter acquired by the Company or in any replacements or proceeds thereof. The Company authorizes and appoints the Payee, in case of need, to execute such financing statements, certificates and other documents in its stead, with full power or substitution, as the Company's attorney in fact. The Company further agrees that a carbon, photographic or other reproduction of a security agreement or financing statement is sufficient as a financing statement under this Agreement. (ii) The Company will take all such reasonable action or actions as may be necessary to prevent any of the Collateral from becoming fixtures. Without limiting the generality of the foregoing, the Company will use its best efforts to obtain waivers of lien, in form satisfactory to the Payee, from each lessor of real property on which any of the Collateral is to be located. 6 SECTION 5. EVENTS OF DEFAULT. (a) Each of the following shall be an Event of Default: (i) If default shall be made in the payment of any installment of principal and interest due from the Company under the Note when and as the same shall become due and payable, whether at maturity or by acceleration or prepayment or otherwise, and such default shall continue for more than five (5) days; (ii) If there shall be default in the due observance or performance of any other provision of this Note and such default shall continue for more than thirty (30) days after the earlier to occur of (i) the Company's obtaining actual knowledge of such default or (ii) the Company's receipt of written notice of such default; (iii) If the Company attempts to remove, sell, transfer, encumber, sublet or part with possession of the Collateral or any part thereof, or permits any other Person to take any such action, except as expressly permitted herein; (iv) If, unless specifically permitted by the terms hereof, the Company ceases doing business as a going concern, makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts as they become due, files a voluntary petition in bankruptcy, is adjudicated a bankrupt or an insolvent, files a petition seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar arrangement under any present or future statute, law or regulation, or files an answer admitting the material allegations of a petition filed against it in any such proceeding, consents to, or acquiesces in the appointment of, a trustee, receiver, or liquidator of it or of all or any substantial part of its assets or properties, or if it or its shareholders shall take any action looking to its dissolution or liquidation; or (v) If within sixty (60) days after the commencement of any proceedings against the Company seeking reorganization, arrangement, readjustment, liquidation, 7 dissolution or similar relief under any present or future statute, law or regulation, such proceedings shall not have been dismissed, or if within sixty (60) days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of either of them or of all or any substantial part of their respective assets and properties, such appointment shall not be vacated. (b) Upon the occurrence and during the continuance of any Event of Default described in Section 5(a) hereof other than in clause (iv) or (v) thereof, the holders of a majority of the outstanding principal amount of the Notes may, by written notice to the Company, declare all or any portion of the unpaid principal amount of the Notes and all interest accrued thereon to be immediately due and payable. Upon the occurrence and during the continuance of any Event of Default described in clauses (iv) or (v) of Section 5(a) hereof, the unpaid principal amount of the Notes and all interest accrued thereon, shall automatically become due and payable, without any action or notice by the Payee. Demand, presentment, protest and notice of non-payment are hereby waived by the Company. All payments made following an Event of Default shall be applied first to payment of all accrued and unpaid interest and then to principal. (c) In addition, upon the occurrence and during the continuance of an Event of Default described in Section 5(a), the Payee may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a Secured Party on default under the Uniform Commercial Code (the "Code") and other applicable laws and agreements and also shall have the right to take possession of the Collateral and, in addition thereto, the right to enter upon any premises on which the Collateral or any part thereof may be situated and remove the same therefrom. The Payee may require the Company to make the Collateral (to the extent the same is moveable) available to the Payee at a place to be designated by the Payee which is reasonably convenient to both parties. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Payee will give the Company at least ten (10) days' prior written notice at the address of the Company set forth below (or at such other address or addresses as the Company shall specify in writing to the Payee) of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. Any such notice shall be deemed to meet any requirement hereunder or under any applicable law (including the Uniform Commercial Code) that reasonable notification be given of the time and place of such sale or other disposition. After deducting all costs and expenses of collection, storage, custody, sale or other disposition and delivery (including legal costs and attorneys' fees) and all other charges against the Collateral, the residue of the proceeds of any such sale or disposition shall be applied to the payment of the Note and, unless otherwise provided by law or by a court of competent 8 jurisdiction, any surplus shall be returned to the Company or to any person or party lawfully entitled thereto (including, if applicable, any subordinated creditors of the Company). In the event the proceeds of any sale, lease or other disposition of the Collateral hereunder are insufficient to pay the Note in full, the Company will be liable for the deficiency, together with interest thereon at the maximum rate provided in the Note, and the cost and expenses of collection of such deficiency, including (to the extent permitted by law), without limitation, reasonable attorneys' fees, expenses and disbursements. The Payee, may, at its option, take control of any and all proceeds to which it is entitled under Section 9-306 of the Uniform Commercial Code, and the Company agrees to cooperate fully in executing any commercially reasonable direction made in the exercise of this right. SECTION 6. ENTIRE AGREEMENT; NO ORAL CHANGE. This Note embodies the entire agreement and understanding between the Payee and the Company relating to the subject matter hereof, and supersedes all prior agreements and understandings relating thereto. None of the provisions hereof may be waived, altered or amended, except by a written instrument signed by the holders of a majority of the outstanding principal amount of the Notes and by the Company. In the case of any waiver, the Company and the holders of a majority of the outstanding principal amount of the Notes shall be restored to their former respective positions and rights hereunder and any Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon except to the extent expressly provided in such waiver. SECTION 7. REMEDIES CUMULATIVE. No failure to exercise or delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 8. Notices. Any notices or other communications required or permitted hereunder shall be given in writing and personally delivered with receipt acknowledged or mailed, postage prepaid, via registered mail, return 9 receipt requested, if to the Payee, at its address notified in writing by the Payee to the Company, and if to the Company, addressed to the Treasurer of the Company at the Company's address at P.O. Box 779, Cincinnati, Ohio 45201 (if by mail) or 580 Walnut Street, Suite 1300, Cincinnati, Ohio 45202 (if personally delivered), or any other address notified in writing by the Company to the Payee. Any notice given in conformity with the foregoing shall be deemed given when personally delivered or upon the date of delivery specified in the registered mail receipt. SECTION 9. GOVERNING LAW. This Note shall be governed by, and construed and enforced in accordance with, the law of the State of Connecticut. SECTION 10. CONSENT TO JURISDICTION. Any legal action or proceeding with respect to this Note shall be brought in the courts of the State of Connecticut or in the courts of the United States of America sitting in the State of Connecticut. The Company hereby waives to the fullest extent permitted by law any objection it may now or hereafter have to the laying of venue in any such action or proceeding in any such court as well as any right it may now or hereafter have to remove any such action or proceeding, once commenced, to another court on the grounds of forum non conveniens or otherwise or to remove an action brought in a state court to a court of the United States of America. The Company hereby irrevocably agrees that service of process in any such action or proceeding may be made either by mailing or delivering a copy of the summons and complaint in any such action or proceeding to the Company at the address provided herein by certified mail, return receipt requested. Service of process in any such action or proceeding, effected as aforesaid, shall be deemed personal service upon the Company and shall be legal and binding upon the Company for all purposes notwithstanding any failure on the part of the Company to receive copies of such process mailed directly to the Company in accordance with the provisions of this Section. SECTION 11. COSTS OF COLLECTION. If the Payee is required to commence suit to recover any amount due under this Note following an Event of Default, the Payee shall be entitled to collect from the Company reimbursement of such reasonable attorneys' fees and expenses of counsel selected by the Payee. SECTION 12. SUCCESSORS AND ASSIGNS; TRANSFERABILITY. This Note shall be binding upon and inure to the benefit of the Payee and the Company and their respective transferees, successors and assigns; provided, however, that the Company may not transfer or assign any of its rights or obligations hereunder without the prior written consent of the Payee. Within five (5) Business Days 10 after receipt of notice of any assignment by the Payee to any person or entity (an "Assignee") of all or any part of this Note, the Company shall execute and deliver to such Assignee, in exchange for the surrendered Note, a new Note to the order of such Assignee in an amount equal to the amount of this Note assigned to it, and if the Payee has retained any amount owing to it hereunder, a new Note to the order of the Payee in an amount equal to the amount retained by it hereunder, which new Note shall be dated the same date as the surrendered Note and be in substantially the form of this Note, and such Assignee will be deemed the Payee under the Note issued to it. References herein to "Notes" shall include all outstanding Notes issued in substitution for or upon any assignment of this Note. SECTION 13. No Set-Off. The obligations of the Company under this Note are absolute and not subject to any right of set-off, counterclaim, recoupment or defenses against the Payee of any kind whatsoever. SECTION 14. MISCELLANEOUS. The headings of the sections of this Note have been inserted for convenience and shall not modify, define, limit or expand the express provisions of this Note. IN WITNESS WHEREOF, the Company has duly executed this Note this ____ day of __________________, 1996. EAGLE-PICHER INDUSTRIES, INC. By: ------------------------------ SCHEDULE A Installment Payment Schedule 11 SCHEDULE B Collateral 12 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- EXHIBIT "1.1.94" FORM OF NORTHWESTERN GROUP NOTE [THIS PAGE LEFT BLANK INTENTIONALLY] [NORTHWESTERN GROUP SECURED CLAIMS] SECURED NOTE AND SECURITY AGREEMENT THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN VIOLATION OF SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER. 10% Secured Installment Note EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company"), for value received, hereby promises to pay to COMAC PARTNERS L.P. and COMAC INTERNATIONAL N.V., or registered assigns (collectively, the "Payee"), on or before May 1, 2001 (the "Maturity Date"), as hereinafter provided, the principal sum of [__________________________________ (_____________)] and to pay interest on the unpaid principal amount thereof from the date hereof to maturity at the rate of 10% per annum computed as if each year consisted of 360 days and each month consisted of 30 days. Such principal and interest shall be payable without presentation of this Note, by bank wire transfer of Federal or other immediately available funds (identifying each payment as Eagle-Picher Industries, Inc. 10% Secured Installment Note due 2001, principal or interest) to the Payee pursuant to instructions provided by the Payee to the Company from time to time, in ___________________ (___) consecutive payments of principal and interest, in the respective amounts of and payable on the dates indicated in the schedule annexed hereto as Schedule A (collectively, the "Installment Payments"). The first of the Installment Payments will be made on [the first Business Day of the second month following issuance of the Note]. Whenever any Installment Payment is not made when due and such default shall continue for more than ten (10) days, the Company shall pay interest on such amount at a rate equal to the lesser of (a) 12% per annum or (b) the maximum rate allowed by law. Each Installment Payment, when paid, shall be applied first to the payment of all interest accrued and unpaid on this Note and then to payment on account of the principal hereof. SECTION 1. The following terms have the following meanings when used in this Note: "Business Day" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Cincinnati, Ohio are authorized or required by law to close. "COLLATERAL" shall have the meaning set forth in Section 3 hereof. "Company" shall have the meaning set forth in the opening paragraph of this Note. "MATURITY DATE" shall have the meaning set forth in the opening paragraph of this Note. "Payee" shall have the meaning set forth in the opening paragraph of this Note. SECTION 2. PRINCIPAL PAYMENTS. (a) SCHEDULED PAYMENT. On the Maturity Date, the Company shall pay to the Payee, in cash or other immediately available funds, the entire unpaid principal amount of this Note plus all accrued and unpaid interest thereon. (b) PREPAYMENT UPON CONDEMNATION OR DESTRUCTION. In the event of condemnation or of destruction by fire or other casualty of the Collateral, the Note may be prepaid in an amount equal to the value of the Collateral so condemned or destroyed, together with all interest then accrued and unpaid thereon, but without any prepayment penalty or premium. (c) Optional Prepayment. This Note may be prepaid at any time in full (but not in part) at a price equal to 100% of the then outstanding principal amount of this Note, together with all interest then accrued and unpaid thereon, but without any prepayment penalty or premium. SECTION 3. SECURITY. This Note is secured by the following property (collectively, the "Collateral"): (a) The equipment described in Schedule B hereto (whether or not constituting fixtures) and all additions and accessions thereto and substitutions therefor; (b) All books and records of the Company relating to any of the foregoing; and (c) All proceeds and products of any of the foregoing, including insurance payable by reason of loss or damage. 2 The Company herewith confirms the grant of a security interest in the Collateral to the Payee. As security for this Note, the Company will maintain an existing first lien in favor of the Payee on the Collateral. SECTION 4. Affirmative Covenants. For as long as any principal or interest remains unpaid under this Note, the Company hereby covenants that, unless the Payee shall otherwise consent in writing: (a) The Company shall deliver to the Payee (i) a consolidated balance sheet, income statement, and cash flow statement of the Company within 60 days after the close of each fiscal quarter other than the last fiscal quarter of the fiscal year and (ii) an audited consolidated balance sheet, income statement, and cash flow statement of the Company certified by an independent certified public accountant of recognized standing and suitable to the Payee within 90 days after the close of each fiscal year. All such financial statements will be prepared in accordance with generally accepted accounting principles consistently applied. All statements will be in the same form as those provided to creditors and shareholders of the Company generally. The Company will also furnish to the Payee promptly copies of any Forms 10-Q, 10-K and 8-K that are filed with the Securities and Exchange Commission as well as copies of any other special mailings to shareholders. (b) The Company will not dispose of all or substantially all of its assets or such other portion of its assets as to materially adversely affect the Company's ability to conduct its business as presently conducted. (c) The Company shall not enter into any merger or consolidation with any other entity nor may any subsidiary of the Company enter into any merger or consolidation with the Company unless (i) the Company is the survivor and (ii) there exists no event which with or without the passing of time or giving of notice, or both, would constitute an event of default hereunder. (d) The Company shall furnish to the Payee: (i) as soon as possible and in any event within 10 days after becoming aware of the occurrence of any event of default as defined in Section 13 hereof, or any event that with notice or passage of time or both would, if unremedied, constitute an event of default, a 3 written statement of the chief executive officer, chief financial officer, or treasurer of the Company, setting forth details of such event of default or event, stating whether or not the same is continuing and, if so, the action that the Company proposes to take with respect thereto; (ii) immediately after receiving knowledge thereof, notice in writing of all actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that directly affect or affects the Company based on financial exposure to the Company of $25 million, or that directly affect or affects the Collateral or that seek or seeks injunctive relief that will materially adversely affect the operations of the Company or the Collateral; (iii) as soon as possible and in any event within 30 days after the Company knows or has reason to know that any Reportable Event has occurred with respect to any Plan (as such terms are used in the Employee Retirement Income Security Act of 1974), a written statement by the chief executive officer, chief financial officer, or treasurer of the Company setting forth details of the Reportable Event and indicating what action, if any, the Company proposes to take with respect thereto, together with a copy of any required notice of such Reportable Event to the Pension Benefit Guaranty Corporation; (iv) as soon as possible and in any event within 5 days after the Company becomes aware of the occurrence of a material adverse change in the business, properties or the operations and condition (financial or otherwise) of the Company, a statement by the chief executive officer, chief financial officer, or treasurer of the Company, setting forth details of such material adverse change and the action that the Company proposes to take with respect thereto, except as otherwise disclosed in public announcements of the Company issued in the ordinary course of business; and (v) such other information respecting the business, properties, condition and operations (financial or otherwise) of the Company as the Payee may from time to time reasonably request be furnished to the Payee. (e) The Company shall not enter into, or permit any subsidiary to enter into, any agreement containing any provision that would be violated or breached 4 by this Note or by the performance by the Company of its obligations in connection herewith. SECTION 5. FURTHER ASSURANCES. (a) The Company agrees that from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary or desirable, or that the Payee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby and the priority thereof or to enable the Payee to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, the Company will execute and file such financing or continuation statements or amendments thereto and such other instruments or notices as may be necessary or desirable or as the Payee may request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (b) The Company hereby authorizes the Payee to file one or more financing or continuation statements and amendments thereto relative to all or any part of the Collateral without the signature of the Company where permitted by law. A carbon, photographic or other reproduction of this Note or any part thereof shall be sufficient as a financing statement where permitted by law. (c) The Company will furnish to the Payee from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Payee may reasonably request, all in reasonable detail. SECTION 6. Insurance. The Company shall, at its own expense, maintain liability and property insurance with respect to its business and property, including the Collateral, with responsible and reputable insurance companies or associations satisfactory to the Payee in such amounts and covering such risks as are acceptable to or specified by the Payee, taking into account, among other factors, such amounts and risks as are usually carried by persons engaged in similar businesses and owning similar properties in the same general areas in which the Company operates. Each policy for liability insurance and property damage insurance shall provide for payment to or on behalf of the Company and the payee as their interests may appear. Each policy of property damage 5 insurance shall in addition (ii) name the Payee as an insured party thereunder (without any representation or warranty by or obligation upon the Payee), (iii) contain an agreement by the insurer that any loss thereunder shall be payable to or on behalf of the Company or the Payee as their interests may appear, (iv) provide that there shall be no recourse against the Payee for payment of premiums or other amounts with respect thereto, and (v) provide that at least 30 days' prior written notice of cancellation or of lapse shall be given to the Payee by the insurer. The Company shall deliver to the Payee certificates evidencing the insurance maintained pursuant hereto. SECTION 7. CERTAIN COVENANTS AS TO THE COLLATERAL. The Company shall: (a) Keep the Collateral at the places identified therefor on Schedule B hereto or, upon 15 days' prior written notice to the Payee, at such other places as shall be identified in such notice (such notice to identify the record owner of the new location) and which are in jurisdictions where all actions required by Section hereof shall have been taken with respect to such Collateral. (b) Cause the Collateral to be maintained and preserved in the same condition, repair, and working order as when new, ordinary wear and tear excepted, and, in the case of any loss or damage to the Collateral, as quickly as practicable after the occurrence thereof make or cause to be made all repairs, replacements, and other improvements in connection therewith which are necessary or desirable to such end, provided, however, that in the event of condemnation or of the destruction by fire or other casualty of the Collateral, the Company shall have the option to prepay the Note to the extent of the value of the Collateral so condemned or destroyed as provided in Section 2(b) hereof. (c) Pay promptly when due all property and other taxes, assessments, and governmental charges or levies imposed upon it, and all claims (including claims for labor, materials and supplies) against the Collateral. (d) After the occurrence and during the continuance of an Event of Default (as hereinafter defined), receive in trust for the benefit of the Payee all amounts and proceeds received or collected by the Company in respect of the Collateral, segregate such amounts and proceeds from other funds of the Company, and forthwith pay such amounts and proceeds over to the Payee in the same form 6 as so received (with any necessary endorsement) to be held as cash collateral and applied as provided in Section 13(b)(iii) hereof. SECTION 8. Substitution of Collateral; Liens. During the term of this Note: (a) The Company may substitute other equipment for the Collateral identified in Schedule B hereto provided, however, that the aggregate value of the Collateral remaining subject to the lien hereunder shall at all times be equal to or greater than the value of the Collateral identified in Schedule B as of the date of such substitution, such value to be determined by an independent appraisal provided at the Company's expense and satisfactory to the Payee. (b) The Company shall not create or suffer to exist any lien, security interest, or other charge or encumbrance upon or with respect to any of the Collateral. SECTION 9. PAYEE APPOINTED ATTORNEY-IN-FACT. The Company hereby irrevocably appoints the Payee as its attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company, the Payee, or otherwise, from time to time to take any action which may be reasonably necessary to protect the Payee's interest under this Note, including, without limitation: (a) to sign in the name and on behalf of the Company any financing statements or other papers required under Section hereof; (b) to obtain and adjust insurance required to be paid to the Payee pursuant to Section hereof; (c) to ask, demand, collect, sue for, recover, compound, receive, and give acquittance and receipts for moneys due and to become due in respect of any of the Collateral; (d) to receive, endorse, and collect any drafts or other instruments in connection with subsection (b) or (c) above; and (e) to file any claims or take any action or institute any proceedings that the Payee may deem necessary or desirable to enforce the respective rights of the Payee with respect to any of the Collateral. The Company hereby ratifies and approves all acts of the Payee as such attorney-in-fact. The Payee shall not, in its capacity as such attorney-in-fact, 7 be liable for any acts or omissions, nor for any error of judgment or mistake of fact or law, but only for gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until the Note shall have been fully satisfied. Any amounts received or collected by the Payee in its capacity as such attorney-in-fact shall be held as cash collateral and applied as provided in Section 13(b)(iii). SECTION 10. Payee May Perform. If the Company fails to perform any agreement contained herein, the Payee may itself perform, or cause performance of, such agreement, and the expenses of the Payee incurred in connection therewith shall be payable by the Company under Section hereof. SECTION 11. Payee's Duties. The powers conferred on the Payee hereunder are solely to protect its interests in the Collateral and shall not impose any duty to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by the Payee hereunder, the Payee shall not have any duty as to any Collateral or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. SECTION 12. Inspection Rights. The Payee, upon 24 hours' notice and during normal business hours, shall have access to inspect, audit, and make extracts from all of the Company's records, files, and books of account relating to the Collateral, and the Company shall deliver any document or instrument necessary for the Payee to obtain records from any service bureau maintaining records for the Company. The Payee may also, at all reasonable times, examine and inspect the Collateral. The Company shall, at the Payee's request, take all steps necessary to facilitate such inspection. SECTION 13. Events of Default. (a) Any of the following occurrences or acts shall constitute an Event of Default hereunder: (i) If default shall be made in the payment of any installment of principal and interest due from the Company under the Note when and as the same shall become due and payable, whether at maturity or by acceleration or prepayment or otherwise, and such default shall continue for more than ten (10) days; 8 (ii) If there shall be default in the due observance or performance of any other provision of this Note and such default shall continue for more than thirty (30) days after written notice thereof shall have been given by the Payee to the Company; (iii) If an event of default shall occur and continue with respect to any borrowing in excess of $5,000,000 by the Company, exclusive of any alleged event of default that is being contested in good faith by the Company; (iv) If the Company shall make an assignment for the benefit of its creditors or file a petition in bankruptcy or for reorganization or for an arrangement or any composition, readjustment, liquidation, dissolution or similar relief pursuant to the Bankruptcy Code or under any similar present or future federal or state law, or shall be adjudicated a bankrupt; (v) If a petition or answer shall be filed proposing the adjudication of the Company as a bankrupt or the reorganization or arrangement of it, or any composition, readjustment, liquidation, dissolution or similar relief with respect to it pursuant to the Bankruptcy Code or any similar present or future federal or state law, and the Company shall consent to the filing thereof, or such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof; or (vi) If a receiver, trustee or liquidator (or other similar official) of the Company, or of all or substantially all of the assets of the Company or any portion thereof shall be appointed and shall not be discharged within sixty (60) days thereafter, or if the Company shall consent to or acquiesce in such appointment. (b) If an Event of Default shall have occurred and be continuing: (i) The Payee may give notice to the Company declaring the entire unpaid principal amount of the Notes, together with all accrued interest accrued and other sums then owing under this Note, to be forthwith payable, and demanding that the same be paid, and thereupon all such amounts shall be forthwith payable, together with all costs and expenses of collection, notwithstanding any contrary provision contained in this Note, and institute proceedings for the collection of all amounts then payable on this Note, whether by declaration or otherwise, enforce any judgment obtained, and exercise such lawful 9 remedies as may be necessary or desirable for the enforcement of each of the Payee's rights hereunder. (ii) The Payee may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a Secured Party on default under the Uniform Commercial Code (the "Code") and other applicable laws and agreements and also may (i) require the Company to, and the Company hereby agrees that it will at its expense and upon request of the Payee forthwith, assemble the Collateral as directed by the Payee and make it available to the Payee at a place or places to be designated by the Payee, which is or are reasonably convenient to the Payee and the Company and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Payee's offices or elsewhere, for cash, on credit or for future delivery and upon such other terms as the Payee may deem commercially reasonable. The Company agrees that, to the extent notice of sale shall be required by law, at least five days' notice to the Company of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Payee shall not be obligated to make any sale of the Collateral regardless of notice of sale having been given. The Payee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor and such sale may, without further notice, be made at the time and place to which it was so adjourned. (iii) All cash proceeds received by the Payee in respect of any sale of, collection from or other realization upon all or any part of the Collateral may, in the discretion of the Payee, be held by the Payee (without interest) as collateral for and/or then or at any time thereafter applied in whole or in part by the Payee against payment of this Note. Any surplus of such cash or cash proceeds held by the Payee and remaining after payment in full of this Note shall be paid over to the Company or to whosoever may be lawfully entitled to receive such surplus. SECTION 14. Entire Agreement; No Oral Change. This Note embodies the entire agreement and understanding between the Payee and the Company relating to the subject matter hereof, and supersedes all prior agreements and understandings relating thereto. This Note may not be changed orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. SECTION 15. NOTICES. Any notices or other communications required or 10 permitted hereunder shall be given in writing and personally delivered with receipt acknowledged or mailed, postage prepaid, via registered mail, return receipt requested, if to the Payee, at its address notified in writing by the Payee to the Company, and if to the Company, Attention: Treasurer, at the Company's address at P.O. Box 779, Cincinnati, Ohio 45201 (if by mail) or 580 Walnut Street, Suite 1300, Cincinnati, Ohio 45202 (if personally delivered), or any other address notified in writing by the Company to the Payee. Any notice given in conformity with the foregoing shall be deemed given when personally delivered or upon the date of delivery specified in the registered mail receipt. SECTION 16. Continuing Security Interest; Etc. This Note confirms the grant of a continuing security interest in the Collateral and shall (a) be binding upon the Company, its heirs, administrators, successors, and assigns and (b) inure to the benefit of the Payee and its respective successors, transferees, and assigns. No security taken hereafter as security for the payment or performance of this Note shall impair in any manner or affect this Note or the security interest confirmed hereby, all present and future additional security to be considered as one general, continuing security interest. Any of the Collateral may be released from this Note without altering, varying, or diminishing in any way this Note or the security interest confirmed hereby as to the Collateral not expressly released, and this Note and such security interest shall continue in full force and effect as to all of the Collateral not expressly released. SECTION 17. Governing Law. This Note shall be governed by, and construed and enforced in accordance with, the law of the State of Connecticut applicable to contracts made and wholly performed in that state (without giving effect to principles relating to conflict of laws). SECTION 18. Consent To Jurisdiction. The parties hereto irrevocably agree that any legal action or proceeding with respect to this Note shall be brought in the courts of the State of Connecticut or in the courts of the United States of America sitting in Connecticut. The Company hereby waives to the fullest extent permitted by law any objection it may now or hereafter have to the laying of venue in any such action or proceeding in any such court as well as any right it may now or hereafter have to remove any such action or proceeding, once commenced, to another court on the grounds of FORUM NON CONVENIENS or otherwise 11 or to remove an action brought in a state court to a court of the United States of America. The Company hereby irrevocably agrees that service of process in any such action or proceeding may be made either by mailing or delivering a copy of the summons and complaint in any such action or proceeding to the Company at the address provided herein by certified mail, return receipt requested. Service of process in any such action or proceeding, effected as aforesaid, shall be deemed personal service upon the Company and shall be legal and binding upon the Company for all purposes notwithstanding any failure on the part of the Company to receive copies of such process mailed directly to the Company in accordance with the provisions of this Section. SECTION 19. Indemnity and Expenses. (a) The Company agrees to indemnify the Payee from and against any and all claims, losses, and liabilities growing out of or resulting from this Note (including, without limitation, enforcement of this Note), except claims, losses, or liabilities resulting from the Payee's gross negligence or willful misconduct. (b) The Company will upon demand pay to the Payee the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, that the Payee may after the date hereof incur in connection with (i) the custody, preservation, use, or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Payee, or (iii) the failure by the Company to perform or observe any of the provisions hereof. SECTION 20. SEVERABILITY. The provisions of this Note are independent of and separable from each other, and no such provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other such provision may be invalid or unenforceable in whole or in part. SECTION 21. MISCELLANEOUS. The headings of the sections of this Note have been inserted for convenience and shall not modify, define, limit or expand the express provisions of this Note. IN WITNESS WHEREOF, the Company has duly executed this Note this ____ day of __________________, 1996. EAGLE-PICHER INDUSTRIES, INC. By: ______________________________ 12 SCHEDULE A Installment Payment Schedule 13 SCHEDULE B Collateral 14 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "1.1.114" FORM OF SENIOR UNSECURED SINKING FUND DEBENTURES [THIS PAGE LEFT BLANK INTENTIONALLY] THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. [____]% SENIOR UNSECURED SINKING FUND DEBENTURES DUE _____ U.S. $250,000,000 Cincinnati, Ohio [Effective Date] FOR VALUE RECEIVED, the undersigned, EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company"), hereby promises to pay to the order of [ ] or to any other holder of this Debenture (such holder being the "Payee") the principal amount of TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000) on [date that is 10 years from the Effective Date] (the "Maturity Date") and interest thereon as hereinafter provided. Both principal and interest hereunder are payable in lawful money of the United States of America to the Payee at such place as the Payee may designate from time to time in writing in cash or other immediately available funds. This Debenture is one of an issue of [____]% Senior Unsecured Sinking Fund Debentures Due [ten years from the Effective Date] of the Company issued in an aggregate principal amount limited to $250,000,000 (the "Debentures") and the holder hereof is entitled equally and ratably with the holders of all other Debentures outstanding to the benefits provided for hereby. SECTION 1. (a) The following terms have the following meanings when used in this Debenture: "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Cincinnati, Ohio are authorized or required by law to close. "COMPANY" shall have the meaning set forth in the opening paragraph of this Debenture. "EVENT OF DEFAULT" shall mean any of the events set forth in Section 4(a). "MATURITY DATE" shall have the meaning set forth in the opening paragraph of this Debenture. "PAYEE" shall have the meaning set forth in the opening paragraph of this Debenture. (b) Unless otherwise provided herein, (i) the word "from" shall mean from and including, and (ii) the words "to" or "until" shall mean to and until but excluding. SECTION 2. INTEREST. The Company will pay interest at a rate of [____]% per annum semiannually on ___________ and _____________ of each year, commencing six months after ___________ (the "Effective Date") or if any such day is not a Business Day on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Debentures will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from _____________. Interest will be computed on the basis of a 360-day year of twelve 30-day months. SECTION 3. PAYMENTS. (a) SCHEDULED PAYMENTS. On the Maturity Date, the Company shall pay to the Payee, in cash or other immediately available funds, the entire unpaid principal amount of this Debenture plus all accrued and 2 unpaid interest thereon. Holders must surrender Debentures to the Company to collect principal payments. (b) SINKING FUND. The Company will redeem $20,000,000 of the aggregate principal amount of the original issuance of the Debentures on each of the third through ninth anniversaries of the Effective Date, in each case at 100% of the principal amount to be redeemed plus accrued interest to the redemption date, by paying such amounts as a sinking fund payment, before each such anniversary of the Effective Date. The Company may reduce the principal amount of Debentures to be redeemed by subtracting 100% of the principal amount of any Debenture that the Company redeemed or repurchased otherwise than pursuant to this Section. The Company may so subtract the same Debenture only once. (c) OPTIONAL REDEMPTION. The Company at its option may on each date it is required to redeem Debentures pursuant to paragraph (b) above redeem up to an additional $20,000,000 of the outstanding aggregate principal amount of the Debentures by paying the principal amount to be redeemed plus accrued and unpaid interest thereon to the applicable redemption date. In addition, the Company at its option may redeem after [date that is three years from the Effective Date] all or, from time to time, part of the Debentures at the following redemption prices (expressed as a percentage of the principal amount thereof) plus accrued interest to the redemption date (the "Redemption Price"): If redeemed during the If redeemed during the twelve month period twelve month period beginning [Month and date Redemption beginning [Month and date Redemption of Effective Date], Price of Effective Date], Price 3 - ------------------------------------------------------------------------------- [3 years from 105.25% [7 years from 101.25% Effective Date] Effective Date] [4 years from 104.25% [8 years from 100.25% Effective Date] Effective Date] [5 years from 103.25% [9 years from Effective Date] Effective Date] and [6 years from 102.25% thereafter 100% Effective Date] (d) NOTICE OF REDEMPTION. A notice of redemption will be mailed at least 20 days but not more than 60 days before the redemption date to each holder of Debentures to be redeemed at its registered address. Debentures in denominations larger than $1,000 may be redeemed in part, but only in whole multiples of $1,000. If any Debenture is to be redeemed in part only, a new Debenture in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original Debenture. If less than all of the Debentures outstanding are to be redeemed, the Debentures to be redeemed will be selected on a pro rata basis (with such adjustments as may be deemed appropriate so that only Debentures in denominations of $1,000, or integral multiples thereof, shall be redeemed). Once notice of redemption is given, Debentures called for redemption become due and payable on the redemption date at the redemption price. SECTION 4. EVENTS OF DEFAULT. (a) Each of the following shall be an Event of Default: (i) any failure by the Company for ninety days to pay all or any portion of principal under the Debentures when the same shall be due and payable in accordance with the terms hereof, whether on the Maturity Date, by acceleration or otherwise; (ii) any failure by the Company for ninety days to pay (by delivery of cash or other immediately available funds) all or any portion of any interest under the Debentures when the same shall be due and payable. 4 (ii) any default by the Company for ninety days after notice to it in the due and punctual performance or observance of any of the agreements of the Company contained in the Debentures; (iii) (A) the filing by the Company of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under title 11 of the United States Code (or corresponding provisions of future laws) or any other applicable bankruptcy, insolvency or similar law, (B) the making by the Company of any assignment for the benefit of its creditors, or the admission by the Company in writing of its inability to pay its debts as they become due, (C) the filing of (x) an involuntary petition against the Company under title 11 of the United States Code, or any other applicable bankruptcy, insolvency or similar law (or corresponding provisions of future laws), (y) an application for the appointment of a custodian, receiver, trustee or other similar official for the Company for all or a substantial part of the assets of the Company or (z) an involuntary petition against the Company seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of the Company or any of the Company's debts under any other federal or state insolvency law, provided that any such filing under (x), (y) or (z) above shall not have been vacated, set aside or stayed within a 60-day period from the date thereof unless the Company shall have filed an answer consenting to or acquiescing therein, or (D) the entry against the Company of a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect; (b) Upon the occurrence and during the continuance of any Event of Default described in paragraph (a) above, the holders of a majority of the outstanding principal amount of the Debentures may, by written notice to the 5 Company, declare all or any portion of the unpaid principal amount of the Debentures and all interest accrued thereon to be immediately due and payable. Demand, presentment, protest and notice of non-payment are hereby waived by the Company. All payments made following an Event of Default shall be applied first to payment of all accrued and unpaid interest and then to principal. SECTION 5. WAIVER OR ALTERATION. Without the consent of the Company and each holder affected, an amendment to the Debentures may not: reduce the amount of Debentures whose holders must consent to an amendment; reduce the rate of or change the time for payment of interest on any Debenture; reduce the principal of or change the fixed maturity of any Debenture; or make any Debenture payable in money other than that stated in the Debenture. Subject to the exceptions listed in the preceding sentence, the Debentures may be amended by a written instrument signed by the Company and the holders of a majority of the outstanding principal amount of the Debentures. In the case of any waiver, the Company and the holders of a majority of the outstanding principal amount of the Debentures shall be restored to their former respective positions and rights hereunder, and any Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon except to the extent expressly provided in such waiver. Without the consent of any holder, the Debentures may be amended to cure any ambiguity, defect or inconsistency, to provide for assumption of Company obligations to holders or to make any change that does not adversely affect the rights of any holder. SECTION 6. REMEDIES CUMULATIVE. No failure to exercise or delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any 6 right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 7. NOTICES. Any notices or other communications required or permitted hereunder shall be given in writing and personally delivered with receipt acknowledged or mailed, postage prepaid, via registered mail, return receipt requested, if to the Payee, at its address notified in writing by the Payee to the Company, and if to the Company, Attention: Treasurer, at the Company's address at Post Office Box 779, Cincinnati, Ohio 45201 (if by mail) or 580 Walnut Street, 13th Floor, Cincinnati, Ohio 45202 (if personally delivered), or any other address notified in writing by the Company to the Payee. Any notice given in conformity with the foregoing shall be deemed given when personally delivered or upon the date of delivery specified in the registered mail receipt. SECTION 8. NO RECOURSE AGAINST OTHERS. A director, officer, employee or a stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Debentures or for any claim based on, in respect of or by reason of such obligations or their creation. Each holder by accepting a Debenture waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Debentures. SECTION 9. GOVERNING LAW. The Debentures shall be governed by, and construed and enforced in accordance with, the law of the State of Ohio. SECTION 10. COSTS OF COLLECTION. If the Payee is required to commence suit to recover any amount due under the Debentures following an Event of Default, the Payee shall be entitled to collect from the Company reimbursement of such reasonable attorneys' fees and expenses of counsel selected by the Payee. 7 SECTION 11. SUCCESSORS AND ASSIGNS; TRANSFERABILITY. The Debentures shall be binding upon and inure to the benefit of the Payee and the Company and their respective transferees, successors and assigns; PROVIDED, HOWEVER, that the Company may not transfer or assign any of its rights or obligations hereunder without the prior written consent of the Payee. Within five Business Days after receipt of notice of any assignment by the Payee to any person or entity (an "Assignee") of all or any part of a Debenture, the Company shall execute and deliver to such Assignee, in exchange for the surrendered Debenture, a new Debenture to the order of such Assignee in an amount equal to the amount of the Debenture assigned to it, and if the Payee has retained any amount owing to it hereunder, a new Debenture to the order of the Payee in an amount equal to the amount retained by it hereunder, which new Debenture shall be dated the same date as the surrendered Debenture and be in substantially the form of this Debenture, and such Assignee will be deemed the Payee under the Debenture issued to it. In the event that the Payee proposes to transfer the Debentures in a transaction that would require qualification of an indenture under the Trust Indenture Act of 1939, the Company shall cooperate with the Payee in the preparation and qualification of such indenture and the replacement of the Debentures with a comparable instrument evidencing the indebtedness represented hereby and providing the holder thereof with substantially comparable terms. References herein to "Debentures" shall include all outstanding Debentures issued in substitution for or upon any assignment of this Debenture. SECTION 12. REPLACEMENT OF DEBENTURE. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of a Debenture, and the Company's receipt of an indemnity agreement of the Payee reasonably satisfactory to the Company, the Company will, at the expense of the Payee, execute and deliver, in lieu thereof, a new Debenture of like terms. SECTION 13. NO SET-OFF. The obligations of the Company under the Debentures are absolute and not subject to any right of set-off, counterclaim, recoupment or defenses against the Payee of any kind whatsoever. SECTION 14. DESCRIPTIVE HEADINGS. The descriptive headings of the Debentures are inserted for convenience only and do not constitute a part of this Debenture. 8 IN WITNESS WHEREOF, the Company has caused this Debenture to be executed by its duly authorized officer as of the day and year first written above. EAGLE-PICHER INDUSTRIES, INC. By: ________________________ Name: Title: 9 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "1.1.119" FORM OF TAX REFUND NOTES [THIS PAGE LEFT BLANK INTENTIONALLY] THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. [__]% TAX REFUND NOTE DUE _____ U.S. $[___________] Cincinnati, Ohio [Effective Date] FOR VALUE RECEIVED, the undersigned, EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company"), hereby promises to pay to the order of the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust or to any other holder (such holder being the "Payee") of this note (the "Note") the principal amount of [_______________________] on June 1, 1998 (the "Maturity Date") and interest thereon as hereinafter provided. Both principal and interest hereunder are payable in lawful money of the United States of America to the Payee at such place as the Payee may designate from time to time in writing in cash or other immediately available funds. SECTION 1. (a) The following terms have the following meanings when used in this Note: "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Cincinnati, Ohio are authorized or required by law to close. "COMPANY" shall have the meaning set forth in the opening paragraph of this Note. "EVENT OF DEFAULT" shall mean any of the events set forth in Section 5(a). "MATURITY DATE" shall have the meaning set forth in the opening paragraph of this Note. "PAYEE" shall have the meaning set forth in the opening paragraph of this Note. (b) Unless otherwise provided herein, (i) the word "from" shall mean from and including, and (ii) the words "to" or "until" shall mean to and until but excluding. SECTION 2. INTEREST. The Company will pay interest at a rate of [__]% per annum semiannually on __________ and ___________ of each year, commencing six months after _______________ (the "Effective Date") or if any such day is not a Business Day on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from _____________________. Interest will be computed on the basis of a 360- day year of twelve 30-day months. SECTION 3. PAYMENTS. (a) SCHEDULED PAYMENTS. On the Maturity Date, the Company shall pay to the Payee, in cash or other immediately available funds, the entire unpaid principal amount of this Note plus all accrued and unpaid interest thereon. The Payee must surrender the Note to the Company to collect principal payments. (b) MANDATORY REDEMPTION. The Company will redeem all of the aggregate principal amount of the Note outstanding plus accrued interest to the redemption date as soon as practicable after its receipt of its federal income 2 tax refund (the "Tax Refund") for the fiscal year ending _______ (in the aggregate principal amount of such tax refunds). (c) OPTIONAL PREPAYMENT. The Company may, at any time and from time to time, without premium or penalty, prepay (in multiples of $1,000) all or a portion of the unpaid principal amount of the Note or all or a portion of accrued and unpaid interest, together with unpaid accrued interest on the amount so prepaid to the date chosen for prepayment, payable in cash or other immediately available funds. A notice of redemption under this subsection will be mailed at least 20 days but not more than 60 days before the redemption date to the Payee at its registered address. The Note may be redeemed in part, but only in whole multiples of $1,000. Once notice of redemption is given, the Note becomes due and payable on the redemption date at the redemption price. SECTION 4. LIENS. The Company shall not create or suffer to exist any lien, security interest, or other charge or encumbrance upon or with respect to, or grant any right to a party other than the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust in, the Tax Refund. SECTION 5. EVENTS OF DEFAULT. (a) Each of the following shall be an Event of Default: (i) any failure by the Company for ninety days to pay all or any portion of principal under the Note when the same shall be due and payable in accordance with the terms hereof, whether on the Maturity Date, by acceleration or otherwise; (ii) any failure by the Company for ninety days to pay (by delivery of cash or other immediately available funds) all or any portion of any interest under the Note when the same shall 3 be due and payable; (ii) any default by the Company for ninety days after notice to it in the due and punctual performance or observance of any of the agreements of the Company contained in the Note; (iii) (A) the filing by the Company of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under title 11 of the United States Code (or corresponding provisions of future laws) or any other applicable bankruptcy, insolvency or similar law, (B) the making by the Company of any assignment for the benefit of its creditors, or the admission by the Company in writing of its inability to pay its debts as they become due, (C) the filing of (x) an involuntary petition against the Company under title 11 of the United States Code, or any other applicable bankruptcy, insolvency or similar law (or corresponding provisions of future laws), (y) an application for the appointment of a custodian, receiver, trustee or other similar official for the Company for all or a substantial part of the assets of the Company or (z) an involuntary petition against the Company seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of the Company or any of the Company's debts under any other federal or state insolvency law, provided that any such filing under (x), (y) or (z) above shall not have been vacated, set aside or stayed within a 60-day period from the date thereof unless the Company shall have filed an answer consenting to or acquiescing therein, or (D) the entry against the Company of a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect; (b) Upon the occurrence and during the continuance of any Event of Default described in paragraph (a) above, the Payee may, by written notice to the Company, declare all or any portion of the unpaid principal amount of the Note and all interest accrued thereon to be immediately due and payable. Demand, presentment, protest and notice of non-payment are hereby waived by the Company. All payments made following an Event of Default shall be applied first to payment of all accrued and unpaid interest and then to principal. SECTION 6. REMEDIES CUMULATIVE. No failure to exercise or delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof, 4 nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 7. NOTICES. Any notices or other communications required or permitted hereunder shall be given in writing and personally delivered with receipt acknowledged or mailed, postage prepaid, via registered mail, return receipt requested, if to the Payee, at its address notified in writing by the Payee to the Company, and if to the Company, Attention: Treasurer, at the Company's address at Post Office Box 779, Cincinnati, Ohio 45201 (if by mail) or 580 Walnut Street, 13th Floor, Cincinnati, Ohio 45202 (if personally delivered), or any other address notified in writing by the Company to the Payee. Any notice given in conformity with the foregoing shall be deemed given when personally delivered or upon the date of delivery specified in the registered mail receipt. SECTION 8. NO RECOURSE AGAINST OTHERS. A director, officer, employee or a stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Note or for any claim based on, in respect of or by reason of such obligations or their creation. The Payee by accepting the Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Note. SECTION 9. GOVERNING LAW. The Note shall be governed by, and construed and enforced in accordance with the law of the State of Ohio. SECTION 10. COSTS OF COLLECTION. If the Payee is required to commence suit to recover any amount due under the Note following an Event of 5 Default, the Payee shall be entitled to collect from the Company reimbursement of such reasonable attorneys' fees and expenses of counsel selected by the Payee. SECTION 11. SUCCESSORS AND ASSIGNS; TRANSFERABILITY. The Note shall be binding upon and inure to the benefit of the Payee and the Company and their respective transferees, successors and assigns; PROVIDED, HOWEVER, that the Company may not transfer or assign any of its rights or obligations hereunder without the prior written consent of the Payee. Within five Business Days after receipt of notice of any assignment by the Payee to any person or entity (an "Assignee") of all or any part of the Note, the Company shall execute and deliver to such Assignee, in exchange for the surrendered Note, a new Note to the order of such Assignee in an amount equal to the amount of the Note assigned to it, and if the Payee has retained any amount owing to it hereunder, a new Note to the order of the Payee in an amount equal to the amount retained by it hereunder, which new Note shall be dated the same date as the surrendered Note and be in substantially the form of this Note, and such Assignee will be deemed the Payee under the Note issued to it. References herein to "Notes" shall include all outstanding Notes issued in substitution for or upon any assignment of this Note. SECTION 12. REPLACEMENT OF NOTE. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of the Note, and the Company's receipt of an indemnity agreement of the Payee reasonably satisfactory to the Company, the Company will, at the expense of the Payee, execute and deliver, in lieu thereof, a new Note of like terms. SECTION 13. NO SET-OFF. The obligations of the Company under 6 the Note are absolute and not subject to any right of set-off, counterclaim, recoupment or defenses against the Payee of any kind whatsoever. SECTION 14. DESCRIPTIVE HEADINGS. The descriptive headings of the Note are inserted for convenience only and do not constitute a part of the Note. IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized officer as of the day and year first written above. EAGLE-PICHER INDUSTRIES, INC. By: ________________________ Name: Title: 7 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "5.2" FORM OF AMENDED CLAIMS SETTLEMENT GUIDELINES [THIS PAGE LEFT BLANK INTENTIONALLY] AMENDED GUIDELINES FOR THE COMPROMISE AND SETTLEMENT OF CLAIMS AND CONTROVERSIES --------------------------- Notwithstanding any requirements that may be imposed pursuant to Bankruptcy Rule 9019, Eagle-Picher Industries, Inc., Daisy Parts, Inc., Transicoil Inc., Michigan Automotive Research Corporation, EDI, Inc., Eagle-Picher Minerals, Inc., and Hillsdale Tool and Manufacturing Co. (the "Debtors") may compromise or settle as allowed claims (i) all claims asserted against the Debtors as to which the Debtors have the power and authority to file and prosecute objections pursuant to section 5.1 of the Third Amended Consolidated Plan of Reorganization, dated August 28, 1996 and (ii) all claims that the Debtors have asserted against other parties prior to [insert Effective Date of Plan] ("Claims") according to the following procedures: 1. Subject to section 2(b) hereof, the following settlements or compromises do not require the review or approval of the United States Bankruptcy Court for the Southern District of Ohio (the "Bankruptcy Court") or any other party in interest: (a) The settlement or compromise of a Claim against the Debtors or their estates pursuant to which such Claim is allowed in an amount of $1,000,000 or less; (b) The settlement or compromise of a Claim against the Debtors or their estates where the difference between the amount of the Claim listed on the Debtors' schedules and the amount of the Claim proposed to be allowed under the settlement is $1,000,000 or less; and (c) The settlement or compromise of a Claim asserted by one or more of the Debtors against a party, where the difference between the amount sought to be recovered by the Debtors and the amount to be paid to the Debtors under the proposed settlement is $1,000,000 or less. 2. The following settlements or compromises shall be submitted to the Bankruptcy Court for approval: (a) Any settlement or compromise not described in section 1 hereof; and (b) Any settlement or compromise of Claims that involve an "insider," as defined in 11 U.S.C. Section 101(3). 2 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "7.11" FORM OF MANAGEMENT CONTRACTS [THIS PAGE LEFT BLANK INTENTIONALLY] EMPLOYMENT AGREEMENT AGREEMENT, dated as of ________________, 1995, between EAGLE-PICHER INDUSTRIES, INC. (the "Company"), having its principal executive offices at 580 Walnut Street, Cincinnati, Ohio 45201, and _____________________________ (the "Executive"), residing at _________________________. W I T N E S S E T H: WHEREAS, the Executive is employed on a full-time basis by the Company and is currently serving as __________ ________________ of the Company; and WHEREAS, on January 7, 1991, the Company and certain of its affiliates (collectively, the "Debtors") each filed a petition for relief under chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Ohio, Western Division (the "Bankruptcy Court"); and WHEREAS, by order dated __________ __, 1995 (the "Confirmation Order") the Bankruptcy Court confirmed the Consolidated Plan of Reorganization, dated _________ __, 1995 (the "Plan"), in the Debtors' chapter 11 cases; and WHEREAS, the Plan contemplates that the Company and the Executive will enter into this Agreement which is to become effective on the Effective Date (as such term is defined in the Plan). NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter contained, the parties hereto agree as follows: 1. EMPLOYMENT; EFFECTIVENESS OF AGREEMENT. The obligation of the Company to employ the Executive, and of the Executive to serve the Company, pursuant to this Agreement shall become effective automatically on the Effective Date. 2. TERM. The term of Executive's employment hereunder (hereinafter referred to as the "Term") shall commence on the Effective Date and shall continue thereafter until the date which is thirty (30) months from and after the date on which the Confirmation Order was entered by the Bankruptcy Court, unless terminated earlier as hereinafter provided. 3. Duties and Extent of Services. During the Term, Executive agrees to continue to serve as the _______ _______________ of the Company faithfully and to the best of his ability under the direction of the [Chief Executive Officer and the] Board of Directors of the Company (the "Board"), and agrees to devote substantially all of his business time, energy and skill to such employment. Executive agrees to perform the duties commensurate with the position of ___________ of the Company, which shall include,without limitation, the duties set forth on Annex A hereto. Executive agrees also to perform such specific duties and services of a senior executive nature as the [Chief Executive Officer of the Company or the] Board shall reasonably request consistent with Executive's position as ___________. The principal place of employment of Executive shall be Cincinnati, Ohio and, subject to such reasonable travel as the performance of his duties may require, such principal place of employment shall not be changed unless the Executive otherwise consents. 4. COMPENSATION. 4.1 BASE SALARY. The Company agrees to pay or cause to be paid to Executive during the Term, a base salary equal to the amount of his base salary as at the date immediately preceding the Effective Date, subject to adjustment as provided below (as so adjusted, the "Base Salary"). The Base Salary shall be payable in accordance with the regular payroll policies of the Company from time to time in effect, less such deductions as shall be required to be withheld by applicable law and regulations. On each December 1 during the Term, the Board or a committee thereof, shall review Executive's Base Salary as then in effect and may, but shall not be obligated to, increase such salary by such amount as the Board (or such committee), in its sole discretion, shall determine. [4.2 DISCRETIONARY BONUS. In addition to Base Salary, the 2 Executive shall be entitled to receive an annual cash bonus based on the performance of the Company and of the Executive, the amount of which, if any, shall be determined by the Board (or a committee thereof). Determinations made by the Board (or such committee) with respect to the amount, if any, of annual bonuses to be paid to Executive under this Agreement shall be final and conclusive.] 4.3 BENEFITS AND PERQUISITES. During the Term, the Company shall provide Executive with and Executive shall be entitled to the following benefits and perquisites: (a) participation in and the receipt of benefits under (i) all of the Company's employee benefit plans and arrangements in effect from time to time applicable to salaried employees of the Company, (ii) all short-term and long-term incentive plans of the Company as in effect from time to time, (iii) a supplemental executive retirement plan (the "SERP") substantially in accordance with and no less favorable to Executive than the terms, provisions and benefits under the supplemental executive retirement plan currently provided by the Company, and (iv) any life insurance, health and accident plan or arrangement made available by the Company, now or in the future, to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. (b) four (4) weeks of paid vacation in each calendar year. (c) an automobile paid for by the Company for use in the performance of his services under this Agreement, in a manner substantially consistent with past practices. 3 (d) membership fees paid for by the Company with respect to any of the Executive's business-related club memberships (it being understood that such membership fees shall not include any fees for country clubs or other similar, primarily social, clubs). The Company also shall implement, as soon as reasonably practicable after the Effective Date, a long-term incentive plan. Although the ability to receive stock of the Company may not be available for such plan, the plan nevertheless shall provide the Executive with opportunities and incentives reasonably economically equivalent to those provided by similar companies, many of which do provide stock options and/or other types of stock grants as components of their long-term incentive plans. 4.4 Expenses. Subject to such policies as may from time to time be established by the Board, the Company shall pay or reimburse Executive for all reasonable expenses actually incurred or paid by Executive during the Term in the performance of his services under this Agreement, upon presentation of expense statements or vouchers or such other supporting information as the Company may require. 5. TERMINATION. 5.1 Cause. The Company may terminate Executive's employment hereunder for Cause. For the purposes of this Agreement, the Company shall have "Cause" to terminate Executive's employment hereunder only by reason of any one or more of the following: (i) Executive's conviction, by a court of competent and final jurisdiction, of any crime (whether or not involving the Company or any of its subsidiaries) which constitutes a felony in the jurisdiction involved; or (ii) Executive's commission of an act of fraud upon the Company or any or its 4 subsidiaries; or (iii) Executive's repeated willful failure to perform in all material respects his duties hereunder in accordance with the terms of this Agreement which failure (other than by reason of death or disability) continues uncorrected for a period of ten (10) days after Executive shall have received written notice from the Board stating with specificity the nature of such failure or refusal. 5.2 TERMINATION BY THE EXECUTIVE. Executive may terminate his employment hereunder upon [thirty (30)] days' prior written notice to the Company for Good Reason. For purposes of this Agreement, "Good Reason" shall mean (i) the material diminution of the nature or scope of the duties assigned to Executive from that contemplated by Section 3 hereof, (ii) a reduction in Executive's Base Salary, or a material reduction in Executive's fringe benefits or any other material failure by the Company to comply with Section 4 hereof, other than any such reduction or failure as shall apply to all executive officers of the Company generally, (iii) ceased participation by Executive, for any reason other than as a result of any action by Executive, in any employee benefit plan of the Company with respect to which Executive is or was, prior to such time, eligible to participate, (iv) the relocation of Executive's principal place of employment more than twenty (20) miles from the location specified in Section 3 hereof without Executive's consent, (v) the requirement that Executive engage in a substantial amount of additional travel (as compared to Executive's past practices) in the performance of his duties hereunder without Executive's consent, or (vi) any other material breach by the Company of its obligations under this Agreement. Good Reason shall not exist in the event of a sale or disposition of a subsidiary or division of the Company and Executive either (a) voluntarily agrees to be employed by such subsidiary or division, or (b) is offered a comparable position with the Company. For purposes hereof, comparable shall encompass such items as salary, benefits, duties and geographic location. 5.3 NOTICE OF TERMINATION. Any termination by the Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2 above shall be communicated by written notice (the "Notice of Termination"), which notice shall indicate the specific termination provision in this Agreement relied upon for such termination. 5.4 DATE OF TERMINATION. "Date of Termination" shall mean (i) if Executive's employment is terminated pursuant to Section 5.1 or 5.2 hereof, the date 5 specified in the Notice of Termination, and (ii) if Executive's employment is terminated by the Company other than for Cause or by Executive other than for Good Reason, the date on which a Notice of Termination is given. 5.5 PAYMENTS UPON TERMINATION. (a) If the employment of Executive with the Company is terminated (i)by the Company other than for Cause or (ii) by the Executive for Good Reason, then Executive shall be entitled to receive from the Company, and the Company shall pay to Executive, a lump sum severance payment equal to the greater of (x) the aggregate Base Salary (at the rate in effect at the Date of Termination) that Executive would have received for the remainder of the Term if his employment had not been terminated, and (y) the aggregate amount of the Base Salary (at the rate in effect at the Date of Termination) which would be paid for a period of twenty-four (24) months, plus, in either case, such other benefits or reimbursement of expenses payable to the Executive pursuant to Sections 4.3 and 4.4 hereof (including, without limitation, the SERP), and less such amounts as shall be required to be withheld by the Company pursuant to applicable laws and regulations (the "Severance Amount"). The Severance Amount shall not be present-valued and shall be payable by the Company to Executive within thirty (30) days after Executive's termination. Executive shall not be required to mitigate the Company's obligation to pay the full Severance Amount by seeking employment or otherwise and the Severance Amount shall not be decreased or otherwise offset as a result of any compensation received by Executive from employment in any capacity. The Severance Amount shall be deemed compensation payable to Executive for the purpose of determining the total amount due Executive pursuant to the SERP. (b) If the employment of Executive with the Company is terminated (i) by the Company for Cause, or (ii) by the Executive other than for Good Reason, then the Executive shall be entitled to receive, and the Company shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due Executive in respect of perquisites provided him hereunder through the Date of Termination at the rate in effect at the time Notice of Termination is given, (y) Base Salary payable in lieu of accrued and unused vacation days in accordance with the policies of the Company from time to time in effect, and (z) all accrued and unpaid benefits payable to Executive pursuant to any benefit plan or otherwise through the Date of Termination. Upon the payment of the foregoing amounts, the Company shall have no further obligations to Executive 6 under this Agreement. 6. Death or Disability. 6.1 DEATH. If Executive dies during the Term, this Employment Agreement, other than the provisions of Section 6.3 hereof, shall terminate. 6.2 Disability. If, during the Term, Executive becomes physically or mentally disabled, whether totally or partially, so that he is unable substantially to perform his services hereunder for (i) a period of six (6) consecutive months or (ii) for shorter periods aggregating six (6) months during any eighteen (18) month period, the Company may at any time after the last day of the six (6) consecutive months of disability or the day on which the shorter periods of disability equal an aggregate of six (6) months, by written notice to Executive (the "Disability Notice"), terminate the Term of the Executive's employment hereunder. 6.3 Payments upon Death or Disability. Upon a termination due to the death or disability of Executive, Executive (or, in the event of a termination as a result of the death of Executive, Executive's estate (or a designated beneficiary thereof)) shall be entitled to receive from the Company, and the Company shall pay to Executive (or Executive's estate, if applicable) the amount of any accrued and unpaid Base Salary and other benefits and reimbursement of expenses payable to the Executive hereunder pursuant to Sections 4.3 and 4.4 hereof as of the date of Executive's death or the date of the Disability Notice, as applicable. In addition, for a period of thirty (30) months following the date of such termination, the Company shall continue to pay and provide to Executive and Executive's dependents at the Date of Termination all medical benefits pursuant to any plans and programs in which Executive was entitled to participate immediately prior to the Date of Termination as if Executive were still employed by the Company pursuant hereto. If Executive's participation in any plan or program pursuant to which such medical benefits are provided to Executive is barred as a result of such termination, the Company shall arrange to provide Executive and Executive's dependents with benefits substantially similar on an after tax basis to those which Executive was entitled to receive under such plan or program. 7. Non-Competition; Confidentiality. 7 7.1 NON-COMPETITION. Executive agrees that, during the Term and for a period of [two years] following the date of termination of Executive's employment hereunder (the "Restricted Period"), he will not, directly or indirectly, own, manage, operate or control, or participate in the ownership, management, operation or control of, or be connected as an officer, employee, partner, director or otherwise with, or have any financial interest in, or aid or assist anyone else in the conduct of, any entity or business which competes with any material business conducted by the Company or by any group, division or subsidiary of the Company, in any area where such business is being conducted, or for which negotiations to conduct business are pending, at the date of such termination (a "Competitive Operation"); PROVIDED, HOWEVER, that Executive may acquire, solely as an investment and through market purchases, securities of any corporation that are traded on any national securities exchange or listed on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), if Executive is not a controlling person of, or a member of a group which controls, such corporation; and Executive does not, directly or indirectly, own more than [one percent (1%)] of any class of securities of such corporation. 7.2 Confidential Information; Personal Relationships. Executive agrees that, during the Term and thereafter, he shall keep secret and retain in strictest confidence, and shall not use for his benefit or the benefit of others, any and all confidential information relating to the Company, including, without limitation, trade secrets, customer lists, financial plans or projections, pricing policies, marketing plans or strategies, business acquisition or divestiture plans, new personnel acquisition plans, technical processes, inventions and other research projects heretofore or hereafter learned by Executive, and he shall not disclose any such information to anyone outside the Company or any of its subsidiaries, except as required by law in connection with any judicial or administrative proceeding or inquiry (provided prior written notice thereof is given by Executive to the Company) or except with the Company's prior written consent, unless such information is known generally to the public or the trade through sources other than Executive's unauthorized disclosure. 7.3 PROPERTY OF THE COMPANY. All memoranda, notes, lists, records and other documents or papers (and all copies thereof), including such items stored in computer memories, or microfiche or by any other means, made or compiled by or on behalf of Executive, or made available to Executive, relating to the Company or any successors thereto, are and shall be 8 the property of the Company or any such successor and shall be delivered to the Company or any such successor promptly at any time on request. 7.4 EMPLOYEES OF THE COMPANY. During the Restricted Period, the Executive shall not, directly or indirectly, hire, solicit or encourage to leave the employment of the Company, any of its employees or hire any such employee who has left the employment of the Company. 7.5 RIGHTS AND REMEDIES UPON BREACH. If Executive breaches, or threatens to commit a breach of, any of the provisions of this Section 7 (the "Restrictive Covenants"), the Company and any successor thereto shall have the following rights and remedies, each of which shall be independent of the other and severally enforceable, and all of which shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity. (a) SPECIFIC PERFORMANCE. The right and remedy to have the Restrictive Covenants specifically enforced by any arbitrator or any court having equity jurisdiction, it being acknowledged and agreed by Executive that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company. (b) Accounting. The right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits (collectively, "Benefits") derived or received by Executive as the result of any transactions constituting a breach of any of the Restrictive Covenants, and Executive shall account for and pay over such Benefits to the Company. 7.6 SEVERABILITY OF COVENANTS. Executive acknowledges and agrees that the Restrictive Covenants are reasonable and valid in geographical and temporal scope and in all other respects. Notwithstanding the foregoing, if any arbitrator or court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable or should be reduced, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full effect without regard to the invalid Restrictive Covenants or portions thereof. 9 8. INSURANCE. The Company may, from time to time, apply for and take out, in its own name and at its own expense, naming itself or others as the designated beneficiary (which it may change from time to time), policies for health, accident, disability or other insurance upon Executive in any amount that it may deem necessary or appropriate to protect its interest. Executive agrees to aid the Company in procuring such insurance by submitting to reasonable medical examinations and by filling out, executing and delivering such applications and other instruments in writing as may reasonably be required by any insurance company to which the Company may apply for insurance. 9. INDEMNIFICATION. To the fullest extent permitted or required by the laws of the State of Ohio, the Company shall indemnify and hold harmless Executive, in accordance with the terms of such laws, if Executive is made a party, or threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Executive is or was an officer or director of the Company, or any subsidiary or affiliate of the Company in which capacity Executive is or was serving at the Company's request, against expenses (including reasonable attorneys' fees), judgments, fines and amounts paid in settlement, all as actually and reasonably incurred by him in connection with such action, suit or proceeding. In the event it becomes necessary for Executive to take any action to enforce the indemnity provided herein, Executive shall be promptly reimbursed by the Company for all costs and expenses associated therewith (including reasonable attorneys' fees). 10. Arbitration. All disputes arising under or related to this Agreement shall be resolved by arbitration. Such arbitration shall be conducted by an arbitrator mutually selected by the Company and Executive (or, if the Company and Executive are unable to agree upon an arbitrator within ten (10) days, then the Company and Executive shall each select an arbitrator, and the arbitrators so selected shall mutually select a third arbitrator, who shall resolve such dispute). Such arbitration shall be conducted in accordance with the applicable rules of the American Arbitration Association. Any decision rendered by an arbitrator pursuant hereto may be enforced by a court of competent jurisdiction without review of such decision by such court. The Company shall pay all of the fees and expenses of the arbitrators and the other costs of arbitration. The Company also shall pay Executive's reasonable legal fees and expenses incurred in connection with any successful enforcement by Executive of his rights hereunder. 11. Miscellaneous. 10 11.1 NOTICES. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telecopied or sent by certified or registered mail, postage prepaid, or by Federal Express or similar overnight courier. Any such notice shall be deemed given when delivered: (i) if to the Company, to: Eagle-Picher Industries, Inc. 580 Walnut Street Cincinnati, Ohio 45201 Attn: Telecopy No.: (ii) if to Executive, to: ---------------------------------- ---------------------------------- ---------------------------------- 11.2 WAIVERS AND AMENDMENTS. This Agreement may not be amended, modified, superseded or cancelled except by a written instrument signed by the Company and Executive. No delay on the part of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right or remedy, nor any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. 11.3 Survival. The provisions of Sections 7 and 9 hereof shall survive the Term, irrespective of the reasons for termination of Executive's employment hereunder. 11.4 Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Ohio applicable to agreements made and to be performed entirely within such State. 11.5 Entire Agreement. This Agreement (including the schedules, annexes and exhibits hereto) contain the entire agreement between 11 the parties with respect to the subject matter hereof and supersede all prior agreements, proposals or representations, arrangements or understandings, written or oral, with respect thereto. 11.6 Assignment. This Agreement, and any rights and obligations hereunder, may not be assigned by any party hereto without the prior written consent of the other party. 11.7 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. EAGLE-PICHER INDUSTRIES, INC. By __________________________ Name: Title: _____________________________ [Executive] 12 ANNEX A TO EMPLOYMENT AGREEMENT OF THOMAS E. PETRY POSITION: Chairman and Chief Executive Officer DUTIES: Serves as presiding officer of the Board of Directors. In that capacity guides the deliberations and activities of that group. Responsible for directing the Company toward the objective of providing maximum profit and return on invested capital. Establishes short-term and long-range objectives, plans, and policies, subject to the approval of the Board of Directors. Represents the Company before all of its constituencies, including, without limitation, major customers, the financial community, the Company's operations and host communities, and the public. ANNEX A TO EMPLOYMENT AGREEMENT OF ANDRIES RUIJSSENAARS POSITION: President and Chief Operating Officer DUTIES: Directs, administers and coordinates the activities of the Company in accordance with policies, goals and objectives established by the Chief Executive Officer and the Board of Directors. Assists the Chief Executive Officer in the development of Company policies and goals for, among others, operations, personnel, financial performance and growth. Has direct line responsibility for all operating units. ANNEX A TO EMPLOYMENT AGREEMENT OF WAYNE R. WICKENS POSITION: Senior Vice President and Group Executive DUTIES: Plans, directs and controls all activities in certain profit centers (currently ten Automotive Divisions) through the general managers of those entities. Those general managers are in turn responsible for production, research, engineering, marketing/sales, purchasing and human resources in their operations. ANNEX A TO EMPLOYMENT AGREEMENT OF DAVID N. HALL POSITION: Senior Vice President and Chief Financial Officer DUTIES: Plans, directs and controls the Company's overall financial plans and policies, and its accounting practices, and conducts the Company's relationship with lending institutions and the financial community. Directs treasury, budgeting, audit, tax, accounting, information management, insurance and certain administrative functions. Develops and coordinates necessary and appropriate accounting and statistical data for all departments. ANNEX A TO EMPLOYMENT AGREEMENT OF CARROLL D. CURLESS POSITION: Vice President and Controller DUTIES: Directs and has responsibility for the Company's accounting practices, the maintenance of its fiscal records, and the preparation of its financial reports. Directs and has overall supervisory responsibility for general and property accounting, internal auditing, cost accounting, and budgetary controls. Appraises operating results in terms of costs, budgets, policies of operations, trends and increased profit opportunities. ANNEX A TO EMPLOYMENT AGREEMENT OF JAMES A. RALSTON POSITION: Vice President, General Counsel and Secretary DUTIES: As chief legal officer directs the legal affairs of the Company. Provides legal counsel and guidance in the ordinary and special activities of the Company to insure maximum protection of its legal rights utilizing broad familiarity with most legal disciplines. Participates in senior management policy deliberations. Directs the defense of suits or claims and manages the prosecution of the Company's claims against others. Supervises the legal aspects of Company transactions and the preparation of reports and statements of a legal nature. Supervises the environmental compliance function within the Company. Serves as Secretary in accordance with the charter, by-laws, and other legal requirements. Coordinates meetings of the Board of Directors and keeps minutes of such meetings. Attends to Company notices and correspondence, and conducts relations with shareholders on matters concerning meetings of shareholders or share holdings. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "7.12" FORM OF AMENDMENTS TO SUPPLEMENTAL SEVERANCE PROGRAM [THIS PAGE LEFT BLANK INTENTIONALLY] AMENDMENT AND RESTATEMENT OF THE EAGLE-PICHER INDUSTRIES, INC. SEVERANCE PLAN EFFECTIVE ___________ SECTION 1. THE AMENDMENT 1.1 THE AMENDMENT. Effective upon entry of an order confirming the Third Amended Consolidated Plan of Reorganization, Eagle-Picher Industries, Inc. ("Company") amends the severance plan (the "Plan"), adopted effective May 13, 1991, to read as follows: SECTION 2. DEFINITIONS 2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall mean: (a) "ADMINISTRATOR" means the Company's Director of Taxes or his designee. The Administrator shall be a named fiduciary under the Plan. (b) "AFFILIATES" means Daisy Parts, Inc., Transicoil Inc., Michigan Automotive Research Corporation, Eagle-Picher Fluid Systems, Inc., Eagle-Picher Minerals, Inc. and Hillsdale Tool & Manufacturing Company. (c) "ANNUAL COMPENSATION" means the total of all compensation, including wages, salary, and any other benefit of monetary value, whether paid in the form of cash or otherwise, which was paid as consideration for the participant's service during the 12-month period preceding the participant's severance, or the total which would have been so paid at the participant's usual rate of compensation for any participant who did not work for the Company or an Affiliate for the full 12-month period preceding the participant's severance. (d) "BASE PAY" means the participant's base annual pay rate at the date of his termination of employment. (e) "BUSINESS DAY" means any day on which commercial banks are required to be open for business in Cincinnati, Ohio. (f) "COMPANY" means Eagle-Picher Industries, Inc., or any successor thereto. (g) "CONFIRMATION DATE" means the date of entry of an order confirming the Reorganization Plan. (h) "CONFIRMATION ORDER" means the order or orders of the court confirming the Reorganization Plan. (i) "EFFECTIVE DATE" means May 13, 1991 pursuant to Judge Burton Perlman's order entered that date. (j) "ELIGIBLE EMPLOYEES" means division presidents (including the presidents of wholly-owned subsidiaries), all persons employed in the Cincinnati, Ohio General Office as salaried employees except Officers, and those employees designated by the Chief Executive Officer of the Company as key division employees. (k) "OFFICERS" means officers of Eagle-Picher Industries, Inc. (l) "REORGANIZATION EFFECTIVE DATE" means the first Business Day after the date on which all of the conditions precedent to the effectiveness of the Reorganization Plan specified in Section 7.9 of the Reorganization Plan have been satisfied or waived, or if a stay of the Confirmation Order is in effect on such date, the first Business Day after the expiration, dissolution, or lifting of such stay. (m) "REORGANIZATION PLAN" means the Third Amended Consolidated Plan of Reorganization of the Company and its affiliated debtors, either in its present form or as it may be amended, supplemented, or otherwise modified from time to time, and the exhibits and schedules to the foregoing, as the same may be in effect at the time such reference becomes operative. (n) "SERVICE" means Vesting Service as defined in the Eagle-Picher Retirement Income Plan for Salaried Employees. (o) "WEEK'S PAY" means a participant's Base Pay divided by 52. 2.2 GENDER REFERENCE. Any words in this Plan document (or amendments to it) which are used in one gender shall be read and construed to mean or include the other gender wherever they would so apply. SECTION 3. PARTICIPATION 3.1 PARTICIPANTS. Eligible Employees employed on the Effective Date shall become participants on that date. 3.2 NEW PARTICIPANTS. Anyone meeting the definition of Eligible Employee hired or designated by the Chief Executive Officer after the Effective Date shall become a participant after completion of three months of Service. The Company's Chief Executive Officer can waive any service period required of a new participant by a written letter to the participant with a copy to the Administrator. SECTION 4. BENEFITS 4.1 SEVERANCE BENEFIT. Participants terminated by the Company or an Affiliate after the Effective Date other than for cause will receive a Base Severance Benefit, a Supplemental Severance Benefit and Group Medical and Life Insurance Benefits as described herein. The eligibility for, and the level of, benefits will be determined by the employee's status as a division president or key employee at the date of the employee's termination of employment. If the operation for which a participant is working is sold and the participant continues to work with the operation, or another entity affiliated with the buyer, after the sale, the participant will not be eligible for the Base Severance Benefit, the Supplemental Severance Benefit, or the Group Medical and Insurance Benefits. 4.2 BASE SEVERANCE BENEFIT. The Base Severance Benefit will provide one Week's Pay for each completed year of Service and, for any partial year of Service, one-twelfth Week's Pay for each completed month of Service. Payments shall be reduced dollar for dollar by compensation earned for services rendered by a participant for a subsequent employer during the period Base Severance Benefits are being paid. The minimum Base Severance Benefit shall be two Week's Pay. Payments under the Base Severance Benefit will be made under the general payroll practice for the unit in which the participant was employed. 4.3 SUPPLEMENTAL SEVERANCE BENEFIT. The Supplemental Severance Benefit will provide one year's Base Pay for division presidents; six months' Base Pay for salaried General Office and division employees designated as key employees by the Chief Executive Officer; and three months' Base Pay for all other salaried General Office employees. The Supplemental Severance Benefit for a salaried employee employed in the Cincinnati, Ohio, General Office who becomes entitled to a benefit under Section 4.1 after age 50 and before the first anniversary of the Reorganization Effective Date will be twice the Supplemental Severance Benefit otherwise provided under this Section. The Supplemental Severance Benefit shall be paid in a lump sum on termination of employment. 4.4 GROUP MEDICAL AND LIFE INSURANCE BENEFITS. The Group Medical and Life Insurance Benefits will provide continued participation in the medical indemnity benefits, self-funded medical benefits, health maintenance organizations, and group term life insurance benefits (including the additional group term life insurance available at employee cost) as if the participant were an active employee of the Company or an Affiliate. These benefits will continue for one week for each year of Service unless similar coverage is obtained from a subsequent employer. Any period for which medical benefits are provided hereunder shall reduce the period for which COBRA benefits are available. These benefits shall continue under the participant's election in force when his severance occurs, subject to any new election that would be available to him as an active employee. If the HMO or medical indemnity provider refuses to continue coverage for the participant, the participant will receive coverage under the self-funded medical benefit program available to employees at his location. 4.5 VACATION PAY. Any existing practices of the Company or Affiliates with respect to payment for unused vacation time at termination of employment shall not be affected by this Plan. 4.6 MAXIMUM SEVERANCE BENEFITS. Payments under the Plan shall not exceed twice the participant's Annual Compensation. 4.7 DEATH OF PARTICIPANT. No benefits shall be payable upon the death of a participant except for any payment which may have been due prior to his date of death. SECTION 5. ADMINISTRATION 5.1 POWERS AND DUTIES. The Administrator shall have the power and the duty to take all action, and to make all decisions necessary or proper to carry out the Plan, including, without limitation, the following: (a) To interpret the Plan, which interpretations shall be final and conclusive; (b) To compute the benefit to be paid to any person under the Plan; (c) To provide procedures for withholding of any income or employment taxes from benefits payable hereunder. 5.2 CLAIMS PROCEDURE. (a) CLAIM, DENIAL AND NOTICE: Any participant who disagrees with the Administrator's determination of his right to benefits or the amount of the benefits shall file a written claim for the benefits he believes he is entitled to. If the Administrator denies the claim, in whole or in part, he shall furnish the participant with written notice of the denial of his claim within sixty (60) days of receipt of the claim. Such notice shall be written in a manner calculated to be understood by the participant and shall contain the specific reasons for such denial, specific references to pertinent Plan provisions on which the denial is based, a description of additional material or information which is needed to complete the claim and why such is necessary, and an explanation of the Plan's appeal procedure. (b) APPEAL: Within sixty (60) days after the receipt of a notice that his claim was denied, the claimant may appeal the denial of his claim to the Administrator in writing stating the reason for his appeal and submitting any issues or comments for the Administrator's review. (c) DECISION ON APPEAL: Within sixty (60) days of receipt of an appeal, the Administrator shall mail to the applicant a written notice of his decision setting forth, in a manner calculated to be understood by the applicant, the specific reasons for his decision and the specific references to the pertinent Plan provisions on which his decision was based. 5.3 INDEMNITY FOR LIABILITY. The Company shall indemnify the Administrator against any and all claims, losses, damages, expenses, including counsel fees, incurred by the Administrator and any liability, including any amounts paid in settlement with the Company's approval, arising from the Administrator's action or failure to act, except when the same is judicially determined to be attributable to the gross negligence or willful misconduct of the Administrator. SECTION 6. MISCELLANEOUS 6.1 PLAN YEAR. The plan year shall be the calendar year. 6.2 AMENDMENT OR TERMINATION. The Company reserves the right to amend, extend or terminate this Plan at any time. However, the benefits provided in Section 4.1 shall remain in effect for at least one year subsequent to the Reorganization Effective Date. A participant whose employment terminates after the termination or amendment of this Plan shall be entitled only to the benefits available under the Plan, if any, in existence at his termination of employment. In Witness Whereof, Eagle-Picher Industries, Inc. has caused this amendment and restatement of the plan to be executed by its duly authorized corporate officers this _________ day of November, 1996. EAGLE-PICHER INDUSTRIES, INC. By: _______________________ Attest: Thomas E. Petry Chairman of the Board and Chief Executive Officer ___________________________ EAGLE-PICHER INDUSTRIES, INC. OFFICERS' SEVERANCE PLAN SECTION 1. THE PLAN 1.1 THE PLAN. Effective upon entry of an order confirming the Third Amended Consolidated Plan of Reorganization, Eagle-Picher Industries, Inc. ("Company") adopts the following severance plan (the "Plan"). The Plan is intended to be an employee welfare benefit plan under Section 201(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). To the extent it may be determined to be a pension plan, it is an unfunded plan maintained to provide benefits to certain individuals described in Section 201(2) of ERISA. SECTION 2. DEFINITIONS 2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall mean: (a) "ADMINISTRATOR" means the Company's Director of Taxes or his designee. The Administrator shall be a named fiduciary under the Plan. (b) "BASE PAY" means the participant's base annual pay rate at the date of his termination of employment. (c) "BUSINESS DAY" means any day on which commercial banks are required to be open for business in Cincinnati, Ohio. (d) "COMPANY" means Eagle-Picher Industries, Inc., or any successor thereto. (e) "CONFIRMATION DATE" means the date of entry of an order confirming the Reorganization Plan. (f) "CONFIRMATION ORDER" means the order or orders of the court confirming the Reorganization Plan. (g) "ELIGIBLE EMPLOYEES" means Officers of the Company employed in the Cincinnati, Ohio General Office. (h) "EXECUTIVE OFFICERS" means Thomas E. Petry, Andries Ruijssenaars, David N. Hall, Wayne R. Wickens, Carroll D. Curless and James A.Ralston. (i) "OFFICERS" means officers of Eagle-Picher Industries, Inc. (j) "REORGANIZATION EFFECTIVE DATE" means the first Business Day after the date on which all of the conditions precedent to the effectiveness of the Reorganization Plan specified in Section 7.9 of the Reorganization Plan have been satisfied or waived, or if a stay of the Confirmation Order is in effect on such date, the first Business Day after the expiration, dissolution, or lifting of such stay. (k) "REORGANIZATION PLAN" means the Third Amended Consolidated Plan of Reorganization of the Company and its affiliated debtors, either in its present form or as it may be amended, supplemented, or otherwise modified from time to time, and the exhibits and schedules to the foregoing, as the same may be in effect at the time such reference becomes operative. (l) "SERVICE" means Vesting Service as defined in the Eagle-Picher Retirement Income Plan for Salaried Employees. (m) "WEEK'S PAY" means a participant's Base Pay divided by 52. 2.2 GENDER REFERENCE. Any words in this Plan document (or amendments to it) which are used in one gender shall be read and construed to mean or include the other gender wherever they would so apply. SECTION 3. PARTICIPATION 3.1 PARTICIPANTS. Eligible Employees employed on the Confirmation Date shall become participants on that date. Participation by the Executive Officers shall cease upon the effective date of the employment contracts described in Section 7.11 of the Reorganization Plan. 3.2 NEW PARTICIPANTS. Anyone meeting the definition of Eligible Employee after the Confirmation Date shall become a participant after completion of three months of Service. The Company's Chief Executive Officer can waive any service period required of a new participant by a written letter to the participant with a copy to the Administrator. SECTION 4. BENEFITS 4.1 SEVERANCE BENEFIT. Participants terminated by the Company on or after the Confirmation Date other than for cause will receive a Base Severance Benefit, a Supplemental Severance Benefit and Group Medical and Life Insurance Benefits as described herein. 4.2 BASE SEVERANCE BENEFIT. The Base Severance Benefit will provide one Week's Pay for each completed year of Service and, for any partial year of Service, one-twelfth Week's Pay for each completed month of Service. Payments shall be reduced dollar for dollar by compensation earned for services rendered by a participant for a subsequent employer during the period Base Severance Benefits are being paid. The minimum Base Severance Benefit shall be two Week's Pay. Payments under the Base Severance Benefit will be made under the general payroll practice for the unit in which the participant was employed. 4.3 SUPPLEMENTAL SEVERANCE BENEFIT. The Supplemental Severance Benefit will provide one year's Base Pay. The Supplemental Severance Benefit will provide two years' Base Pay for an Officer employed in the Cincinnati, Ohio, General Office who becomes entitled to a benefit under Section 4.1 (i) before the first anniversary of the Reorganization Effective Date, and (ii) after the Officer reaches age 50. The Supplemental Severance Benefit shall be paid in a lump sum on termination of employment. 4.4 GROUP MEDICAL AND LIFE INSURANCE BENEFITS. The Group Medical and Life Insurance Benefits will provide continued participation in the medical indemnity benefits, self-funded medical benefits, health maintenance organizations, and group term life insurance benefits (including the additional group term life insurance available at employee cost) as if the participant were an active employee of the Company or an Affiliate. These benefits will continue for one week for each year of Service unless similar coverage is obtained from a subsequent employer. Any period for which medical benefits are provided hereunder shall reduce the period for which COBRA benefits are available. These benefits shall continue under the participant's election in force when his severance occurs, subject to any new election that would be available to him as an active employee. If the HMO or medical indemnity provider refuses to continue coverage for the participant, the participant will receive coverage under the self-funded medical benefit program available to employees at his location. 4.5 VACATION PAY. Any existing practices of the Company or Affiliates with respect to payment for unused vacation time at termination of employment shall not be affected by this Plan. 4.6 DEATH OF PARTICIPANT. No benefits shall be payable upon the death of a participant except for any payment which may have been due prior to his date of death. SECTION 5. ADMINISTRATION 5.1 POWERS AND DUTIES. The Administrator shall have the power and the duty to take all action, and to make all decisions necessary or proper to carry out the Plan, including, without limitation, the following: (a) To interpret the Plan, which interpretations shall be final and conclusive; (b) To compute the benefit to be paid to any person under the Plan; (c) To provide procedures for withholding of any income or employment taxes from benefits payable hereunder. 5.2 CLAIMS PROCEDURE. (a) CLAIM, DENIAL AND NOTICE: Any participant who disagrees with the Administrator's determination of his right to benefits or the amount of the benefits shall file a written claim for the benefits he believes he is entitled to. If the Administrator denies the claim, in whole or in part, he shall furnish the participant with written notice of the denial of his claim within sixty (60) days of receipt of the claim. Such notice shall be written in a manner calculated to be understood by the participant and shall contain the specific reasons for such denial, specific references to pertinent Plan provisions on which the denial is based, a description of additional material or information which is needed to complete the claim and why such is necessary, and an explanation of the Plan's appeal procedure. (b) APPEAL: Within sixty (60) days after the receipt of a notice that his claim was denied, the claimant may appeal the denial of his claim to the Administrator in writing stating the reason for his appeal and submitting any issues or comments for the Administrator's review. (c) DECISION ON APPEAL: Within sixty (60) days of receipt of an appeal, the Administrator shall mail to the applicant a written notice of his decision setting forth, in a manner calculated to be understood by the applicant, the specific reasons for his decision and the specific references to the pertinent Plan provisions on which his decision was based. 5.3 INDEMNITY FOR LIABILITY. The Company shall indemnify the Administrator against any and all claims, losses, damages, expenses, including counsel fees, incurred by the Administrator and any liability, including any amounts paid in settlement with the Company's approval, arising from the Administrator's action or failure to act, except when the same is judicially determined to be attributable to the gross negligence or willful misconduct of the Administrator. SECTION 6. MISCELLANEOUS 6.1 PLAN YEAR. The plan year shall be the calendar year. 6.2 AMENDMENT OR TERMINATION. The Company reserves the right to amend, extend or terminate this Plan at any time. However, the benefits provided in Section 4.1 shall remain in effect for at least one year subsequent to the Reorganization Effective Date. A participant whose employment terminates after the termination or amendment of this Plan shall be entitled only to the benefits available under the Plan, if any, in existence at his termination of employment. 6.3 UNFUNDED PLAN. The Plan shall be unfunded and all benefit payments shall be made from the general assets of Eagle-Picher Industries, Inc. In Witness Whereof, Eagle-Picher Industries, Inc. has caused this plan to be executed by its duly authorized corporate officers this _________ day of November, 1996. EAGLE-PICHER INDUSTRIES, INC. By: -------------------------- Attest: Thomas E. Petry Chairman of the Board and Chief Executive Officer - ------------------------ /s/ James A. Ralston -------------------------- Name: James A. Ralston Title: Vice President, General Counsel and Secretary UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "8.1" EXECUTORY CONTRACTS OR UNEXPIRED LEASES TO BE ASSUMED [THIS PAGE LEFT BLANK INTENTIONALLY] ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: CINCINNATI INDUSTRIAL MACHINERY - -------------------------------------------------------------------------------- Herman Engineering Inc Sales Representative 0.00 5011 28th Street, S.E. Agreement Grand Rapids, MI 45912 - -------------------------------------------------------------------------------- Holloway & Assoc Sales Representative 0.00 P.O. Box 100 Agreement 501 Archdale Dr., Ste. 225 Charlotte, NC 28217 - -------------------------------------------------------------------------------- Lohrer, Larry Sales Representative 0.00 260 Northland Blvd., Ste. 224 Agreement Cincinnati, OH 45246-3651 - -------------------------------------------------------------------------------- Mechanics Laundry Service Agreement 31.66 711 E. Vermont Ave. 10/19/90 Indianapolis, IN 46202 - -------------------------------------------------------------------------------- A8.1-1 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: CONSTRUCTION EQUIPMENT - -------------------------------------------------------------------------------- Caterpillar, Inc. Warranty Agreement 0.00 600 W. Washington St. E. Peoria, IL 61630-0001 - -------------------------------------------------------------------------------- Equipos de Acuna SA de CV Intercompany Agreement undetermined Carretera Presa La Amistad, KM 9 07/23/86 CD Acuna, Coahuila Mexico - -------------------------------------------------------------------------------- Weaver, David Real Estate Lease 139.38 500 E. 50th Street 01/01/80 Lubbock, TX 79404-3726 - -------------------------------------------------------------------------------- A8.1-2 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: EAGLE-PICHER MINERALS, INC. - -------------------------------------------------------------------------------- ACF Industries Inc. RR Hopper Car Lease 0.00 3301 Rider Trail South 08/01/79 Earth City, MO 63045-1309 - -------------------------------------------------------------------------------- ACF Industries Inc. RR Hopper Car Lease 0.00 3301 Rider Trail South 06/01/88 Earth City, MO 63045-1309 - -------------------------------------------------------------------------------- Anderson, Virginia C. Mining Lease 0.00 6861 N. Ocean Blvd. 01/01/80 Ocean Ridge, FL 33435 - -------------------------------------------------------------------------------- Bohanan, James A. Mining Lease 0.00 208 Parkview 01/01/80 PO Box 293 Luling, TX 78648 - -------------------------------------------------------------------------------- Brown, Lola K. Mining Lease 150.00 Route 1, Box 357 04/16/74 Fernely, NV 89408-9746 - -------------------------------------------------------------------------------- Brown, Lola K. Mining Lease 0.00 Route 1, Box 357 03/01/84 Fernely, NV 89408-9746 - -------------------------------------------------------------------------------- Catellus Development Corp Mining Lease 0.00 201 Mission Street, Ste. 250 12/01/71 San Francisco, CA 94105 - -------------------------------------------------------------------------------- Catellus Development Corp Commercial Lease 0.00 201 Mission Street, Ste. 250 02/01/80 San Francisco, CA 94105 - -------------------------------------------------------------------------------- Copeland, Ella Mae Mining Lease 0.00 1452 Plymouth Rock 01/01/80 Clovis, CA 93612-2444 - -------------------------------------------------------------------------------- Cowie, Elizabeth Herrmann Mining Lease 1,530.08 4 Hawk Lane, North Oaks 01/01/80 St. Paul MN 55127 - -------------------------------------------------------------------------------- Diatomite Products Co Mining Lease 0.00 5 Greenwood Ave., N.W. 07/18/79 Bend, OR 97701-2028 - -------------------------------------------------------------------------------- Eagle-Picher Industries Inc Agency Agreement undetermined 580 Walnut St. 12/01/86 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- Eagle-Picher Industries Inc Export Management Agreement undetermined 580 Walnut St. 12/01/86 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- A8.1-3 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Fischer, Dalmar Mining Lease 0.00 618 Beacon St. 01/01/80 Newton Centre, MA 02159 - -------------------------------------------------------------------------------- Fischer, Jeannette Mining Lease 0.00 618 Beacon Street 01/01/80 Newton Center, MA 02159 - -------------------------------------------------------------------------------- Fisk, Walter M. Mining Lease 400.00 P.O. Box 458 07/27/87 Lovelock, NV 89419-0458 - -------------------------------------------------------------------------------- GE Rail Car Service Corp. RR Hopper Car Lease 0.00 33 W. Monroe Street 04/01/89 Chicago, IL 60603-5302 - -------------------------------------------------------------------------------- GE Rail Car Service Corp. RR Hopper Car Lease 0.00 33 W. Monroe Street 09/01/90 Chicago, IL 60603-5302 - -------------------------------------------------------------------------------- GE Rail Car Service Corp. RR Hopper Car Lease 0.00 33 W. Monroe Street 10/01/90 Chicago, IL 60603-5302 - -------------------------------------------------------------------------------- Grove, Robert E. Farm Lease 1,331.45 2331 Loop Road 04/01/87 Vale, OR 97918-5636 - -------------------------------------------------------------------------------- Knight, James A. Mining Lease 4,131.23 135 S. Elm St. 01/01/80 Hinsdale, IL 60521 also: - ----- c/o S. Duhl, Schwarts & Freeman 401 N. Michigan #1900 Chicago, IL 60611-4206 - -------------------------------------------------------------------------------- Moore, Leonard W. Farm Lease 0.00 Route 1, Box 451 04/01/87 Vale, OR 97918-9801 - -------------------------------------------------------------------------------- Moran, Richard T. Residential Lease 0.00 2558 Graham Blvd. 12/22/89 Vale, OR 97918-5625 - -------------------------------------------------------------------------------- Rauch, John Rental Agreement 0.00 1340 Nixon Avenue 01/29/80 Reno, NV 89509-2640 - -------------------------------------------------------------------------------- Savage, Louise Mining Lease 0.00 Savage, Thomas & Thomas Jr. 01/01/80 Trust of T. Savage 1949/T.C. Savage, Trustee 1700 1st Bank Building St. Paul, MN 55101 - -------------------------------------------------------------------------------- A8.1-4 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- SFP Minerals Corp. Mineral Lease 0.00 P.O. Box 27019 12/01/66 Albuquerque, NM 87125-7019 - -------------------------------------------------------------------------------- SFP Minerals Corp. Sand & Gravel Lease 4,364.32 P.O. Box 27019 11/14/85 Albuquerque, NM 87125-7019 - -------------------------------------------------------------------------------- Southern Pacific Trans Co Commercial Lease 17.28 One Market Plaza 12/01/70 San Francisco, CA 94105 - -------------------------------------------------------------------------------- Southern Pacific Trans Co. Industrial Lease 0.00 One Market Plaza 03/14/80 San Francisco, CA 94105 - -------------------------------------------------------------------------------- State of Oregon Mining Lease 0.00 Division of State Lands 09/02/82 1600 State Street Salem, OR 97310-0302 - -------------------------------------------------------------------------------- Terminal Mini Warehouse Lease 12/15/83 61.94 2900 Vassar Street Reno, NV 89502-3224 - -------------------------------------------------------------------------------- Terminal Mini Warehouse Rental Agreement 0.00 2900 Vassar Street 04/01/84 Reno, NV 89502-3224 - -------------------------------------------------------------------------------- Terminal Mini Warehouse Rental Agreement 0.00 2900 Vassar Street 04/01/84 Reno, NV 89502-3224 - -------------------------------------------------------------------------------- Tweedt, Andre M., Jr. Mining Lease 16.67 P.O. Box 59 03/01/84 Durham, CA 95938-0059 - -------------------------------------------------------------------------------- Tweedt, John A. Mining Lease 16.67 11895 Parey Avenue 03/01/84 Red Bluff, CA 96080-8982 - -------------------------------------------------------------------------------- Tweedt, Peter Mining Lease 16.67 424 Stanford Drive 03/01/84 Arcadia, CA 91006 - -------------------------------------------------------------------------------- Twiname, John & Carolyn A. Mining Lease 0.00 60 East End Avenue 01/01/80 New York, NY 10028-7907 - -------------------------------------------------------------------------------- US Postmaster Post Office Box Rental 0.00 2000 Vassar 03/20/80 Reno, NV 89510 - -------------------------------------------------------------------------------- A8.1-5 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: ELECTRONICS - -------------------------------------------------------------------------------- Abel Lemon et al Distributor Sales Agreement 0.00 Division of La Porte Group 02/15/90 Australia, Ltd. 26 Fariola Street Silverwater, New South Wales, 2141 Australia - -------------------------------------------------------------------------------- Albright, Lawrence Consultant Agreement 58.06 Route 1, Box 365 10/15/84 Neosho, MO 64850-9801 - -------------------------------------------------------------------------------- Chemag Aktiengesellschaft Distributor Sales Agreement 0.00 Postfach 970167 08/21/90 Senckenbergenlage 10/12 D-6000 Frankfurt AM Main 97 Germany - -------------------------------------------------------------------------------- City of Joplin Real Estate Lease 0.00 P.O. Box 1355 10/01/90 303 E. 3rd Street Joplin, MO 64802-1355 - -------------------------------------------------------------------------------- Diehl & Eagle-Picher GMBH License 0.00 Bahnhofsplatz 6 06/26/89 D-8500 Nuernberg 70 Germany - -------------------------------------------------------------------------------- Diehl & Eagle-Picher GMBH Customer Sales Contract 0.00 Bahnhofsplatz 6 06/26/90 D-8500 Nuernberg 70 Germany - -------------------------------------------------------------------------------- Diehl & Eagle-Picher GMBH Customer Sales Contract 0.00 Bahnhofsplatz 6 08/29/90 D-8500 Nuernberg 70 Germany - -------------------------------------------------------------------------------- Diehl GMBH & C Cooperation Agreement 0.00 Stephanstrassr 49 06/09/89 D-8500 Nuernberg 30 Germany - -------------------------------------------------------------------------------- Dons Machine Shop Lease 0.00 1021 Moffet Street 07/07/77 Joplin, MO 64801-1024 - -------------------------------------------------------------------------------- Evode Laboratories Secrecy Agreement 0.00 Stafford St. 16 3 EH 02/10/89 United Kingdom - -------------------------------------------------------------------------------- A8.1-6 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Flexibulk Ltd. Distributor Sales Agreement 0.00 Davidson House Upper St. John's 05/14/90 Street Lichfield, Staffordshire WS14 9DU United Kingdon - -------------------------------------------------------------------------------- HB Fuller Co, Research & Dev. Confidentiality Agreement 0.00 Laboratory 09/07/89 1200 Wolters Blvd. Vadnais Heights, MN 55110-5146 - -------------------------------------------------------------------------------- Le Clanche SA License 0.00 48 Avenue De Grandson Ch 1401 Yuerdon, Switzerland - -------------------------------------------------------------------------------- Massey Machine Shop Lease 0.00 1915 Iron Gates Road 01/01/78 Joplin, MO 64801 - -------------------------------------------------------------------------------- Meheffy, Orville A. Medical Services Agreement 0.00 2817 McClelland Blvd., Ste. 108 02/01/86 Joplin, MO 64801 - -------------------------------------------------------------------------------- Morton International Secrecy Agreement 0.00 1275 Lake Avenue 01/01/83 Woodstock, IL 60098-7415 - -------------------------------------------------------------------------------- Swiss Federal Aircraft Factory License 0.00 CH 6032 Emmen, Switzerland - -------------------------------------------------------------------------------- Union Carbide Chemicals & Plastics License Agreement 0.00 39 Old Ridgebury Road 10/01/82 Danbury, CT 06817-0001 - -------------------------------------------------------------------------------- A8.1-7 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: FABRICON PRODUCTS - -------------------------------------------------------------------------------- Davies Packing Manufacturer Representative 0.00 P.O. Box 3825 07/19/81 2901 Brixham Drive Richmond, VA 23235-7825 - -------------------------------------------------------------------------------- Jackson & Assoc. Manufacturer Representative 0.00 5826 Castle Lane 03/26/90 Norcross, GA 30093-3801 - -------------------------------------------------------------------------------- Marks, George Manufacturer Representative 0.00 310 Bok Road 05/01/83 Wyncote, PA 19095-2004 - -------------------------------------------------------------------------------- Pierce, Earl Manufacturer Representative 0.00 7 N. Gate Road 05/01/83 West Chester, PA 19380 - -------------------------------------------------------------------------------- A8.1-8 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: GENERAL OFFICE - -------------------------------------------------------------------------------- BIS Offsite Records Real Property Lease - 32.28 318 W. Third St. Storage Cincinnati, Ohio 45202-3408 - -------------------------------------------------------------------------------- Brooks, BB Mineral Rights Interest - 0.00 1501 Mission 07/30/80 Bartlesville, OK 74003 - -------------------------------------------------------------------------------- Bunting Bearings Corp. Subordination Agreement - 0.00 P.O. Box 729 02/23/89 1001 Holland Park Blvd. Holland, OH 43528-0729 - -------------------------------------------------------------------------------- Bunting Bearings Corp. Indemnity Agreement - 0.00 P.O. Box 729 02/23/89 1001 Holland Park Blvd. Holland, OH 43528-0729 - -------------------------------------------------------------------------------- City of Joplin Lease & Operation Agreement 0.00 303 E. Third Street - 12/18/90 P.O. Box 1355 Joplin, MO 64802-1355 - -------------------------------------------------------------------------------- City of Joplin Lease & Operation Agreement 0.00 303 E. Third Street - 12/18/90 P.O. Box 1355 Joplin, MO 64802-1355 - -------------------------------------------------------------------------------- Cooper, Geoffrey Vernon Acquisition of Shares (GVC) 189,825.80 Green Hayes, Broad Street - 08/25/88 (British pounds Brixworth sterling) Northamptonshire, England, U.K. - -------------------------------------------------------------------------------- Donlen Corporation Master Agreement 44 0.00 500 Lake Cook Road Deerfield, IL 60015-4996 - -------------------------------------------------------------------------------- Eagle-Picher, Inc. Export Management Agreement undetermined 580 Walnut Street - 01/01/85 Suite 1300 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- Eagle-Picher, Inc. Agency Agreement - 01/01/85 undetermined 580 Walnut Street Suite 1300 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- Firm Diehl Incorporation of Joint 0.00 Stephenstrasse 49 Company, amendments 1978, 8500 Nuernberg 30 1986, 1989 - 05/19/71 Federal Republic of Germany - -------------------------------------------------------------------------------- A8.1-9 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Foundation Technology Ltd. License Agreement - 0.00 28 Nerang Centre 06/28/89 Price Street, Nerange, Queensland, 4211 Australia - -------------------------------------------------------------------------------- Goldman Sachs Group Industrial Revenue Bond 932.40 85 Broad Street (Remarketing Agent-Oregon New York, NY 10005 IRB) - 12/01/84 - -------------------------------------------------------------------------------- Lane, Vincent G.J. Acquisition of Shares; 126,860.00 The Beeches, Burnmill Road Indemnity (GVC) - 08/25/88 (British pounds Market Harborough sterling) Leicestershire, England LE16 7JG - -------------------------------------------------------------------------------- Ohio Office Machines Maintenance Agreement - 0.00 124 Burkhart Avenue 08/15/90 Cincinnati, OH 45215 - -------------------------------------------------------------------------------- Pitney Bowes Credit Corp. Equipment Lease - 06/01/88 12.77 P. O. Box 5151 Norwalk, CT 06851 - -------------------------------------------------------------------------------- Pitney Bowes Corp. Maintenance Agreement - 0.00 P.O. Box 14447 01/01/91 Cincinnati, OH 45214 - -------------------------------------------------------------------------------- Powers Energy, Inc. Mineral Rights Interest - 0.00 11930 Menaul Blvd., N.E. 07/30/80 Suite 223 Albuquerque, NM 87112-2461 - -------------------------------------------------------------------------------- Rozai Kogyo Kaisha License Agreement - 0.00 5, 1-Chome Minami 04/18/70 Horeidori Nishiku Osaka, Japan - -------------------------------------------------------------------------------- Security Water & Sanitation Dist. Test Well License & Land 1,431.50 231 Security Blvd. Use Agreement - 04/01/90 P.O. Box 5156 Joplin, MO 64802 - -------------------------------------------------------------------------------- Sun Refining & Marketing Co. Mineral Rights Interest - 0.00 P.O. Box 2039 07/30/80 Tulsa, OK 74102-2039 - -------------------------------------------------------------------------------- Veluwse Machine Industries BV License Agreements - 0.00 P. O. Box 161 05/30/73 816 AD EDE The Netherlands - -------------------------------------------------------------------------------- A8.1-10 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: HILLSDALE TOOL - -------------------------------------------------------------------------------- Grede Vassar Inc. Real Estate Lease 0.00 P.O. Box 26499 06/01/89 Milwaukee, WI 53226-0499 - -------------------------------------------------------------------------------- A8.1-11 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: INJECTION MOLDING (PARIS) - -------------------------------------------------------------------------------- Future Three Software Inc. Software Support Agreement 0.00 33031 Schoolcraft Rd. 03/22/90 Livonia, MI 48150-1604 - -------------------------------------------------------------------------------- Mid American Telephone Supply Telephone System Service 0.00 1628 Wabash 02/18/90 Terre Haute, IN 47807-3321 - -------------------------------------------------------------------------------- A8.1-12 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: MAT - -------------------------------------------------------------------------------- Kalcor Coatings Co. Use of Land - 05/01/80 0.00 37721 Stevens Boulevard Willoughby, OH 44094-6231 - -------------------------------------------------------------------------------- A8.1-13 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: MICHIGAN AUTOMOTIVE RESEARCH CORP (MARCO) - -------------------------------------------------------------------------------- Creative Investment Assoc. Real Estate Lease 0.00 P.O. Box 7209 09/15/88 1254 N. Main Street Ann Arbor, MI 48107-7209 - -------------------------------------------------------------------------------- Detroit Edison Co. Primary Supply Rate 13.38 2000 Second Avenue Schedule D6 Detroit, MI 48226 05/15/90 - -------------------------------------------------------------------------------- Detroit Edison Co. Parallel Operation & 0.00 2000 Second Avenue Standby Service Detroit, MI 48226 07/23/90 - -------------------------------------------------------------------------------- Detroit Edison Co. Parallel Operation 0.00 2000 Second Avenue Interconnection Agreement Detroit, MI 48226 08/01/90 - -------------------------------------------------------------------------------- Federal Energy Regulatory Comm Qualification as a 0.00 Security of the Commission Cogeneration Facility 825 North Capital St., N.E. 07/03/90 Washington, DC 20426 - -------------------------------------------------------------------------------- A8.1-14 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: ORCOMATIC - -------------------------------------------------------------------------------- Iron Mountain Group Inc. Service Agreement 1.20 P.O. Box 1772 01/01/91 Albany, NY 12201-1772 - -------------------------------------------------------------------------------- Unifirst Corp. Rental of Uniforms & rugs 2,101.35 205 Garfield Avenue 01/02/91 Stratford, CT 06497-7103 Claim Assigned to: - ------------------ Amroc Investments Inc. Sonia Gardner 335 Madison Ave., 26th Floor New York, NY 10017 - -------------------------------------------------------------------------------- A8.1-15 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: PLASTICS - -------------------------------------------------------------------------------- Adams/Remco Inc. Maintenance Agreement 0.00 1109 Sherman Drive 11/03/90 Ft. Wayne, IN 46808-3430 - -------------------------------------------------------------------------------- ADT Security Systems Service Agreement 0.00 P.O. Box 6720 01/01/91 8770 Manchester St. Louis, MO 63144 - -------------------------------------------------------------------------------- Arrow Service Inc. Service Agreement 0.00 4121 Northrup 01/01/91 Ft. Wayne, IN 46805-1034 - -------------------------------------------------------------------------------- B Safe Extinguishers Service Agreement 0.00 310 Railroad Street 01/01/91 Huntington, IN 46750-2845 - -------------------------------------------------------------------------------- Bertsch Coffee Service Agreement 6,099.79 P.O. Box 815 01/01/91 Warsaw, IN 46580 Claim Assigned to: - ------------------ Debt Acquisition Co. of America Kirsen Kuykendall 2120 W. Washington St. San Diego, CA 92110 - -------------------------------------------------------------------------------- Dekalb Fire & Safety Inc Service Agreement 709.93 P.O. Box 406 10/01/90 103 Depot Street Auburn, IN 46706-0406 - -------------------------------------------------------------------------------- GTE Telephone Operations North Utility Agreement 4,616.96 Area 08/15/90 11611 N. Meridian, Ste 600 MMI Carmel, IN 46032 - -------------------------------------------------------------------------------- IBM Information Network Service Agreement 0.00 P.O. Box 30104 01/23/89 Tampa, FL 33630-3104 - -------------------------------------------------------------------------------- Jims Auto Care Service Agreement 0.00 P.O. Box 78 01/01/91 Grabill, IN 46741-0078 - -------------------------------------------------------------------------------- A8.1-16 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Medec Inc. Service Agreement 225.00 1012 LaFort 01/01/91 Ft. Wayne, IN 46805-4333 Claim Assigned to: - ------------------ Debt Acquisition Co. of America Kirsen Kuykendall 2120 W. Washington St. San Diego, CA 92110 - -------------------------------------------------------------------------------- Mid City Office Systems Maintenance Agreement 489.30 P.O. Box 403 07/20/90 138 E. Seventh Street Auburn, IN 46706-0403 Claim Assigned to: - ------------------ Debt Acquisition Co. of America Kirsen Kuykendall 2120 W. Washington St. San Diego, CA 92110 - -------------------------------------------------------------------------------- National Serv All Waste Disposal Agreement 0.00 P.O. Box 2234 01/01/91 Ft. Wayne, IN 46809 - -------------------------------------------------------------------------------- Northern Indiana Trading Co. Utility Agreement 67,819.72 P.O. Box 526 10/28/88 Auburn, IN 46706-0526 - -------------------------------------------------------------------------------- Northern Indiana Trading Co. Utility Agreement 0.00 P. O. Box 526 10/28/88 Auburn, IN 46706-0526 - -------------------------------------------------------------------------------- Nowak & Williams Supply Service Agreement 0.00 302 W. Superior Street 01/01/91 Ft. Wayne, IN 46802-1112 - -------------------------------------------------------------------------------- Nowak & Williams Supply Service Agreement 0.00 302 W. Superior Street 01/01/91 Ft. Wayne, IN 46802-1112 - -------------------------------------------------------------------------------- TDJ Snow Plowing Service Agreement 0.00 7791 N. Goshen Road 01/01/91 Huntington, IN 46750-8879 - -------------------------------------------------------------------------------- VanDyne Crotty Service Agreement 0.00 3115 Independence Drive 01/01/91 Ft. Wayne, IN 46808-4502 - -------------------------------------------------------------------------------- Welding Services Inc. Service Agreement 0.00 836 Market Street 01/01/91 Huntington, IN 46750-2870 - -------------------------------------------------------------------------------- A8.1-17 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: ROSS ALUMINUM FOUNDRIES - -------------------------------------------------------------------------------- Aktiengesellschaft Customer PO 80493 0.00 Kuhnle Kopp & Kausch 11/23/90 Postfach 265, 6710 Frankenthal Pfalz, Germany - -------------------------------------------------------------------------------- Cummins Engine Company Inc Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Cummins Engine Company Inc. Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Cummins Engine Company Inc. Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Cummins Engine Company Inc. Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Cummins Engine Company Inc. Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Cummins Engine Company Inc. Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Cummins Engine Company Inc. Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Cummins Engine Company Inc. Customer PO 940024 0.00 P.O. Box 1789 01/04/90 Columbus, IN 47202-1789 - -------------------------------------------------------------------------------- Decision Data Service Inc. Maintenance Agreement 175.91 One Progress Avenue 09/09/83 Worsham, PA 19044-3502 - -------------------------------------------------------------------------------- Gardner, Mary G., Trustee Royalty Agreement 23,481.08 2500 N. Kuther Rd., Apt. 301 02/17/89 Sidney, OH 45365 - -------------------------------------------------------------------------------- JC Sales Company Inc. Sales Representative 0.00 P.O. Box 2566, 200 East Howard St. Agreement Des Plaines, IL 60018 09/01/82 - -------------------------------------------------------------------------------- John P Winn Assoc. Sales Representative 0.00 10164 Bear Valley Road Agreement Jacksonville, FL 32257-5960 12/01/89 - -------------------------------------------------------------------------------- A8.1-18 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: SPECIALTY MATERIALS - -------------------------------------------------------------------------------- Alco Capital Resource Inc. Copier Lease - 12/19/90 372.26 P.O. Box 9915 Macon, GA 31298-2099 - -------------------------------------------------------------------------------- Ameritech Operator Lease 4,697.63 7255 W. 98th Terrace, Ste. 200 12/04/89 Overland Park, KS 66210 - -------------------------------------------------------------------------------- Ameritech Operator Lease 0.00 7255 W. 98th Terrace, Ste. 200 12/08/89 Overland Park, KS 66210 - -------------------------------------------------------------------------------- Ameritech Operator Lease 0.00 7255 W. 98th Terrace, Ste. 200 03/01/90 Overland Park, KS 66210 - -------------------------------------------------------------------------------- Eagle Picher Indus Material GMBH Sales Commission undetermined P.O. Box 1549, D-74605 10/01/90 Ohringen, Germany - -------------------------------------------------------------------------------- Theresa A. Meyers Government Contract-Cost 0.00 P. O. Box 29396 Plus Fixed Fee Brookland Station 07/18/90 Washington, D.C. 20017 - -------------------------------------------------------------------------------- National Cancer Institute Cost Plus Fixed Fee 0.00 Research Contracts Branch 03/16/87 Executive Plaza South, Room 620 Bethesda, MD 20892 - -------------------------------------------------------------------------------- National Cancer Institute DOD Cost Plus Fixed Fee 0.00 Research Contracts Branch 06/18/86 Executive Plaza South, Room 620 Bethesda, MD 20892 - -------------------------------------------------------------------------------- Pitney Bowes Operator Lease 0.00 23 Barney Place 05/01/85 Stamford, CT 06926 - -------------------------------------------------------------------------------- A8.1-19 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: TRANSICOIL, INC. - -------------------------------------------------------------------------------- A Tech Instruments Ltd Sales Representative 0.00 50 Weybright Court Agreement Unit 24 02/16/90 Scarborough, Ontario M1S5A8 Canada - -------------------------------------------------------------------------------- Advance Control Equip Co Sales Representative 0.00 6404 Mallory Drive Agreement Richmond, VA 23226-2912 12/01/82 - -------------------------------------------------------------------------------- Advent Components Corp Sales Representative 0.00 3080 N. Civic Center Plaza #30 Agreement Scottsdale, AZ 85251-7930 08/01/88 - -------------------------------------------------------------------------------- AMJ Equipment Corp Sales Representative 0.00 P.O. Box 6320 Agreement Lakeland, FL 33807-6320 11/03/89 - -------------------------------------------------------------------------------- Douglas Lee Associates Inc. Sales Representative 0.00 249 Ayer Rd., Ste. 304 Agreement Harvard, MA 01451-1133 04/16/90 - -------------------------------------------------------------------------------- Eagle-Picher Industries, Inc. Export Management Agreement undetermined 580 Walnut St. 10/01/87 Cincinnati, OH 45202-3159 - -------------------------------------------------------------------------------- Eagle-Picher Industries, Inc. Agency Agreement undetermined 580 Walnut St. 12/01/87 Cincinnti, OH 45202-3159 - -------------------------------------------------------------------------------- FLW Inc Sales Representative 0.00 2930 C Grace Lane Agreement Costa Mesa, CA 92626-4194 07/01/81 - -------------------------------------------------------------------------------- FLW Southeast Inc Sales Representative 0.00 1400 Marietta Pkwy., Ste. 108 Agreement Marietta, GA 30067-8269 10/01/85 - -------------------------------------------------------------------------------- Intl. Precision Products Sales Representative 0.00 28 Blvd. Belgique Agreement MC 98000 12/16/88 Monaco - -------------------------------------------------------------------------------- J&B Technical Sales Sales Representative 0.00 211 Lexsington Avenue Agreement Pssiac, NJ 07055-6206 04/16/90 - -------------------------------------------------------------------------------- Keystone Precision Machining Lease Purchase Agreement 0.00 220 N. Center Street 05/02/90 North Wales, PA 19454-3326 - -------------------------------------------------------------------------------- A8.1-20 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- National Guardian Security Security System 0.00 Services Lease/Service 1816 W. Point Pike 07/01/90 West Point, PA 19486 - -------------------------------------------------------------------------------- Raddatz Aero Dynamic Vertriebs Sales Representative 0.00 GMBH Agreement Otto-Wagner Str. 16 03/15/89 D-8034 Germering, Germany - -------------------------------------------------------------------------------- Raeco Rep Inc. Sales Representative 0.00 253 West Joe Orr Road Agreement Chicago Heights, IL 60411-1744 09/03/85 - -------------------------------------------------------------------------------- RDP Corp. Sales Representative 0.00 5877 Huberville Ave. Agreement Dayton, OH 45431-1218 09/22/90 - -------------------------------------------------------------------------------- Russell Associates Inc Sales Representative 0.00 P. O. Box 6000 Agreement Pinellas Park, FL 34664-6000 11/01/90 - -------------------------------------------------------------------------------- Synergic Engr Corp Sales Representative 0.00 7100 OHMS Lane Agreement Edina, MN 55435 08/30/78 - -------------------------------------------------------------------------------- A8.1-21 ================================================================================ EXHIBIT 8.1 EXECUTORY CONTRACTS - -------------------------------------------------------------------------------- Creditor Contract Proposed Name Type Cure and Address and Date Amount ($) - -------------------------------------------------------------------------------- Division: WOLVERINE GASKET - -------------------------------------------------------------------------------- LDI Corporation Equipment Schedule No. 9, 758.16 30033 Clemens Road as replaced and renewed by Westlake, OH 44145-1021 Equipment Schedule No. 23- 91, to Master Lease Agreement No. 7044, dated 01/08/88 ================================================================================ A8.1-22 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "8.4" PREVIOUSLY SCHEDULED CONTRACTS [THIS PAGE LEFT BLANK INTENTIONALLY] ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: CINCINNATI INDUSTRIAL MACHINERY - -------------------------------------------------------------------------------- Lohre & Associates Printing/Advertising 0.00 Suite 101 - 2330 Victory Parkway Agreement Cincinnati, OH 45206-2809 06/28/90 - -------------------------------------------------------------------------------- A8.4-1 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: CONSTRUCTION EQUIPMENT - -------------------------------------------------------------------------------- Caterpillar Inc. License Agreement 0.00 600 W. Washington St. 08/30/65 E. Peoria, IL 61630-0001 - -------------------------------------------------------------------------------- Caterpillar Inc. License Agreement 0.00 600 W. Washington St. 11/20/68 E. Peoria, IL 61630-0001 - -------------------------------------------------------------------------------- Caterpillar Inc. License Agreement 0.00 600 W. Washington St. 05/19/81 E. Peoria, IL 61630-0001 - -------------------------------------------------------------------------------- A8.4-2 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: EAGLE-PICHER EUROPE - -------------------------------------------------------------------------------- Eagle-Picher Europe, Inc. Loan Agreement - 8/23/88 0.00 P. O. Box 779 580 Walnut St. Cincinnati, OH 45202 - -------------------------------------------------------------------------------- NBD Bank N.A. - London Loan Agreement - 8/23/88 0.00 28 Finsbury Circus London EC2M 7AU United Kingdom - -------------------------------------------------------------------------------- A8.4-3 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - ------------------------------------------------------------------------------ Division: EAGLE-PICHER MINERALS, INC. - -------------------------------------------------------------------------------- Bank of Nova Scotia Credit & Agency Agreement 0.00 New York Agency 11/02/88 One Liberty Plaza, 26th Floor New York, NY 10006-1401 - -------------------------------------------------------------------------------- Central Trust Co. N.A. Credit & Agency Agreement 0.00 201 East Fifth Street 11/02/88 Cincinnati, OH 45202-4117 - -------------------------------------------------------------------------------- Fifth-Third Bank Credit & Agency Agreement 0.00 38 Fountain Square Plaza 11/02/88 Fifth Third Center Cincinnati, OH 45263 - -------------------------------------------------------------------------------- National City Bank Credit & Agency Agreement 0.00 600 Vine Street, Suite 304 11/02/88 Cincinnati Commerce Center Cincinnati, OH 45202-4425 - -------------------------------------------------------------------------------- NBD Bank NA Credit & Agency Agreement 0.00 611 Woodward Avenue 11/02/88 Detroit, MI 48226-3408 - -------------------------------------------------------------------------------- Pittsburgh National Bank Credit & Agency Agreement 0.00 Fifth Ave. & Wood Street 11/02/88 Pittsburgh, PA 15265 - -------------------------------------------------------------------------------- Star Bank N.A. Credit & Agency Agreement 0.00 425 Walnut Street 11/02/88 Mail Location 8160 Cincinnati, OH 45202-3912 - -------------------------------------------------------------------------------- A8.4-4 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: EDI - -------------------------------------------------------------------------------- Chrysler Credit Installment Loan 0.00 40 Oak Hollow, Ste. 155 09/01/89 Southfield, MI 48034-7470 - -------------------------------------------------------------------------------- Star Bank N.A. Guarantee of Loan Agreement 0.00 425 Walnut Street 08/03/89 Mail Location 8160 Cincinnati, OH 45202-3912 - -------------------------------------------------------------------------------- A8.4-5 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: ELECTRONICS - -------------------------------------------------------------------------------- IBM Boston Remarketer Lease - 05/01/90 470,000.00 404 Wyman Street (also listed under Waltham, MA 02254 Plastics Division) - -------------------------------------------------------------------------------- A8.4-6 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: GENERAL OFFICE - -------------------------------------------------------------------------------- Amvestors Investment GRP Loan Agreement, Security 0.00 415 S.W. 8th Avenue Agreement Topeka, KS 66603-3913 03/21/89 - -------------------------------------------------------------------------------- Bank of New York (Trustee) 9 1/2 Sinking Fund 51,662,500.00 21 W. Street, 12th Floor Debentures New York, NY 10286 02/24/87 - -------------------------------------------------------------------------------- Bank of Nova Scotia Credit & Agency Agreement - 0.00 One Liberty Plaza 11/02/88 26th Floor New York, NY 10006-1401 - -------------------------------------------------------------------------------- Bank of Nova Scotia Industrial Revenue Bond - 0.00 One Liberty Plaza 12/01/84 26th Floor New York, NY 10006-1401 - -------------------------------------------------------------------------------- Bankers Trust Industrial Revenue Bond being (Trustee & Tender Agt) (Oregon) - reinstated 4 Albany Street 12/01/84 under the Plan New York, NY 10006-1592 - -------------------------------------------------------------------------------- Blue Dove Development Assn. Guarantee of Transicoil 0.00 1352 Bobarn Drive Lease Narberth, PA 19072-1147 04/21/89 - -------------------------------------------------------------------------------- Central Trust Co., N.A. (Trustee) Industrial Development Bonds 0.00 201 East Fifth Street (Loudon Cty.) - 05/01/80 Cincinnati, OH 45202-4117 - -------------------------------------------------------------------------------- Central Trust Co., N.A. Loan 0.00 201 East Fifth Street Cincinnati, OH 45202-4117 - -------------------------------------------------------------------------------- Central Trust Co., N.A. Credit & Agency Agreement - 0.00 201 East Fifth Street 11/02/88 Cincinnati, OH 45202-4117 - -------------------------------------------------------------------------------- City of Mansfield Industrial Revenue Bond - 2,052,000.00 30 N. Diamond Street 10/01/80 Mansfield, OH 44902-1716 - -------------------------------------------------------------------------------- Connecticut Mutual Life Ins. Co. Note Agreement, Guarantee - see below Private Placement Division 07/29/88 140 Garden Street Hartford, CT 06154 - -------------------------------------------------------------------------------- Connecticut Mutual Life Ins. Co. Note Agreement, Security 927,100.60 Private Placement Division Agreement - 07/29/88 140 Garden Street Hartford, CT 06154 - -------------------------------------------------------------------------------- A8.4-7 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Fifth Third Bank Credit & Agency Agreement - 0.00 38 Fountain Square Plaza 11/02/88 Fifth Third Center Cincinnati, OH 45263 - -------------------------------------------------------------------------------- First Fidelity Leasing Corp. Capitalized Lease - 10/31/90 70,932.99 255 Business Center Dr. #250 Horsham, PA 19044-3473 - -------------------------------------------------------------------------------- Grove Industrial Development Auth. Secured Note - Mortgage - 0.00 P. O. Box 1268 08/09/89 Grove, OK 74344-1268 - -------------------------------------------------------------------------------- Henry County Development Auth. Industrial Development 2,630,000.00 345 Phillips Drive Revenue Bonds - 08/01/81 McDonough, GA 30253-3425 - -------------------------------------------------------------------------------- IBM Capitalized Lease - 05/01/89 446,230.87 1300 E. Ninth Street (also listed Cleveland, OH 44114-1502 under Mat Division) - -------------------------------------------------------------------------------- Industrial Dev. Board Industrial Development Bonds 0.00 of Loudon Cty. - 05/01/80 Loudon County Courthouse Lenoir City, TN 37771 - -------------------------------------------------------------------------------- JD Manly Construction Trust Mortgage - 12/01/83 0.00 P.O. Box 491611 Leesburg, FL 34749 - -------------------------------------------------------------------------------- LDI Corporation Capitalized Lease - 02/01/90 177,796.97 30033 Clemens Road (Equipment Schedule No. 14 (also listed Westlake, OH 44145-1021 to Master Lease Agreement under No. 7044, dated 01/08/88) Wolverine Gasket Division) - -------------------------------------------------------------------------------- LDI Corporation Capitalized Lease - 03/01/90 70,089.19 30033 Clemens Road (Equipment Schedule No. 16- (also listed Westlake, OH 44145-1021 90 to Master Lease Agreement under No. 7044, dated 01/08/88) Wolverine Gasket Division) - -------------------------------------------------------------------------------- Lister, Roy D. Patent License Agreement - 0.00 457 Pine Tree 12/04/89 (also listed Keller, TX 76248 under Orthane Division) - -------------------------------------------------------------------------------- National City Bank Credit & Agency Agreement - 0.00 600 Vine Street, Ste. 304 11/02/88 Cincinnati Commerce Center Cincinnati, OH 45202 - -------------------------------------------------------------------------------- A8.4-8 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- National City Bank Industrial Revenue Bond 0.00 P.O. Box 5756 (Huntington) - 10/1/84 Reference Account 66688 Cleveland, OH 44101-0756 - -------------------------------------------------------------------------------- NBD Bank NA - London Loan Agreement - 08/23/88 0.00 28 Finsbury Circus London EC2M 7AU England - -------------------------------------------------------------------------------- NBD Bank N.A. Credit & Agency Agreement - 0.00 611 Woodward Avenue 11/02/88 Detroit, MI 48226-3408 - -------------------------------------------------------------------------------- New England Mutual Life Ins. Co. Note Agreement - 07/07/88 891,723.30 501 Boylston Street Boston, MA 02117 Claim Assigned to: - ------------------ certain affiliates of Morgens Waterfall Vintiades & Co. Jouko Tamminen 10 E. 50th St. New York, NY 10022 - -------------------------------------------------------------------------------- New England Mutual Life Ins. Co. Guarantee of E-P Note see above 501 Boylston Street Agreement - 09/14/89 Boston, MA 02117 Claim Assigned to: - ------------------ certain affiliates of Morgens Waterfall Vintiades & Co. Jouko Tamminen 10 E. 50th St. New York, NY 10022 - -------------------------------------------------------------------------------- Northern Atlantic Life Ins. Co. Loan Agreement, Security 1,546,907.11 Robbins Lane Agreement - 03/21/89 Jericho, NY 11753 Claim Assigned to: - ------------------ Morgens Waterfall Vintiades & Co. Jouko Tamminen 10 E. 50th St. New York, NY 10022 - -------------------------------------------------------------------------------- A8.4-9 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Northern Life Ins. Co. Loan Agreement, Security see above 1110 Third Avenue Agreement - 03/21/89 Seattle, WA 98111 Claim Assigned to: - ------------------ Morgens Waterfall Vintiades & Co. Jouko Tamminen 10 E. 50th St. New York, NY 10022 - -------------------------------------------------------------------------------- Northwestern Natl. Life Ins. Co. Loan Agreement, Security see above 20 Washington Avenue, South Agreement - 03/21/89 Minneapolis, MN 55401-1908 Claim Assigned to: - ------------------ Morgens Waterfall Vintiades & Co. Jouko Tamminen 10 E. 50th St. New York, NY 10022 - -------------------------------------------------------------------------------- Norwich Cmty. Development Corp. Community Development Loan - 0.00 One Thomas Plaza 03/01/71 Norwich, CT 06360-5314 - -------------------------------------------------------------------------------- Pittsburgh National Bank Credit & Agency Agreement - 0.00 Fifth & Wood Street 11/02/88 Pittsburgh, PA 15265 - -------------------------------------------------------------------------------- Port Development Corp. Industrial Development 3,078,000.00 1519 Capitol Avenue Revenue Bonds - 10/01/80 Houston TX 77002-3613 - -------------------------------------------------------------------------------- Societe Generale Financial Corp. Guarantee of Capitalized 0.00 50 Rockefeller Plaza Lease - 04/19/90 New York, NY 10020-1675 - -------------------------------------------------------------------------------- Societe Generale Financial Corp. Capitalized Lease - 04/19/90 0.00 50 Rockefeller Plaza New York, NY 10020-1675 - -------------------------------------------------------------------------------- Star Bank, N.A. Guarantee of Loan Agreement 0.00 425 Walnut Street -08/03/89 Mail Location 8160 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- Star Bank, N.A. Guarantee of Loan Agreement 0.00 425 Walnut Street - 08/03/89 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- Star Bank, N.A. of Cinti. (Trustee) Industrial Revenue Bonds see City of P.O. Box 1118 (Mansfield) - 10/01/80 Mansfield Cincinnati, OH 45202 above - -------------------------------------------------------------------------------- A8.4-10 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Star Bank, N.A. of Cinti. (Trustee) Industrial Revenue Bonds 0.00 425 Walnut Street (Storey Cty. IRB) - 04/26/83 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- Star Bank, N.A. Credit & Agency Agreement - 0.00 425 Walnut Street 11/02/88 Mail Location 8160 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- State of Oregon Industrial Revenue Bond - see Bankers Economic Development Dept. 12/01/84 Trust above 595 Cottage Street, NE Salem, OR 97410 - -------------------------------------------------------------------------------- Storey County Industrial Revenue Bonds - 0.00 "B" Street County Courthouse 04/26/83 Virginia City, NV 89440 - -------------------------------------------------------------------------------- Texas Commerce Bank (Trustee) Industrial Development see Port P. O. Box 2558 Revenue Bonds (Port Development Attn: Corporate Trust Development) - 10/01/80 above Houston, TX 77001 - -------------------------------------------------------------------------------- Trust Company Bank (Trustee) Industrial Development see Henry P. O. Box 4625 Revenue Bonds (Henry County) County above Atlanta, GA 30302-4625 - 08/01/81 - -------------------------------------------------------------------------------- U.S. Dept. of Commerce Community Development Loan 0.00 Economic Development Administration (Norwich) - 03/01/71 105 S. 7th Street, 1st Floor Philadelphia, PA 19106-3324 - -------------------------------------------------------------------------------- Washington Square Capital Inc. Loan Agreement, Security see Northern 625 Marquette Ave., South Agreement - 03/21/89 Atlantic 1500 North Star West above Minneapolis, MN 55402-1702 Claim Assigned to: - ------------------ Morgens Waterfall Vintiades & Co. Jouko Tamminen 10 E. 50th St. New York, NY 10022 - -------------------------------------------------------------------------------- A8.4-11 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: HILLSDALE TOOL - -------------------------------------------------------------------------------- Bank of Nova Scotia Credit & Agency Agreement 0.00 New York Agency 11/02/88 One Liberty Plaza, 26th Floor New York, NY 10006-1401 - -------------------------------------------------------------------------------- Central Trust Co. N.A. Credit & Agency Agreement 0.00 201 East Fifth Street 11/02/88 Cincinnati, OH 45202-4117 - -------------------------------------------------------------------------------- Fifth Third Bank Credit & Agency Agreement 0.00 38 Fountain Square Plaza 11/02/88 Fifth Third Center Cincinnati, OH 45263 - -------------------------------------------------------------------------------- National City Bank Credit & Agency Agreement 0.00 600 Vine Street, Ste. 304 11/02/88 Cincinnati Commerce Center Cincinnati, OH 45202-4425 - -------------------------------------------------------------------------------- NBD Bank N.A. Credit & Agency Agreement 0.00 611 Woodward Avenue 11/02/88 Detroit, MI 48226-3408 - -------------------------------------------------------------------------------- Pittsburgh National Bank Credit & Agency Agreement 0.00 Fifth Ave. & Wood Streets 11/02/88 Pittsburgh, PA 15222 - -------------------------------------------------------------------------------- Star Bank N.A. Credit & Agency Agreement 0.00 425 Walnut Street 11/02/88 Mail Location 8160 Cincinnati, OH 45202-3912 - -------------------------------------------------------------------------------- A8.4-12 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: MAT - -------------------------------------------------------------------------------- IBM Credit Corp. Lease Agreement - 05/16/89 446,230.87 18000 W. Nine Mile Road (also listed B/O YR6 - 14th Fl. under General Southfield, MI 48086 Office Division) - -------------------------------------------------------------------------------- Pansophic Systems Inc. License Agreement - 04/14/89 0.00 P. O. Box 95372 Chicago, IL 60694-5372 - -------------------------------------------------------------------------------- A8.4-13 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: MICHIGAN AUTOMOTIVE RESEARCH CORP (MARCO) - -------------------------------------------------------------------------------- Eagle-Picher Industries, Inc. Unsecured Loan Agreement undetermined 580 Walnut Street 09/27/88 Cincinnati, OH 45202 - -------------------------------------------------------------------------------- Fleet Credit Corp. Capitalized Equipment Lease 152,280.03 P. O. Box 37144M Agreement Pittsburgh, PA 15251 01/28/88 - -------------------------------------------------------------------------------- Fleet Credit Corp. Lease Agreement - 03/24/88 see above 111 Westminster St., 9th Fl. Providence, RI 02903-2303 - -------------------------------------------------------------------------------- Fleet Credit Corp. Lease Agreement - 05/19/88 see above 111 Westminster St., 9th Fl. Providence, RI 02903-2303 - -------------------------------------------------------------------------------- Fleet Credit Corp. Lease Agreement - 05/25/88 see above 111 Westminster St., 9th Fl. Providence, RI 02903-2303 - -------------------------------------------------------------------------------- First of America Bank-Ann Arbor Loan Agreement - 07/20/88 0.00 101 S. Main Street Ann Arbor, MI 48107 - -------------------------------------------------------------------------------- First of America Bank-Ann Arbor Loan Agreement - 04/21/89 0.00 101 S. Main Street Ann Arbor, MI 48107 - -------------------------------------------------------------------------------- First of America Bank-Ann Arbor Loan Agreement - 09/29/89 0.00 101 S. Main Street Ann Arbor, MI 48017 - -------------------------------------------------------------------------------- First of America Bank-Ann Arbor Loan Agreement - 02/20/90 0.00 101 S. Main Street Ann Arbor, MI 48017 - -------------------------------------------------------------------------------- First of America Bank-Ann Arbor Loan Agreement - 02/28/90 0.00 101 S. Main Street Ann Arbor, MI 48017 - -------------------------------------------------------------------------------- Ford Motor Credit Co. Equipment Loan Agreement 0.00 P. O. Box 371065 09/01/88 Pittsburgh, PA 15251-7065 - -------------------------------------------------------------------------------- Star Bank, N.A. Equipment Loan Agreement 0.00 425 Walnut Street 08/03/89 Mail Location 8160 Cincinnati, OH 45202-3912 - -------------------------------------------------------------------------------- Star Bank, N.A. Loan Agreement - 08/03/89 0.00 425 Walnut Street Mail Location 8160 Cincinnati, OH 45202-3912 - -------------------------------------------------------------------------------- A8.4-14 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: ORTHANE - -------------------------------------------------------------------------------- Lister, Roy D. License Agreement 0.00 457 Pine Tree 12/04/89 (also listed under Keller, TX 76248-4421 General Office Division) - -------------------------------------------------------------------------------- A8.4-15 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: PLASTICS - -------------------------------------------------------------------------------- Future Three Software Inc. License Agreement - 10/26/88 0.00 33031 Schoolcraft Road Livonia, MI 48150-1604 - -------------------------------------------------------------------------------- GE Capital Corp. Equipment Lease - 02/07/90 0.00 P.O. Box 94916 Cleveland, OH 44101-4916 - -------------------------------------------------------------------------------- IBM Credit Corp. Equipment & Software Lease 470,000.00 200 E. Main Street 11/22/88 (also listed Fort Wayne, IN 46801 under Electronics Division) - -------------------------------------------------------------------------------- Pansophic Systems Inc. License Agreement - 04/25/89 0.00 P. O. Box 95372 Chicago, IL 60694-5372 - -------------------------------------------------------------------------------- A8.4-16 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: SPECIALTY MATERIALS - -------------------------------------------------------------------------------- Southwestern Bell Finance Lease - 04/01/90 5,913.92 P.O. Box 18767 St. Louis, MO 63178-0767 - -------------------------------------------------------------------------------- A8.4-17 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: TRANSICOIL - -------------------------------------------------------------------------------- Bank of Nova Scotia Credit & Agency Agreement 0.00 New York Agency 11/02/88 One Liberty Plaza - 26th Floor New York, NY 10006-1401 - -------------------------------------------------------------------------------- Bell Savings Bank Pasa Subordination Agreement 0.00 9 South 69th Street 07/28/89 Upper Darby, PA 19082-2416 - -------------------------------------------------------------------------------- Blue Dove Development Assn. Subordination Agreement 0.00 c/o Ronald Bluestein 07/28/89 1352 Bobarn Drive Narberth, PA 19072-1147 - -------------------------------------------------------------------------------- Central Trust Co., N.A. Credit & Agency Agreement 0.00 201 East Fifth Street 11/02/88 Cincinnati, OH 45202-4117 - -------------------------------------------------------------------------------- Fidelcor Services Inc. Lease of Citizen- Cuncom 16,946.00 1700 Market St., 9th Floor 08/29/86 Philadelphia, PA 19103-3913 - -------------------------------------------------------------------------------- Fidelcor Services Inc. Equipment Lease see above 1700 Market St., 9th Floor 02/25/87 Philadelphia, PA 19103-3913 - -------------------------------------------------------------------------------- Fifth Third Bank Credit & Agency Agreement 0.00 38 Fountain Square Plaza 11/02/88 Fifth Third Center Cincinnati, OH 45263 - -------------------------------------------------------------------------------- National City Bank Credit & Agency Agreement 0.00 600 Vine Street, Suite 304 11/02/88 Cincinnati Commerce Center Cincinnati, OH 45202-4425 - -------------------------------------------------------------------------------- NBD Bank, N.A. Credit & Agency Agreement 0.00 611 Woodward Avenue 11/02/88 Detroit, MI 48226-3408 - -------------------------------------------------------------------------------- Pittsburgh National Bank Credit & Agency Agreement 0.00 Fifth Ave. & Wood Streets 11/02/88 Pittsburgh, PA 15222 - -------------------------------------------------------------------------------- Star Bank, N.A. Credit & Agency Agreement 0.00 425 Walnut Street 11/02/88 Mail Location 8160 Cincinnati, OH 45202-3912 - -------------------------------------------------------------------------------- Star Bank, N.A. Loan Agreement 0.00 425 Walnut Street 08/03/89 Mail Location 8160 Cincinnati, OH 45202-3912 - -------------------------------------------------------------------------------- A8.4-18 ================================================================================ EXHIBIT 8.4 - -------------------------------------------------------------------------------- Creditor Contract Allowed Name and Address Type and Date Unsecured Claim ($) - -------------------------------------------------------------------------------- Division: WOLVERINE GASKET - -------------------------------------------------------------------------------- LDI Corporation Equipment Lease 177,796.97 30033 Clemens Road (Equipment Schedule No. 14 (also listed Westlake, OH 44145-1021 to Master Lease Agreement under General No. 7044, dated 01/08/88) Office Division) - -------------------------------------------------------------------------------- LDI Corporation Equipment Lease 70,089.19 30033 Clemens Road (Equipment Schedule No. 16- (also listed Westlake, OH 44145-1021 90 to Master Lease Agreement under General No. 7044, dated 01/08/88) Office Division) - -------------------------------------------------------------------------------- NBD Bank, N.A. Equipment Lease - 0.00 611 Woodward Avenue 04/01/87 Detroit, MI 48226-3408 - -------------------------------------------------------------------------------- A8.4-19 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "8.5.1" INSURANCE POLICIES TO BE ASSUMED All insurance policies and related agreements as to which any insurer may still have obligations to any of the Debtors so long as such policies and agreements are not listed on Exhibit "8.5.2." [THIS PAGE LEFT BLANK INTENTIONALLY] UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - -------------------------------------- ) EXHIBIT "8.5.2" INSURANCE AGREEMENTS TO BE REJECTED Liberty Mutual Insurance Company Liberty Mutual Fire Insurance Company Liberty Mutual Insurance Corporation c/o William F. Cupelo, Esq. Home Office Legal Department 175 Berkeley Street Boston, Massachusetts 02117: All retrospective premium agreements with respect to workers' compensation, automobile, and comprehensive general liability insurance policies issued by Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and Liberty Insurance Corporation for all years prior to June 1, 1986. [THIS PAGE LEFT BLANK INTENTIONALLY] UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) ) - ------------------------------------ EXHIBIT "B" Order of the Bankruptcy Court, dated August 28, 1996, approving this Disclosure Statement [THIS PAGE LEFT BLANK INTENTIONALLY] UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re: ) EAGLE-PICHER INDUSTRIES, ) CONSOLIDATED CASE NO. INC., et al., ) 1-91-00100 ) Chapter 11 - Judge Perlman Debtors. ) ORDER (A) APPROVING THE DEBTORS' JOINT DISCLOSURE STATEMENT, (B) SCHEDULING HEARING ON CONFIRMATION OF DEBTORS' THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION, AND (C) APPROVING NOTICE OF (i) LAST DAY FOR RECEIPT OF BALLOTS WITH RESPECT TO DEBTORS' THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION, (ii) LAST DAY FOR FILING OBJECTIONS TO CONFIRMATION OF DEBTORS' THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION, AND (iii) HEARING ON CONFIRMATION OF DEBTORS' THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION Upon the record of the hearings held on August 12, 1996, and August 28, 1996 (collectively, the "Disclosure Hearing"), to consider approval of the Proposed Joint Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code (the "Disclosure Statement") with respect to the Third Amended Consolidated Plan of Reorganization (as such plan may be modified, the "Plan") of Eagle-Picher Industries, Inc. and its affiliated debtors in the above-captioned chapter 11 cases (collectively, the "Debtors"); and each of the objections to the Disclosure Statement having been withdrawn, overruled by the Court, or rendered moot by reason of modifications made to the Disclosure Statement and/or the Plan; and the Debtors having revised the Disclosure Statement to make certain technical changes thereto; and it appearing that no further notice of the approval of the Disclosure Statement, as modified, need be given; and upon the record of the Disclosure Hearing and all of the proceedings had before the Court; and the Court B-1 having determined after due deliberation that the Disclosure Statement contains adequate information, as such term is defined in section 1125 of title 11 of the United States Code (the "Bankruptcy Code"); and sufficient cause appearing therefor, it is ORDERED that, in accordance with section 1125 of the Bankruptcy Code and Bankruptcy Rule 3017(b), the Disclosure Statement be, and it hereby is, approved in all respects; and it is further ORDERED that the forms of ballot (the "Ballots") filed with the Court on August 27, 1996, be, and they hereby are, approved in all respects; and it is further ORDERED that compliance with Local Bankruptcy Rule 3.15(a) and (b) be, and it hereby is, waived; and it is further ORDERED that, pursuant to Bankruptcy Rules 3017(c) and 3018(a), the holders of Bearer Unsecured Debt Securities (as such term is defined in the Plan), the holders of Registered Unsecured Debt Securities (as such term is defined in the Plan) as of the date that is five (5) business days after the entry of this Order (the "Voting Record Date"), and other holders of claims in each of Classes, 3, 4, 10, 12, 16, 17, 18, 19, 20, and 21 of the Plan as of the Voting Record Date may vote to accept or reject the Plan by indicating their acceptance or rejection of the Plan on the Ballots provided therefor; and it is further ORDERED that, the Voting Deadline, as such term is used in the Ballot Solicitation and Tabulation Procedures approved by an order of the Court, dated July 23, 1996 (the "Voting Procedures"), shall be 5:00 p.m., Cincinnati, Ohio, time on November 4, 1996; and it is further ORDERED that a hearing (the "Confirmation Hearing") to consider (i) confirmation of the Plan and (ii) approval of any and all compromises and settlements embodied in or contemplated by the Plan shall be held before the Court at the United States Bankruptcy Court, Room 817, 221 East 4th Street, Atrium Two, Cincinnati, Ohio, on November 13, 1996, at 9:30 a.m., or as soon thereafter as counsel may be heard; and it is further B-2 ORDERED that objections, if any, to confirmation of the Plan shall be in writing, and shall (a) state the name and address of the objecting party and the nature of the claim or interest of such party, (b) state with particularity the basis and nature of each objection to confirmation of the Plan, and (c) be filed, together with proof of service, with the Court (with a copy delivered directly to the Honorable Burton Perlman) and served so that such objections are received no later than November 4, 1996 at 4:00 p.m., Cincinnati, Ohio, time, by the Court, Judge Perlman, and the following parties: (i) Weil, Gotshal & Manges LLP, Co-Attorneys for the Debtors, 767 Fifth Avenue, New York, New York 10153, Attention: Stephen Karotkin, Esq., (ii) Frost & Jacobs, Co-Attorneys for the Debtors, 2500 PNC Center, 201 E. Fifth Street, Cincinnati, Ohio 45202-4183, Attention: Edmund J. Adams, Esq., (iii) Eagle-Picher Industries, Inc., (if by courier) 580 Walnut Street, 13th Floor, Cincinnati, Ohio 45202, Attention: James A. Ralston, Esq., or (if by mail) P.O. Box 1847, Cincinnati, Ohio 45201, Attention: James A. Ralston, Esq.; (iv) Squire, Sanders & Dempsey, 4900 Society Center, 127 Public Square, Cleveland, Ohio 44114-3404, Attention: Carolyn J. Buller, Esq.; (v) Keating, Muething & Klekamp, 1800 Provident Tower, One East Fourth Street, Cincinnati, Ohio 45202, Attention: Kevin E. Irwin, Esq.; (vi) McCarthy, Lebit, Crystal & Haiman, Co., L.P.A., 1800 Midland Building, 101 Prospect Avenue, West, Cleveland, Ohio 44115, Attention: Robert S. Balantzow, Esq.; and (vii) the Office of the United States Trustee, 36 East 7th Street, Suite 2030, Cincinnati, Ohio 45202, Attention: Neal J. Weill, Esq.; and it is further ORDERED that replies, if any, to any objections to confirmation shall be filed, together with proof of service, with the Court (with a copy delivered directly to the Honorable Burton Perlman) and served so that such replies are received no later than November 8, 1996 at 4:00 p.m., Cincinnati, Ohio, time, by the Court, Judge Perlman, and the following parties: (i) Weil, Gotshal & Manges LLP, Co-Attorneys for the Debtors, 767 Fifth Avenue, New York, New York 10153, Attention: Stephen Karotkin, Esq., (ii) Frost & Jacobs, Co-Attorneys for the Debtors, 2500 PNC Center, 201 E. Fifth Street, Cincinnati, B-3 Ohio 45202-4183, Attention: Edmund J. Adams, Esq., (iii) Eagle-Picher Industries, Inc., (if by courier) 580 Walnut Street, 13th Floor, Cincinnati, Ohio 45202, Attention: James A. Ralston, Esq., or (if by mail) P.O. Box 1847, Cincinnati, Ohio 45201, Attention: James A. Ralston, Esq.; (iv) Squire, Sanders & Dempsey, 4900 Society Center, 127 Public Square, Cleveland, Ohio 44114-3404, Attention: Carolyn J. Buller, Esq.; (v) Keating, Muething & Klekamp, 1800 Provident Tower, One East Fourth Street, Cincinnati, Ohio 45202, Attention: Kevin E. Irwin, Esq.; (vi) McCarthy, Lebit, Crystal & Haiman, Co., L.P.A., 1800 Midland Building, 101 Prospect Avenue, West, Cleveland, Ohio 44115, Attention: Robert S. Balantzow, Esq.; and (vii) the Office of the United States Trustee, 36 East 7th Street, Suite 2030, Cincinnati, Ohio 45202, Attention: Neal J. Weill, Esq.; and it is further ORDERED that the Confirmation Hearing may be adjourned from time to time without prior notice to holders of claims, holders of equity interests, or parties in interest other than the announcement of the adjourned hearing date at the Confirmation Hearing; and it is further ORDERED that the Debtors be, and they hereby are, authorized and directed to mail or cause to be mailed by first-class mail within fifteen (15) business days after the date of entry of this Order a copy of the notice (the "Notice") of, among other things, the Confirmation Hearing, substantially in the form annexed hereto as Exhibit "A," and the Disclosure Statement, including a copy of the Plan and this Order annexed as exhibits thereto, to all entities as provided in the Ballot Tabulation and Solicitation Procedures (the "Voting Procedures"), as approved by the order of the Court dated July 23, 1996, and also to (i) the indenture trustees under any debt instruments of the Debtors and (ii) the Office of the United States Trustee; and it is further ORDERED that the Debtors be, and they hereby are, directed to cause the Notice to be published two (2) times no less than twenty (20) days prior to the date of the Confirmation Hearing in the national editions of The Wall Street Journal and The New York Times; and it is further B-4 ORDERED that the provision of notice in accordance with the procedures set forth in this Order and the Voting Procedures shall be deemed good and sufficient notice of the Confirmation Hearing, the time fixed for filing objections to confirmation of the Plan, and the time within which holders of claims may vote to accept or reject the Plan; and it is further ORDERED that the Debtors be, and they hereby are, authorized and empowered to take such steps and perform such acts as may be necessary to implement and effectuate this Order. Dated: Cincinnati, Ohio August 28, 1996 /s/ Burton Perlman ------------------------------- United States Bankruptcy Judge B-5 [THIS PAGE LEFT BLANK INTENTIONALLY] EXHIBIT "A" UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) ) ) - --------------------------------- NOTICE OF (A) SOLICITATION OF VOTES TO ACCEPT OR REJECT THE DEBTORS' THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION AND (B) HEARING TO CONSIDER CONFIRMATION OF DEBTORS' THIRD AMENDED CONSOLIDATED PLAN OF REORGANIZATION TO ALL CREDITORS, INDENTURE TRUSTEES, EQUITY SECURITY HOLDERS, AND PARTIES IN INTEREST: NOTICE IS HEREBY GIVEN that on August 28, 1996, the United States Bankruptcy Court for the Southern District of Ohio (the "Court") entered an order (the "Order") approving the disclosure statement (the "Disclosure Statement") with respect to the Third Amended Consolidated Plan of Reorganization dated August 28, 1996, (the "Plan") for Eagle-Picher Industries, Inc., Daisy Parts, Inc., Transicoil Inc., Michigan Automotive Research Corporation, EDI, Inc., Eagle-Picher Minerals, Inc., and Hillsdale Tool and Manufacturing Co., Inc. (collectively, the "Debtors"). Pursuant to the Order, copies of the Plan and Disclosure Statement have been mailed to all known creditors and equity security holders of the Debtors. Ballots for voting to accept or reject the Plan have been mailed to all known creditors entitled to vote to accept or reject the Plan. If you are a creditor of the Debtors and have not received a copy of the Plan, Disclosure Statement or, if applicable, a ballot, you may obtain a copy of same by telephoning the Debtors' solicitation agent, Hill and Knowlton, Inc., at (212) 885-0555. IF YOU HOLD DEBT SECURITIES ISSUED BY ANY OF THE DEBTORS IN BEARER FORM, YOU MUST CALL HILL AND KNOWLTON, INC. IN ORDER TO RECEIVE A BALLOT. NOTICE IS FURTHER GIVEN that all ballots cast to accept or reject the Plan must be properly completed, executed and mailed or delivered to (i) for all ballots relating to any debt securities issued by any of the Debtors, Hill and Knowlton, Inc., 466 Lexington Avenue, New York, New York 10017 and (ii) for all other claims, the Federated Claims Service Group, 9111 Duke Blvd., P.O. Box 8041, Mason, Ohio 45040, so that they are RECEIVED no later than 5:00 p.m., Cincinnati Ohio, time, on November 4, 1996. Owners of debt securities that are registered in "street name" or that are on deposit with a depositary should follow the instructions on the ballot for BA-1 the completion and return of the ballot. If your ballot is not properly completed or received within such time, it will not be counted as a vote to accept or reject the Plan. NOTICE IS FURTHER GIVEN that the Court has fixed November 13, 1996, at 9:30 a.m. as the date and time for the hearing to consider confirmation of the Plan and related matters (the "Confirmation Hearing"). The Confirmation Hearing will be held in Room 817 of the United States Bankruptcy Court, 221 East 4th Street, Atrium Two, Cincinnati, Ohio. The Confirmation Hearing may be adjourned from time to time without further notice other than announcement made at the Confirmation Hearing or any adjourned hearing. NOTICE IS FURTHER GIVEN that objections, if any, to the confirmation of the Plan shall be in writing, and (a) shall state the name and address of the objecting party and the nature of the claim or interest of such party, (b) shall state with particularity the basis and nature of each objection to confirmation of the Plan and (c) be filed, together with proof of service, with the Court (with a copy to the Honorable Burton Perlman) and served so that they are received not later than 4:00 p.m., Cincinnati, Ohio, time, on November 4, 1996, 1996, by the Court, Judge Perlman, and the following parties: (i) Weil, Gotshal & Manges LLP, Co-Attorneys for the Debtors, 767 Fifth Avenue, New York, New York 10153, Attention: Stephen Karotkin, Esq., (ii) Frost & Jacobs, Co- Attorneys for the Debtors, 2500 PNC Center, 201 E. Fifth Street, Cincinnati, Ohio 45202-4183, Attention: Edmund J. Adams, Esq., (iii) Eagle-Picher Industries, Inc., (if by courier) 580 Walnut Street, 13th Floor, Cincinnati, Ohio 45202, Attention: James A. Ralston, Esq., or (if by mail) P.O. Box 1847, Cincinnati, Ohio 45201, Attention: James A. Ralston, Esq.; (iv) Squire, Sanders & Dempsey, 4900 Society Center, 127 Public Square, Cleveland, Ohio 44114-3404, Attention: Carolyn J. Buller, Esq.; (v) Keating, Muething & Klekamp, 1800 Provident Tower, One East Fourth Street, Cincinnati, Ohio 45202, Attention: Kevin E. Irwin, Esq.; (vi) McCarthy, Lebit, Crystal & Haiman, Co., L.P.A., 1800 Midland Building, 101 Prospect Avenue, West, Cleveland, Ohio 44115, Attention: Robert S. Balantzow, Esq.; and (vii) the Office of the United States Trustee, 36 East 7th Street, Suite 2030, Cincinnati, Ohio 45202, Attention: Neal J. Weill, Esq. Dated: Cincinnati, Ohio August 28, 1996 BY ORDER OF THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF OHIO WEIL GOTSHAL & MANGES LLP FROST & JACOBS Co-Attorneys for the Debtors Co-Attorneys for the Debtors 767 Fifth Avenue 2500 PNC Center New York, New York 10153 201 E. Fifth Street (212) 310-8000 Cincinnati, Ohio 45202-4183 (513) 651-6800 BA-2 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) ) - ----------------------------------- EXHIBIT "C" FINANCIAL APPENDIX A. HISTORICAL FINANCIAL INFORMATION: Report on Form 10-K for the Fiscal Year Ended November 30, 1995 Report on Form 10-Q for Quarter Ended May 31, 1996 B. PROJECTED FINANCIAL INFORMATION: Pro Forma Consolidated Balance Sheet of Reorganized Eagle-Picher as of December 1, 1996; Projected Consolidated Balance Sheets of Reorganized Eagle-Picher as of December 1, 1996, and November 30 of each of the years from 1997 through 2001; Projected Consolidated Statements of Income of Reorganized Eagle-Picher for each of the six fiscal years in the period ended November 20, 2001; Projected Consolidated Statements of Cash Flow of Reorganized Eagle-Picher for each of the six fiscal years in the period ended November 30, 2001; and Projected Capital Structure of Reorganized Eagle-Picher as of December 1, 1996. [THIS PAGE LEFT BLANK INTENTIONALLY] ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995 COMMISSION FILE NUMBER 1-1499 EAGLE-PICHER INDUSTRIES, INC. AN OHIO CORPORATION I.R.S. EMPLOYER IDENTIFICATION NO. 31-0268670 580 BUILDING, 580 WALNUT STREET, P. O. BOX 779, CINCINNATI, OHIO 45201 REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 513-721-7010 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: TITLE OF CLASS Common Capital Stock, Par Value $1.25 per Share Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the registrant as of February 23, 1996 was $1,313,029 based upon the average of the bid and asked prices as of such date. On February 23, 1996, 11,040,932 shares of the registrant's Common Stock were outstanding. The registrant had and has no other classes of stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Excerpts from registrant's Annual Report for the fiscal year ended November 30, 1995 -- Incorporated in Part I and Part II. ================================================================================ NOTE This copy of Eagle-Picher's Form 10-K for 1995 includes only Exhibits 13, 21, 23, 24(a), 24(b) and 99. In accordance with SEC requirements, copies of the following exhibits will be furnished upon payment of a fee of ten cents per page. Please remit the proper amount with your request to: James A. Ralston, Vice President, General Counsel and Secretary Eagle-Picher Industries, Inc. P. O. Box 779 Cincinnati, Ohio 45201. Exhibits not included in this Form 10-K for 1995 have the following number of pages (see list of Exhibits in Part IV, Item 14(a)(3)): 3. (i) -- 10 4. (a) -- 99 10. (a) -- 6 (ii) -- 12 (b)(i) -- 120 (b) -- 6 (b)(ii) -- 5 (c) -- 9 (d) -- 4 TABLE OF CONTENTS ITEM PAGE - ---- ---- PART I 1. Business............................................................ 3 2. Properties.......................................................... 5 3. Legal Proceedings................................................... 6 4. Submission of Matters to a Vote of Security Holders................. 12 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters............................................................. 13 6. Selected Financial Data............................................. 13 7. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................... 13 8. Financial Statements and Supplementary Data......................... 13 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure................................................ 13 PART III 10. Directors and Executive Officers of the Registrant.................. 14 11. Executive Compensation.............................................. 17 12. Security Ownership of Certain Beneficial Owners and Management...... 20 13. Certain Relationships and Related Transactions...................... 20 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.... 21 Signatures............................................................... 22 Exhibit Index............................................................ 23 2 PART I ITEM 1. BUSINESS. General Development of Business. Eagle-Picher Industries, Inc. (the "Company") was incorporated in 1867 under the laws of the State of Ohio as an outgrowth of a business enterprise founded in Cincinnati in 1843. It conducts its business through unincorporated operating divisions and separately incorporated subsidiaries, both of which are referred to herein as divisions. On January 7, 1991, the Company and seven of its domestic subsidiaries each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code ("chapter 11"). The chapter 11 filings were the consequence of a cash shortfall resulting from the Company's inability to satisfy certain immediate asbestos litigation liabilities. See Item 3.(a) below. Financial Information About Industry Segment. The Company's major industry segments are: 1. Industrial; 2. Machinery; and 3. Automotive. Industry Segment Data is incorporated herein by reference to Exhibit 13, the Company's Annual Report for the fiscal year ended November 30, 1995, pages 29-30. Narrative Description of Business. The Industrial Group, which is composed of three divisions and operations in three other divisions, produces a variety of products for industrial markets, principally manufacturers of consumer products. The Minerals Division mines and refines diatomaceous earth products used for high purity filtration primarily by the food and beverage industry and also for general industrial applications. The Fabricon Products Division produces printed packaging materials for the dairy and confectionery industries. The Specialty Materials Division refines rare metals, such as high purity germanium and gallium compounds, and is a major source of boron isotopes for nuclear applications. This Division also produces a wide range of super-clean containers, which meet strict EPA protocols, for environmental sampling. Other products manufactured in the Industrial Group include custom designed cast plastic parts, injection molded rubber parts and industrial chemicals. The methods of distribution and competitive positions of the divisions of the Industrial Group vary widely. For example, the Minerals Division is second to the Alleghany Corporation in the sale of certain filter aid products which are sold both directly and through distributors to many large and small customers. By contrast, the Fabricon Products Division conducts its sales through sales personnel and competes against many other firms in a highly price-sensitive market. Other products are sold under competitive conditions which vary widely from plant to plant. The Machinery Group consists of five divisions, which are involved in manufacturing products for various industrial markets. The Construction Equipment Division produces earthmoving equipment for Caterpillar Inc. and a line of heavy-duty industrial forklift trucks. The Electronics Division is a leading supplier of sophisticated special purpose batteries for aerospace and defense applications. The Cincinnati Industrial Machinery Division produces specialized high-volume metal cleaning and finishing systems. The Ross Aluminum Foundries Division manufactures complex aluminum castings in sand and plaster. Transicoil Inc. manufactures sophisticated electronic components for aerospace, shipboard, ground-based, and industrial applications. The principal products manufactured by the Machinery Group are distributed through various methods and in a variety of competitive environments. The Electronics Division bids competitively for numerous fixed price government contracts for special purpose batteries. The Division is a recognized leader in this business 3 and has a few competitors for some highly technological products, but many large and small competitors for other products. The Construction Equipment Division is the sole supplier of four lines of earthmoving equipment to its longstanding largest customer, Caterpillar Inc. The forklift trucks are distributed through a dealer network. The Automotive Group consists of ten divisions, which are involved largely in the production and sale of mechanical, structural and trim parts for passenger cars, trucks, vans, and recreational and sport utility vehicles. The Hillsdale Tool Division specializes in the manufacture of precision-machined aluminum and steel parts. Typical machined products include torsional vibration dampers and a variety of castings and forgings. The Division also produces the entire front pump assembly for Ford Motor Co.'s electronic four-speed overdrive transmission primarily used on one-half and three-quarter ton pick-up trucks, vans and sport utility vehicles. The Plastics Division is a major supplier of fiberglass reinforced molded plastic parts to automotive and other customers. The Division also produces the fiberglass reinforced plastic roof panels for General Motors Corporation's all-plastic body, all-purpose vehicle. The Wolverine Gasket Division coats steel and aluminum with elastomeric compounds and produces materials which are particularly suitable for high compression applications. The International Operations Division includes Eagle-Picher Industries Europe GmbH, with responsibility over three plants in Europe which manufacture sealing and insulating products, elastomeric extrusions, and injection molded parts for the European automotive market. The Division also includes a sales and engineering office in Japan that serves the Asian market. The Trim Division manufactures automotive interior trim including headliners, rear package trays, spare tire covers and door panels. The Michigan Automotive Research Corporation Division offers vehicle and vehicle system manufacturers a comprehensive range of testing programs for engines, power trains and power train components. The Rubber Molding Division manufactures small rubber precision-molded parts. The Suspension Systems Division, which was formerly part of the Rubber Molding Division, manufactures engineered rubber and rubber-to- metal products. The department of the Orthane Division which produces injection-molded plastic parts for automotive and industrial applications was sold in January 1996. Certain assets of the Orthane Division, related to the elastomeric extrusion process, were transferred to the new Fluid Systems Division. The Automotive Group distributes its products primarily to the "Big Three" automotive manufacturers, or to other suppliers to those manufacturers, directly through internal sales personnel. With respect to the hundreds of products manufactured by the Automotive Group, competition varies widely as to the number and type of competitors, the methods of competition and the Group's competitive positions. Divisions producing precision-machined parts, such as Hillsdale Tool Division, tend to have a few strong competitors (including among others the automotive manufacturers themselves) and compete on the basis of quality and price. Divisions such as Trim and Wolverine Gasket tend to have many competitors of varying sizes and compete primarily on the basis of price. Generally, competitive conditions for this Group are characterized by a decreasing number of competitors, an increasing amount of foreign competition (particularly from the Far East), an increased emphasis on quality and intense pricing pressures from major customers. No product accounted for more than 7%, and no customer accounted for more than 10%, of total sales of the Company for fiscal 1993 through fiscal 1995 except Ford Motor Co., for which sales were $166.8 million in 1995, $165.3 million in 1994, and $148.0 million in 1993, and General Motors Corporation, in 1994 and 1993, when sales were $81.4 million and $73.1 million, respectively. In addition, the Company is not dependent upon any individual raw material source for a substantial part of its business and believes that its sources of raw materials are adequate. In the Machinery Group, order backlog was approximately $182.5 million as of November 30, 1995, $190.1 million as of November 30, 1994 and $148.1 million as of November 30, 1993. The decrease from the prior year is due primarily to softer demand for capital equipment and heavy-duty forklift trucks and better efficiencies in producing forklift trucks which worked off the prior year backlog. A substantial portion of the order backlog outstanding at November 30, 1995 is expected to be filled within the current fiscal year. In no other segment is order backlog of significance, except in the Specialty Materials Division which had order backlogs of $34.4 million as of November 30, 1995, and $25.1 million and $19.9 million as of November 30, 1994 and 1993, respectively. 4 In fiscal 1995, the Company spent approximately $19.9 million for research and development and related activities, primarily for the development of new products or the improvement of existing products. Comparable costs were $21.1 million and $17.1 million for 1994 and 1993, respectively. The Company owns or is licensed under patents relating to methods and products in several areas of its business. Although these have been of value and are expected to be of value in the future, the loss of any individual patent or group of patents would not materially affect the conduct of the Company's business. In the fiscal years 1995, 1994, and 1993, for current operations the Company spent approximately $10.9 million, $9.6 million and $8.6 million, respectively, to comply with federal, state and local regulatory provisions relating to the protection of the environment. This level of expenditures has had no material effect on the earnings or competitive position of the Company or its operations during the period described. The Company expects these expenditures to be approximately $12.3 million in fiscal 1996. See Item 3.(d) for information with respect to various other environmental proceedings. As of November 30, 1995, the Company employed approximately 7,500 persons in its operations, of whom approximately 1,900 were salaried employees and approximately 5,600 were hourly employees. Approximately 20% of the Company's hourly employees are represented by eight labor organizations under twelve separate contracts. The thirteenth contract is currently being negotiated. The Company believes that its relations with its employees generally are good. Export sales totaled approximately $92.5 million, $76.9 million and $73.2 million in fiscal 1995, 1994 and 1993, respectively. The revenues generated by foreign operations do not exceed 10% of consolidated revenues, nor do their identifiable assets exceed 10% of consolidated total assets. The Company's debtor-in-possession financing expires on the earlier of December 31, 1996 or the effective date of a plan of reorganization. Should a plan not become effective by the end of 1996, the Company would expect to have the current facility extended as long as necessary. ITEM 2. PROPERTIES. Eagle-Picher Industries, Inc. manufactures at 57 locations a wide variety of products primarily for other manufacturers. Types of manufacturing include, among others, chemical processing, mining, metal fabricating, aluminum casting, precision machining, electronic and electrical assembling, and rubber and plastic molding and extruding. The plants are fully utilized for the purposes intended and generally have capacity for expansion of existing buildings on owned real estate. Plants range in size from 425,000 square feet of floor area to under 50,000 square feet and generally are located away from large urban centers. Information on the locations of all manufacturing plants is contained in Exhibit 99 attached hereto, which is incorporated by reference into this report. The Company considers the following plants to be its most important physical properties: LOCATION GENERAL CHARACTER -------------- --------------------- INDUSTRIAL GROUP Minerals Division........................ Lovelock, NV Processing facility MACHINERY GROUP Electronics Division..................... Joplin, MO Manufacturing plants (six locations) Construction Equipment Division.......... Lubbock, TX Fabrication and assembly facility AUTOMOTIVE GROUP Hillsdale Tool Division.................. Hillsdale, MI Manufacturing plants (four locations) Plastics Division........................ Grabill, IN Manufacturing plant. All of such properties are held in fee and none of them is subject to any major encumbrances. 5 ITEM 3. LEGAL PROCEEDINGS. (a) Chapter 11 Proceedings. On January 7, 1991 ("petition date"), the Company and seven of its domestic subsidiaries each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Ohio, Western Division, in Cincinnati, Ohio ("Bankruptcy Court"). The subsidiaries that filed chapter 11 petitions are Daisy Parts, Inc., Transicoil Inc., Michigan Automotive Research Corporation ("MARCO"), EDI, Inc., Eagle-Picher Minerals, Inc., Eagle-Picher Europe, Inc., and Hillsdale Tool & Manufacturing Co. On November 30, 1991, substantially all of the assets of EDI, Inc. were sold pursuant to authority granted by the Bankruptcy Court. All of the chapter 11 cases have been consolidated for procedural purposes only under the caption: "In re Eagle-Picher Industries, Inc., et al.," Consolidated Case No. 1-91-00100, before the Honorable Burton Perlman, United States Bankruptcy Judge. The Company and its petitioning subsidiaries, other than EDI, Inc., are operating their businesses and managing their properties as debtors in possession, in accordance with the provisions of the Bankruptcy Code. The filing of a chapter 11 petition operates as an automatic stay of all litigation against the debtor that was or could have been commenced before the filing of the chapter 11 petition and of any act to collect or recover a claim against the debtor that arose before the commencement of the chapter 11 case. While claimants or the Company may petition the Bankruptcy Court for a modification of the stay to permit such litigation or claim recovery to proceed, the Company believes that it is unlikely that the Bankruptcy Court will grant such permission except in certain limited instances to permit the liquidation of a pre-petition claim, but not any payment or collection efforts with respect thereto. Consistent with the provisions of chapter 11, the Company intends to address all of the pre-petition claims in a plan of reorganization. An Unsecured Creditors' Committee ("UCC"), an Injury Claimants' Committee ("ICC"), an Equity Security Holders' Committee ("ESC") and a Legal Representative for Future Claimants ("RFC") have been appointed in the chapter 11 cases. An unofficial asbestos co-defendants' committee has also been participating in the chapter 11 cases. In accordance with the provisions of the Bankruptcy Code, these parties have the right to be heard with respect to transactions outside the ordinary course of business. At the Company's request, the Bankruptcy Court established a bar date of October 31, 1991 for all pre-petition claims against the Company other than those arising from the sale of asbestos-containing products and other than those arising from any future rejection of executory contracts or unexpired leases in the chapter 11 cases. The bar date is the date by which claimants who disagree with the amounts recorded by the Company as owing to such claimants must file a proof of claim against the Company in the Bankruptcy Court. The Company notified all known or potential claimants subject to the October 31, 1991 bar date of their possible need to file a proof of claim with the Bankruptcy Court. Of the 5,600 claims filed pursuant to this bar date, 2,675 were general claims (e.g. vendor, note holder and other miscellaneous claims), 1,325 were litigation-related claims and environmental claims, and 1,600 were asbestos-related claims. Substantially all of the general claims have been reconciled by the Company. Such claims, as reconciled, have been allowed as pre-petition claims against the Company's estate. The impact of these reconciliations on the Company's financial statements was not material. The Company continues to attempt to negotiate settlements for the remaining unreconciled general claims. If they cannot be resolved by a negotiated settlement, the Company intends to have them resolved by the Bankruptcy Court. The Company does not expect that the impact of the resolution of these claims will be material. The litigation-related and environmental claims are discussed in subsections (c) and (d) respectively, below. The Bankruptcy Court also established a bar date of September 30, 1992 for all present asbestos-related claims. Approximately 161,000 asbestos-related claims were filed with the Bankruptcy Court pursuant to the bar date. Approximately 1,000 of these claims alleged property damage. The 1,600 asbestos-related claims referred to above filed prior to the October 31, 1991 bar date will be treated in the reorganization cases in the same manner as the asbestos-related claims filed in connection with the September 30, 1992 bar date. The asbestos-related claims are discussed more fully in subsection (b), below. 6 The Bankruptcy Court has approved five extensions of the periods during which the Company has the exclusive right to file and confirm a chapter 11 plan under section 1121(a) of the Bankruptcy Code ("Exclusive Periods"). The most recent order of the Bankruptcy Court, entered on May 23, 1995, provides that the Exclusive Periods are extended until further order of the Bankruptcy Court. On June 5, 1992, a mediator was appointed by the Bankruptcy Court to assist the Company, the ICC, the UCC, the RFC and the ESC in their efforts to negotiate a consensual plan of reorganization. On November 9, 1993, the Company reached an agreement ("Agreement") on the principal elements of a joint plan of reorganization with the ICC and the RFC, the representatives of the holders of present and future asbestos-related and other toxic tort claims in the Company's chapter 11 case. The Agreement was reached with the assistance of the mediator appointed by the Bankruptcy Court. As a consequence of the Agreement, the Company recorded a provision in the fourth quarter of 1993 of $1.135 billion to increase the asbestos liability subject to compromise to $1.5 billion. The Company also recorded a provision of $41.4 million in 1993 for environmental and other litigation claims. Throughout 1994, the Company, the ICC and the RFC continued to refine the details of a joint plan of reorganization. On February 28, 1995, the Company and its petitioning subsidiaries filed a plan of reorganization and accompanying disclosure statement with the Bankruptcy Court ("Original Plan"). The Original Plan was proposed jointly with the ICC and the RFC. The Original Plan was premised on the settlement of the Company's liability for all present and future asbestos-related personal injury claims and certain other tort claims contemplated by the Agreement. Pursuant to the Original Plan, these claims were to be channeled to and resolved by an independently administered claims trust ("Trust") and the Bankruptcy Court would issue an injunction with respect to such claims. The injunction would forever stay, restrain and enjoin actions against the Company for the purpose of, directly or indirectly, collecting, recovering, or receiving payment of, on or with respect to any personal injury claims resulting from exposure to asbestos-containing products allegedly manufactured or sold by the Company. In 1994, the Bankruptcy Code was amended to add, among others, new subsections 524(g) and (h), which authorize the issuance of a permanent injunction to supplement the existing injunctive relief afforded by section 524 of the Bankruptcy Code in asbestos-related reorganizations under chapter 11. The new subsections provide that, if certain specified conditions are satisfied, a court may issue a supplemental permanent injunction barring the assertion of asbestos-related claims or demands against the reorganized company and channeling those claims to an independent trust. The issuance of such a channeling injunction was a condition precedent to confirmation of the Original Plan. The Original Plan provided for the distribution of cash, notes, debentures, and common stock of the reorganized Company ("Plan Consideration") to the Trust and to holders of allowed unsecured claims on a pro-rata basis proportionate to their share of the aggregate amount of allowed pre-petition unsecured claims against the Company and the other debtor entities. The Original Plan also provided that claims entitled to priority in payment under the Bankruptcy Code and convenience claims (general unsecured claims of $500 or less or claims that will be reduced to that amount) would be paid in full, in cash. Under the Bankruptcy Code, shareholders are not entitled to any distribution under a plan of reorganization unless all classes of pre-petition creditors receive satisfaction in full of their allowed claims or accept a plan which allows shareholders to participate in the reorganized company or to receive a distribution. The Original Plan did not provide that all classes of pre-petition creditors would receive satisfaction in full of their allowed claims. Consequently, the Original Plan did not provide for any distribution to shareholders and their equity interests were to be canceled. The Original Plan did not have the support of the UCC or the ESC because neither the UCC or the ESC agreed with the amount of the aggregate asbestos liability which had been negotiated and which was used in the proposed Plan to determine the allocation of the consideration to be distributed to the unsecured creditor and shareholder classes. As a result of the dispute, the Company was unable to move forward with the Original Plan. In order to resolve this dispute, the Company filed a motion in July 1995, requesting that the Bankruptcy Court estimate the Company's aggregate liability on account of present and future asbestos-related personal injury claims. The Bankruptcy Court ruled in December 1995 that the Company's estimated liability with 7 respect to such claims is $2.5 billion ("Estimation Ruling"). The UCC and the ESC and two individual members of the UCC have filed notices of appeal of the Estimation Ruling. The Company does not know whether the appellate court will hear the appeals or, if it does, when any decision will be rendered. Following the Estimation Ruling, the Company recorded a provision of $1.0 billion to increase the asbestos liability subject to compromise to the amount found by the Bankruptcy Court. This resulted in negative shareholders' equity in excess of $2.2 billion. As a result, the Company filed a motion in the Bankruptcy Court in December 1995 seeking an order directing the United States Trustee to disband the ESC on the basis that existing equity holders do not have an economic interest in the chapter 11 cases. In January 1996, the Bankruptcy Court ruled that the ongoing activities of the ESC shall be limited to pursuing its appeal of the Estimation Ruling. In August 1995, certain entities that had, since the petition date, purchased claims held by certain trade creditors of Hillsdale Tool & Manufacturing Co., filed with the Bankruptcy Court a complaint seeking to preclude the use of substantive consolidation as an element of any plan of reorganization of the Company and its subsidiaries. Under the principles of substantive consolidation, the assets of all debtors are used to satisfy claims against all debtors. In its answer, the Company requested that the Bankruptcy Court substantively consolidate the estates of the Company and its subsidiaries. The Company believes that substantive consolidation is warranted in the chapter 11 cases. The Bankruptcy Court has scheduled an evidentiary hearing to commence on March 4, 1996. The Company intends to file with the Bankruptcy Court as soon as practicable an amended plan of reorganization ("Amended Plan") and an accompanying proposed amended disclosure statement. It is anticipated that the Amended Plan essentially will modify the Original Plan so as to reflect in the allocation of the distributions of Plan Consideration the effect of the Estimation Ruling. More specifically, based upon an aggregate amount of allowed pre-petition unsecured claims to share in the Plan Consideration of approximately $2.663 billion, it is anticipated that under the Amended Plan the Trust would receive approximately 94 percent of the Plan Consideration and the other unsecured creditors the balance. Each class of creditors and equity security holders that is impaired under a plan of reorganization is entitled to vote to accept or reject the plan. The Bankruptcy Code defines acceptance of a plan by a class of creditors as acceptance by holders of two-thirds in dollar amount and more than one-half in number of claims of that class that have timely voted to accept or reject the plan. The Bankruptcy Code defines acceptance of a plan by a class of equity security holders as acceptance by holders of equity interests that hold at least two-thirds in amount of the allowed equity interests in such class who have timely voted to accept or reject the plan. The Bankruptcy Code further provides that any class that does not receive a distribution under a plan is deemed to have rejected the plan, and, accordingly, does not vote. Thus, because the Amended Plan will not provide for any distribution to the Company's existing shareholders, that class will not vote on the Amended Plan and will be deemed to reject the Amended Plan. The Bankruptcy Court will confirm a plan only if all of the requirements of section 1129 of the Bankruptcy Code are met. Among the requirements for confirmation of a plan are that the plan is (i) accepted by all impaired classes of claims and equity interests or, if rejected by an impaired class, that the plan "does not discriminate unfairly" and is "fair and equitable" as to such class, (ii) feasible, and (iii) in the "best interest" of creditors and stockholders impaired under the plan. Additional information concerning the Original Plan, the Amended Plan and the chapter 11 cases can be found in Note B to the Consolidated Financial Statements in the Company's Annual Report for the fiscal year ended November 30, 1995, which is attached as Exhibit 13 to this Form 10-K and which is incorporated herein by reference. Additional information concerning the chapter 11 proceedings can be found in subsections (b) through (d), inclusive, of this Item 3. (b) Asbestos. Prior to its chapter 11 filing, the Company had been named as a co-defendant in a substantial number of lawsuits alleging personal injury from exposure to asbestos-containing insulation products. As of the petition date, there were approximately 67,800 asbestos-related claims outstanding against the Company. The claims, which were pending in 48 states, British Columbia, Guam, the Virgin Islands, and the District of Columbia, 8 alleged, in general, that the Company and other defendant manufacturers failed to warn of the potential hazard to health from the inhalation of asbestos fiber contained in their products. As a result of the chapter 11 filing by the Company, all of such litigation was automatically stayed pursuant to section 362 of the Bankruptcy Code and additional suits were not allowed to be filed against the Company. Since the first asbestos case was filed in 1966, the Company has disposed of approximately 73,500 claims through trial, dismissal or settlement. On average, the Company spent approximately $7,800 per claim, including attorneys' fees and other defense costs, to dispose of these claims. All persons with a pre-petition asbestos-related claim were required to file a proof of claim by the September 30, 1992 bar date. Approximately 160,000 proofs of claim were filed alleging personal injury. The Company believes that approximately 11,000 of these claims are duplicates or were filed by persons whose lawsuits were previously disposed of through trial, dismissal or settlement. The Company expects that additional asbestos-related personal injury claims will arise for several decades into the future. Such future claims were not subject to the September 30, 1992 bar date. The Company recorded a provision in the fourth quarter of 1993 of $1.135 billion to increase the asbestos liability subject to compromise on its books to $1.5 billion, as a consequence of the proposed settlement discussed in subsection (a), above. In July 1995, the Company filed a motion requesting that the Bankruptcy Court estimate the Company's aggregate liability on account of present and future asbestos-related personal injury claims. The motion was filed because the UCC and the ESC appointed in the Company's chapter 11 cases had not agreed with the amount of such liability previously negotiated for settlement purposes among the Company, the ICC and the RFC. Utilizing information available from the Company and from other sources, the Company's expert and the experts retained by the committees and the RFC appointed in the chapter 11 cases gave opinions as to this liability at the hearing before the Bankruptcy Court on this matter. In December 1995, the Bankruptcy Court ruled that the Company's estimated liability for such claims is $2,502,511,000. Specifically, the Bankruptcy Court found the value of the asbestos-related personal injury claims asserted prior to the petition date to be $478,000,000 and the value of future such claims, claims which will be filed after the petition date, to be $2,024,511,000. Appeals have been filed by certain creditors, the UCC and the ESC, seeking to have the Bankruptcy Court's ruling overturned. The Company does not know whether the appellate court will hear the appeals or, if it does, when any decision may be rendered. The Company, and numerous others, also were sued in both state and federal courts by various entities that own or operate commercial properties and public buildings, such as school districts, counties, cities, states, libraries and hospitals, based on allegations that asbestos or asbestos-containing products are or may be in the buildings. The typical demand in such suits is that the defendants compensate the plaintiffs for any costs incurred in identifying, repairing, encapsulating or removing the asbestos-containing products, or that defendants perform such remedial action. Many suits seek an injunction requiring abatement and punitive damages on the basis that the defendants allegedly knew of the hazards and, in concert with one another, concealed and misrepresented the dangers. Many such suits also seek indemnification from the defendants for all claims for personal injury brought against plaintiffs resulting from the presence of asbestos-containing products in plaintiffs' buildings. These suits too have been stayed as against the Company as a result of the commencement of the chapter 11 cases. One hundred forty-nine such lawsuits were instituted against the Company prior to the filing of its chapter 11 petition, including two which were certified as class actions. Two of such suits were consolidated into one. One hundred and one were disposed of through dismissals by the court following rulings on pre-trial motions, or voluntarily by the plaintiffs. The Company settled seven of these cases for less than $22,000 in the aggregate, prior to filing its chapter 11 petition. Forty of such suits remain pending, but have been stayed as a consequence of the chapter 11 filing. The class actions that were certified pre-petition are a national school class action consisting of all public and private elementary and secondary school systems in the United States that have not excluded themselves from the suit; and a Michigan school class action consisting of all public and private elementary and secondary school systems in Michigan that have excluded themselves from the national school class action and included themselves in the state class action. In four lawsuits, class certification petitions were pending pre-petition. One of these suits has since been dismissed; one suit has been suspended; and the remaining two suits, one 9 involving a class of colleges and universities and the other a class of buildings leased to the government, have been certified as class actions. Many of the claimants which voluntarily dismissed their individual claims as set forth above did so to pursue them in one of the certified class actions. Approximately 1,000 proofs of claim alleging asbestos property damage were filed in the chapter 11 cases pursuant to the bar date. Certain of these claims have been withdrawn by the claimants or disallowed by the Bankruptcy Court. The remaining, approximately 930 proofs of claim assert claims in the aggregate amount of approximately $11.5 billion. These claims include most of those asserted in the lawsuits described above that were pending as of the petition date. It is anticipated that the Amended Plan will provide for the establishment of a second trust to resolve asbestos-related property damage claims and alternative mechanisms relating to such trust. More specifically, if the class of asbestos-related property damage claimants votes to accept the Amended Plan, the Company will fund the trust with $3 million in cash, the trustees for the trust will be selected by the representatives of the claimants, and such trustees will develop claims resolution procedures. If such class votes to reject the Amended Plan, but the Amended Plan is nevertheless confirmed, the trust will be funded with its pro rata share of the Plan Consideration, based upon an estimate of the aggregate value of asbestos-related property damage claims by the Bankruptcy Court, and such claims will be resolved and discharged pursuant to claims resolution procedures contained in the Amended Plan. These procedures will require such claimants to prove by application of a scientific protocol that the asbestos-containing insulation products for which they are seeking damages were manufactured by the Company. In February 1996, after the close of the fiscal year, the hospital members of the American Hospital Association, which filed asbestos-related property damage claims against the Company in the alleged approximate amount of $300 million ("Hospitals"), filed a motion in the Bankruptcy Court seeking an order (a) estimating the aggregate value of all asbestos-related property damage claims against the Company, and (b) temporarily allowing such claims for purposes of voting on a plan of reorganization. The motion states that the relief requested is not intended to be a determination by the Bankruptcy Court of the Company's liability, if any, on account of such claims or to assign a permanently fixed value for such claims, but is sought in order to determine the appropriate distribution to creditor classes under a plan of reorganization. Because the motion was just filed, the Company has not yet made a determination as to how it intends to respond. On February 15, 1996, however, the Company filed with the Bankruptcy Court an objection on various grounds to the allowance of many asbestos-related property damage claims, including the claims filed by the Hospitals. Additional information concerning the asbestos litigation can be found in Note K to the Consolidated Financial Statements in the Company's Annual Report for the fiscal year ended November 30, 1995, which is attached as Exhibit 13 to this Form 10-K and which is incorporated herein by reference. (c) Other. In June 1989, the City of New York filed suit against the Company and others in New York state court seeking indemnity for costs New York had incurred and would incur because residents of housing owned by the city were allegedly injured by ingesting paint in that housing. Counts in this suit alleging negligence and strict product liability have been dismissed. Certain other counts are still pending. The City of New York did not file a proof of claim in the Company's chapter 11 case with respect to the claims asserted in such lawsuit by the 1991 bar date. In November 1993, however, it filed three proofs of claim with respect to the litigation each seeking $50 million in damages. The Company's objection to these claims, seeking to have them disallowed on the basis that they were filed after the bar date, was sustained in November 1994, and the claims were disallowed. As a result, and given the voluntary withdrawal of three other lead-related property damage claims, the Company has disposed of all lead-related property damage claims that were asserted in its chapter 11 case. In addition to the foregoing, late in 1987, litigation was initiated against the Company and numerous other defendants, which alleged claims for personal injuries resulting from ingestion of lead-containing paint. Such suits have been stayed as to the Company as a consequence of the filing of the chapter 11 cases. One hundred twenty-eight (128) non-duplicative proofs of claim were timely filed in the Bankruptcy Court asserting liability for personal injuries from lead chemicals allegedly manufactured and sold by the 10 Company. Four of such claims have been voluntarily withdrawn at the Company's request. One of such claims was dismissed by the Bankruptcy Court. The Company filed objections with the Bankruptcy Court to seven of such claims. Pursuant to the objections, the Company sought an order of the Bankruptcy Court disallowing such claims because the claimants' lawsuits asserting similar claims against other defendants which were not in bankruptcy had been dismissed. Prior to the filing of its chapter 11 case, the Company also had been a defendant in these lawsuits. In June 1995, the Bankruptcy Court disallowed all seven of such claims. Currently, there are 113 remaining timely-filed, lead-related personal injury claims that have not been resolved. The Company believes that it has valid grounds to object to the allowance of all of the remaining lead-related personal injury claims. However, in December 1994, the Eighth District Court of Appeals, Cleveland, Ohio, ruled that the plaintiff in a lawsuit filed in state court in Cuyahoga County, Ohio, may pursue certain claims against defendants, such as the Company, that manufactured lead pigment. The trial court had dismissed the plaintiffs' enterprise liability, market share and alternative liability theories pursuant to a defense motion to dismiss. The Ohio Appeals Court upheld the dismissal of the enterprise liability count, but reversed the dismissal as to the market share and alternative liability counts and remanded the case to the trial court. The case is currently proceeding before the trial court on the market share and alternative liability counts. It is not possible to predict how or when the trial court will rule on these counts or whether its rulings will be appealed. It is currently contemplated that all lead-related personal injury claims that were filed that are not disposed of pursuant to an objection filed by the Company, and all such claims which may be filed in the future, will be channeled to and resolved by the Trust that will be established under the Amended Plan for the benefit of holders of asbestos-related and certain other personal injury claims discussed in subsection (a), above. On June 18, 1993, the Company, together with its wholly-owned subsidiary, Transicoil Inc., commenced an adversary proceeding in the Bankruptcy Court against Blue Dove Development Associates ("Blue Dove"), the landlord for Transicoil's domestic manufacturing facility in Valley Forge, Pennsylvania, and against K-Jem, Inc., Blue Dove's general partner. The suit seeks to recover excess rent that the Company and Transicoil believe has been paid to the landlord. The landlord filed a counterclaim in the adversary proceeding seeking a determination that Transicoil has breached the lease and, therefore, the entire rent through June 30, 2005 should be accelerated and due. The landlord made similar claims in a suit filed against Transicoil in October 1993, in the United States District Court for the Eastern District of Pennsylvania ("Pennsylvania Action"). Prosecution of the Pennsylvania Action which seeks approximately $10.3 million in damages has been enjoined by the Bankruptcy Court. The parties filed cross motions for Summary Judgment in the adversary proceeding in the Bankruptcy Court, which the Bankruptcy Court denied in December 1995. The Company and Transicoil are seeking leave of the United States District Court for the Southern District of Ohio to appeal the denial of their Motion for Summary Judgment, which sought as a matter of law and without a trial an order requiring repayment of the excess rent that was paid, on the grounds that the Bankruptcy Court misread the lease in denying their Motion. The Company cannot predict when the District Court will rule on this request for leave to appeal the Bankruptcy Court's decision. The Company believes that the counterclaim asserted by the landlord and the claims asserted in the Pennsylvania Action are without merit and that the resolution of the dispute with respect to the lease will not have a materially adverse impact on the financial condition of the Company or Transicoil Inc. Additional information concerning such litigation claims can be found in Note L to the Consolidated Financial Statements in the Company's Annual Report for the fiscal year ended November 30, 1995, which is attached as Exhibit 13 to this Form 10-K and which is incorporated herein by reference. (d) Environmental. The Company received 1,102 proofs of claim in its chapter 11 cases alleging a right to payment because of environmental matters. Many of these claims were filed in connection with environmental matters reported in Form 10-K reports for prior fiscal years. These include claims with respect to numerous waste disposal sites previously discussed. They also include claims with respect to the Tri-State mining district of Kansas, Missouri and Oklahoma previously disclosed: Ottawa County, Oklahoma; Cherokee County, Kansas; Jasper 11 County, Missouri; and the Baxter Springs, Treece, and Galena Subsites in Kansas. The Company has resolved the majority of these environmental claims through negotiations with the EPA and the United States Department of Interior. Pursuant to a negotiated agreement, the agencies and certain states will be granted allowed pre-petition general unsecured claims in the Company's chapter 11 case aggregating approximately $43.0 million in full satisfaction of all of the Company's alleged liability at most of its known Superfund sites, including any liability for any natural resource damage. In exchange for these allowed claims, the agencies will release the Company from liability at such Superfund sites and the Company will be protected from contribution claims of other parties with potential liability at the sites. Accordingly, the Company's settlement should completely resolve all claims with respect to these sites. Further, the agreement provides a process which will permit any liability, which may arise with respect to a small number of sites as to which the EPA believes that it does not have sufficient information to negotiate a meaningful settlement at this time, to be resolved in the future when additional information is available. During fiscal 1995, following execution of the settlement agreement by all parties, the settlement agreement was lodged with the Bankruptcy Court and notice of it was published in the Federal Register as required by law. In April and September 1995, respectively, the Company and the United States filed motions seeking approval of the settlement by the Bankruptcy Court. Certain parties that may be liable at certain of the sites resolved by the settlement agreement opposed Bankruptcy Court approval of the settlement. Such opposition basically seeks increases in the amount of the allowed claims provided in the settlement agreement attributable to the sites where the objector may have liability. The UCC also opposed approval of the settlement, arguing that the potential repeal of the retroactive liability provisions of the Superfund laws could substantially reduce the Company's pre-petition liability, and, accordingly, the allowed pre-petition claims of $43.0 million should be reduced. The Company believes, however, that the terms and provisions of the settlement agreement are fair and equitable and that the objections raised have no basis. In November 1995, a hearing was held before the Bankruptcy Court on the motions seeking the approval of the settlement agreement. The Court has not yet ruled on the motions. Additional information concerning the environmental claims can be found in Note L to the Consolidated Financial Statements in the Company's Annual Report for the fiscal year ended November 30, 1995, which is attached as Exhibit 13 to this Form 10-K and which is incorporated herein by reference. (e) Summary - Environmental And Other Claims. The Company intends to defend all remaining litigation claims vigorously in the manner permitted by the Bankruptcy Code and/or applicable law. All pre-petition claims against the Company arising from litigation must be liquidated or otherwise addressed in the context of the chapter 11 cases. Further, all such claims against the Company will be addressed in a plan of reorganization. During the pendency of the chapter 11 cases, any unresolved litigation with respect to pre-petition claims can proceed against the Company only with the express permission of the Bankruptcy Court. The Company has resolved most of the litigation claims that were asserted pursuant to the October 31, 1991 bar date, other than those claims arising from the sale of asbestos-containing products. The Company has filed objections to certain of the unresolved litigation-based claims seeking to reduce the amount of such claims or eliminate them entirely. These objections have not yet been resolved. The Company anticipates filing additional objections to other such claims if they cannot be resolved through negotiation. These objections will be litigated vigorously by the Company pursuant to the provisions of the Bankruptcy Code and applicable law. The Company expects that all such claims will be resolved without material adverse effect on the Company, its operations or its financial condition. In addition, the Company may have insurance coverage for certain of these claims and may have factual and legal defenses available to it. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. 12 PART II CROSS REFERENCE SHEET TO ANNUAL REPORT FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995 MARKED AS EXHIBIT 13 EXHIBIT 13
PAGES CAPTIONS ------ -------------------------------------- ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Market Information 18 -- Quarterly Data (b) Holders of Common Stock -- 5,932 holders of record at February 23, 1996 (c) Dividends 35 -- Selected Financial Data 32-34 -- Management's Discussion and Analysis of Results of Operations and Financial Condition 20-21 -- Note B to the Consolidated Financial Statements ITEM 6. SELECTED FINANCIAL DATA 35 -- Selected Financial Data ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 32-34 -- Management's Discussion and Analysis of Results of Operations and Financial Condition ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 13 -- Consolidated Statement of Income (Loss) for the Three Years Ended November 30, 1995 16 -- Consolidated Statement of Cash Flows for the Three Years Ended November 30, 1995 14-15 -- Consolidated Balance Sheet as of November 30, 1995 and 1994 17 -- Consolidated Statement of Shareholders' Equity (Deficit) for the Three Years Ended November 30, 1995 19-29 -- Notes to Consolidated Financial Statements 32 -- Report of Management 31 -- Independent Auditors' Report 18 -- Quarterly Data
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 13 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. (a) Directors. The name and age; the positions and offices held with the registrant; principal occupation during the past five years and present employer; other boards of directors on which he serves; the year in which he first became a director of the Company and the committees on which he serves, follow for each director:
PRESENT FIRST TERM BECAME OF OFFICE DIRECTOR EXPIRES -------- --------- PAUL W. CHRISTENSEN, JR., 71.............................................. 1969 1996 Retired, 1987; Chairman of the Board 1978-87, and President prior thereto, of The Cincinnati Gear Company, Cincinnati, Ohio, a manufacturer of custom gears and enclosed drives. Member of Audit, Executive and Stock Option/Compensation Committees. Chairman of Audit Committee. MELVIN F. CHUBB, JR., 62.................................................. 1990 (1) Senior Vice President 1988-96, of Eagle-Picher Industries, Inc.; Lieutenant General, United States Air Force and Commander of the Electronic Systems Division at Hanscom Air Force Base, Massachusetts, 1984-88. Director of Empire District Electric Co. V. ANDERSON COOMBE, 69.................................................... 1974 1996 Chairman of the Board since March 1991, and President prior thereto (through April 1991), of The Wm. Powell Company, Cincinnati, Ohio, a valve manufacturer. Director of Star Banc Corp., The Starflo Corp., Union Central Life Insurance Co. and The Wm. Powell Company. Member of Audit, Executive and Stock Option/Compensation Committees. ROGER L. HOWE, 61......................................................... 1986 (2) Chairman of the Board of U.S. Precision Lens, Inc., Cincinnati, Ohio, a manufacturer of optics for video projection, instrumentation, and photographic applications. Director of Cintas Corporation, Star Banc Corp. and Baldwin Piano & Organ Co. Member of Executive and Stock Option/Compensation Committees. DANIEL W. LEBLOND, 69..................................................... 1965 (2) Chairman of the Board of LeBlond Makino Machine Tool Company, Cincinnati, Ohio, a manufacturer of machine tools. Director of The Ingersoll Milling Machine Company, LeBlond Makino Machine Tool Company and The Ohio National Life Insurance Co. Member of Executive and Stock Option/Compensation Committees. Chairman of Stock Option/Compensation Committee. POWELL MCHENRY, 69........................................................ 1991 (2) Of Counsel to Dinsmore & Shohl, a law firm, Cincinnati, Ohio, as of October 1, 1991; Senior Vice President and General Counsel of The Procter & Gamble Company, Cincinnati, Ohio, a manufacturer of consumer and industrial products, 1983-91. Member of Audit Committee.
14
PRESENT FIRST TERM BECAME OF OFFICE DIRECTOR EXPIRES -------- --------- THOMAS E. PETRY, 56....................................................... 1981 (2) Chairman of the Board and Chief Executive Officer 1994, Chairman of the Board, President, and Chief Executive Officer 1992, Chairman of the Board and Chief Executive Officer 1989, President and Chief Executive Officer 1982, President and Chief Operating Officer 1981, Group Vice President 1978, President, Akron Standard Division 1977, Vice President and Treasurer 1974, of Eagle-Picher Industries, Inc. Director of Cinergy Corp., Star Banc Corp., Union Central Life Insurance Co. and Insilco Corp. Member and Chairman of Executive Committee. EUGENE P. RUEHLMANN, 71................................................... 1991 1996 Of Counsel to Vorys, Sater, Seymour & Pease, a law firm, Cincinnati, Ohio as of January 1, 1996; Partner of that firm 1989-1996, Chairman, Hamilton County (Ohio) Republican Central Committee, 1991. Director of Western-Southern Life Insurance Company. Member of Audit Committee. ANDRIES RUIJSSENAARS, 53.................................................. 1994 (2) President and Chief Operating Officer as of December 1, 1994, Senior Vice President 1989-94, President, the Ohio Rubber Company Division 1987-89, Executive Vice President, the Ohio Rubber Company Division 1986-87, General Manager of the subsidiary, Eagle-Picher Industries GmbH in Ohringen, Germany 1980-86, of Eagle-Picher Industries, Inc.
- ---------- (1) Mr. Chubb retired from the Company's Board of Directors effective February 1, 1996. (2) Messrs. LeBlond and Petry were elected directors to hold office for terms expiring at the annual meeting of shareholders in 1994 or when their successors are elected and qualified. Messrs. Howe and McHenry were elected directors to hold office for terms expiring at the annual meeting of shareholders in 1995 or when their successors are elected and qualified. As the Company did not hold an annual meeting of shareholders in 1994 or 1995, these directors continue to hold office until their successors are elected and qualified. Mr. Ruijssenaars was elected director by the incumbent directors on November 2, 1994 to serve in the same class as Messrs. LeBlond and Petry, and accordingly will hold office until his successor is elected and qualified. (b) Executive Officers. The name and age, the positions and offices held with the registrant and employment history with the registrant, term of office as officer and period during which each has served as such, follow for each executive officer:
YEAR ELECTED OR ASSUMED PRESENT AGE DUTIES --- ------------ Thomas E. Petry.......... Chairman of the Board of Directors and Chief Executive Officer 56 1982 Andries Ruijssenaars..... President and Chief Operating Officer, Director 53 1994 Melvin F. Chubb, Jr...... Senior Vice President and Director* 62 1988 David N. Hall............ Senior Vice President-Finance 56 1987 Wayne R. Wickens......... Senior Vice President 49 1994 Carroll D. Curless....... Vice President and Controller 57 1984 James A. Ralston......... Vice President, General Counsel and Secretary 49 1982
- ---------- * Retired effective February 1, 1996. 15 Thomas E. Petry was first employed by the Company in 1968. He was elected Assistant Treasurer in 1971, Treasurer in 1973 and Vice President and Treasurer in 1974. He served as President of the Akron Standard Division from 1977 to 1978. He was elected Group Vice President in 1978, a Director, President and Chief Operating Officer in 1981, and President and Chief Executive Officer in 1982. He served as President from 1981-89 and from 1992-94. He has been serving as Chief Executive Officer since 1982 and as Chairman of the Board since 1989. Andries Ruijssenaars was first employed by the Company in 1980 as General Manager of Eagle-Picher Industries GmbH in Ohringen, Germany. He served as Executive Vice President of The Ohio Rubber Company Division from 1986 to 1987 and as President of The Ohio Rubber Company Division from 1987 to 1989. He was elected Senior Vice President in 1989 and was appointed a Director in November, 1994. He was elected President and Chief Operating Officer effective December 1, 1994 and has been serving in those capacities since December 1, 1994. Melvin F. Chubb, Jr., was first employed by the Company in 1988 and was elected and served as Senior Vice President from 1988 until his retirement effective February 1, 1996. In 1990 Mr. Chubb was elected a Director. Prior to joining the Company, he completed a career in the United States Air Force, having attained the rank of Lieutenant General and having served most recently as commander of the Electronic Systems Division, Air Force Systems Command at Hanscom Air Force Base. David N. Hall was first employed by the Company and elected Treasurer in 1977. He was elected Vice President and Treasurer in 1979, and he was elected and has been serving as Senior Vice President-Finance since 1987. Wayne R. Wickens was first employed by the Company in 1976 as a management trainee with the former Fabricon Automotive Division, was promoted to Plant Manager in 1979, Vice President in 1981 and then President of Fabricon Automotive in 1986. He was named President of the Wolverine Gasket Division in 1988, Vice President of the Eagle-Picher Automotive Group in 1989, and Division President of Hillsdale Tool & Manufacturing Co. in 1990. He was elected Senior Vice President of the Company effective December 1, 1994. Carroll D. Curless was first employed by the Company in 1964. He was elected Assistant Controller in 1978 and Controller in 1984. He was elected and has been serving as Vice President and Controller since 1986. James A. Ralston was first employed by the Company as an attorney in the Legal Department in 1979. He was elected Assistant Secretary in 1982, General Counsel in 1982, Vice President and General Counsel in 1984, and Secretary in 1994. He has been serving as Vice President, General Counsel and Secretary since 1994. Executive officers serve during the pleasure of the Board, or until their successors are elected and qualified. There are no family relationships existing between or among the above executive officers and directors of the registrant. 16 ITEM 11. EXECUTIVE COMPENSATION. The following Summary Compensation Table sets forth for the last three fiscal years the compensation provided by the Company to the Chief Executive Officer and each of the other four most highly compensated executive officers (collectively, "named executive officers"): SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ---------------------------------------------- OTHER FISCAL ANNUAL ALL OTHER NAME AND YEAR COMPENSATION COMPENSATION PRINCIPAL POSITION ENDED SALARY($) BONUS($) ($)(2) ($)(3) - ----------------------------------------- --------- --------- -------- ------------ ------------ Thomas E. Petry.......................... 11/30/95 575,000 244,000 255,296 285,611 Chairman and 11/30/94 575,000 216,000 150,149 169,763 Chief Executive Officer 11/30/93 575,000 100,000 149,492 178,154 Andries Ruijssenaars..................... 11/30/95 390,000 145,000 87,298 102,571 President and Chief Operating Officer 11/30/94 300,000 100,000 86,033 101,197 11/30/93 275,000 75,000 22,760 31,420 Melvin F. Chubb, Jr...................... 11/30/95 290,000 100,000 129,387 149,692 Senior Vice President(1) 11/30/94 280,000 75,000 326,853 370,313 11/30/93 275,000 45,000 0 4,497 David N. Hall............................ 11/30/95 345,000 110,000 120,284 136,415 Senior Vice President -- Finance 11/30/94 320,000 95,000 193,447 216,177 11/30/93 310,000 65,000 50,133 62,692 Wayne R. Wickens......................... 11/30/95 280,000 85,000 24,377 31,109 Senior Vice President 11/30/94 205,000 60,000 20,272 29,512 11/30/93 195,000 60,000 7,150 25,202
- ---------- (1) Mr. Chubb retired effective February 1, 1996. (2) This column includes nothing for perquisites since in no case did they exceed the reporting thresholds (the lesser of 10% of salary plus bonuses or $50,000), but includes amounts for the payment of taxes on purchases of annuities under the Supplemental Executive Retirement Plan. (3) All Other Compensation:
COST OF ANNUITY UNDER COMPANY NON-QUALIFIED CONTRIBUTIONS SUPPLEMENTAL TO EAGLE-PICHER EXECUTIVE RETIREMENT YEAR RETIREMENT SAVINGS ENDED PLAN($) PLAN($) TOTAL($) --------- ------------- ---------------- -------- Thomas E. Petry.................. 11/30/95 280,991 4,620 285,611 Andries Ruijssenaars............. 11/30/95 97,951 4,620 102,571 Melvin F. Chubb, Jr.............. 11/30/95 145,072 4,620 149,692 David N. Hall.................... 11/30/95 131,795 4,620 136,415 Wayne R. Wickens................. 11/30/95 26,489 4,620 31,109
17 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES NOTE: Registrant has never granted Stock Appreciation Rights (SARs), so there are no SARs outstanding. There were no exercises of options by, or grants of options to, the named executive officers during fiscal 1995.
NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL OPTIONS AT FISCAL YEAR-END(#) YEAR-END($) NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE - ---------------------------------------- ------------------------- ------------------------- Thomas E. Petry......................... 0/100,000 ** Andries Ruijssenaars.................... 0/50,000 ** David N. Hall........................... 0/50,000 ** Melvin F. Chubb, Jr.*................... 0/50,000 ** Wayne R. Wickens........................ 0/10,000 **
- ---------- * Retired effective February 1, 1996. ** None of the unexercised options held by any of the named executive officers was "In-the-Money" as of November 30, 1995. Further, the options were exercisable only if the last selling price per share on the New York Stock Exchange ("NYSE") or its successor prior to the date on which the Company received written notice of the exercise was at least 20% above the option price per share. Trading in the Company's shares on the NYSE was suspended on November 15, 1993, and the NYSE delisted the Company's shares effective June 9, 1994. All of the unexercised options are at a price of $2.50 per share. PENSION BENEFITS The following table shows the estimated total combined annual benefits to named executive officers upon retirement at age 62 payable under Social Security, the Eagle-Picher Salaried Plan, and the Supplemental Executive Retirement Plan: PENSION PLAN TABLE
YEARS OF SERVICE ------------------------------------------------------------- REMUNERATION 15 20 25 30 35 - ---------------------------- --------- --------- --------- --------- --------- $ 250,000................... $ 90,000 $ 120,000 $ 150,000 $ 150,000 $ 150,000 300,000................... 108,000 144,000 180,000 180,000 180,000 350,000................... 126,000 168,000 210,000 210,000 210,000 400,000................... 144,000 192,000 240,000 240,000 240,000 450,000................... 162,000 216,000 270,000 270,000 270,000 500,000................... 180,000 240,000 300,000 300,000 300,000 550,000................... 198,000 264,000 330,000 330,000 330,000 600,000................... 216,000 288,000 360,000 360,000 360,000 650,000................... 234,000 312,000 390,000 390,000 390,000 700,000................... 252,000 336,000 420,000 420,000 420,000 750,000................... 270,000 360,000 450,000 450,000 450,000 800,000................... 288,000 384,000 480,000 480,000 480,000 850,000................... 306,000 408,000 510,000 510,000 510,000 900,000................... 324,000 432,000 540,000 540,000 540,000 950,000................... 342,000 456,000 570,000 570,000 570,000 1,000,000................... 360,000 480,000 600,000 600,000 600,000
The Eagle-Picher Salaried Plan, a non-contributory defined benefit pension plan in which the named executive officers are participants, provides benefits after retirement based on the highest average monthly compensation during five consecutive years of the last ten years preceding retirement. For purposes of the Plan, compensation includes base salary, bonuses, commissions, and severance payments; salary and bonus included are as reported in the Summary Compensation Table, and commissions and severance payments, if 18 there had been any, would have been included in that Table. The benefits shown by the Pension Plan Table above include amounts payable under Social Security and the Company's Supplemental Executive Retirement Plan as well as those payable under the Eagle-Picher Salaried Plan. Benefits are computed on the basis of straight-life annuity amounts. The estimated credited years of service with the Company for the named executive officers at age 62 are: Thomas E. Petry............................................ 33 David N. Hall.............................................. 24 Andries Ruijssenaars....................................... 24 Melvin F. Chubb, Jr........................................ 12 Wayne R. Wickens........................................... 32
SEVERANCE PLAN On February 6, 1991, the Board of Directors adopted a Severance Plan for certain employees, including the named executive officers, which was approved by the Bankruptcy Court on May 13, 1991. Under the Severance Plan, a participant whose employment is terminated by the Company other than for cause receives: a Base Severance Benefit of one week's pay for each year of Company service, payable under general payroll pay practices, but reduced dollar for dollar by any compensation earned from a subsequent employer during the period such benefits are being paid; a Supplemental Severance Benefit ranging from three months' salary up to one year's salary, payable in a lump sum upon termination; and continuation of certain insurance benefits for up to one week for each year of service. Currently, the Severance Plan provides that the payment of Supplemental Severance Benefits will terminate upon confirmation of a plan of reorganization. It is anticipated, however, that the Amended Plan that the Company intends to file will provide for the continuation of the Severance Plan for a period of at least twelve months after the effective date of the Amended Plan. COMPENSATION OF DIRECTORS During fiscal 1995, directors were paid a retainer of $18,000 per year, a fee of $750 for each Board meeting attended and a fee of $750 for each Board committee meeting attended. Effective December 1, 1995, this retainer was increased to $24,000 per year, and the fee for attending a meeting of the Board or a Board committee was increased to $1,000 for each meeting attended. Board committee members, excluding committee chairmen, are paid a retainer of $3,000 per year for each committee on which they serve; the chairman of each Board committee is paid a retainer of $5,000 per year. The Company does not pay director retainers or attendance fees, or committee retainers or attendance fees, to directors who are also employees of the Company. Directors who are not also employees of the Company who retire with ten or more years of service as members of the Board are paid an annual advisory fee for life in an amount equal to the annual retainer paid to active directors at the time of their retirement. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During fiscal 1995, Messrs. LeBlond (Chairman), Christensen, Coombe and Howe, directors of the Company, constituted the Stock Option/Compensation Committee. During fiscal 1995 and as of February 23, 1996, Mr. Petry, Chairman and Chief Executive Officer of the Company, served as a director and as a member of the compensation committee of The Wm. Powell Company. During fiscal 1995 and as of February 23, 1996, Mr. Coombe was Chairman of the Board of The Wm. Powell Company. 19 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. As of February 23, 1996, beneficial ownership of the Company's Common Stock by all directors; each of the named executive officers (except Mr. Chubb who retired effective February 1, 1996); and all directors and executive officers as a group, was:
AMOUNT AND NATURE OF BENEFICIAL PERCENT OWNERSHIP OF CLASS ----------- --------- DIRECTORS Paul W. Christensen, Jr....................................... 38,000(1) * V. Anderson Coombe............................................ 3,480(1) * Roger L. Howe................................................. 0 * Daniel W. LeBlond............................................. 0 * Powell McHenry................................................ 1,000 * Thomas E. Petry............................................... 129,102(2)(3) 1.17% Eugene P. Ruehlmann........................................... 1,000 * Andries Ruijssenaars.......................................... 52,433(2)(3) * NAMED EXECUTIVE OFFICERS David N. Hall................................................. 62,482(3) * Wayne R. Wickens.............................................. 10,000(3) * DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (12 PERSONS)...... 369,027(4) 3.34%
- ---------- * Less than 1%. (1) The following persons disclaim beneficial ownership as to the following numbers of shares included herein which are beneficially owned by family members: Mr. Christensen -- 13,000 shares; Mr. Coombe -- 1,520 shares. (2) Messrs. Petry and Ruijssenaars are also executive officers of the Company; their holdings of Company stock are listed here and not duplicated under the Named Executive Officers individual listing immediately below. (3) Includes shares subject to options to purchase within 60 days: Mr. Petry -- 100,000; Mr. Ruijssenaars -- 50,000; Mr. Hall -- 50,000; Mr. Wickens -- 10,000. The terms of the option grants make the options exercisable if the last selling price per share on the New York Stock Exchange or its successor is at least $3.00 on the day prior to the date on which the Company receives written notice of the exercise. (4) This figure includes 270,000 shares subject to options to purchase within 60 days on the same terms as set forth in footnote (3), above. All shares shown above as owned were directly owned except as footnoted. Directors and executive officers are considered control persons of the Company. There were as of February 23, 1996 no beneficial owners of more than 5% of the Company's Common Stock. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The Board of Directors has no knowledge of any significant transaction or proposed significant transaction to which the Company or any subsidiary and any director, officer or nominee for director, or any associate of such director, officer, or nominee, were or are to be parties. 20 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) 1. All Financial Statements Eagle-Picher Industries, Inc. (Incorporated by reference to the Company's Annual Report for the fiscal year ended November 30, 1995, Exhibit 13 -- See Part II above) Independent Auditors' Report -- Incorporated by reference to Exhibit 13, page 36 3. Exhibits (numbers keyed to Item 601, Regulation S-K). * 3.(i) Amended Articles of Incorporation as adopted May 1, 1985 and amended May 28, 1986. Incorporated by reference to Exhibit 1 to Form S-8 Registration Statement No. 33-45179 for the Registrant's Stock Option Plan of 1990. * (ii) Code of Regulations of Eagle-Picher Industries, Inc., last amended March 26, 1985. Incorporated by reference to Exhibit 3(b) to Report on Form 10-K of Registrant for the fiscal year ended November 30, 1992. * 4.(a) Form of Indenture relating to the $50,000,000 Eagle-Picher Industries, Inc. 9 1/2% Sinking Fund Debentures due March 1, 2017, dated as of March 1, 1987, between Eagle-Picher Industries, Inc. and The Bank of New York. Incorporated by reference to Report on Form 8-K of Registrant dated March 5, 1987 (on file with the SEC; SEC File No. 1-1499). * (b)(i) Credit and Agency Agreement (debtor-in-possession financing agreement) dated as of November 5, 1992. Incorporated by reference to Exhibit 4(b) to Form 10-K of Registrant for the fiscal year ended November 30, 1992. * (ii) First Amendment to Credit Agreement dated as of August 29, 1994 incorporated by reference to Exhibit 4(b)(ii) to Report on Form 10-K of Registrant for the fiscal year ended November 30, 1994. *10.(a) Eagle-Picher Industries, Inc. Stock Option Plan of 1983, as amended. Incorporated by reference to Exhibit 28 to Post Effective Amendment No. 1 dated April 10, 1990 and Appendix 2 dated May 30, 1991 to Registrant's Form S-8 Registration Statement No. 33-5792. * (b) Eagle-Picher Industries, Inc. Stock Option Plan of 1990. Incorporated by reference to Appendix A to Registrant's Proxy Statement for Annual Meeting of Shareholders, March 27, 1990 (on file with the SEC; SEC File No. 1-1499). * (c) Eagle-Picher Supplemental Executive Retirement Plan. Incorporated by reference to Report on Form 10-Q of Registrant for the quarter ended May 31, 1995. * (d) Eagle-Picher Industries, Inc. Severance Plan dated as of June 25, 1991. Incorporated by reference to Report on Form 10-K of Registrant for the fiscal year ended November 30, 1994. 13. Excerpts from Eagle-Picher Industries, Inc. Annual Report for the fiscal year ended November 30, 1995. 21. Subsidiaries of the Registrant. 23. Independent Auditors' Consent. 24.(a),(b) Powers of Attorney. 27. Financial Data Schedules (submitted electronically to the SEC for its information). 99. Plants and Locations.
(b) Reports on Form 8-K. * (i) December 7, 1995 - Reporting December 4, 1995 decision of the U.S. Bankruptcy Court presiding over chapter 11 cases of the Company and seven of its domestic subsidiaries that the Company's estimated aggregate liability on account of present and future asbestos-related personal injury claims is $2,502,511,000. - ---------- * Incorporated by reference. 21 SIGNATURES Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Eagle-Picher Industries, Inc. By /s/ Thomas E. Petry ---------------------------- Thomas E. Petry Chairman of the Board and Chief Executive Officer Date: February 27, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Thomas E. Petry Date: February 27, 1996 - ------------------------------------------- Thomas E. Petry, Chairman of the Board and Chief Executive Officer /s/ David N. Hall Date: February 27, 1996 - -------------------------------------------- David N. Hall, Senior Vice President-Finance (Principal Financial Officer) /s/ Carroll D. Curless* Date: February 27, 1996 - -------------------------------------------- Carroll D. Curless, Vice President and Controller (Principal Accounting Officer) /s/ Paul W. Christensen, Jr.* Date: February 27, 1996 - -------------------------------------------- Paul W. Christensen, Jr., Director /s/ V. Anderson Coombe* Date: February 27, 1996 - -------------------------------------------- V. Anderson Coombe, Director /s/ Roger L. Howe* Date: February 27, 1996 - -------------------------------------------- Roger L. Howe, Director /s/ Daniel W. LeBlond* Date: February 27, 1996 - -------------------------------------------- Daniel W. LeBlond, Director /s/ Powell McHenry* Date: February 27, 1996 - -------------------------------------------- Powell McHenry, Director /s/ Eugene P. Ruehlmann* Date: February 27, 1996 - -------------------------------------------- Eugene P. Ruehlmann, Director /s/ Andries Ruijssenaars* Date: February 27, 1996 - -------------------------------------------- Andries Ruijssenaars, Director - --------------- * By /s/ James A. Ralston - -------------------------------------------- James A. Ralston Attorney-in-fact
22 EXHIBIT INDEX
EXHIBIT NUMBER - --------- 3(i) -- Articles of Incorporation* 3(ii) -- Code of Regulations* 4(a) -- Form of Indenture, $50,000,000 9 1/2% Sinking Fund Debentures due March 1, 2017* 4(b)(i) -- Credit and Agency Agreement dated as of November 5, 1992* 4(b)(ii) -- First Amendment to Credit Agreement, dated as of August 29, 1994* 10(a),(b) -- Eagle-Picher Industries, Inc. Stock Option Plans of 1983 and 1990* 10(c) -- Eagle-Picher Supplemental Executive Retirement Plan* 10(d) -- Eagle-Picher Industries, Inc. Severance Plan dated as of June 25, 1991* 13 -- Excerpts from Annual Report for the Fiscal Year Ended November 30, 1995 21 -- Subsidiaries of the Registrant 23 -- Independent Auditors' Consent 24(a),(b) -- Powers of Attorney 27 -- Financial Data Schedules (Submitted electronically to the SEC for its information.) 99 -- Plants and Locations
- ---------- * Incorporated by reference. See page 21 above. 23 EXHIBIT 13 CONSOLIDATED STATEMENT OF INCOME (LOSS)
Years Ended November 30 ----------------------------------------- (In thousands of dollars, except per share) 1995 1994 1993 - ---------------------------------------------------------------------------------------- NET SALES $ 848,548 $ 756,741 $ 661,452 OPERATING COSTS AND EXPENSES Cost of products sold 706,586 622,907 548,605 Selling and administrative 78,875 75,553 69,093 - ---------------------------------------------------------------------------------------- 785,461 698,460 617,698 - ---------------------------------------------------------------------------------------- OPERATING INCOME 63,087 58,281 43,754 Provision for asbestos litigation (1,005,511) -- (1,135,500) Provision for environmental and other claims -- -- (41,436) Interest expense (contractual interest of $8,897 in 1995, $8,940 in 1994 and $9,369 in 1993) (1,926) (1,809) (2,070) Gain on sale of investment 11,505 -- -- Other income (expense) 199 703 (174) - ---------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE REORGANIZATION ITEMS, TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (932,646) 57,175 (1,135,426) REORGANIZATION ITEMS (2,225) (3,426) (4,344) - ---------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (934,871) 53,749 (1,139,770) INCOME TAXES 9,300 5,000 5,000 - ---------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (944,171) 48,749 (1,144,770) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR POSTRETIREMENT BENEFITS -- -- (12,598) - ---------------------------------------------------------------------------------------- NET INCOME (LOSS) $ (944,171) $ 48,749 $(1,157,368) ======================================================================================== INCOME (LOSS) PER SHARE: INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (85.51) $ 4.42 $ (103.78) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR POSTRETIREMENT BENEFITS -- -- (1.14) - ---------------------------------------------------------------------------------------- NET INCOME (LOSS) $ (85.51) $ 4.42 $ (104.92) ========================================================================================
See accompanying notes to consolidated financial statements. 13. CONSOLIDATED BALANCE SHEET
November 30 ----------------------- (In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 93,330 $ 92,606 Receivables, less allowances of $1,860 in 1995 and $1,445 in 1994 127,044 109,130 Income tax refund receivable 4,402 2,246 Inventories 83,647 81,982 Prepaid expenses 17,695 10,295 - -------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 326,118 296,259 - -------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT Land and land improvements 12,482 11,940 Buildings 84,549 79,937 Machinery and equipment 319,987 301,518 Construction in progress 24,939 14,623 - -------------------------------------------------------------------------------- 441,957 408,018 Less accumulated depreciation 286,139 263,369 - -------------------------------------------------------------------------------- NET PROPERTY, PLANT AND EQUIPMENT 155,818 144,649 - -------------------------------------------------------------------------------- DEFERRED INCOME TAXES 62,824 43,924 OTHER ASSETS 35,313 36,275 - -------------------------------------------------------------------------------- TOTAL ASSETS $580,073 $521,107 ================================================================================
See accompanying notes to consolidated financial statements. 14. Eagle-Picher Industries, Inc. CONSOLIDATED BALANCE SHEET
November 30 -------------------------- (In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 40,318 $ 43,691 Compensation and employee benefits 13,759 14,005 Long-term debt - current portion 1,525 1,726 Income taxes 4,789 5,223 Taxes other than income 4,772 4,611 Other accrued liabilities 17,460 16,705 - -------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 82,623 85,961 - -------------------------------------------------------------------------------------- LIABILITIES SUBJECT TO COMPROMISE 2,662,530 1,657,265 LONG-TERM DEBT, less current portion 19,103 19,896 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 21,720 21,070 OTHER LONG-TERM LIABILITIES 5,405 3,608 - -------------------------------------------------------------------------------------- TOTAL LIABILITIES 2,791,381 1,787,800 - -------------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY (DEFICIT) Preference stock - no par value Authorized 873,457 shares; none issued -- -- Common stock - $1.25 par value per share Authorized 30,000,000 shares; issued 11,125,000 shares 13,906 13,906 Additional paid-in capital 36,378 36,378 Accumulated deficit (2,261,289) (1,317,118) Unrealized gain on investments 333 -- Foreign currency translation 1,277 2,054 - -------------------------------------------------------------------------------------- (2,209,395) (1,264,780) Cost of 84,068 common treasury shares (1,913) (1,913) - -------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (2,211,308) (1,266,693) - -------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 580,073 $ 521,107 ======================================================================================
See accompanying notes to consolidated financial statements. 15. CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended November 30 ----------------------------------------- (In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (944,171) $ 48,749 $(1,157,368) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision for asbestos litigation 1,005,511 -- 1,135,500 Provision for environmental and other claims -- -- 41,436 Cumulative effect of accounting change -- -- 12,598 Depreciation and amortization 28,708 26,143 24,955 Gain on sale of investment (11,505) -- -- Changes in assets and liabilities: Receivables (17,914) (11,544) (10,764) Inventories (1,665) (13,676) (4,098) Deferred income taxes (18,900) (14,000) (12,137) Accounts payable (3,373) 11,326 5,539 Other (6,235) (1,905) 2,015 - -------------------------------------------------------------------------------------------- Net cash provided by operating activities 30,456 45,093 37,676 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of investment 11,505 -- -- Capital expenditures (40,558) (35,887) (28,512) Other 340 1,800 335 - -------------------------------------------------------------------------------------------- Net cash used in investing activities (28,713) (34,087) (28,177) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt 1,240 -- 810 Reduction of long-term debt (2,259) (2,974) (4,007) Issuance of common shares -- -- 156 - -------------------------------------------------------------------------------------------- Net cash used in financing activities (1,019) (2,974) (3,041) - -------------------------------------------------------------------------------------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 724 8,032 6,458 - -------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 92,606 84,574 78,116 - -------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 93,330 $ 92,606 $ 84,574 ============================================================================================
See accompanying notes to consolidated financial statements. 16. Eagle-Picher Industries, Inc. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
TOTAL ADDITIONAL UNREALIZED FOREIGN SHAREHOLDERS' COMMON PAID-IN ACCUMULATED GAIN ON CURRENCY TREASURY EQUITY STOCK CAPITAL DEFICIT INVESTMENTS TRANSLATION STOCK (DEFICIT) ----------------------------------------------------------------------------------------------- (In thousands of dollars) - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE NOVEMBER 30, 1992 $ 13,906 $ 37,644 $ (208,499) $ -- $ 1,326 $ (3,335) $ (158,958) Net loss -- -- (1,157,368) -- -- -- (1,157,368) Stock options -- (1,266) -- -- -- 1,422 156 Foreign currency translation -- -- -- -- (1,036) -- (1,036) - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE NOVEMBER 30, 1993 13,906 36,378 (1,365,867) -- 290 (1,913) (1,317,206) Net income -- -- 48,749 -- -- -- 48,749 Foreign currency translation -- -- -- -- 1,764 -- 1,764 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE NOVEMBER 30, 1994 13,906 36,378 (1,317,118) -- 2,054 (1,913) (1,266,693) Cumulative effect of change in accounting for marketable securities -- -- -- 5,377 -- -- 5,377 Net loss -- -- (944,171) -- -- -- (944,171) Realized gain on investment -- -- -- (5,044) -- -- (5,044) Foreign currency translation -- -- -- -- (777) -- (777) - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE NOVEMBER 30, 1995 $ 13,906 $ 36,378 $(2,261,289) $ 333 $ 1,277 $ (1,913) $(2,211,308) ==================================================================================================================================
See accompanying notes to consolidated financial statements. 17. QUARTERLY DATA
(Unaudited) (In thousands of dollars, except per share) - ----------------------------------------------------------------------------------------- 1995 FIRST SECOND THIRD FOURTH YEAR - ----------------------------------------------------------------------------------------- NET SALES $197,603 $225,378 $210,723 $214,844 $848,548 - ----------------------------------------------------------------------------------------- OPERATING INCOME 15,113 19,147 14,022 14,805 63,087 - ----------------------------------------------------------------------------------------- NET INCOME (LOSS) 13,032 16,776 23,394(1) (997,373)(2) (944,171) - ----------------------------------------------------------------------------------------- NET INCOME (LOSS) PER SHARE 1.18 1.52 2.12 (90.33)(2) (85.51) - ----------------------------------------------------------------------------------------- BID PRICES (3) HIGH 23/32 9/32 3/16 7/32 23/32 - ----------------------------------------------------------------------------------------- LOW 1/16 1/32 1/16 3/32 1/32 - ----------------------------------------------------------------------------------------- ASK PRICES (3) HIGH 1-1/32 1/2 11/32 11/32 1-1/32 - ----------------------------------------------------------------------------------------- LOW 3/16 5/32 3/16 7/32 5/32 - ----------------------------------------------------------------------------------------- 1994 First Second Third Fourth Year - ----------------------------------------------------------------------------------------- Net Sales $177,754 $196,994 $186,191 $195,802 $756,741 - ----------------------------------------------------------------------------------------- Operating Income 13,781 17,537 14,226 12,737 58,281 - ----------------------------------------------------------------------------------------- Net Income 11,039 14,669 11,733 11,308 48,749 - ----------------------------------------------------------------------------------------- Net Income Per Share 1.00 1.33 1.06 1.03 4.42 - ---------------------------------------------------------------------------------------- Bid Prices (3) High 7/8 13/16 1/2 7/16 7/8 - ------------------------------------------------------------------------------------------ Low 1/16 1/4 7/32 1/16 1/16 - ----------------------------------------------------------------------------------------- Ask Prices (3) High 1-3/8 1-1/4 7/8 11/16 1-3/8 - ----------------------------------------------------------------------------------------- Low 5/32 9/16 15/32 1/4 5/32 - -----------------------------------------------------------------------------------------
(1) The Company realized an $11.5 million gain on the sale of certain equity investments in June 1995. (2) In December 1995, the Bankruptcy Court ruled that the estimated aggregate liability on account of present and future asbestos-related personal injury claims is $2.5 billion. Accordingly, the Company recorded a provision of approximately $1.0 billion to increase its asbestos liability subject to compromise to $2.5 billion. (3) Effective June 9, 1994, the Company's Common Stock was delisted from the New York Stock Exchange. It is now trading on the Over-the-Counter Market (trading symbol is EPIHQ). The sources of all prices are quotations from the pink sheets and the OTC Bulletin Board. The bid and ask quotations represent prices between dealers, do not include retail markup, markdown or commission, and do not represent actual transactions. 18. Eagle-Picher Industries, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies used in the preparation of the consolidated financial statements are summarized below. These policies conform to generally accepted accounting principles and have been consistently applied. The Company has accounted for all transactions related to the chapter 11 proceedings in accordance with Statement of Position 90-7 ("SOP 90-7"), "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code," issued by the American Institute of Certified Public Accountants. Accordingly, Liabilities Subject to Compromise under the chapter 11 proceedings have been segregated on the Consolidated Balance Sheet and are recorded at the amounts that have been or are expected to be allowed on known claims rather than estimates of consideration those claims may receive in a plan of reorganization. In addition, the Consolidated Statement of Income (Loss) separately discloses expenses related to the chapter 11 proceedings. Principles of Consolidation The consolidated financial statements include the accounts of all of the Company's subsidiaries which are more than 50% owned and controlled. Intercompany accounts and transactions have been eliminated. Investments in nonconsolidated companies which are at least 20% owned are accounted for using the equity method. Separate condensed combined financial statements of the entities in chapter 11 have not been presented because they represent a substantial portion of the Company. Additionally, entities not in chapter 11 represent identifiable investments of those entities in chapter 11 and are therefore subject to the chapter 11 process. Cash and Cash Equivalents Marketable securities with original maturities of three months or less are considered to be cash equivalents. The carrying amount reported in the Consolidated Balance Sheet approximates fair value. Marketable Securities Effective December 1, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards No. 115 ("FAS 115"), "Accounting for Certain Investments in Debt and Equity Securities." On November 30, 1995, these investments have been categorized as available for sale and, as a result, are stated at fair value, based generally on quoted market prices. Unrealized holding gains and losses are included as a component of Shareholders' Equity (Deficit) until realized. Realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the Consolidated Statement of Income. Concentrations of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade accounts receivable. The Company's customer base includes all significant automotive manufacturers and their first tier suppliers in North America and Europe. Although the Company is directly affected by the well-being of the automotive industry, management does not believe significant credit risk existed at November 30, 1995. Inventories Inventories are valued at the lower of cost or market, which approximates current replacement cost. A substantial portion of domestic inventories are valued using the last-in first-out ("LIFO") method while the balance of the Company's inventories are valued using the first-in first-out method. Property, Plant and Equipment The Company records investments in plant, property and equipment at cost. The Company provides for depreciation of plant and equipment using the straight-line method over the estimated lives of the assets which are generally 20 to 40 years for buildings and 3 to 12 years for machinery and equipment. Improvements which extend the useful life of property are capitalized, while repair and maintenance costs are charged to operations as incurred. Cost in Excess of Net Assets Acquired Amounts are being amortized using the straight-line method primarily over 40 years. Income Taxes Income taxes are provided based upon income for financial statement purposes. Deferred tax assets and liabilities are established based on the difference between the financial statement and income tax bases of assets and liabilities using existing tax rates. 19. Foreign Currency Translation Assets and liabilities of foreign subsidiaries are translated at current exchange rates, and income and expenses are translated using weighted average exchange rates. Adjustments resulting from translation of financial statements stated in local currencies generally are excluded from the results of operations and accumulated in a separate component of Shareholders' Equity (Deficit). Gains and losses from foreign currency transactions are included in the determination of net income (loss) and were not material. Reclassifications Certain prior year amounts have been reclassified to conform with current year financial statement presentation. B. PROCEEDINGS UNDER CHAPTER 11 On January 7, 1991 ("petition date"), Eagle-Picher Industries, Inc. ("Company") and seven of its domestic subsidiaries each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code ("chapter 11") with the United States Bankruptcy Court for the Southern District of Ohio, Western Division, in Cincinnati, Ohio ("Bankruptcy Court"). Each filing entity, other than EDI, Inc., currently is operating its business as a debtor in possession in accordance with the provisions of the Bankruptcy Code. An Unsecured Creditors' Committee ("UCC"), an Injury Claimants' Committee ("ICC"), an Equity Security Holders' Committee ("ESC") and a Legal Representative for Future Claimants ("RFC") have been appointed in the chapter 11 cases. An unofficial asbestos co-defendants' committee has also been participating in the chapter 11 cases. In accordance with the provisions of the Bankruptcy Code, these parties have the right to be heard with respect to transactions outside the ordinary course of business. The official committees and the RFC typically are the entities with which the Company would negotiate the terms of a plan of reorganization. In June 1992, a mediator was appointed by the Bankruptcy Court to assist the constituencies in their negotiations. On November 9, 1993, the Company reached an agreement on the principal elements of a joint plan of reorganization. The agreement was with the ICC and the RFC, the representatives of the holders of present and future asbestos-related personal injury and other toxic tort claims in the Company's chapter 11 case, and was reached with the assistance of the mediator. One of the principal elements of the agreement was a negotiated settlement of the Company's aggregate liability for such claims in the amount of $1.5 billion. As a consequence of this agreement, the Company recorded a provision in the fourth quarter of 1993 of $1.135 billion to increase the asbestos liability subject to compromise to $1.5 billion. The Company also recorded a provision of $41.4 million in 1993 for environmental and other litigation claims. Throughout 1994, the Company, the ICC and the RFC continued to refine the details of a joint plan of reorganization ("Original Plan"). The Original Plan was filed with the Bankruptcy Court on February 28, 1995. The Original Plan did not have the support of the UCC or the ESC because they did not agree with the amount of the aggregate asbestos liability which had been negotiated and which was used in the Original Plan to determine the allocation of the consideration to be distributed to the unsecured creditor and shareholder classes. As a result of the dispute, the Company was unable to move forward with the Original Plan. In order to resolve this dispute, the Company filed a motion in July 1995 requesting that the Bankruptcy Court estimate the Company's aggregate liability on account of present and future asbestos-related personal injury claims. The Bankruptcy Court ruled in December 1995 that the Company's liability is $2.5 billion ("Estimation Ruling"). The UCC, the ESC and two individual members of the UCC have filed notices of appeal of the Estimation Ruling. The Company does not know whether the Appellate Court will hear the appeals or, if it does, when any decision will be rendered. The Company intends to file a First Amended Consolidated Plan of Reorganization ("Amended Plan") which will reflect the Estimation Ruling. The Company anticipates that the only substantive modification to the Original Plan will relate to the allocation of the consideration to be distributed under the plan to the various classes of unsecured claims. The Amended Plan, like the Original Plan, contemplates a resolution of the Company's liability for all present and future asbestos-related personal injury claims and certain other tort claims. These claims will be channeled to and resolved by an independently administered claims trust ("Trust"). The Amended Plan also will provide for the distribution of cash, notes, debentures, and common stock 20. Eagle-Picher Industries, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS of the reorganized Company to the Trust and to holders of allowed unsecured claims on a pro-rata basis proportionate to the percentage of their claims to the total of the Liabilities Subject to Compromise. Claims entitled to priority under the Bankruptcy Code and convenience claims (general unsecured claims of $500 or less or claims that will be reduced to that amount) will be paid in full, in cash. In addition, it is contemplated that the Amended Plan will resolve and discharge all asbestos property damage claims. Under the Bankruptcy Code, shareholders are not entitled to any distribution under a plan of reorganization unless all classes of pre-petition creditors receive satisfaction in full of their allowed claims or accept a plan which allows shareholders to participate in the reorganized company or to receive a distribution. It is anticipated that under the Amended Plan, existing shareholders will receive no distributions and their shares will be canceled. Following the Estimation Ruling, the Company recorded a provision of $1.0 billion to increase the asbestos liability subject to compromise to the amount found by the Bankruptcy Court. This resulted in negative shareholders' equity in excess of $2.2 billion. As a result, the Company filed a motion in the Bankruptcy Court in December 1995 seeking an order to direct the United States Trustee to disband the ESC on the basis that existing equity holders do not have an economic interest in the chapter 11 cases. In January 1996, the Bankruptcy Court ruled that the ongoing activities of the ESC shall be limited to pursuing its appeal of the Estimation Ruling. The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. The Liabilities Subject to Compromise have been reported on the basis of the amount of the allowed claims even though it is expected that the distributions under a plan of reorganization with respect to such claims will be lesser amounts. Upon confirmation of a plan of reorganization, the Company would utilize the "fresh-start" reporting principles contained in SOP 90-7, which would result in adjustments relating to the amounts and classification of recorded assets and liabilities, determined as of the plan confirmation date. Pursuant to the Amended Plan, the ultimate consideration to be received by all unsecured creditors will be substantially less than the amounts shown in the accompanying Consolidated Balance Sheet. Until a plan of reorganization is confirmed, however, the Company cannot be certain of the final terms thereof or the ultimate amount creditors will receive. Liabilities incurred by the Company as of the petition date and subject to compromise under a plan of reorganization are separately classified in the Consolidated Balance Sheet and include the following:
(In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- Asbestos liability - Note K $2,502,511 $1,499,993 Long-term debt - Note E 62,003 62,004 Accounts payable 41,236 41,074 Accrued liabilities - Note L 56,780 54,194 - -------------------------------------------------------------------------------- $2,662,530 $1,657,265 - --------------------------------------------------------------------------------
The net expense resulting from the Company's chapter 11 filings has been segregated from expenses related to ordinary operations in the accompanying Consolidated Statement of Income (Loss) and includes the following:
(In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------- Professional fees $ 7,047 $ 6,218 $ 5,865 Debt financing costs -- 200 -- Other expenses 181 296 863 Interest income (5,003) (3,288) (2,384) - -------------------------------------------------------------------------------- $ 2,225 $ 3,426 $ 4,344 - --------------------------------------------------------------------------------
Interest income is attributable to the accumulation of cash and cash equivalents subsequent to the petition date. C. INVENTORIES Inventories consisted of:
(In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- Raw materials and supplies $49,358 $52,146 Work-in-process 27,943 24,907 Finished goods 19,470 15,853 - -------------------------------------------------------------------------------- 96,771 92,906 Allowance to value inventory at cost on the LIFO method 13,124 10,924 - -------------------------------------------------------------------------------- $83,647 $81,982 - --------------------------------------------------------------------------------
The percentage of inventories valued using the LIFO method was 75% in 1995 and 81% in 1994. The effects of liquidations of LIFO inventory quantities carried at lower costs prevailing in prior years were not material. 21. D. OTHER ASSETS Other assets consisted of:
(In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- Cost in excess of net assets acquired, net of accumulated amortization of $4,385 in 1995 and $3,973 in 1994 $12,382 $12,507 Notes receivable 5,137 5,778 Prepaid pension cost - Note I 7,545 7,879 Other 10,249 10,111 - -------------------------------------------------------------------------------- $35,313 $36,275 - --------------------------------------------------------------------------------
Notes receivable include $4,550,000 received as partial consideration for the sale of a division. This note is payable in two equal installments in 1997 and 1998 and bears interest at 8%. Pursuant to the terms of the note, interest is payable semiannually commencing in August 1994. The Company is receiving interest payments in accordance with the terms of the note. E. LONG-TERM DEBT AND SHORT-TERM BORROWINGS The Company has a Bankruptcy Court approved debtor in possession financing agreement which provides a $40,000,000 committed revolving credit facility ("Facility"). The entire amount of the Facility is available for both cash borrowings and letters of credit. The Facility expires on the earlier of December 31, 1996 or the effective date of a plan of reorganization. Letters of credit totaling $30,205,000 and $32,941,000 were outstanding on November 30, 1995 and 1994, respectively, leaving the Company with $9,795,000 and $7,059,000, respectively, in available borrowing capacity under the Facility. There were no cash borrowings under the Facility at any time in 1995 or 1994. The annual rate of interest under the Facility is the agent bank's prime rate plus 1-1/2%. Fees for letters of credit range up to 2-1/2% per annum and a commitment fee equal to 1/2% per annum is due on the unused portion. The obligations are secured by accounts receivable and inventories and are afforded administrative priority under the Bankruptcy Code. The Company has had sufficient collateral to borrow the maximum amount under the Facility. The Facility also contains affirmative and negative covenants which include, among other things, limitations on capital expenditures and additional borrowings and minimum quarterly and annual cash flow requirements. The Company has been in compliance with these covenants throughout the term of the Facility. The Company's foreign subsidiaries entered into agreements with various banks which provided lines of credit in the amount of $17,100,000 that expire in 1998. At November 30, 1995, there were $1,200,000 in borrowings outstanding leaving $15,900,000 in available borrowing capacity. The annual rates of interest on these lines of credit range from 3/4% to 1-1/2% over the banks' base rates. Some have no commitment fees; the fees on the others range from .25% to .65% per annum on the unused portion. These agreements also contain covenants which include restrictions on dividends and minimum financial requirements. The Company is in compliance with these covenants at November 30, 1995. Repayments of pre-petition debt obligations may be made only with the approval of the Bankruptcy Court. The Bankruptcy Court has approved payments by the Company with respect to certain pre-petition secured debt obligations in order to provide the holders of such obligations with adequate protection of their interests in their collateral security. These adequate protection payments generally have been in the form of principal payments paid over the remaining lives of the collateral assets in an aggregate amount equal to the determined market value of those assets. The amount by which the original obligation and pre-petition accrued interest exceeds the collateral value is deemed to be a general unsecured claim. These claims are included in Liabilities Subject to Compromise. Interest expense has not been recorded on these obligations for the post-petition period because interest is not payable. Interest on undersecured and other unsecured pre-petition debt obligations would have been $6,971,000, $7,131,000 and $7,299,000 in 1995, 1994, and 1993, respectively. Due to the chapter 11 filings and the anticipated reorganization, it is not practicable to estimate the fair value of long-term debt which is described below. 22. Eagle-Picher Industries, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Long-term debt consisted of:
(In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- 9-1/2% Sinking fund debentures, due 2017 $50,000 $50,000 Industrial revenue bonds 18,050 18,125 Secured notes 12,161 13,683 Debt of foreign subsidiaries 1,949 1,304 Other 471 514 - -------------------------------------------------------------------------------- 82,631 83,626 Less: Current portion 1,525 1,726 Subject to compromise 62,003 62,004 - -------------------------------------------------------------------------------- Long-term debt, less current portion $19,103 $19,896 - -------------------------------------------------------------------------------- Unsecured debt included in Liabilities Subject to Compromise consisted of: Sinking fund debentures $50,000 $50,000 Industrial revenue bonds 7,500 7,500 Unsecured portion of secured notes 4,131 4,132 Other 372 372 - -------------------------------------------------------------------------------- $62,003 $62,004 - --------------------------------------------------------------------------------
Interest rates averaged 5% in 1995, 4% in 1994, and 5% in 1993 on the industrial revenue bonds, foreign and other long-term debt on which the Company is obligated to pay interest. These long-term debt amounts are to mature at various dates through 2004. Long-term debt (excluding amounts subject to compromise) is scheduled to mature as follows: $1,525,000 in 1996, $2,203,000 in 1997, $2,721,000 in 1998, $1,179,000 in 1999, and $877,000 in 2000. The unsecured portion of long-term debt will be resolved in a plan of reorganization. During 1995, 1994, and 1993, the Company paid interest of $1,966,000, $1,765,000, and $2,075,000, respectively. F. INCOME TAXES The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109"), in 1993. The cumulative effect of this change in accounting for income taxes was not material and prior year financial statements were not restated to apply the provisions of FAS 109. Total income tax benefit for the year ended November 30, 1993 of $1,490,000 consisted of $5,000,000 expense from operations and $6,490,000 tax benefit of the cumulative effect of the change in accounting for postretirement benefits. The following is a summary of the components of income taxes (benefit) from operations:
(In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------- Federal - current $ 20,900 $ 15,600 $ 12,500 - deferred (18,900) (14,000) (11,800) Foreign 3,400 900 2,700 State and local 3,900 2,500 1,600 - -------------------------------------------------------------------------------- $ 9,300 $ 5,000 $ 5,000 - --------------------------------------------------------------------------------
The sources of income (loss) before income tax expense (benefit) and cumulative effect of accounting change are as follows:
(In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------- United States $ (941,971) $ 47,670 $(1,143,312) Foreign 7,100 6,079 3,542 - -------------------------------------------------------------------------------- $ (934,871) $ 53,749 $(1,139,770) - --------------------------------------------------------------------------------
The significant components of deferred income tax expense (benefit) attributable to income from operations are as follows:
(In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------- Deferred tax benefit (exclusive of the effects of other components listed below) $(351,800) $ (400) $(412,900) Adjustments to deferred tax assets and liabilities for enacted changes in tax laws and rates -- -- (3,800) Change in beginning-of-the-year balance of the valuation allowance for deferred tax assets 332,900 (13,600) 404,900 - -------------------------------------------------------------------------------- $ (18,900) $ (14,000) $ (11,800) - --------------------------------------------------------------------------------
Components of deferred tax balances as of November 30 are as follows:
(In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- Deferred tax liabilities: Property, plant and equipment $ (7,820) $ (6,608) Prepaid pension (2,641) (2,758) Other (3,338) (3,371) - -------------------------------------------------------------------------------- Total deferred tax liabilities (13,799) (12,737) - -------------------------------------------------------------------------------- Deferred tax assets: Asbestos liability 877,171 524,998 Accrued liabilities (including amounts subject to compromise) 26,246 26,223 Postretirement benefit liability 7,602 7,375 Other 4,483 4,048 - -------------------------------------------------------------------------------- Total deferred tax assets 915,502 562,644 - -------------------------------------------------------------------------------- Valuation allowance (838,879) (505,983) - -------------------------------------------------------------------------------- Net deferred tax assets $ 62,824 $ 43,924 - --------------------------------------------------------------------------------
23. Given the uncertainties surrounding the chapter 11 cases, the Company does not believe that recognition of a significant portion of the deferred tax assets relating to the asbestos liability and other pre-petition liabilities is appropriate at this time. These liabilities have been recorded at the expected amounts of the allowed claims; if the liabilities are settled for lesser amounts, there will be a corresponding reduction in the deferred tax assets and related valuation allowance. A significant portion of the net deferred tax asset recognized at November 30, 1995 is expected to be recovered through the carryback of amounts which will become deductible when the related liabilities are paid. It is expected that the Company will realize the benefits related to these deductions when it emerges from chapter 11. The changes in the valuation allowance result from increased amounts provided for asbestos litigation and other claims net of increases in the amounts recoverable through these carrybacks. The differences between the total income tax expense from operations and the income tax expense (benefit) computed using the Federal income tax rate were as follows:
(In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------- Computed "expected" tax expense (benefit) $(327,200) $ 18,800 $(398,900) Change in valuation allowance 332,900 (13,600) 404,900 Change in Federal income tax rate -- -- (3,800) Foreign tax rate differential 600 (1,500) 1,300 State and local taxes, net of Federal benefit 2,500 1,600 1,000 Other 500 (300) 500 - -------------------------------------------------------------------------------- Total income tax expense $ 9,300 $ 5,000 $ 5,000 - --------------------------------------------------------------------------------
The Company paid income taxes, net of refunds received, in 1995, 1994, and 1993 of $28,800,000, $18,200,000, and $16,500,000, respectively. G. INCOME (LOSS) PER SHARE The calculation of net income (loss) per share is based upon the average number of common shares outstanding assuming the exercise of stock options. The average number of shares used in the computation of net income (loss) per share was 11,040,932 in 1995 and 1994 and 11,030,515 in 1993. H. COMMON STOCK OPTIONS At November 30, 1995, there were outstanding common stock options under a 1990 and a 1983 plan each authorizing 450,000 shares. The options expire at various dates through 2000. No options could be exercised as of November 30, 1995. Stock option transactions are summarized as follows:
Shares Option Price - -------------------------------------------------------------------------------- Outstanding at November 30, 1992 597,000 $ 2.50 to $14.25 Exercised (62,500) $ 2.50 Expired (15,000) $ 2.50 - -------------------------------------------------------------------------------- Outstanding at November 30, 1993 519,500 $ 2.50 to $14.25 Expired (20,000) $ 2.50 - -------------------------------------------------------------------------------- Outstanding at November 30, 1994 499,500 $ 2.50 to $14.25 Expired (5,000) $ 2.50 - -------------------------------------------------------------------------------- Outstanding at November 30, 1995 494,500 $ 2.50 to $14.25 - --------------------------------------------------------------------------------
There were 284,274 shares available for future grants at November 30, 1995. I. RETIREMENT BENEFIT PLANS Substantially all employees of the Company and its subsidiaries are covered by various pension or profit sharing retirement plans. The cost of providing retirement benefits was $1,900,000 in 1995, $998,000 in 1994, and $849,000 in 1993. Plan benefits for salaried employees are based primarily on employees' highest five consecutive years' earnings during the last ten years of employment. Plan benefits for hourly employees typically are based on a dollar unit multiplied by the number of service years. Net periodic pension expense for the Company's defined benefit plans included the following components:
(In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------- Service cost - benefits earned during the period $ 4,001 $ 4,684 $ 3,924 Interest cost on projected benefit obligation 12,972 12,144 12,490 Actual gain on plan assets (40,975) (635) (20,658) Net amortization and deferral 24,336 (17,052) 3,943 - -------------------------------------------------------------------------------- Net periodic pension costs $ 334 $ (859) $ (301) - --------------------------------------------------------------------------------
The plans' assets consist primarily of listed equity securities and publicly traded notes and bonds. The actual net return on plan assets was 21.2% in 1995, .3% in 1994, 24. Eagle-Picher Industries, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and 11.3% in 1993, and generally reflects the performance of the equity and bond markets. The following table sets forth the plans' funded status and amounts recognized in the Company's Consolidated Balance Sheet at November 30:
(In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- Actuarial present value of: Vested benefit obligation $(167,376) $(143,249) - -------------------------------------------------------------------------------- Accumulated benefit obligation $(174,515) $(148,243) - -------------------------------------------------------------------------------- Projected benefit obligation $(191,831) $(161,089) Plan assets at fair value 208,256 178,216 - -------------------------------------------------------------------------------- Projected benefit obligation less than plan assets 16,425 17,127 Unrecognized net gain (1,942) (72) Unrecognized prior service cost 2,244 1,192 Unrecognized net asset (9,182) (10,368) - -------------------------------------------------------------------------------- Prepaid pension cost recognized $ 7,545 $ 7,879 - --------------------------------------------------------------------------------
The discount rate and weighted average rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.0% and 4.2%, and 8.0% and 4.2%, respectively, at November 30, 1995 and 1994, respectively. The expected long-term rate of return on assets was 9.0% in 1995 and in 1994. The Company's funding policy is to fund amounts on an actuarial basis to provide for current and future benefits in accordance with the funding guidelines of ERISA. J. EMPLOYEE BENEFITS OTHER THAN PENSIONS In addition to providing pension retirement benefits, the Company makes health care and life insurance benefits available to certain retired employees on a limited basis. Generally, the medical plans pay a stated percentage of medical expenses reduced by deductibles and other coverages. Eligible employees may elect to be covered by these health and life insurance benefits if they reach early or normal retirement age while working for the Company. In most cases, a retiree contribution for health insurance coverage is required. The Company funds these benefit costs primarily on a pay-as-you-go basis. In the fourth quarter of 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" ("FAS 106"). The Company recognized the accumulated postretirement benefit obligation of $19,088,000 retroactively to December 1, 1992 as an accounting change. On an aftertax basis, this charge was $12,598,000 or $1.14 per share. Previously reported quarterly results in 1993 were restated to reflect the adoption of FAS 106 as of December 1, 1992. The adoption of FAS 106 had no impact on consolidated cash flows. The components of expense were as follows:
(In thousands of dollars) 1995 1994 1993 - -------------------------------------------------------------------------------- Service cost - benefits earned during the period $ 396 $ 510 $ 467 Interest cost on accumulated postretirement benefit obligation 1,202 1,327 1,394 Amortization of unrecognized net gain (179) -- -- - -------------------------------------------------------------------------------- Net periodic postretirement benefit costs $ 1,419 $ 1,837 $ 1,861 - --------------------------------------------------------------------------------
The accumulated postretirement benefit obligation at November 30 consisted of the following components:
(In thousands of dollars) 1995 1994 - -------------------------------------------------------------------------------- Retirees and dependents $12,021 $13,017 Eligible active participants 1,650 1,602 Other active participants 5,862 4,823 - -------------------------------------------------------------------------------- Accumulated postretirement benefit obligation 19,533 19,442 Unrecognized net gain 2,187 1,628 - -------------------------------------------------------------------------------- Accrued postretirement benefit costs $21,720 $21,070 - --------------------------------------------------------------------------------
Benefit costs were estimated assuming retiree health care costs would initially increase at an 11% annual rate which decreases to an ultimate rate of 6% in 5 years. If this annual trend rate would increase by 1%, the accumulated postretirement obligation as of November 30, 1995 would increase by $2,021,000 with a corresponding increase of $267,000 in the postretirement benefit expense in 1995. The discount rates used in determining the accumulated postretirement obligation at November 30, 1995 and 1994 were 6.5% and 7.5%, respectively. K. ASBESTOS LITIGATION AND CLAIMS As discussed above in Note B, the Company currently intends to file a First Amended Consolidated Plan of Reorganization ("Amended Plan") with the ICC and the RFC. Like the Original Plan filed in 1995, the Amended Plan will provide, among other things, that all present and future asbestos-related personal injury claims 25. will be channeled to and resolved by an independently administered claims trust. Similar plans of reorganization have been confirmed in the chapter 11 cases of certain other companies involved in asbestos litigation. It is also currently contemplated that the Amended Plan will resolve and discharge all asbestos property damage claims. The asbestos-related claims, which consist of personal injury and property damage claims, are discussed below. Personal Injury Prior to its chapter 11 filing, the Company had been named as a co-defendant in a substantial number of lawsuits brought by present or former insulators, shipyard workers, steel workers, tire workers and other persons alleging damage to their health from exposure to dust from asbestos-containing industrial insulation products. As a result of the chapter 11 filing by the Company, all such litigation is automatically stayed pursuant to section 362 of the Bankruptcy Code. As of the petition date, there were approximately 67,800 asbestos-related personal injury claims outstanding against the Company. The Bankruptcy Court set September 30, 1992 as the bar date for present asbestos-related claims. The Company implemented the Court-approved plan to notify known and potential claimants of the bar date. All persons with a pre-petition asbestos-related claim were required to file a proof of claim by the bar date in order to participate in the reorganization cases. Approximately 160,000 proofs of claim were filed alleging personal injury. The Company believes that approximately 11,000 of these claims are duplicates or were filed by persons whose lawsuits were previously closed. The vast majority of persons who had filed pre-petition lawsuits against the Company, and whose lawsuits were pending as of the petition date, filed proofs of claim in the reorganization cases. Therefore, approximately 81,200 previously undisclosed claims were filed as a result of the bar date. The Company believes that most of the approximately 40,000 claimants who in 1991, pursuant to a previous Bankruptcy Court order, notified the Company of their intent to assert a claim against the Company, also filed claims pursuant to the bar date. The Company expects that additional asbestos-related personal injury claims will arise for several decades into the future. Holders of these claims were not required to file claims pursuant to the bar date. In July 1995, the Company filed a motion requesting that the Bankruptcy Court estimate the Company's aggregate liability on account of present and future asbestos-related personal injury claims. The motion was filed because the UCC and the ESC appointed in the Company's chapter 11 cases had not agreed with the amount of such liability previously negotiated for settlement purposes among the Company, the ICC and the RFC. In December 1995, the Bankruptcy Court ruled that the Company's estimated liability for such claims is $2,502,511,000. Appeals have been filed by certain creditors, the UCC and the ESC seeking to have the Bankruptcy Court's ruling overturned. The Company does not know whether the Appellate Court will hear the appeals or, if it does, when any decision may be rendered. Property Damage There were forty-one lawsuits pending against the Company at the end of fiscal 1991 arising from the alleged presence of asbestos-containing products in buildings. The pending lawsuits typically named numerous defendants, were filed in both state and federal courts, and were brought by school districts, cities, states, counties, universities, hospitals and commercial building owners. The lawsuits typically demanded compensation for any costs incurred in identifying, repairing, encapsulating or removing asbestos-containing products, or sought to have the defendants do these things directly. Many lawsuits also sought punitive damages. A few of the pending cases were certified as class actions. Prior to filing its chapter 11 petition, the Company settled seven building related cases for less than $22,000 in the aggregate. Approximately 1,000 proofs of claim alleging such property damage claims were filed in the chapter 11 cases pursuant to the bar date. These claims include most of those asserted in the lawsuits described above that were pending on the petition date. Many of the other claims also appear to be asserted by claimants similar to those which had commenced pre-petition lawsuits. In February 1996, after the close of the fiscal year, the hospital members of the American Hospital Association, which filed asbestos-related property damage claims against the Company in the alleged approximate amount of $300 million ("Hospitals"), filed a motion in the Bankruptcy Court seeking an order (a) estimating the aggregate value of 26. Eagle-Picher Industries, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS all asbestos-related property damage claims against the Company and (b) temporarily allowing such claims for purposes of voting on a plan of reorganization. The motion states that the relief requested is not intended to be a determination by the Bankruptcy Court of the Company's liability, if any, on account of such claims or to assign a permanently fixed value for such claims, but is sought in order to determine the appropriate distribution to creditor classes under a plan of reorganization. Because the motion was just filed, the Company has not yet made a determination as to how it intends to respond. The Company does, however, intend to file with the Bankruptcy Court shortly an objection on various grounds to many asbestos-related property damage claims, including claims filed by the hospitals. It is anticipated that the Amended Plan will provide alternative methods for treatment of the asbestos-related property damage claims. If the class of asbestos-related property damage claimants votes to accept the Amended Plan, a second trust will be established to resolve the claims and the Company will fund the trust with $3 million in cash. If such class votes to reject the Amended Plan, but the Amended Plan is nevertheless confirmed, such claims will be resolved and discharged pursuant to claims resolution procedures contained in the Amended Plan. These procedures will require such claimants to prove by application of a scientific protocol that the asbestos-containing insulation products for which they are seeking damages were manufactured by the Company. If the class of asbestos-related property damage claimants rejects the Amended Plan and has its claims resolved through the claims resolution procedures discussed above, the eventual outcome of its claims cannot be reasonably predicted at this time. It should also be noted that the Company may have insurance coverage for certain of these claims. L. ENVIRONMENTAL AND OTHER LITIGATION CLAIMS The Bankruptcy Court established a bar date of October 31, 1991 for all pre-petition claims against the Company other than those arising from the sale of asbestos-containing products. Pursuant to this general claims bar date, numerous proofs of claim were filed alleging a right to payment from the estate due to litigation matters. Certain of such claims are discussed below. Environmental The Company received 1,102 proofs of claim alleging a right to payment because of environmental matters. These claims, relating primarily to various Superfund sites, sought payment aggregating $27.9 billion, of which readily identifiable duplicate claims approximated $27.5 billion. The Company has resolved the majority of these environmental claims through negotiations with the United States Environmental Protection Agency ("USEPA") and the United States Department of Interior ("USDOI"). The USEPA is responsible for resolving, among other things, claims arising from Superfund sites and the USDOI is responsible for resolving the Company's liability for any natural resource damage that may have occurred at the Superfund sites. Natural resource damage is damage caused to the environment or to plants or animals by the release of hazardous materials at Superfund sites. Pursuant to an agreement among the Company, USEPA, USDOI, and certain states, which is subject to the approval of the Bankruptcy Court, the agencies would be afforded allowed pre-petition general unsecured claims aggregating approximately $43.0 million in full satisfaction of all of the Company's alleged liability at most of its known Superfund sites, including any liability for any natural resource damage. This amount has been provided for and is included in Liabilities Subject to Compromise. In exchange for these allowed claims, the agencies and such states would release the Company from liability at these sites and grant the Company protection from claims of other parties that may be co-liable at the sites. The intent of the settlement agreement is to completely resolve all claims against the Company with respect to these sites. With respect to the small number of sites as to which the USEPA believes that it does not have sufficient information to negotiate a meaningful settlement with the Company, the settlement agreement provides a process which permits any liability with respect to these sites to be resolved in the future when additional information is available. Pursuant to this process, the Company retains all of its rights and defenses as to these sites and may settle or litigate its liability at such future time. The settlement agreement also provides that any future liability of the Company, when fixed, will be satisfied essentially with the same type and amount of consideration that pre-petition general unsecured 27. creditors receive pursuant to a confirmed plan of reorganization in the Company's chapter 11 case. In November 1995, a hearing was held before the Bankruptcy Court on the Company's motion seeking the approval of the settlement agreement. USEPA and USDOI joined in the motion. Certain parties that may be liable at certain of the sites resolved by the settlement agreement opposed the Company's motion. Such opposition basically seeks increases in the amount of the allowed claims provided in the settlement agreement attributable to the sites where the objectants may have liability. The Company believes, however, that the terms and provisions of the settlement agreement are fair and equitable and that the objections raised have no basis. The Court has not yet ruled on the motion. Lead Chemicals The Bankruptcy Court received 131 timely proofs of claim asserting liability based on personal injury or property damage from lead chemicals allegedly manufactured and sold by the Company. Three additional claims were filed in November 1993, after the 1991 bar date. While some of the timely filed claims did not specify an amount, those that did sought an aggregate of $165 million. All of the timely filed claims which specified an amount of damages have been fully withdrawn without the allowance of any amount by the Company. The three late filed claims referred to above were filed by the City of New York or its agencies which had filed a pre-petition lawsuit against the Company. In November 1994, the Bankruptcy Court sustained the Company's objection to these claims and disallowed them because they were late filed. No appeal of this ruling was sought by the claimants. As a result, the Company has disposed of all filed lead-related property damage claims. The Company had also filed objections to seven other claims that were filed against it seeking damages for bodily injuries resulting from exposure to lead. Pursuant to the objections, the Company sought an order of the Bankruptcy Court disallowing such claims because the claimants' lawsuits asserting similar claims against other defendants which were not in bankruptcy had been dismissed in the trial court. In June 1995, the Bankruptcy Court disallowed all seven of such claims. Currently, there are 113 remaining timely-filed lead-related personal injury claims that have not been resolved. The Company believes that it has valid grounds to object to the allowance of all of the remaining lead-related personal injury claims. It is currently contemplated that all lead-related personal injury claims that were filed that are not disposed of pursuant to an objection filed by the Company, and all future lead-related personal injury claims, will be channeled to and resolved by the trust referred to in Note K above, to be established under the Amended Plan for the benefit of holders of personal injury claims resulting from exposure to asbestos or lead- containing products. Other Litigation The Company received, by the 1991 bar date, ninety-two claims arising out of litigation matters other than those related to lead, asbestos or environmental issues. These claims aggregated approximately $1.1 billion. The majority of these claims have been resolved by disallowance, settlement pursuant to Bankruptcy Court authority or by the allowance of a pre-petition general unsecured claim for amounts that are not material to the Company or its operations. Summary During the pendency of the chapter 11 cases, any unresolved litigation with respect to pre-petition claims can proceed against the Company only with the express permission of the Bankruptcy Court. The Company intends to defend all litigation claims vigorously in the manner permitted by the Bankruptcy Code and/or applicable law. All pre-petition claims against the Company arising from litigation must be liquidated or otherwise addressed in the context of the chapter 11 cases. Further, all such claims against the Company will be treated in a plan of reorganization. The Company has resolved most of the litigation claims that were asserted by the October 31, 1991 bar date for claims other than those arising from the sale of asbestos-containing products. The Company has filed objections to certain of these litigation-based claims which have not been resolved, seeking to reduce the amount of such claims or eliminate them entirely. The Company anticipates filing additional objections to other such claims if they cannot be resolved through negotiation. These objections will be vigorously litigated by the Company pursuant to the provisions of the Bankruptcy Code and applicable law. 28. Eagle-Picher Industries, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The eventual outcome of the environmental and other litigation claims described herein cannot be reasonably predicted due to numerous uncertainties that are inherent in the reorganization process. However, the Company believes that its provision for these claims is adequate. In addition, the Company may have insurance coverage for certain of these claims and other factual and legal defenses available to it. M. OTHER INCOME The Company held certain equity investments having no cost basis, but which had a fair value of approximately $5.4 million when FAS 115 was adopted. A substantial portion of these investments related to shares of stock in a Canadian mining concern that the Company received in 1990 in settlement of certain indebtedness. The Company had previously deemed the investment to be permanently impaired and had recorded a loss on the investment in the amount of its full book value. The price of the stock, however, had recently increased significantly. Substantially all of these investments were sold in June, 1995, resulting in a realized gain of $11.5 million. N. INDUSTRY SEGMENT INFORMATION A general description of the products manufactured by the Company's three industry segments is: Industrial Diatomaceous earth products, rubber products, rare metals, fiberglass reinforced plastic parts and industrial chemicals. Machinery Earth moving machines, heavy-duty forklift trucks, aerospace and defense parts, metal cleaning and finishing systems and aluminum castings. Automotive Mechanical, structural, and trim parts for passenger cars, trucks, vans and utility vehicles for the OEM and replacement markets. Sales between segments and foreign operations were not material. Consolidated sales to Ford Motor Company amounted to $166,800,000 in 1995, $165,300,000 in 1994, and $148,000,000 in 1993. No other customer accounted for 10% or more of consolidated sales with the exception of General Motors Corporation ("GMC") in 1994 and 1993 when consolidated sales to GMC amounted to $81,400,000 and $73,100,000, respectively. Consolidated export sales were $92,500,000 in 1995, $76,900,000 in 1994 and $73,200,000 in 1993. 29. INDUSTRY SEGMENT INFORMATION
Industrial Machinery Automotive Years ended November 30 ----------------------------------------------------------------------------------------------- (In millions of dollars) 1995 1994 1993 1995 1994 1993 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------------------------- Sales $ 160.6 $ 141.4 $ 132.6 $ 254.7 $ 217.0 $ 171.7 $ 433.2 $ 398.3 $ 357.2 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income 15.6 14.5 15.0 24.1 18.8 9.1 42.1 43.7 37.4 - ---------------------------------------------------------------------------------------------------------------------------------- Identifiable assets 80.6 78.2 72.7 112.0 109.8 92.8 217.1 190.6 168.2 - ---------------------------------------------------------------------------------------------------------------------------------- Depreciation and amortization 6.1 5.5 4.9 4.7 4.0 3.4 17.6 16.2 16.2 - ---------------------------------------------------------------------------------------------------------------------------------- Capital expenditures 4.4 7.7 5.6 7.6 6.9 7.4 28.3 21.2 15.4 - ----------------------------------------------------------------------------------------------------------------------------------
Segment Total Corporate Total ------------------------------------------------------------------------------------------------- 1995 1994 1993 1995 1994 1993 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------------------------- Sales $ 848.5 $ 756.7 $ 661.5 $ -- $ -- $ -- $ 848.5 $ 756.7 $ 661.5 - ----------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 81.8 77.0 61.5 (18.7) (18.7) (17.7) 63.1 58.3 43.8 - ---------------------------------------------------------------- Provision for asbestos ligitation (1,005.5) -- (1,135.5) (1,005.5) -- (1,135.5) Provision for environmental and other claims -- -- (41.4) -- -- (41.4) Interest expense (1.9) (1.8) (2.1) (1.9) (1.8) (2.1) Other income (expense) 11.6 .6 (.2) 11.6 .6 (.2) Reorganization items (2.2) (3.4) (4.4) (2.2) (3.4) (4.4) - ------------------------------------------------------------------------------------------------- -------------------------------- Income (loss) before taxes (934.9) 53.7 (1,139.8)(1) - ----------------------------------------------------------------------------------------------------------------------------------- Identifiable assets 409.7 378.6 333.7 170.4 142.5 125.7 580.1 521.1 459.4 - ----------------------------------------------------------------------------------------------------------------------------------- Depreciation and amortization 28.4 25.7 24.5 .3 .4 .5 28.7 26.1 25.0 - ----------------------------------------------------------------------------------------------------------------------------------- Capital expenditures 40.3 35.8 28.4 .3 .1 .1 40.6 35.9 28.5 - -----------------------------------------------------------------------------------------------------------------------------------
(1) Before cumulative effect of accounting changes. 30. Eagle-Picher Industries, Inc. INDEPENDENT AUDITORS' REPORT THE BOARD OF DIRECTORS EAGLE-PICHER INDUSTRIES, INC.: We have audited the accompanying consolidated balance sheet of Eagle-Picher Industries, Inc. and subsidiaries (debtor in possession, as of January 7, 1991) as of November 30, 1995 and 1994, and the related consolidated statements of income (loss), shareholders' equity (deficit), and cash flows for each of the years in the three-year period ended November 30, 1995. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eagle-Picher Industries, Inc. and subsidiaries as of November 30, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended November 30, 1995 in conformity with generally accepted accounting principles. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B to the consolidated financial statements, on January 7, 1991, Eagle-Picher Industries, Inc. and seven of its domestic subsidiaries each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court. Although the Company and its operating subsidiaries, other than EDI, Inc., are currently operating their businesses as debtors in possession under the jurisdiction of the Bankruptcy Court, the continuation of their businesses as going concerns is contingent upon, among other things, the ability to formulate a plan of reorganization which will gain approval of the creditors and confirmation by the Bankruptcy Court. The filing under chapter 11 and the continued uncertainty related to claims associated with the Company's sale of asbestos products and certain other litigation, raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that may be required in connection with restructuring the Company and its subsidiaries as they reorganize under chapter 11 of the United States Bankruptcy Code. As discussed in Note J, the Company adopted the provisions of the Financial Accounting Standards Board's SFAS No. 106, Employers' Accounting for Postretirement Benefits Other than Pensions, on December 1, 1992. KPMG Peat Marwick LLP - ------------------------- KPMG Peat Marwick LLP Cincinnati, Ohio February 14, 1996 31. REPORT OF MANAGEMENT The Company's management is responsible for the preparation and presentation of the consolidated financial statements and related financial data included in this annual report. The financial information has been prepared in conformity with generally accepted accounting principles and as such includes amounts based on judgments and estimates made by management. The Company's system of internal accounting controls is designed to provide reasonable assurance at reasonable costs that assets are safeguarded from loss or unauthorized use, and that the financial records may be relied upon for the preparation of the consolidated financial statements. The consolidated financial statements have been audited by our independent auditors, KPMG Peat Marwick LLP. Their audit is conducted in accordance with generally accepted auditing standards and provides an independent assessment as to the fair presentation, in all material respects, of the Company's consolidated financial statements. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with management and the independent auditors to review internal accounting controls and the quality of financial reporting. Financial management and the independent auditors have full and free access to the Audit Committee. Thomas E. Petry - ------------------------ Thomas E. Petry Chairman and Chief Executive Officer Andries Ruijssenaars - ------------------------ Andries Ruijssenaars President and Chief Operating Officer David N. Hall - ------------------------ David N. Hall Senior Vice President - Finance Cincinnati, Ohio February 14, 1996 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS 1995 COMPARED TO 1994 On a 12% sales increase, operating income increased 8% to $63.1 million in 1995 from $58.3 million in 1994. Comparative sales volume by industry segment showed increases of 14% in the Industrial segment, 17% in the Machinery segment, and 9% in the Automotive segment. Operating income increased 8% in the Industrial segment and 28% in the Machinery segment, but decreased 4% in the Automotive segment. The increase in operating income in the Industrial Segment was shared by all operations within the segment. This segment tends not to experience cyclical swings as its customers serve a range of consumer nondurable markets. The increase in operating income in the Machinery segment was attributable solely to the continuing improvements in both volume and operating efficiencies in the operations making earth moving and material handling equipment. The decrease in operating income in the Automotive segment was due to: 1) intense pricing pressure by major customers demanding price concessions; 2) inability to pass on raw material cost increases on a timely basis; and 3) start-up costs associated with new business. In December 1995, the Bankruptcy Court estimated the Company's aggregate liability on account of present and future asbestos-related personal injury claims to be $2.5 billion. As a result, the Company recorded a provision in the fourth quarter of 1995 of $1.0 billion to increase the asbestos liability subject to compromise to $2.5 billion. Interest expense was $1.9 million in 1995 compared to $1.8 million in 1994. A gain on sale of investments of $11.5 million resulted from the sale of securities which the Company had received several years ago in settlement of financing it had provided to a supplier. Reorganization items are described in Note B. The primary components of the income tax provision are described in Note F. 1994 COMPARED TO 1993 On a 14% sales increase, operating income increased 33% to $58.3 million in 1994 from $43.8 million in 1993. 32. Eagle-Picher Industries, Inc. Comparative sales volume by industry segment showed increases of 7% in the Industrial segment, 26% in the Machinery segment, and 12% in the Automotive segment. Operating income decreased 3% in the Industrial segment, but increased 107% in the Machinery segment and 17% in the Automotive segment. The decrease in operating income in the Industrial segment was attributable to pricing pressures on diatomaceous earth products. The increase in operating income in the Machinery segment was primarily associated with improvements in production of a line of heavy-duty forklift trucks. An increase in sales volumes of metal cleaning and finishing equipment also contributed to the increase in operating income in the Machinery segment. The increase in operating income in the Automotive segment was due to: 1) an increase in export sales and stronger performance of our operations in Great Britain and Spain; 2) broader market penetration coupled with record domestic auto production; and 3) favorable product mix heavily weighted toward the light truck, van, and sport utility segment of the market for which several divisions produce components. In November 1993, the Company reached an agreement on the principal elements of a plan of reorganization with the Injury Claimants' Committee and the Legal Representative for Future Claimants, the representatives of the holders of present and future asbestos-related personal injury and other toxic tort claims in the Company's chapter 11 case. The agreement contemplated a settlement of the Company's liability for all present and future asbestos-related personal injury claims. As a consequence of the proposed settlement, the Company recorded an additional provision of $1.135 billion for all present and future asbestos-related personal injury claims, thereby increasing the asbestos liability subject to the compromise on the Consolidated Balance Sheet to $1.5 billion. In addition, in 1993 a provision of $41.4 million was made for environmental and other litigation claims. Interest expense decreased to $1.8 million from $2.1 million due primarily to the repayment of certain foreign debt in 1994. Reorganization items are described in Note B. The primary components of the income tax provision are described in Note F. INDUSTRY SEGMENT DATA Industry segment data for 1995, 1994 and 1993 is summarized on page 30. FINANCIAL CONDITION The filing of the petitions for reorganization under chapter 11 on January 7, 1991 had a significant positive impact on the Company's liquidity. The filing stayed all litigation against the Company with respect to pre-petition claims and reduced the cash drain for asbestos litigation. In the third quarter of 1995, the Company filed a motion with the Bankruptcy Court presiding over the Company's chapter 11 case asking the Court to estimate its aggregate liability on account of present and future asbestos-related personal injury claims. In December 1995, the Court ruled on the motion and estimated this liability to be $2.5 billion. As a result, the Company recorded a provision in the fourth quarter of 1995 of $1.0 billion to increase the asbestos liability subject to compromise to $2.5 billion. At November 30, 1995, the balance of Liabilities Subject to Compromise was $2.663 billion. These amounts were recorded based on the expected amount of the allowed claims, not the amounts of consideration that such allowed claims may receive pursuant to a plan of reorganization. During 1995, there was a $.7 million increase in cash. Operating activities provided $30.5 million. Items which affected cash provided by operations include the following: 1) There was a significant increase in customer tooling costs from $15.0 million at the end of fiscal 1994, to $26.5 million at November 30, 1995. It is common practice in the automotive industry to accumulate customer tooling costs while the tooling is under construction and bill the customer upon its completion. It is anticipated that customer tooling will return to a more traditional level of $10.0 to $12.0 million by the end of 1996, which would generate $14.5 to $16.5 million in cash in the coming fiscal year. 2) There was an increase in working capital, other than customer tooling costs, which was in line with the 12% increase in sales volume. 3) While income tax expense for financial statement purposes was $9.3 million, the Company paid income taxes, net of a small refund, of $28.8 million. 4) The Company incurred interest expenses of $1.9 million and reorganization costs of $2.2 million. 33. In addition, the Company used cash of $28.7 million, net of an $11.5 million sale of an investment (Note M), for investing activities. The Company had near record ($43.0 million in 1988) capital expenditures of $40.6 million in 1995. This compares to $35.9 million spent in 1994. The capital expenditures in 1995 included $10.3 of an approved $12.0 million expansion of a new coating line for the manufacture of gasket materials which is to be completed in early 1996. Finally, the Company used $1.0 million of cash for financing activities which included repayment of debt in accordance with adequate protection payments authorized by the Bankruptcy Court, combined with the financing activities of the foreign subsidiaries. As of November 30, 1995, the Company had $82.6 million of long-term debt compared to $83.6 million at the end of the prior year. The disposition of unsecured debt included in liabilities subject to compromise of $62.0 million will be treated in a plan of reorganization. The Company has a Bankruptcy Court approved debtor in possession financing agreement which provides a $40.0 million committed revolving credit facility. This facility expires the earlier of December 31, 1996 or the effective date of a plan of reorganization. Should a plan not become effective by the end of 1996, the Company would expect to have the current facility extended for as long as necessary. At November 30, 1995, $30.2 million in letters of credit were outstanding under the facility leaving the Company with $9.8 million in available borrowing capacity. There were no cash borrowings in 1995 under the facility. While the Company is reorganizing under chapter 11, it is prohibited from paying interest or principal on pre-petition obligations without the approval of the Bankruptcy Court. To the extent cash generated from operations exceeds capital expenditures, working capital requirements, approved payments of secured debt and administrative expenses of the reorganization, the Company will continue to accumulate cash. Consequently, the liquidity of the Company should improve. The Company intends to file an amended plan of reorganization with the Bankruptcy Court as soon as practicable. It is contemplated that such plan will provide for a discharge of the Company's pre-petition liabilities (Liabilities Subject to Compromise) and provide the reorganized Company with a capital structure appropriate for an industrial products company which will enable the Company to access financing in the credit and debt markets. RECENT FASB PRONOUNCEMENTS During the year, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121"). This statement requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Measurement of an impairment loss on these assets should be based on the fair value of the assets. FAS 121 is required to be adopted for fiscal years beginning after December 15, 1995. As such, the Company will adopt this standard the sooner of the fiscal year ended November 30, 1997 or the effective date of a plan of reorganization. Management has not fully assessed the impact of FAS 121; however, it is not anticipated that its adoption will have a material impact on the financial statements. Statement of Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"), was also issued in 1995. This statement establishes a fair value method of accounting for stock-based compensation plans. Adoption of the fair value method is encouraged; however, entities may elect to continue to account for stock-based compensation plans according to the provisions of Accounting principles Bulletin No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), but provide the disclosures related to FAS 123. FAS 123 is effective for transactions entered into in fiscal years that begin after December 15, 1995. Accordingly, the Company will adopt this standard the sooner of the fiscal year ended November 30, 1997 or the effective date of a plan of reorganization. As a result of the numerous uncertainties that are inherent in the reorganization process, Management has not assessed the impact that adoption of FAS 123 would have on the financial statements. 34. Eagle-Picher Industries, Inc. SELECTED FINANCIAL DATA
(Unaudited) (In thousands of dollars, except per share) 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------ Net Sales $ 848,548 $ 756,741 $ 661,452 $ 611,458 $ 598,631 - ------------------------------------------------------------------------------------------------------------------------------ Operating Income 63,087 58,281 43,754 46,560 18,849 - ------------------------------------------------------------------------------------------------------------------------------ Income (Loss) Before Reorganization Items and Taxes (932,646)(1) 57,175 (1,135,426)(2) 40,924 (788) - ------------------------------------------------------------------------------------------------------------------------------ Reorganization Items(3) (2,225) (3,426) (4,344) (9,038) (12,124) - ------------------------------------------------------------------------------------------------------------------------------ Income (Loss) Before Taxes (934,871) 53,749 (1,139,770) 31,886 (12,912) - ------------------------------------------------------------------------------------------------------------------------------ Net Income (Loss) (944,171) 48,749 (1,144,770)(4) 28,886 (15,812) - ------------------------------------------------------------------------------------------------------------------------------ Net Income (Loss) Per Share (85.51) 4.42(4) (103.78)(4) 2.63 (1.44) - ------------------------------------------------------------------------------------------------------------------------------ Common Dividend Per Share -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Total Assets 580,073 521,107 459,360 419,435 398,990 - ------------------------------------------------------------------------------------------------------------------------------ Long-Term Debt, less current portion 19,103(5) 19,896(5) 21,712(5) 25,033(5) 32,001(5) - ------------------------------------------------------------------------------------------------------------------------------
(1) Includes a provision for asbestos litigation of $1.0 billion in 1995. (2) Includes a provision for asbestos litigation of $1.135 billion and a provision for environmental and other claims of $41.4 million in 1993. (3) On January 7, 1991, the Company and seven of its domestic subsidiaries each filed a petition for relief under chapter 11 of the U.S. Bankruptcy Code. (4) Excludes cumulative adjustment for adoption of FAS 106 in 1993 which decreased net income by $12.6 million ($1.14 per share). (5) Long-term debt of $62.0 million in 1995, 1994 and 1993 and $61.7 million in 1992, and 1991 has been included in liabilities subject to compromise. 35. [THIS PAGE LEFT BLANK INTENTIONALLY] EXHIBIT 21 EAGLE-PICHER INDUSTRIES, INC. SUBSIDIARIES OF THE REGISTRANT Cincinnati Industrial Machinery Sales Company [Ohio] Daisy Parts, Inc. [Michigan] Eagle-Picher Development Company, Inc. [Delaware] Transicoil Inc. [Pennsylvania] Transicoil (Malaysia) SDN. BHD. [Malaysia] Michigan Automotive Research Corporation (MARCO) [Michigan] EDI, Inc. [Michigan] Eagle-Picher Espana, S.A. [Spain] Eagle-Picher Europe, Inc. [Delaware] Eagle-Picher Fluid Systems Ltd [England and Wales] Eagle-Picher Far East, Inc. [Delaware] Eagle-Picher, Inc. [Virgin Islands] Eagle-Picher Industries of Canada Limited [Canada] Eagle-Picher Industries GmbH [Germany] Eagle-Picher Industries Materials GmbH [Germany] Eagle-Picher Minerals, Inc. [Nevada] Eagle-Picher Minerals International S.A.R.L. [France] United Minerals Verwaltungs- und Beteiligungs GmbH [Germany] United Minerals GmbH & Co. KG [Germany] Equipos de Acuna, S.A. de C.V. [Mexico] Hillsdale Tool & Manufacturing Co. [Michigan] Eagle-Picher Industries Europe GmbH [Germany] EPTEC, S.A. de C.V. [Mexico] Eagle-Picher Fluid Systems, Inc. [Michigan] - ----------- [ ] Brackets indicate state or country of incorporation and do not form part of corporate name. EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT The Board of Directors Eagle-Picher Industries, Inc.: We consent to incorporation by reference in Registration Statement Nos. 2-50595, 33-5792, 33-31975 and 33-37518 on Form S-8 of Eagle-Picher Industries, Inc. of our report, with explanatory paragraphs, dated February 14, 1996 relating to the consolidated balance sheet of Eagle-Picher Industries, Inc. and subsidiaries (debtor in possession, as of January 7, 1991) as of November 30, 1995 and 1994, and the related consolidated statements of income (loss), shareholders' equity (deficit), and cash flows for each of the years in the three-year period ended November 30, 1995, which reports appear in the Company's 1995 Annual Report on Form 10-K and in the 1995 Annual Report, which is incorporated by reference in the Company's 1995 Annual Report on Form 10-K. Our report on the consolidated financial statements refers to a change in accounting for postretirement benefits other than pensions in 1993. /s/ KPMG Peat Marwick LLP Cincinnati, Ohio February 27, 1996 EXHIBIT 24(a) POWER OF ATTORNEY Each of the undersigned officers and/or directors of Eagle-Picher Industries, Inc. hereby consents to and appoints Thomas E. Petry and James A. Ralston, and each of them, as his true and lawful attorneys-in-fact and agents with all power of substitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K for the 1995 fiscal year of Eagle-Picher Industries, Inc., a corporation organized and existing under the laws of the State of Ohio, and any and all amendments thereto, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission pursuant to the requirements of the Securities Exchange Act of 1934, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the same as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. In Witness Whereof, each of the undersigned has hereunto set his hand on this 14th day of February, 1996. /s/ Thomas E. Petry ------------------------------------------------------ Thomas E. Petry Director, Chairman of the Board and Chief Executive Officer /s/ Andries Ruijssenaars ------------------------------------------------------ Andries Ruijssenaars Director, President and Chief Operating Officer /s/ David N. Hall ------------------------------------------------------ David N. Hall Senior Vice President-Finance (Principal Financial Officer) /s/ Paul W. Christensen, Jr. ------------------------------------------------------ Paul W. Christensen, Jr. Director /s/ V. Anderson Coombe ------------------------------------------------------ V. Anderson Coombe Director /s/ Roger L. Howe ------------------------------------------------------ Roger L. Howe Director /s/ Daniel W. LeBlond ------------------------------------------------------ Daniel W. LeBlond Director /s/ Powell McHenry ------------------------------------------------------ Powell McHenry Director /s/ Eugene P. Ruehlmann ------------------------------------------------------ Eugene P. Ruehlmann Director EXHIBIT 24(b) POWER OF ATTORNEY The undersigned officer of Eagle-Picher Industries, Inc. hereby consents to and appoints Thomas E. Petry and James A. Ralston, and each of them, as his true and lawful attorneys-in-fact and agents with all power of substitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K for the 1995 fiscal year of Eagle-Picher Industries, Inc., a corporation organized and existing under the laws of the State of Ohio, and any and all amendments thereto, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission pursuant to the requirements of the Securities Exchange Act of 1934, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the same as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. In Witness Whereof, the undersigned has hereunto set his hand on this 20th day of February, 1996. /s/ Carroll D. Curless - ------------------------------------ Carroll D. Curless Vice President and Controller (Principal Accounting Officer) EXHIBIT 99
EPI OPERATIONS (DIVISIONS) PLANT LOCATIONS - -------------------------- --------------- Cincinnati Industrial Machinery Sharonville, Ohio 3280 Hageman Street Sharonville, Ohio 45241 Construction Equipment Lubbock, Texas 1802 E. 50th Street Acuna, Coahuila, Mexico Lubbock, Texas 79404 Eagle-Picher Fluid Systems, Inc. Brighton, Michigan* 7854 Lochlin Drive Brighton, Michigan 48116 Electronics Joplin, Missouri (6) "C" and Porter Streets Colorado Springs, Colorado (2) Joplin, Missouri 64801 Galena, Kansas Grove, Oklahoma Seneca, Missouri Stella, Missouri Socorro, New Mexico** Fabricon Products River Rouge, Michigan 1721 West Pleasant Avenue Philadelphia, Pennsylvania River Rouge, Michigan 48218 Riverton, New Jersey Hillsdale Tool & Manufacturing Co. Hillsdale, Michigan (4)** 135 E. South Street Hamilton, Indiana Hillsdale, Michigan 49242 Jonesville, Michigan Vassar, Michigan San Luis Potosi, Mexico Michigan Automotive Ann Arbor, Michigan Research Corporation (MARCO) 1254 North Main Street Ann Arbor, Michigan 48104 Minerals Clark Station, Nevada 6110 Plumas Street Lovelock, Nevada Reno, Nevada 89509 Vale, Oregon
- ---------- * Effective approximately March 1, 1996. ** The New Mexico plant and one of the Hillsdale, Michigan plants have little, if any, manufacturing activity at this time.
EPI OPERATIONS (DIVISIONS) PLANT LOCATIONS - -------------------------- --------------- Orthane Denton, Texas*** 1500 I-35 W. (at Airport Road) Denton, Texas 76202 Plastics Grabill, Indiana 14123 Roth Road Ashley, Indiana Grabill, Indiana 46741 Huntington, Indiana Ross Aluminum Foundries Sidney, Ohio (2) 815 North Oak Avenue Sidney, Ohio 45365 Rubber Molding Norwich, Connecticut 19 Ohio Avenue Pine Bluff, Arkansas Norwich, Connecticut 06360 Stratford, Connecticut Specialty Materials Quapaw, Oklahoma (2) One Mile NE of Quapaw on Hwy. 69A Miami, Oklahoma (3) Quapaw, Oklahoma 74363 Harrisonville, Missouri Lenexa, Kansas Suspension Systems Paris, Illinois Route 133 West Paris, Illinois 61944 Transicoil Inc. Trooper, Pennsylvania 2560 General Armistead Avenue Melaka, Malaysia Trooper, Pennsylvania 19403 Trim Kalkaska, Michigan 829 U.S. Hwy. 131 NW Kalkaska, Michigan 49646 Wolverine Gasket Inkster, Michigan 2638 Princess Street Blacksburg, Virginia Inkster, Michigan 48141 Leesburg, Florida Garden City, Michigan Eagle-Picher Industries Europe GmbH Market Harborough, England Soria, Spain Ohringen, Germany
- ---------- *** A substantial portion of the business of the Denton, Texas facility was sold on January 31, 1996. The remainder will be transferred to the Brighton, Michigan plant, listed above. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended May 31, 1996 Commission file number 1-1499 EAGLE-PICHER INDUSTRIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) OHIO 31-0268670 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 580 Walnut Street, P. O. Box 779, Cincinnati, Ohio 45201 - -------------------------------------------------------------------------------- (Address of principal executive offices) Zip Code Registrant's telephone number, including area code 513-721-7010 (Not Applicable) - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No [ ] 11,040,932 shares of common capital stock, par value $1.25 per share, were outstanding at July 12, 1996. 1 TABLE OF CONTENTS
Page Number ------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements.................................... 3 Consolidated Statement of Income............................ 3 Consolidated Balance Sheet.................................. 4 Consolidated Statement of Cash Flows........................ 6 Notes to Consolidated Financial Statements.................. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings....................................... 14 Item 3. Defaults Upon Senior Securities......................... 14 Item 6. Exhibits and Reports on Form 8-K........................ 15 Signature........................................................ 16 Exhibit Index.................................................... 17
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended May 31 May 31 ------------------------- ------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net Sales $ 235,126 $ 225,378 $ 443,708 $ 422,981 --------- --------- --------- --------- Operating Costs and Expenses: Cost of products sold 194,276 186,658 368,640 349,946 Selling and administrative 21,569 19,573 42,416 38,775 --------- --------- --------- --------- 215,845 206,231 411,056 388,721 --------- --------- --------- --------- Operating Income 19,281 19,147 32,652 34,260 Interest expense (462) (500) (949) (987) Other income 30 21 357 406 --------- --------- --------- --------- Income Before Reorganization Items and Taxes 18,849 18,668 32,060 33,679 Reorganization items 22 (331) 90 (756) --------- --------- --------- --------- Income Before Taxes 18,871 18,337 32,150 32,923 Income Taxes 2,115 1,561 3,886 3,115 --------- --------- --------- --------- Net Income $ 16,756 $ 16,776 $ 28,264 $ 29,808 ========= ========= ========= ========= Income per Share $ 1.52 $ 1.52 $ 2.56 $ 2.70 ========= ========= ========= =========
See accompanying notes to the consolidated financial statements. 3 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands)
ASSETS May 31 Nov. 30 1996 1995 ---------- ---------- CURRENT ASSETS Cash and cash equivalents $ 109,719 $ 93,330 Receivables, less allowances 131,289 127,044 Income tax refund receivable 679 4,402 Inventories: Raw materials and supplies 37,060 42,140 Work in process 30,842 23,349 Finished goods 17,069 18,158 ---------- ---------- 84,971 83,647 Prepaid expenses 12,057 17,695 ---------- ---------- Total current assets 338,715 326,118 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT 452,153 441,957 Less accumulated depreciation 294,861 286,139 ---------- ---------- Net property, plant and equipment 157,292 155,818 DEFERRED INCOME TAXES 70,024 62,824 OTHER ASSETS 35,493 35,313 ---------- ---------- Total Assets $ 601,524 $ 580,073 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 35,026 $ 40,318 Long-term debt - current portion 2,611 1,525 Income taxes 4,836 4,789 Other current liabilities 36,666 35,991 ---------- ---------- Total current liabilities 79,139 82,623 ---------- ---------- LIABILITIES SUBJECT TO COMPROMISE 2,662,414 2,662,530 LONG-TERM DEBT - less current portion 17,572 19,103 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 22,278 21,720 OTHER LONG TERM LIABILITIES 4,714 5,405 ---------- ---------- Total liabilities 2,786,117 2,791,381 ---------- ----------
4 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands)
May 31 Nov. 30 1996 1995 ----------- ----------- SHAREHOLDERS' EQUITY (DEFICIT) Common shares - par value $1.25 per share authorized 30,000,000 shares, issued 11,125,000 shares $ 13,906 $ 13,906 Additional paid-in capital 36,378 36,378 Accumulated deficit (2,233,025) (2,261,289) Unrealized gain on investments 396 333 Foreign currency translation (335) 1,277 ----------- ----------- (2,182,680) (2,209,395) Cost of 84,068 common treasury shares (1,913) (1,913) ----------- ----------- Total Shareholders' Equity (Deficit) (2,184,593) (2,211,308) ----------- ----------- Total Liabilities and Shareholders' Equity (Deficit) $ 601,524 $ 580,073 =========== ===========
See accompanying notes to the consolidated financial statements. 5 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands)
Six Months Ended May 31 ----------------------- 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 28,264 $ 29,808 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 15,299 14,572 Changes in assets and liabilities: Receivables (4,245) (8,538) Inventories (1,324) (5,300) Deferred taxes (7,200) (9,500) Accounts payable (5,292) (492) Accrued liabilities 675 4,122 Other 8,834 (6,394) -------- -------- Net cash provided by operating activities 35,011 18,278 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (19,109) (13,978) Other 687 908 -------- -------- Net cash used in investing activities (18,422) (13,070) CASH FLOWS FROM FINANCING ACTIVITIES: Reduction of long-term debt (200) (980) -------- -------- Net cash used in financing activities (200) (980)
6 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands)
Six Months Ended May 31 ---------------------- 1996 1995 ---- ---- Net increase in cash and cash equivalents 16,389 4,228 Cash and cash equivalents, beginning of period 93,330 92,606 -------- -------- Cash and cash equivalents, end of period $109,719 $ 96,834 ======== ======== Supplemental cash flow information: Cash paid during the year: Interest paid $ 842 $ 955 Income taxes paid (net of refunds received) $ 7,316 $ 10,119 Cash paid during the quarter: Interest paid $ 432 $ 462 Income taxes paid (net of refunds received) $ 6,216 $ 9,478 See accompanying notes to consolidated financial statements.
7 EAGLE-PICHER INDUSTRIES, INC. Notes to Consolidated Financial Statements A. PROCEEDINGS UNDER CHAPTER 11 On January 7, 1991 ("petition date"), Eagle-Picher Industries, Inc. ("Company") and seven of its domestic subsidiaries each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code ("chapter 11") in the United States Bankruptcy Court for the Southern District of Ohio, Western Division, in Cincinnati, Ohio ("Bankruptcy Court"). Each filing entity, other than EDI, Inc., is currently operating its business as a debtor in possession in accordance with the provisions of the Bankruptcy Code. An Unsecured Creditors' Committee ("UCC"), an Injury Claimants' Committee ("ICC"), an Equity Security Holders' Committee ("ESC"), and a Legal Representative for Future Claimants ("RFC") have been appointed in the chapter 11 cases. An unofficial asbestos co-defendants' committee has also been participating in the chapter 11 cases. In accordance with the provisions of the Bankruptcy Code, these parties have the right to be heard with respect to transactions outside the ordinary course of business. The official committees and the RFC typically are the entities with which the Company would negotiate the terms of a plan of reorganization. In June 1992, a mediator was appointed by the Bankruptcy Court to assist the constituencies in their negotiations. On November 9, 1993, the Company reached an agreement on the principal elements of a joint plan of reorganization. The agreement was with the ICC and the RFC, the representatives of the holders of present and future asbestos-related personal injury and other toxic tort claims in the Company's chapter 11 case, and was reached with the assistance of the mediator. One of the principal elements of the agreement was a negotiated settlement of the Company's aggregate liability for such claims in the amount of $1.5 billion. As a consequence of this agreement, the Company recorded a provision in the fourth quarter of 1993 of $1.135 billion to increase the asbestos liability subject to compromise to $1.5 billion. The Company also recorded a provision of $41.4 million in 1993 for environmental and other litigation claims in anticipation of settlement of such claims. Throughout 1994, the Company, the ICC and the RFC continued to refine the details of a joint plan of reorganization ("Original Plan"). The Original Plan was filed with the Bankruptcy Court on February 28, 1995. The Original Plan did not have the support of the UCC or the ESC because they did not agree with the amount of the aggregate asbestos liability which had been negotiated and which was used in the Original Plan to determine the allocation of the consideration to be distributed to the unsecured creditor and shareholder classes. As a result of the dispute, the Company was unable to move forward with the Original Plan. In order to resolve this dispute, the Company filed a motion in July 1995 requesting that the Bankruptcy Court estimate the Company's aggregate liability on account of present and future asbestos-related personal injury claims. The Bankruptcy Court ruled in December 1995 that such estimated liability is $2.5 billion ("Estimation Ruling"). The UCC, the ESC and two individual members of the UCC have appealed the Estimation Ruling. The U.S. District Court for the Southern District of Ohio, Western Division heard oral argument on these appeals in June 1996. A decision is pending. On April 9, 1996, the Company filed a First Amended Consolidated Plan of Reorganization ("Amended Plan") reflecting the Estimation Ruling, and a proposed First Amended Joint Disclosure Statement ("Disclosure Statement"). The principal substantive modification to the Original Plan relates to the allocation of the consideration to be distributed under the plan to the various classes of unsecured claims. A hearing before the Bankruptcy Court to consider approval of the Disclosure Statement has been scheduled for July 22, 1996. Pursuant 8 to the Bankruptcy Code, the acceptance or rejection of a plan of reorganization may not be solicited from the holder of a claim unless at the time of or before such solicitation there is transmitted to such holder the plan or a summary of the plan and a disclosure statement approved by the Bankruptcy Court as containing information of a kind and in sufficient detail that would enable a hypothetical reasonable investor typical of holders of claims to make an informed judgment about the plan. The Amended Plan, like the Original Plan, contemplates a resolution of the Company's liability for all present and future asbestos-related personal injury claims and certain other tort claims. These claims will be channeled to and resolved by an independently administered claims trust ("Trust"). The Amended Plan provides for the distribution of cash, notes and common stock of the reorganized Company to the Trust and to holders of allowed unsecured claims on a pro-rata basis proportionate to the percentage of their claims to the total of the Liabilities Subject to Compromise. Accordingly, pursuant to the Amended Plan, it is anticipated that the Trust will be distributed approximately 94% of such cash, notes and stock, and claimants holding environmental-related and other pre-petition unsecured claims will be distributed approximately 6% of such cash, notes and stock. Pursuant to the Amended Plan, claims entitled to priority under the Bankruptcy Code and "convenience claims" (pre-petition general unsecured claims of $500 or less or claims that are reduced to that amount) will be paid in full, in cash. The Amended Plan also provides for the resolution of all asbestos-related property damage claims, as further discussed in Note B below. Under the Bankruptcy Code, shareholders are not entitled to any distribution under a plan of reorganization unless all classes of pre-petition creditors receive satisfaction in full of their allowed claims or accept a plan which allows shareholders to participate in the reorganized company or to receive a distribution. Under the Amended Plan, existing shareholders will receive no distributions and their shares will be canceled. Following the Estimation Ruling, the Company recorded a provision of approximately $1.0 billion to increase the asbestos liability subject to compromise to the amount estimated by the Bankruptcy Court. This resulted in a negative shareholders' equity in excess of $2.2 billion. As a result, the Company filed a motion in the Bankruptcy Court in December 1995 seeking an order directing the United States Trustee to disband the ESC on the basis that existing equity holders do not have an economic interest in the chapter 11 cases. In January 1996, the Bankruptcy Court ruled that the ongoing activities of the ESC shall be limited to pursuing its appeal of the Estimation Ruling. The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. The liabilities subject to compromise listed above have been reported on the basis of the expected amount of the allowed claims even though they may be settled for lesser amounts. Upon confirmation of a plan of reorganization, the Company would utilize the "fresh-start" reporting principles contained in the AICPA's Statement of Position 90-7, which would result in adjustments relating to the amounts and classification of recorded assets and liabilities, determined as of the plan confirmation date. Pursuant to the Amended Plan, the ultimate consideration to be received by unsecured creditors will be substantially less than the amounts shown in the accompanying Consolidated Balance Sheet. Until a plan of reorganization is confirmed, however, the Company cannot be certain of the final terms and provisions thereof or the ultimate amount creditors will receive. 9 Liabilities incurred by the Company as of the petition date and subject to compromise under a plan of reorganization are separately classified in the Consolidated Balance Sheet and include the following (in thousands of dollars):
May 31, November 30, 1996 1995 ---------- ---------- Asbestos liability $2,502,511 $2,502,511 Long-term debt (unsecured portion) 62,003 62,003 Accounts payable 41,181 41,236 Accrued and other liabilities 56,719 56,780 ---------- ---------- $2,662,414 $2,662,530 ========== ==========
The net expense (income) resulting from the Company's administration of the chapter 11 cases has been segregated from expenses related to ordinary operations in the accompanying financial statements and includes the following (in thousands):
Three Months Six Months Ended Ended May 31 May 31 ------------------ -------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Professional fees and other expenses directly related to bankruptcy $ 1,248 $ 1,563 $ 2,401 $ 3,078 Interest income (1,270) (1,232) (2,491) (2,322) ------- ------- ------- ------- $ (22) $ 331 $ (90) $ 756 ======= ======= ======= =======
Interest income is attributable to the accumulation of cash and short-term investments subsequent to the petition date. B. LITIGATION As discussed in Note K to the Consolidated Financial Statements included in the Company's Annual Report and Form 10-K for the fiscal year ended November 30, 1995 and Note A above, the accompanying Consolidated Financial Statements include an estimated liability related to personal injury claims resulting from the Company's sale of asbestos-containing insulation products. Litigation with respect to asbestos-related claims was stayed by reason of the chapter 11 filing. Approximately 1,000 proofs of claim alleging asbestos-related property damage were filed in the chapter 11 cases pursuant to the September 30, 1992 bar date for asbestos-related claims. Under the Amended Plan, a second trust will be established to resolve asbestos-related property damage claims. If the class of asbestos-related property damage claims votes to accept the Amended Plan, such trust will be funded with $3 million in cash. If such class votes to reject the Amended Plan, but the Amended Plan is nevertheless confirmed, the trust will be funded with the pro-rata share of plan consideration allocable to asbestos-related property damage claims in the aggregate, based upon the Bankruptcy Court's estimate of the aggregate value of such claims. It cannot be reasonably predicted at this time what the Bankruptcy Court's estimate of the aggregate value of such claims would be. The Company may have insurance coverage for certain of these claims. In February 1996, the hospital members of the American Hospital Association, which had filed asbestos-related property damage claims against the Company ("Hospitals"), filed a motion in the Bankruptcy Court seeking an order estimating the aggregate value of all 10 asbestos-related property damage claims against the Company and temporarily allowing such claims for purposes of voting on a plan of reorganization. The Company and the RFC opposed the motion on the basis that, should the class of asbestos-related property damage claims accept the Amended Plan, an estimation of these claims would be unnecessary. The Company also argued that voting issues should be addressed in connection with the Company's motion for an order from the Bankruptcy Court establishing the voting procedures with respect to the Amended Plan. At a hearing held in May 1996, the Bankruptcy Court denied the Hospitals' motion. In February and May 1996, the Company filed with the Bankruptcy Court objections to many asbestos-related property damage claims, including claims filed by the Hospitals, because the claims are barred by the applicable time limitations under state laws for prosecuting the claims, the claims fail to state the requisite legal and factual bases therefor, and/or the claims fail to provide any evidence that the Company's products were located in the claimants' facilities. The holders of approximately 365 claims did not respond to the objections; some of these claims have been disallowed by the Bankruptcy Court and the Company's request for disallowance of the other such claims is pending with the Bankruptcy Court. With respect to the remaining claims that were objected to, the Bankruptcy Court has not yet issued a ruling. The Company is a defendant in other litigation which was pending as of the petition date which was discussed in Note L to the Consolidated Financial Statements for the fiscal year ended November 30, 1995. The Company intends to defend all litigation claims vigorously in the manner permitted by the Bankruptcy Code and/or applicable law. All pre-petition claims against the Company arising from litigation must be liquidated or otherwise addressed in the context of the chapter 11 cases and will be treated in any plan of reorganization. The Company has resolved most of the litigation-based claims that were asserted pursuant to the October 31, 1991 bar date for claims other than those arising from the sale of asbestos-containing products. In June 1996, the Bankruptcy Court approved the settlement agreement among the Company, the EPA, the U.S. Department of Interior and certain states which resolves the majority of the environmental claims asserted against the Company. The terms of the settlement agreement were discussed in Note L to the Consolidated Financial Statements included in the Company's Annual Report and Form 10-K for the fiscal year ended November 30, 1995. Certain parties that may be liable at certain of the sites resolved by the settlement agreement have appealed the Bankruptcy Court's decision. The Company has filed objections to certain of the litigation-based claims that have not yet been resolved, seeking to reduce the amount of such claims or eliminate them entirely. The Company anticipates filing additional objections to other such claims if they cannot be resolved through negotiation. These objections will be vigorously pursued by the Company. The Company believes that its provisions for these claims is adequate, and, in addition, the Company may have insurance coverage for certain of them. C. BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS The unaudited financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report and Form 10-K for the fiscal year ended November 30, 1995. The financial statements presented herewith reflect all adjustments (consisting of normal and recurring accruals) which, in the opinion of management, are necessary to fairly state the results of operations for the three month and six month periods ended May 31, 1996 and 1995. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Sales for the second quarter ended May 31, 1996 were $235.1 million compared with $225.4 million for the second quarter of 1995. Operating income was $19.3 million compared with $19.1 million for the same period last year. Net income for the second quarter of 1996 was $16.8 million or $1.52 per share which was equal to that of the second quarter of 1995. There was an organizational change during the second quarter of 1996. The Electronics Division was merged with the Specialty Materials Division to form the Eagle-Picher Technologies Division. Those operations of the Eagle-Picher Technologies Division which are included within the Machinery Group (formerly the operations of the Electronics Division) constitute the largest international supplier of power systems for commercial, military and weather satellites. These operations also produce special purpose batteries for a variety of other purposes. Those operations of the Eagle-Picher Technologies Division which are included within the Industrial Group (formerly the operations of the Specialty Materials Division) produce germanium substrates for solar cells which are used on satellites, boron isotopic components and certified clean sample containers for environmental testing. Sales for the Automotive Group for the second quarter of 1996 were ahead of the levels for the second quarter of 1995, while operating income was essentially the same as that of the second quarter of 1995. Despite a strike at the General Motor's Delphi Division, increased production levels in the North American market and a favorable product mix were important factors in the improving trend during the second quarter of 1996. European operations did well during the second quarter as these operations continue to increase market share. Start-up costs associated with expansions, and continued delays by one customer in meeting anticipated production schedules, placed pressure on profit margins during the quarter. Sales for the Machinery Group were essentially equal to those for the second quarter of last year, while operating income declined. The primary reason for the decline in operating income was reduced shipments of earth moving machinery by the Construction Equipment Division. Shipments of special purpose batteries by the Eagle-Picher Technologies Division were strong. Results for the remaining operations in the Machinery Group were mixed. Sales and operating income for the Industrial Group increased in the second quarter of 1996 over the results for last year's second quarter. Shipments of diatomaceous earth products, both to the domestic and to the international markets, continue to be at a high level. Diatomaceous earth products are used for high purity filtration in the food and beverage industry and in a variety of general industrial applications. Eagle-Picher Technologies' operations in the Industrial Group enjoyed an outstanding quarter. The increase in cellular communications has expanded demand for satellite components. Additionally, although the price of certain raw materials has increased over the past year, it has had a minimal impact on margins as the raw material price increases were absorbed by the customer. Shipments of boron isotopic compounds were also at a high level. Recent penetration of the European nuclear market has provided an excellent growth opportunity for boron products. It is expected that economic activity will be at a reasonably high level during the second half of 1996. Several operations are serving growing markets and/or are increasing market share, while others are serving sluggish segments of the economy. On balance, and based on forecasts from the Company's Divisions, results for the second half of 1996 should approximate those of the second half of 1995. Interest expense did not change appreciably in the second quarter or the first six months of 1996 compared to the same periods in 1995. Contractual interest on debt outstanding was $2.2 million in the second quarters of 1996 and 1995 and $4.4 and $4.5 million in the six 12 month periods ended May 31, 1996 and 1995, respectively. Interest income on the cash balances accumulated as a result of the reorganization slightly exceeded the expenses of the reorganization effort throughout 1996. FINANCIAL CONDITION The cash balance of the Company increased from $93.3 million at November 30, 1995 to $109.7 million at May 31, 1996, an increase of $16.4 million. One component of this increase was the reduction in the amount of customer tooling carried on the balance sheet to $16.7 million at May 31, 1996 from $26.5 million at November 30, 1995. It is custom practice in the automotive industry to accumulate customer tooling costs while the tooling is under construction and bill the customer upon its completion. It is anticipated that the amount of customer tooling on the balance sheet will decline further throughout the remainder of the year. There were increases in working capital, which are typical in periods in which sales growth is experienced, which partially offset the effects of the decrease in tooling. Capital expenditures totaled $9.4 million in the second quarter of 1996 and $19.1 million for the six months ended May 31, 1996 compared to $7.5 million and $14.0 million in the respective periods of 1995. The Company presently expects, however, that the total amount of capital expenditures in the 1996 fiscal year will be comparable to that of 1995. On April 9, 1996, the Company filed a First Amended Consolidated Plan of Reorganization with the Bankruptcy Court. Such plan provides for the satisfaction and discharge of the Company's pre-petition liabilities (Liabilities Subject to Compromise) and for the reorganized Company to have a capital structure appropriate for an industrial products company that is intended to enable the Company to access financing in the credit and debt markets. Decisions with respect to the appeals of the Estimation Ruling and the hearing on the Disclosure Statement, as further discussed in Note A to the Consolidated Financial Statements contained herein, will have a direct impact on the reorganization process. Accordingly, at this time it is not possible to predict when a plan of reorganization will be confirmed and become effective. 13 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. In May 1996, the Bankruptcy Court denied the motion of the Hospitals seeking an order estimating the aggregate value of all asbestos-related property damage claims against the Company and temporarily allowing such claims for purposes of voting on a plan of reorganization. This motion, as well as objections the Company has filed with the Bankruptcy Court to many of the asbestos-related property damage claims, are discussed in Note B to the Consolidated Financial Statements contained herein. Following the close of the quarter, on June 6, 1996, the Bankruptcy Court issued a judgment and decision in which it granted the motions of the Company and the United States seeking an order approving the settlement agreement among the Company, the EPA, the U.S. Department of Interior and certain states relating to certain environmental claims asserted against the Company. The settlement agreement provides, among other things, that the agencies and certain states will be granted allowed pre-petition unsecured claims in the Company's chapter 11 case aggregating approximately $43.0 million in full satisfaction of all of the Company's alleged liability at 23 specified Superfund sites, including any liability for any natural resource damage. The settlement agreement also provides that the liability, if any, of the Company at certain other sites will be determined in the future and be satisfied at that time in substantially the same manner and with the same value as such claims would have been satisfied if they had been treated under a reorganization plan. The settlement agreement was discussed in the Company's Report on Form 10-K for the fiscal year ended November 30, 1995. Certain parties that may be liable at certain of the sites resolved by the settlement agreement have filed a notice of appeal of the Bankruptcy Court's decision. Following the close of the quarter, on June 14, 1996, the U.S. District Court for the Southern District of Ohio heard oral argument on the appeals of the Estimation Ruling filed by the UCC, the ESC and two individual members of the UCC. The Estimation Ruling is further discussed in Note A to the Consolidated Financial Statements contained herein. The parties who filed the appeals argued, among other things, that the Bankruptcy Court lacked jurisdiction to estimate the Company's liability with respect to asbestos-related personal injury claims and that it erred in its determination of the amount of such liability. The Company, the ICC and the FRC have opposed the appeals. The District Court has not yet ruled on the appeals. Following the close of the quarter, on June 21, 1996, the UCC withdrew the motion it had filed with the Bankruptcy Court seeking relief from the Estimation Ruling. In its motion, the UCC had argued that, through inadvertence or mistake, the Bankruptcy Court overestimated the Company's liability for future asbestos-related personal injury claims by approximately $500 million. Because this issue was also raised in the appeal filed by the UCC to the Estimation Ruling, the UCC withdrew it from present consideration by the Bankruptcy Court. This motion was reported in the Company's Report on Form 10-Q for the quarter ended February 29, 1996. The Bankruptcy Court has scheduled a hearing for July 22, 1996 to consider the adequacy of the Debtors' First Amended Joint Disclosure Statement, which the Company submitted in connection with the filing of the Amended Plan, as further discussed in Note A to the Consolidated Financial Statements contained herein. Following the close of the quarter, at a hearing in June 1996, the Bankruptcy Court granted the Company's Motion for an Order Establishing Procedures for Solicitation and Tabulation of Votes to Accept or Reject the Consolidated Plan of Reorganization, subject to such procedures being modified to provide that individual creditors holding multiple claims shall have a separate vote for each allowed claim they hold. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. The chapter 11 filings constituted a default under substantially all of the 14 Company's and its 'affiliates' senior securities. The obligations under the Company's pre-petition credit facility and other obligations owing to the lenders who were party to the pre-petition credit facility have been addressed in the debtor in possession financing agreement approved by the Bankruptcy Court on May 24, 1991. At that time, certain of such obligations were repaid and the remaining of such obligations were deemed to be post-petition. With respect to certain other secured obligations, the Company (or its affiliates) have been making settlements or "adequate protection" payments approved by orders of the Bankruptcy Court. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 27 - Financial Data Schedule. (b) Reports on Form 8-K Report on Form 8-K (File 1-1499), dated April 9, 1996, in which the Company reported that on April 9, 1996 the Company and seven of its domestic subsidiaries filed a First Amended Consolidated Plan of Reorganization in their chapter 11 cases pending before the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division. 15 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 thereunto duly authorized. EAGLE-PICHER INDUSTRIES, INC. /s/ David N. Hall ------------------------------- David N. Hall, Senior Vice President - Finance and Chief Financial Officer DATE July 12, 1996 16 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 27 Financial Data Schedule (submitted electronically to the Securities and Exchange Commission for its information) 17 [THIS PAGE LEFT BLANK INTENTIONALLY] EAGLE-PICHER INDUSTRIES, INC. SIGNIFICANT ASSUMPTIONS FOR FINANCIAL PROJECTIONS For purposes of developing the Plan of Reorganization (the "Plan") and evaluating its feasibility, the following financial projections were prepared. These financial projections reflect the Debtors' estimate of their expected consolidated financial position, results of operations and cash flows. Accordingly, the projections reflect Management's judgment, as of the date of this Disclosure Statement, of expected future operating and business conditions, which are subject to change. All estimates and assumptions shown within the projections were developed by Management. The assumptions disclosed herein are those that Management believes to be significant to the projections. Although the Debtors are of the opinion that these assumptions are reasonable in the circumstances, such assumptions are subject to significant uncertainties, such as the cyclical nature of the automotive industry. There will be differences between projected and actual results because events and circumstances frequently do not occur as expected. Further, such assumptions may be affected by other events and circumstances outside of the Debtors' control. Consequently, actual financial results could vary significantly from projected results. THE PROJECTIONS SHOULD NOT BE REGARDED AS A REPRESENTATION OR WARRANTY BY THE DEBTORS OR ANY OTHER PERSON AS TO THE ACCURACY OF THE PROJECTIONS OR THAT THE PROJECTIONS WILL BE REALIZED. The financial projections were prepared by the Debtors; they have not been audited or reviewed by independent accountants. The significant assumptions used in the preparation of the financial projections are stated below. THE FINANCIAL PROJECTIONS, INCLUDING THE UNDERLYING ASSUMPTIONS, SHOULD BE CAREFULLY REVIEWED IN EVALUATING THE PLAN. It is projected that the Debtors will emerge from chapter 11 December 1, 1996 (the "Effective Date"). The reorganization will be accounted for in accordance with the American Institute of Certified Public Accountants' Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"). The projections included herein are: 1. Pro Forma Consolidated Balance Sheet of Reorganized Eagle-Picher as of the Effective Date which reflects the projected accounting effects of the Plan's consummation and of "fresh start" accounting as promulgated by SOP 90-7. C-1 2. Projected Consolidated Balance Sheets of Reorganized Eagle- Picher as of the Effective Date and November 30 for each of the years from 1997 through 2001. 3. Projected Consolidated Statements of Income of Reorganized Eagle-Picher for each of the six fiscal years in the period ended November 30, 2001. 4. Projected Consolidated Statements of Cash Flow of Reorganized Eagle-Picher for each of the six fiscal years in the period ended November 30, 2001. 5. Projected Capital Structure of Reorganized Eagle-Picher as of the Effective Date. The projections have been prepared on the basis of generally accepted accounting principles consistent with those currently utilized by Eagle-Picher in the preparation of its consolidated financial statements except as noted in the following assumptions. The projections should be read in conjunction with the significant assumptions, qualifications and notes set forth below and with the audited consolidated financial statements for the fiscal year ended November 30, 1995 contained in the 1995 Annual Report included in Exhibit C. WHILE MANAGEMENT BELIEVES THE ASSUMPTIONS UNDERLYING THE PROJECTED FINANCIAL INFORMATION, WHEN CONSIDERED ON AN OVERALL BASIS, ARE REASONABLE IN LIGHT OF CURRENT CIRCUMSTANCES AND EXPECTATIONS, NO ASSURANCE CAN BE GIVEN THAT THE PROJECTIONS WILL BE REALIZED. A. GENERAL ASSUMPTIONS The sales volumes of many of the Debtors' operations fluctuate with general economic cycles. In the interest of presenting a balanced view of their prospects, the Debtors have assumed that there will be an economic recession in the years 1997 and 1998. Other factors considered in formulating the projections are discussed below: Automotive Segment The Debtors' automotive operations serve the automotive industry worldwide as a tier one supplier to the original equipment manufacturers or as a supplier to other manufacturers that supply automotive manufacturers with component parts or assemblies. Major factors considered in developing the projections for the Automotive Segment include: 1. Automotive industry production in North America in 1995 was approximately 15.3 million units of passenger cars, vans, utility vehicles and light trucks. A new record of 15.7 C-2 million units was reached in 1994, surpassing the record of 15.1 million units in 1978. 2. Projections for 1996 assume North American automotive production levels will be down 2%. 3. The effects of the cyclical recession projected in 1997 and 1998 are comparable to those of the last two downturns of the automotive industry. 4. Economic recovery will begin in the last few months of 1998 moving toward record automotive production worldwide by 2000. 5. The Debtors will achieve broader market penetration of their products, particularly in the light truck, van, and sport utility vehicle segment of the automotive market. 6. There will be increased emphasis on growth opportunities within the European automotive market. 7. The intense pricing pressure from the automotive manufacturers will continue and, on occasion, Eagle-Picher will be unable to recover cost increases from customers on a timely basis. Machinery Segment The Debtors' operations in the Machinery Segment manufacture several lines of earth moving, material handling and other industrial machinery and equipment, components for a wide range of capital goods and systems and components for aerospace and commercial aviation markets as well as the defense industry. Specific factors considered in developing the projections of the Machinery Segment include: 1. The U.S. Government will continue to cut defense spending. However, significant operations of the Debtors are more dependent on certain portions of the defense budget which are less subject to funding cuts than other areas. 2. The level of worldwide commercial and industrial activity will decline with the projected economic recession in 1997 and 1998 and will begin recovery thereafter. 3. Government and commercial aerospace spending, particularly in the communication satellite area, will remain healthy over the next several years. Industrial Segment The Debtors' operations in the Industrial Segment can be characterized as serving niche markets where they enjoy a position C-3 of market leadership based on technical capabilities, proprietary advantages, manufacturing know-how or marketing skills. These operations generally are not impacted by fluctuations of the general economy. Specific factors considered in developing the projections for the Industrial Segment include: 1. Recent historic trends in the performance of individual product lines were analyzed to develop these projections. 2. Opportunities exist in certain niche markets where the Debtors have a specific competitive advantage. 3. Since the demand for the Industrial products is not impacted by economic fluctuations, these products are characterized as being somewhat "recession proof." 4. In 1997, construction will be completed and production will begin at a new $14 million facility which will process diatomaceous earth products, primarily for export markets. B. DISTRIBUTIONS UNDER THE PLAN Cash, debt securities and common stock of Reorganized Eagle-Picher will be distributed pursuant to the Plan. Cash Distributions The Debtors expect to distribute cash on the Effective Date as follows: a) Approximately $10.3 million will be distributed with respect to Priority Claims, Convenience Claims, certain Secured Claims and certain Administrative Expenses; b) Assuming the class of asbestos property damage claimants votes to approve the Plan, $3.0 million will be used to establish a Qualified Settlement Fund which will be responsible for satisfying asbestos property damage claims (the "PD Trust"). c) Approximately $89.0 million will be distributed with respect to the PI Trust and other unsecured creditors. Debt Securities It is anticipated that existing secured debt of Eagle-Picher approximating $6.0 million will be restructured. Such indebtedness will bear interest at an appropriate market rate and, for the most part, be repaid in installments. An existing $10 million secured industrial revenue bond financing is expected to be reinstated. In addition, debt securities, as described below, will be issued on the Effective Date: C-4 a) Tax Refund Notes in the anticipated principal amount of $71 million. It is assumed that these notes will mature on June 1, 1998 based on the assumed Effective Date of December 1, 1996. b) Divestiture Notes in the principal amount of $50 million which will mature three years after the Effective Date. These Divestiture Notes will be redeemed in the event the Debtors consummate major asset sales. c) Senior Unsecured Sinking Fund Debentures ("Debentures") in the principal amount of $250 million, which will mature 10 years after the Effective Date. The Debentures will have a mandatory sinking fund of $20 million per year on each of the third through ninth anniversaries of the Effective Date with a final maturity of $110 million. The assumed interest rates for each of the foregoing is set forth in Section C below. Common Stock Common stock of the Reorganized Eagle-Picher will also be issued pursuant to the Plan. Based on, among other things, its analysis of the projections, the market value of securities of other companies serving similar markets and their capitalization rates, the Debtors' financial advisors, McDonald & Company Securities, Inc. ("McDonald & Co."), have calculated that the residual value of such common stock is $254.8 million. The stockholders' existing Eagle-Picher Common Stock will not receive any distribution under the Plan, and their equity will be canceled. Pursuant to the Plan, the holders of Unsecured Claims and Environmental Claims will receive 50% of their distribution value in Divestiture Notes and 50% cash. The PI Trust will receive the balance of the cash and Divestiture Notes as consideration, as well as the entire issues of the Tax Refund Notes and the Debentures and all of the common stock of the Reorganized Eagle-Picher. C. OTHER SPECIFIC ASSUMPTIONS Cash It is assumed interest of 6% will be earned on cash balances exceeding $15 million. It is also assumed Eagle-Picher will have a line of credit available to it for certain letters of credit and, if necessary, working capital and operating needs. Any borrowings on this line of credit will carry an interest rate of 8%. For these purposes, borrowings will be made on December 1 to fund cash C-5 needs on that day and payments on those borrowings will be made the following December 1. Interest was calculated accordingly. Property, Plant and Equipment To adjust net property, plant and equipment to an estimate of its fair value in accordance with the fresh-start accounting provisions of SOP 90-7, Eagle-Picher plans to review its property, plant and equipment and obtain appraisals to determine what revisions, if any, should be made to individual accounts. Since the appraisal process is not yet complete, $20 million is an estimate used for purposes of the projections. The actual adjustment at the Effective Date could be higher or lower. Any adjustment to this allocation would have no impact on cash flow. For purposes of this projection, the fair value adjustment of the property, plant and equipment is to be amortized over eight years, which approximates the estimated remaining useful life of the assets. However, actual amortization periods used at the Effective Date could be shorter or longer. Reorganization Goodwill In accordance with SOP 90-7, the reorganization value in excess of amounts allocable to identifiable assets is an intangible asset. The amortization period of this intangible asset is assumed for these purposes to be 7 years, but the actual amortization period utilized at the Effective Date could be shorter or longer. This item has no tax or cash flow implications. Debt The Tax Refund Notes, the Divestiture Notes and the Debentures will bear interest at a rate these debt securities should bear in order to have a market value of 100% of their principal amount on the Effective Date. For purposes of these projections, it is assumed that such interest rates would be 8% for the Tax Refund Notes, 9 1/2% for the Divestiture Notes and 10 1/2% for the Debentures. All payments of principal are assumed to be made on the anniversary of the Effective Date and interest will be paid semiannually, unless otherwise specified. It is assumed the the Tax Refund Notes will be repaid when the majority of the tax refunds are received, approximately June 1, 1998. For these purposes, it was assumed the Divestiture Notes will be repaid by their maturity date. It is assumed that sinking fund payments on the Debentures will be made as scheduled throughout the projections. C-6 Income Taxes It is assumed that Eagle-Picher will receive tax deductions for cash and the value of stock distributed to the PI Trust upon such distribution. With respect to Debt Securities distributed to the PI Trust, deductions are received as the Debt Securities are repaid or refunded. These deductions will result in substantial tax net operating losses. An income tax receivable of $67.8 million will result from the carryback of tax net operating losses to years in which income is available for carryback. An additional refund of $3.2 million, which arose from results of prior years' audits, is expected to be received in 1997. Assuming the Effective Date is December 1, 1996, $55.4 million will be received approximately June 1, 1998, $9.3 million will be received in 1999, $2.7 million will be received in 2001 and $.4 million will be received in 2002. A deferred income tax asset results from tax net operating losses and deferred deductions available to offset income tax payments in future years. General business credit carryforwards have been ignored, since it is expected that they will expire unutilized. For purposes of these projections, it is assumed that all other tax benefits are available upon the Effective Date and no valuation allowance is necessary. A statutory federal income tax rate of 35% is assumed throughout the projection period. The differences between the statutory and the effective tax rates for the projection period are due primarily to the amortization of the reorganization gain, depletion deductions and foreign and state taxes. Due to the large tax net operating loss carryforward, the Debtor's current Federal tax liability will be limited to alternative minimum taxes. Approximately $6.6 million of alternative minimum taxes will be paid in 1999; however, of this amount, $5.9 million will be refunded in 2002. Liabilities Subject to Compromise Liabilities Subject to Compromise will be discharged at the Effective Date. This will result in a gain for forgiveness of debt. This, along with the establishment of the deferred taxes and reorganization gain will offset the retained deficit. C-7 EAGLE-PICHER INDUSTRIES, INC. PRO FORMA CONSOLIDATED BALANCE SHEET DECEMBER 1, 1996 (IN THOUSANDS - UNAUDITED)
BEFORE REORGANIZATION AFTER REORGANIZATION ADJUSTMENTS REORGANIZATION Cash $118,237 ($102,338)(1) $15,899 Escrow cash 5,125 5,500 (2) 10,625 Accts receivable, net 129,000 (1,800)(2) 127,200 Inventories, net 82,600 11,800 (2,3) 94,400 Income tax receivable 3,200 67,800 (4) 71,000 Prepaid expenses 14,700 (50)(2) 14,650 ---------------------------------------------- Total current assets 352,862 (19,088) 333,774 Property, plant & equipment, net 164,318 18,750 (2,5) 183,068 Deferred income taxes 80,124 42,360 (4) 122,484 Reorganization goodwill -- 75,438 (6) 75,438 Other assets 34,000 (4,000)(7) 30,000 ---------------------------------------------- Total assets $631,304 $113,460 $744,764 ============================================== Accounts payable $38,000 (600)(2) $37,400 Accr. liabilities 32,999 (3,049)(1,2) 29,950 Short-term debt -- 71,000 (8) 71,000 Secured debt - current 2,163 (20)(1) 2,143 New debt - current -- -- Income tax payable 5,289 5,289 ---------------------------------------------- Total current liab 78,451 67,331 145,782 Secured debt 17,676 (615)(1) 17,061 New debt-10 year -- 250,000 (8) 250,000 New debt-3 year -- 50,000 (8) 50,000 Other long-term liabilities 27,125 27,125 Liabilities subject to compromise 2,160,493 (2,160,493)(8) -- Equity (1,652,441) 1,907,237 (9) 254,796 ---------------------------------------------- Total liab. & equity $631,304 $113,460 $744,764 ==============================================
C-8 EAGLE-PICHER INDUSTRIES, INC. NOTES TO PRO-FORMA CONSOLIDATED BALANCE SHEET 1. Cash projected to be paid at the Effective Date of the Plan includes distributions with respect to Priority Claims, Convenience Claims, certain Secured Claims and Administrative Expenses of approximately $10.3 million, the Asbestos Property Damage Claim of $3.0 million, and approximately $89.0 million to be distributed to the unsecured creditors and the PI Trust. 2. To reflect the sale of the Fabricon Products Division for $5.5 million, which approximates the book value of the assets. The proceeds will be deposited to an Escrow Cash account, which is held for the purpose of repaying the Divestiture Notes due December 1, 1999. The proceeds from the sale of the Orthane Division, which took place in early 1996, are also included in the Escrow cash account. 3. To adjust inventory to its approximated fair value through elimination of the LIFO reserve. Inventory will continue to be calculated on the LIFO method for tax purposes, which results in a deferred tax liability. For purposes of this statement, this has been treated as a reduction of deferred tax assets existing at the Effective Date. 4. Eagle-Picher will receive tax deductions for cash and the value of equity securities contributed to the PI Trust. An income tax receivable of $67.8 million will result from carryback of losses to years with available income. Additional deferred income tax assets of $57.4 million result from net operating losses and deferred deductions available to offset income tax payments in future years. For purposes of these projections, it was assumed that all tax benefits, other than general business credit carryforwards, are available upon the Effective Date and no valuation allowance is necessary. General business credit carryforwards were ignored because they are expected to expire unutilized. 5. To adjust net property, plant and equipment to an estimate of its fair value in accordance with the fresh-start accounting provisions of SOP 90-7. Since the appraisal process is not yet complete, $20 million is an estimate used for purposes of the projections. 6. To record reorganization value in excess of amounts allocable to identifiable assets in accordance with SOP 90-7. 7. To write off existing goodwill of approximately $12.0 million. This is offset by a $8.0 million increase to the prepaid pension asset to the amount by which the plan assets exceed the projected benefit obligations. C-9 8. To record the discharge of Liabilities Subject to Compromise through the distribution pursuant to the Plan of debt securities, common stock, and the cash previously mentioned in Note 1. This will result in a gain for forgiveness of debt. a) Eagle-Picher will issue Tax Refund Notes in the principal amount of $71.0 million. b) Eagle-Picher will issue three-year Divestiture Notes in the principal amount of $50 million. c) Eagle-Picher will issue Senior Unsecured Sinking Fund Debentures in the principal amount of $250 million. d) New Eagle-Picher Common Stock with an estimated value of $254.8 million will be issued. Existing Eagle-Picher Common Stock will be canceled and the holders thereof will receive no distribution. 9. To eliminate the retained deficit and record the new equity of Eagle-Picher. C-10 EAGLE-PICHER INDUSTRIES, INC. PROJECTED CONSOLIDATED BALANCE SHEETS AS OF NOVEMBER 30 UNLESS OTHERWISE NOTED (IN THOUSANDS - UNAUDITED)
DEC. 1 REORGANIZED COMPANY ---------------------- ---------------------------------------------------- 1996 1996 1997 1998 1999 2000 2001 Cash $118,237 $15,899 $49,738 $46,350 $67,850 $58,046 $69,605 Escrow cash 5,125 10,625 11,225 11,875 12,575 -- -- Accts receivable, net 129,000 127,200 127,700 129,000 135,000 141,000 148,000 Inventories, net 82,600 94,400 94,200 94,600 96,100 97,600 98,600 Income tax receivable 3,200 71,000 67,800 12,400 3,100 3,100 6,300 Prepaid expenses 14,700 14,650 14,650 15,650 16,150 16,650 17,150 ---------------------- ---------------------------------------------------- Total current assets 352,862 333,774 365,313 309,875 330,775 316,396 339,655 Property, plant & equipment, net 164,318 183,068 185,568 186,668 186,368 184,668 181,568 Deferred income taxes 80,124 122,484 118,112 113,084 111,674 100,998 80,974 Reorganization goodwill -- 75,438 64,661 53,884 43,107 32,330 21,553 Other assets 34,000 30,000 28,000 26,500 27,500 28,000 28,000 ---------------------- ---------------------------------------------------- Total assets $631,304 $744,764 $761,654 $690,011 $699,424 $662,392 $651,750 ====================== ==================================================== Accounts payable $38,000 $37,400 $36,400 $37,400 $38,400 $39,400 $39,900 Accr. liabilities 32,999 29,950 48,140 45,300 45,800 43,675 42,725 Short-term debt -- 71,000 71,000 -- -- 20,000 10,000 Secured debt - current 2,163 2,143 2,237 1,159 856 1,490 80 New debt - current -- -- -- -- 70,000 20,000 20,000 Income tax payable 5,289 5,289 5,289 5,289 5,289 5,289 5,289 ---------------------- ---------------------------------------------------- Total current liab 78,451 145,782 163,066 89,148 160,345 129,854 117,994 Secured debt 17,676 17,061 14,824 13,666 12,809 11,320 11,240 New debt-10 year -- 250,000 250,000 250,000 230,000 210,000 190,000 New debt-3 year -- 50,000 50,000 50,000 -- -- -- Other long-term liabilities 27,125 27,125 26,825 26,825 26,325 26,325 25,825 Liabilities subject to compromise 2,160,493 -- -- -- -- -- -- Equity (1,652,441) 254,796 256,939 260,372 269,945 284,893 306,691 ---------------------- ---------------------------------------------------- Total liab. & equity $631,304 $744,764 $761,654 $690,011 $699,424 $662,392 $651,750 ====================== ====================================================
C-11 EAGLE-PICHER INDUSTRIES, INC. PROJECTED CONSOLIDATED STATEMENTS OF INCOME FISCAL YEARS ENDED NOVEMBER 30 (IN THOUSANDS - UNAUDITED)
REORGANIZED COMPANY -------- ------------------------------------------------------------------ 1996 1997 1998 1999 2000 2001 Net sales $865,923 $854,000 $855,500 $912,000 $963,000 $1,017,000 Operating Costs and Expenses Cost of products sold 724,071 711,325 713,350 762,225 805,900 849,775 Selling and administrative 80,100 81,600 82,500 83,700 86,300 88,900 -------- ------------------------------------------------------------------ 804,171 792,925 795,850 845,925 892,200 938,675 -------- ------------------------------------------------------------------ Operating Income 61,752 61,075 59,650 66,075 70,800 78,325 Amortization: Reorganization asset -- (10,777) (10,777) (10,777) (10,777) (10,777) Property, plant and equipment adjustment -- (2,500) (2,500) (2,500) (2,500) (2,500) Interest expense (2,000) (39,155) (35,540) (32,525) (27,175) (24,150) Interest income 500 2,400 2,200 2,400 1,000 1,300 Other income (expense) 502,515 -- -- -- -- -- Reorganization items (500) -- -- -- -- -- -------- ------------------------------------------------------------------ Income before income taxes and non-recurring item 562,267 11,043 13,033 22,673 31,348 42,198 Income taxes 3,400 8,900 9,600 13,100 16,400 20,400 -------- ------------------------------------------------------------------ Income before non- recurring item 558,867 2,143 3,433 9,573 14,948 21,798 Gain on discharge of debt -- 1,561,853 -- -- -- -- Fresh start adjustments -- 91,388 -- -- -- -- Administrative items related to reorganization -- (800) -- -- -- -- -------- ------------------------------------------------------------------ Net income 558,867 1,654,584 3,433 9,573 14,948 21,798 ======== ================================================================== BY INDUSTRY SEGMENT: Sales Automotive 432,136 450,370 451,680 491,700 532,220 569,740 Machinery 248,481 233,140 230,110 240,050 244,990 255,930 Industrial 185,306 170,490 173,710 180,250 185,790 191,330 -------- ------------------------------------------------------------------ Total sales 865,923 854,000 855,500 912,000 963,000 1,017,000 ======== ================================================================== Operating Income Automotive 32,462 36,785 37,560 42,835 48,095 52,895 Machinery 20,086 16,855 15,780 17,455 17,145 18,895 Industrial 12,555 12,495 13,020 14,145 15,240 16,215 Corporate items (3,351) (5,060) (6,710) (8,360) (9,680) (9,680) -------- ------------------------------------------------------------------ Total operating income 61,752 61,075 59,650 66,075 70,800 78,325 ======== ==================================================================
C-12 EAGLE-PICHER INDUSTRIES, INC. PROJECTED CONSOLIDATED STATEMENTS OF CASH FLOWS FISCAL YEARS ENDED NOVEMBER 30 (IN THOUSANDS - UNAUDITED)
REORGANIZED COMPANY ------- ------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 Operating Cash: Net income 558,867 1,654,584 3,433 9,573 14,948 21,798 Reduction of asbestos liability (502,511) -- -- -- -- -- Gain on discharge of debt -- (1,561,853) -- -- -- -- Fresh start adjustments -- (91,388) -- -- -- -- Administrative items related to reorganization -- 800 -- -- -- -- Depreciation & amortization 31,200 43,277 44,677 46,077 47,477 48,877 Deferred taxes (17,300) 4,372 5,028 1,410 10,676 20,024 Working capital (637) 18,590 (3,040) (8,000) (9,625) (9,450) Income tax refunds 1,202 3,200 55,400 9,300 -- (3,200) ------- ------------------------------------------------------------- Operating cash 70,821 71,582 105,498 58,360 63,476 78,049 Investing Cash: Capital expenditures (40,000) (35,000) (35,000) (35,000) (35,000) (35,000) Financing Cash: Escrow activity (5,125) (600) (650) (700) 12,575 -- Short-term borrowings -- -- (71,000) -- 20,000 (10,000) Repayments (789) (2,143) (2,236) (1,160) (70,855) (21,490) ------- ------------------------------------------------------------- Financing cash (5,914) (2,743) (73,886) (1,860) (38,280) (31,490) Cash Payments Pursuant to the Plan -- (102,338) -- -- -- -- Increase (decrease) in cash 24,907 (68,499) (3,388) 21,500 (9,804) 11,559 Beginning cash balance 93,330 118,237 49,738 46,350 67,850 58,046 ------- ------------------------------------------------------------- 118,237 49,738 46,350 67,850 58,046 69,605 ======= =============================================================
C-13 EAGLE-PICHER INDUSTRIES, INC. CALCULATION OF EQUITY VALUE NOVEMBER 30 1996
Total Value of Estate* $734.0 million Less: Cash Distributed 89.0 Secured Debt 19.2 Tax Refund Notes 71.0 Divestiture Notes 50.0 Debentures 250.0 ------ Value of Equity $254.8 million
* Excludes Priority Claims and Remaining Expenses of Administration CAPITAL STRUCTURE OF REORGANIZED COMPANY
Value Percentage Secured Notes $19.2 3.0% Tax Refund Notes 71.0 11.0 Divestiture Notes 50.0 7.8 Debentures 250.0 38.8 Common Equity 254.8 39.5 ------ ----- $645.0 100.0%
C-14 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - ----------------------------------- ) EXHIBIT "D" BALLOT SOLICITATION AND TABULATION PROCEDURES, AS APPROVED BY AN ORDER OF THE BANKRUPTCY COURT, DATED JULY 23, 1996 PLEASE CALL THE SOLICITATION AGENT, HILL AND KNOWLTON, INC., AT (212) 885-0555, IF YOU HAVE ANY QUESTIONS ABOUT THESE PROCEDURES. [THIS PAGE LEFT BLANK INTENTIONALLY] TABLE OF CONTENTS 1. Definitions................................................................ D-1 2. Publication Notice......................................................... D-3 3. Distribution of Solicitation Packages by the Tabulation Agent.............. D-3 a. Scheduled Claims............................................. D-3 b. Filed Claims................................................. D-4 c. Primary Asbestos Personal Injury Claims...................... D-4 i. Proofs of Claim Signed by Individual Claimants.... D-4 ii. Proofs of Claim Signed by Disqualified Attorneys......................................... D-4 iii. Proofs of Claim Signed by Attorneys............... D-4 d. Asbestos Property Damage Claims:............................. D-6 e. Unimpaired Claims............................................ D-6 f. Determination of Holders of Record........................... D-6 4. Distribution of Solicitation Packages by the Solicitation Agent............ D-7 a. Registered Debt Securities................................... D-7 i. List of Record Holders............................ D-7 ii. Determination of Number of Beneficial Owners...... D-7 iii. Distribution to Record Holders other than Debt Nominees.......................................... D-7 iv. Distribution to Debt Nominees in Unimpaired Classes........................................... D-7 v. Distribution to Debt Nominees in Impaired Classes........................................... D-8 (1) Options for Obtaining Votes........... D-8 (2) Reimbursement of Expenses............. D-9 b. Bearer Debt Securities....................................... D-9 i. Lists of Holders of Bearer Debt Securities........ D-9 ii. Notices........................................... D-10 iii. Contents of Individual, Non-Prevalidated Ballots for Bearer Debt Securities........................ D-10 iv. Bearer Debt Securities Held by a Depositary....... D-11 v. Reimbursement of Expenses......................... D-12 c. Equity Interests............................................. D-12 i. List of Equity Holders............................ D-12 ii. Distribution of Solicitation Packages to Holders of Equity Interests............................... D-13 5. Return of Ballots.......................................................... D-13 a. Claimants That Are Entitled to Vote.......................... D-13 b. Place to Send Completed Ballots.............................. D-13 c. Deadline for Receiving Completed Ballots..................... D-13 i. Deadline For Receipt By Tabulation Agent.......... D-13 ii. Deadline For Receipt By Solicitation Agent........ D-14
D-i 6. Tabulation of Ballots...................................................... D-14 a. Determination of Amount of Claims Voted...................... D-14 i. Bearer Debt Securities............................ D-14 ii. Registered Debt Securities:....................... D-15 iii. Claims other than Debt Securities, Asbestos Property Damage Claims, Asbestos Personal Injury Claims, Environmental Claims, and Lead Personal Injury Claims............................ D-16 iv. Asbestos Property Damage Claims, Asbestos Personal Injury Claims, and Lead Personal Injury Claims..................................... D-17 v. Environmental Claims.............................. D-17 b. Determination of Number of Claims Voted...................... D-17 i. Specific Rules Relating to Registered Debt Securities and Bearer Debt Securities............. D-18 ii. Specific Rules Relating to Class Asbestos Property Damage Claims:........................... D-18 c. Ballots Excluded:............................................ D-18 d. General Voting Procedures and Standard Assumptions........... D-18
D-ii BALLOT SOLICITATION AND TABULATION PROCEDURES The following procedures (these "Voting Procedures") are adopted with respect to (a) the distribution of ballot solicitation materials with respect to the chapter 11 plan jointly proposed by the Debtors, the Official Injury Claimants' Committee, and the Future Claimants' Representative (as such plan may be amended from time to time, the "Plan") and (b) the return and tabulation of ballots and master ballots. 1. DEFINITIONS: a. "ASBESTOS BAR DATE ORDER" means the order of the Bankruptcy Court, dated June 11, 1992, which fixed the deadline for filing proofs of claim against the Debtors' estates for all Asbestos Property Damage Claims and Primary Asbestos Personal Injury Claims. b. "BANKRUPTCY COURT" means the United States Bankruptcy Court for the Southern District of Ohio, Western Division. c. "BEARER DEBT SECURITIES" means debt securities of the Debtors that are not registered as to principal or are registered to "bearer." d. "BEARER DEBT SECURITIES TRUSTEE" means the indenture trustee for any issue of debt securities of the Debtors as to which some or all of such debt securities constitute Bearer Debt Securities. e. "CONFIRMATION HEARING" means the hearing on the confirmation of the Plan, as such hearing may be adjourned from time to time. f. "DEBT NOMINEES" means institutional holders of record of Registered Debt Securities who hold Registered Debt Securities in "street name" on behalf of beneficial owners or otherwise represent such beneficial holders. g. "DEPOSITARY" means a trust company, bank, or other depositary having trust powers recognized by the Federal Reserve System of the United States. h. "DISCLOSURE STATEMENT" means the disclosure statement in connection with the Plan, as approved by the Bankruptcy Court in the Disclosure Statement Order. i. "DISCLOSURE STATEMENT ORDER" means the Order of the Bankruptcy Court approving the Disclosure Statement. j. "EQUITY NOMINEE" means an institutional holder of record that may hold shares of common stock of Eagle-Picher in "street name" on behalf of beneficial owners or otherwise represent such beneficial owners. D-1 k. "GENERAL BAR DATE ORDER" means the order of the Bankruptcy Court, dated July 19, 1991, which fixed the deadline for filing proofs of claim against the Debtors' estates for all Claims other than Asbestos Property Damage Claims and Primary Asbestos Personal Injury Claims. l. "MASTER BALLOT" means a ballot (a) filed on behalf of one or more beneficial owners of Registered Debt Securities or Bearer Debt Securities in accordance with the procedures set forth in section 4.a.v.(1) or section 4.b.iv. respectively, of these Voting Procedures, (b) filed on behalf of one or more holders of Primary Asbestos Personal Injury Claims pursuant to section of these Voting Procedures, or (c) filed by an Asbestos Property Damage Claim class member pursuant to section 3.d of these Voting Procedures. m. "PRIMARY ASBESTOS PERSONAL INJURY CLAIM" means an Asbestos Personal Injury Claim other than an Asbestos or Lead Contribution Claim. n. "PUBLICATION NOTICE" means a published notice of (a) the approval of the Disclosure Statement and the scheduling of the Confirmation Hearing and (b) the procedure for holders of Claims and Equity Interests to obtain a Solicitation Package. o. "RECORD AMOUNT" means the amount shown on the records of the Registered Debt Securities Trustees and the Debt Nominees (as confirmed by record and depositary listings) as of the Voting Record Date. p. "REGISTERED DEBT SECURITIES" means debt securities of the Debtors that are either fully registered or registered as to principal only, but excluding debt securities registered to "bearer." q. "REGISTERED DEBT SECURITIES TRUSTEE" means the indenture trustee for any issue of debt securities of the Debtors as to which all or some of such debt securities constitute Registered Debt Securities. r. "SCHEDULES" means the Debtors' schedules of liabilities previously filed with the Bankruptcy Court, as amended or reconstituted. s. "SOLICITATION AGENT" means Hill and Knowlton, Inc., or such other firm that may be retained by the Debtors to act as the Solicitation Agent with respect to the Plan. t. "SOLICITATION PACKAGE" means, and will consist of, all of the following: i. Disclosure Statement Order. ii. Disclosure Statement (with the Plan attached as an exhibit thereto). iii. For entities entitled to vote, appropriate ballots and voting instructions. D-2 iv. For entities entitled to vote, pre-addressed, postage-paid, return envelopes. v. Any other materials ordered by the Bankruptcy Court to be included as part of the Solicitation Package. u. "TABULATION AGENT" means Federated Claims Service Group, or such other firm that may be retained by the Debtors to act as the Tabulation Agent with respect to the Plan. v. "TRANSFER AGENT" means Key Corp., the transfer agent for Eagle-Picher's common stock, or such other transfer agent as may be acting for Eagle-Picher at the relevant time. w. "UNIMPAIRED CLASSES SOLICITATION PACKAGE" means, collectively, (a) notice that the class in which an entity's Claim is classified is designated in the Plan as unimpaired and that, upon written request by such entity to the Solicitation Agent, a copy of the Solicitation Package shall be furnished to such entity at the Debtors' expense and (b) notice of the Confirmation Hearing and the time fixed for filing objections to confirmation or the Plan. x. "VOTING DEADLINE" means the date that is established by the Bankruptcy Court as the deadline for the return of ballots on the Plan. y. "VOTING RECORD DATE" means the date that is five (5) business days after the date on which the Disclosure Statement Order is entered by Bankruptcy Court. Any capitalized term used but not defined herein shall have the meaning ascribed to such term in the Plan. 2. PUBLICATION NOTICE: The Debtors will cause the Publication Notice to be published twice in The Wall Street Journal (all U.S. editions) and The New York Times (national edition). 3. DISTRIBUTION OF SOLICITATION PACKAGES BY THE TABULATION AGENT: The Tabulation Agent will cause Solicitation Packages to be served as follows: a. SCHEDULED CLAIMS: Upon each holder of a Claim (in a class that is not rendered unimpaired under the Plan) listed in the Schedules as of the Voting Record Date as liquidated, D-3 undisputed, and not contingent (other than holders of Registered Debt Securities and Bearer Debt Securities). b. FILED CLAIMS: Upon each holder of a Claim (in a class that is not rendered unimpaired under the Plan) represented by a proof of claim against any of the Debtors that has not been disallowed by an order entered on or before the Voting Record Date, other than a proof of claim asserting (a) Claims under, or evidenced by, any Registered Debt Securities or Bearer Debt Securities, (b) Primary Asbestos Personal Injury Claims, or (c) Asbestos Property Damage Claims. c. PRIMARY ASBESTOS PERSONAL INJURY CLAIMS: Upon the holders of Primary Asbestos Personal Injury Claims, as follows: i. PROOFS OF CLAIM SIGNED BY INDIVIDUAL CLAIMANTS: Each holder of a Primary Asbestos Personal Injury Claim that filed a proof of claim asserting a Primary Asbestos Personal Injury Claim against any of the Debtors that has not been disallowed by an order entered on or before the Voting Record Date and who personally signed such proof of claim shall receive a Solicitation Package. ii. PROOFS OF CLAIM SIGNED BY DISQUALIFIED ATTORNEYS: If a proof of claim asserting a Primary Asbestos Personal Injury Claim against any of the Debtors was signed and filed by an attorney purporting to represent the holder of such Claim, and (a) the Debtors know that such attorney has been disqualified from representing such holder, and (b) such Primary Asbestos Personal Injury Claim has not been disallowed by an order entered on or before the Voting Record Date, the Solicitation Package shall be served directly upon the holder of such Primary Asbestos Personal Injury Claim, if such holder's address is known. Otherwise, the Solicitation Package shall be served upon the last-known attorney of record for such holder, with instructions for such attorney to forward the Solicitation Package to the holder of such Primary Asbestos Personal Injury Claim within two (2) business days after receipt of the Solicitation Package. iii. PROOFS OF CLAIM SIGNED BY ATTORNEYS: If any proofs of claim asserting Primary Asbestos Personal Injury Claims against any of the Debtors were signed and filed by an attorney purporting to represent the holders of such Claims, and such Primary Asbestos Personal Injury Claims have not been disallowed by an order or orders entered on or before the Voting Record Date, a single Solicitation Package D-4 shall be served upon such attorney, and (except to the extent that individual holders of such Primary Asbestos Personal Injury Claims also signed such proofs of claims) Solicitation Packages WILL NOT be served upon the individual holders thereof. The Solicitation Package will contain a separate copy of these Voting Procedures and a Master Ballot for the computation of votes on the Plan. The following procedures will govern the completion and return of such Master Ballot: (1) The Master Ballot to be sent to each such attorney will contain as an exhibit thereto a computer-generated listing of each individual holder of a Primary Asbestos Personal Injury Claim for whom such attorney signed and filed a proof of claim, by name and Claim number, with a separate box next to each entry to note, if necessary, whether such individual holder accepts or rejects the Plan. (2) The Master Ballot will contain a certification to be completed by such attorney pursuant to which such attorney will certify that, except as otherwise noted on the exhibit thereto by the striking of the name of the holder of a Primary Asbestos Personal Injury Claim, such attorney has the authority to cast a ballot on the Plan on behalf of the holders of Primary Asbestos Personal Injury Claims listed on such exhibit. If such attorney is unable to make such certification with respect to any holders of Primary Asbestos Personal Injury Claims on whose behalf such attorney signed and filed proofs of claim, such attorney shall, within ten (10) business days after the receipt of the Solicitation Package, furnish the Tabulation Agent with the names and addresses of such holders, on a preprinted form to be included with the Solicitation Package. (3) The Master Ballot shall contain, in substantially similar form, the following options for voting, one of which shall be marked by the attorney: (a) "All claimants listed on the exhibit accompanying this ballot ACCEPT the Plan." (b) "All claimants listed on the exhibit accompanying this ballot REJECT the Plan." (c) "All claimants listed on the exhibit accompanying this ballot ACCEPT the Plan, EXCEPT as marked on such exhibit." (d) "All claimants listed on the exhibit accompanying this ballot REJECT the Plan, EXCEPT as marked on such exhibit." D-5 (4) If any exceptions to the certification are noted pursuant to section 3.c.iii.(2), or if any exceptions are noted pursuant to section 3.c.iii.(3)(c) or 3.c.iii.(3)(d), the attorney shall note such exceptions on the exhibit accompanying the ballot and shall return the ENTIRE exhibit, together with the completed Master Ballot, to the Tabulation Agent in accordance with section of these Voting Procedures. Otherwise, the attorney need only return the completed Master Ballot, without the exhibit, to the Tabulation Agent in accordance with section of these Voting Procedures. d. ASBESTOS PROPERTY DAMAGE CLAIMS: Upon each holder of an Asbestos Property Damage Claim that filed a proof of claim asserting an Asbestos Property Damage Claim that (i) does not purport to constitute a class proof of claim and (ii) has not been disallowed by an order entered on or before the Voting Record Date. With respect to Asbestos Property Damage Claims filed by representatives of classes of Asbestos Property Damage Claims that have been certified or conditionally certified in pending federal or state court actions, the Tabulation Agent will select 100 members of each class at random from a list of class members provided to the Tabulation Agent by the class representative. The class representative shall provide such list to the Tabulation Agent within ten (10) business days after receipt by such class representative of a written request therefor from Eagle-Picher. If the class representative does not timely provide such list, Eagle-Picher shall have no obligation to solicit the votes of such class. The Tabulation Agent will send a Solicitation Package to each randomly selected class member and to the class representative, and, unless individual class members filed separate proofs of claim in accordance with the Asbestos Bar Date Order, individual class member shall not receive Solicitation Packages. e. UNIMPAIRED CLAIMS: Each entity that, as of the Voting Record Date, has a Claim (other than a Claim pursuant to Registered Debt Securities or Bearer Debt Securities) that is unimpaired under the Plan will receive an Unimpaired Classes Solicitation Package. f. DETERMINATION OF HOLDERS OF RECORD: Except with respect to Primary Asbestos Personal Injury Claims and Claims under, or evidenced by, any Registered Debt Securities or Bearer Debt Securities, the Solicitation Package or Unimpaired Solicitation Package, as the case may be, will be served upon the entity that holds a Claim as of the Voting Record Date, and the Debtors will have no obligation to cause a Solicitation Package or Unimpaired Solicitation Package, as the case may be, to be served upon any subsequent holder of such Claim (as evidenced by any notice of assignment of such Claim entered on the Bankruptcy Court's docket after the Voting Record Date or otherwise). D-6 4. DISTRIBUTION OF SOLICITATION PACKAGES BY THE SOLICITATION AGENT: The Solicitation Agent will cause Solicitation Packages to be served as follows: a. REGISTERED DEBT SECURITIES: To all holders of Registered Debt Securities, according to the following procedures: i. LIST OF RECORD HOLDERS: Pursuant to Bankruptcy Rules 1007(i) and 3017(e), within five (5) business days after the Voting Record Date, the Registered Debt Securities Trustee shall provide to the Solicitation Agent (a) a copy of the list of the names, addresses, and holdings of the holders of Registered Debt Securities as of the Voting Record Date, (b) a set of mailing labels for such holders, and (c) such other information as the Solicitation Agent deems reasonably necessary to perform its duties hereunder. Upon request by the Solicitation Agent, the Registered Debt Securities Trustee shall provide additional sets of mailing labels. The Solicitation Agent shall use such lists, mailing labels, and other information only for purposes consistent with these Voting Procedures. ii. DETERMINATION OF NUMBER OF BENEFICIAL OWNERS: As soon as practicable after the entry of the Disclosure Statement Order, the Solicitation Agent shall attempt to contact the institutional holders of record of the Registered Debt Securities to determine whether such holders hold as Debt Nominees and to ascertain the number of beneficial owners of such Registered Debt Securities holding through each such Debt Nominee. iii. DISTRIBUTION TO RECORD HOLDERS OTHER THAN DEBT NOMINEES: The Solicitation Agent will cause to be served upon each record holder (other than Debt Nominees), as of the Voting Record Date, of any Registered Debt Securities either (a) a Solicitation Package (if the Registered Debt Securities are in a class that is impaired under the Plan) or (b) an Unimpaired Classes Solicitation Package (if the Registered Debt Securities are in a class that is not impaired under the Plan). iv. DISTRIBUTION TO DEBT NOMINEES IN UNIMPAIRED CLASSES: For Registered Debt Securities that are in a class that is not impaired under the Plan, the Solicitation Agent will cause to be served upon each Debt Nominee materials comprising Unimpaired Classes Solicitation Packages, in sufficient numbers estimated to allow dissemination of Unimpaired Classes Solicitation Packages to each of the beneficial owners of Registered D-7 Debt Securities for which they serve, together with a copy of these Voting Procedures, and with instructions to such Debt Nominee to (i) contact the Solicitation Agent for additional sets of Unimpaired Classes Solicitation Packages, if necessary, and (ii) promptly (within five (5) business days after receipt of the Unimpaired Classes Solicitation Packages) distribute the Unimpaired Classes Solicitation Packages to the beneficial owners for which they serve. v. DISTRIBUTION TO DEBT NOMINEES IN IMPAIRED CLASSES: For Registered Debt Securities that are in a class that is impaired under the Plan, the Solicitation Agent will cause to be served upon each Debt Nominee materials comprising Solicitation Packages, in sufficient numbers estimated to allow dissemination of Solicitation Packages to each of the beneficial owners of Registered Debt Securities for which they serve, together with a copy of these Voting Procedures, and with instructions to such Debt Nominee to (i) contact the Solicitation Agent for additional sets of Solicitation Packages, if necessary, and (ii) promptly (within five (5) business days after receipt of the Solicitation Packages) distribute the Solicitation Packages to the beneficial owners for which they serve. Upon request by a Registered Debt Securities Trustee or an entity purporting to be a Debt Nominee or a beneficial owner of Registered Debt Securities, the Solicitation Agent shall send any such entity a Solicitation Package. (1) OPTIONS FOR OBTAINING VOTES: Debt Nominees will have two options for obtaining the votes of beneficial owners of Registered Debt Securities in impaired classes, consistent with customary practices for obtaining the votes of securities held in street name: (a) The Debt Nominee may "prevalidate" the individual ballot contained in the Solicitation Package and then forward the Solicitation Package to the beneficial owner of the Registered Debt Securities for voting, with the beneficial owner then returning the individual ballot directly to the Solicitation Agent in the return envelope to be provided in the Solicitation Package. A Debt Nominee "prevalidates" a beneficial owner's ballot by indicating thereon the record holder of the Registered Debt Securities voted, the amount of Registered Debt Securities held by the beneficial owner, and the appropriate account numbers through which the beneficial owner's holdings are derived. (b) The Debt Nominee may forward the Solicitation Package to the beneficial owner of the Registered Debt Securities D-8 for voting along with a return envelope provided by and addressed to the Debt Nominee, with the beneficial owner then returning the individual ballot to the Debt Nominee. In such case, the Debt Nominee will summarize the votes of its respective beneficial owners on a Master Ballot that will be provided to the Debt Nominee separately by the Solicitation Agent, in accordance with any instructions set forth in the instructions to the Master Ballot, and then return the Master Ballot to the Solicitation Agent. THE DEBT NOMINEE SHOULD ADVISE THE BENEFICIAL OWNERS TO RETURN THEIR INDIVIDUAL BALLOTS TO THE DEBT NOMINEE BY A DATE CALCULATED BY THE DEBT NOMINEE TO ALLOW IT TO PREPARE AND RETURN THE MASTER BALLOT TO THE SOLICITATION AGENT SO THAT THE MASTER BALLOT IS ACTUALLY RECEIVED BY THE SOLICITATION AGENT BY THE VOTING DEADLINE. (c) Debt Nominees that elect to use the Master Ballot voting process are required to retain the ballots cast by their respective beneficial owners for inspection for one (1) year following the Voting Deadline, unless otherwise instructed in writing by the Debtors or ordered by the Bankruptcy Court. Each Debt Nominee that elects to "prevalidate" ballots must maintain a list of those beneficial owners as of the Voting Record Date to whom ballots were sent for one (1) year following the Voting Deadline, unless otherwise instructed in writing by the Debtors or ordered by the Bankruptcy Court. (2) REIMBURSEMENT OF EXPENSES: The Debtors will, upon written request, reimburse Debt Nominees (or their agents) for their reasonable, actual, and necessary out-of-pocket expenses incurred in performing the tasks described above. b. BEARER DEBT SECURITIES: To all holders of Bearer Debt Securities, according to the following procedures: i. LISTS OF HOLDERS OF BEARER DEBT SECURITIES: Pursuant to Bankruptcy Rules 1007(i) and 3017(e), within five (5) business days after the Voting Record Date, the Bearer Debt Securities Trustee shall provide to the Solicitation Agent (a) a copy of any list of the last-known names, addresses, and holdings of the holders of Bearer Debt Securities and the identity and address of each Depositary believed to hold Bearer Debt Securities, (b) a set of mailing labels to such holders or Depositaries, D-9 if practicable and appropriate, and (c) such other information as the Solicitation Agent deems reasonably necessary to perform its duties hereunder. Upon request by the Solicitation Agent, the Bearer Debt Securities Trustee shall provide additional sets of mailing labels. The Solicitation Agent shall use such lists, mailing labels, and other information only for purposes consistent with these Voting Procedures. ii. NOTICES: In addition to the Publication Notice, the Solicitation Agent will provide notice of the approval of the Disclosure Statement and the scheduling of the Confirmation Hearing and will solicit votes concerning the Plan from the holders of Bearer Debt Securities in the following manner: (1) The Solicitation Agent shall cause to be mailed to each last-known holder of Bearer Debt Securities, whose name and address is furnished by the Bearer Debt Securities Trustee pursuant to section 4.b.i above, a copy of the Publication Notice. (2) The Solicitation Agent will cause to be mailed to each Depositary whose name and address is furnished by the Bearer Debt Securities Trustee pursuant to section 4.b.i above or who is otherwise believed to hold Bearer Debt Securities on behalf of customers a copy of the Publication Notice and will provide Solicitation Packages to any such Depositary, as requested in accordance with section 4.b.ii.(2)(a) below. (a) The Publication Notice will provide that to obtain a Solicitation Package, holders of Bearer Debt Securities or Depositaries may either (i) call the Solicitation Agent at the number that will be listed in the Publication Notice or (ii) request a Solicitation Package in writing, either addressed to the Solicitation Agent at the address specified in the Publication Notice or telecopied to the Solicitation Agent at the telecopy number specified in the Publication Notice. Upon being contacted by entities purporting to be either holders of Bearer Debt Securities or Depositaries, the Solicitation Agent will provide such purported holders or Depositaries with Solicitation Packages and will make reasonable efforts to encourage such purported holders or Depositaries to return their ballots. iii. CONTENTS OF INDIVIDUAL, NON-PREVALIDATED BALLOTS FOR BEARER DEBT SECURITIES: All ballots to be completed directly by holders of Bearer Debt Securities (i.e., other than a Master Ballot submitted by a Depositary or an individual D-10 ballot that is not prevalidated in accordance with section 4.b.iv.(1)) will require the holder, inter alia, to sign and date the ballot and to list the aggregate amount and the individual certificate numbers of such holder's Bearer Debt Securities. Signature of such ballot will constitute a certification by such holder that such holder, as of the date thereof, holds the Bearer Debt Securities listed on such ballot. In addition, each holder of Bearer Debt Securities that submits a ballot directly will be required to have a Depositary certify on the ballot that the holder identified therein presented the original Bearer Debt Securities bearing the certificate numbers listed on such ballot to the Depositary for verification by such Depositary as of the date of such certification. iv. BEARER DEBT SECURITIES HELD BY A DEPOSITARY: If a holder has deposited its Bearer Debt Securities with a Depositary, the Depositary will have two options for obtaining the votes of holders of Bearer Debt Securities: (1) The Depositary may "prevalidate" the individual ballot contained in the Solicitation Package and then forward the Solicitation Package to the holder of the Bearer Debt Securities for voting, with the holder then returning the individual ballot directly to the Solicitation Agent in the return envelope to be provided in the Solicitation Package. A Depositary "prevalidates" a holder's ballot by dating the ballot and (i) listing thereon the identity of the holder and the certificate numbers of all the Bearer Debt Securities deposited by such holder with the Depositary, or (ii) (A) listing thereon the holder's account number and the certificate numbers of all the Bearer Debt Securities deposited by such holder and (B) stating that the appropriate number of Bearer Debt Securities has been "blocked" with respect to such holder. The ballot will provide for the certification of such information by the Depositary. (a) Bearer Debt Securities will only be considered "blocked" when the Depositary prevents the Bearer Debt Securities from being withdrawn, moved, or used for any purpose, other than allowing the holder to vote on the Plan, until after entry of the order confirming the Plan. (b) When requested by the Solicitation Agent, each Depositary will be required to provide to the Solicitation Agent a list of the certificate numbers of all Bearer Debt Securities being blocked by such Depositary. (2) The Depositary may forward the Solicitation Package to the holder of the Bearer Debt Securities for voting, along with a return D-11 envelope provided by and addressed to the Depositary, with such holder then returning the individual ballot to the Depositary. In such case, the Depositary will summarize the votes of its respective holders on a Master Ballot that will be provided separately to the Depositary, in accordance with the instructions set forth in the instructions to the Master Ballot, and then return the Master Ballot to the Solicitation Agent. Among other things, the instructions will direct the Depositary to list (i) by beneficial owner, the certificate numbers of all Bearer Debt Securities on deposit with the Depositary as of the Voting Deadline or (ii) only if the Bearer Debt Securities are blocked as of the Voting Deadline, by account number, the certificate numbers of all Bearer Debt Securities on deposit with the Depositary as of the Voting Deadline. Only votes with respect to Bearer Debt Securities that are held by the Depositary as of the date of such ballot may be listed on the ballot. THE DEPOSITARY SHOULD ADVISE THE INDIVIDUAL HOLDERS TO RETURN THEIR BALLOTS TO THE DEPOSITARY BY A DATE CALCULATED BY THE DEPOSITARY TO ALLOW IT TO PREPARE AND RETURN THE MASTER BALLOT SO THAT THE MASTER BALLOT IS ACTUALLY RECEIVED BY THE SOLICITATION AGENT BY THE VOTING DEADLINE. Each Depositary will maintain a photocopy of each "prevalidated" ballot and each individual ballot for a period of one (1) year after the Confirmation Date, unless otherwise instructed by the Debtors or ordered by the Bankruptcy Court. v. REIMBURSEMENT OF EXPENSES: The Debtors will, upon written request, reimburse Depositaries (or their agents) for their reasonable, actual, and necessary out-of-pocket expenses incurred in performing the tasks described above. c. EQUITY INTERESTS: i. LIST OF EQUITY HOLDERS: Within five (5) business days after the Voting Record Date, the Transfer Agent shall furnish to the Solicitation Agent (a) a list of the names and addresses of all holders of record of Eagle-Picher common stock as of the Voting Record Date, (b) a set of mailing labels for such holders, and (c) such other information as the Solicitation Agent deems reasonably necessary to perform its duties hereunder. Upon request by the Solicitation Agent, the Transfer Agent shall provide additional sets of mailing labels. The Solicitation Agent shall use such lists, mailing labels, and other information only for purposes consistent with these Voting Procedures. D-12 ii. DISTRIBUTION OF SOLICITATION PACKAGES TO HOLDERS OF EQUITY INTERESTS: The Solicitation Agent will cause a Solicitation Package to be served upon each such holder of record. In addition, the Solicitation Agent shall notify each Equity Nominee that it may receive additional Solicitation Packages by contacting the Solicitation Agent. The Equity Nominees shall promptly (within five (5) business days after receipt of the Solicitation Packages) distribute the Solicitation Packages to the beneficial owners for which they serve. 5. RETURN OF BALLOTS: a. CLAIMANTS THAT ARE ENTITLED TO VOTE: Each claimant that has a Claim for which a Claim amount may be determined pursuant to section hereof and which Claim is not treated as unimpaired under the Plan as of the Voting Deadline is entitled to vote to accept or reject the Plan. b. PLACE TO SEND COMPLETED BALLOTS: i. All ballots (other than ballots with respect to Registered Debt Securities or Bearer Debt Securities) will be accompanied by return envelopes addressed to the Eagle-Picher Ballot Tabulation Center c/o Federated Claims Service Group, P.O. Box 8041, 9111 Duke Blvd., Mason, Ohio 45040. ii. All ballots with respect to Registered Debt Securities or Bearer Debt Securities (i.e., record holder ballots, master ballots and prevalidated owner ballots), except those beneficial owner ballots that are to be returned to the Debt Nominees or Depositaries, will be accompanied by return envelopes addressed to Hill and Knowlton, Inc., 466 Lexington Avenue, 3rd Floor, New York, New York 10007, Attention: Eagle-Picher Ballot Tabulation Center. c. DEADLINE FOR RECEIVING COMPLETED BALLOTS: i. DEADLINE FOR RECEIPT BY TABULATION AGENT All ballots, except ballots with respect to Registered Debt Securities or Bearer Debt Securities (i.e., record holder ballots, master ballots and prevalidated owner ballots), must be ACTUALLY RECEIVED at the Eagle-Picher Ballot Tabulation Center by 5:00 p.m., Cincinnati, Ohio, time, by the Voting Deadline. Such ballots may be received at the Eagle-Picher Ballot Tabulation Center at the address set forth on the return envelope. The Tabulation Agent will NOT accept ballots submitted by facsimile transmission. The Tabulation Agent will date and time-stamp all ballots when it receives them. In addition, the Tabulation Agent will make a D-13 photocopy of all such ballots it receives (including all ballots forwarded to it by the Solicitation Agent) and will retain a copy of such ballots for a period of one (1) year after the Effective Date of the Plan, unless otherwise instructed by the Debtors, in writing. ii. DEADLINE FOR RECEIPT BY SOLICITATION AGENT All ballots with respect to Registered Debt Securities or Bearer Debt Securities (i.e., record holder ballots, master ballots and prevalidated owner ballots) must be ACTUALLY RECEIVED by the Solicitation Agent by the Voting Deadline. Such ballots may be received by the Solicitation Agent at the address set forth on the return envelope. The Solicitation Agent will NOT accept ballots submitted by facsimile transmission. The Solicitation Agent will date and time-stamp all such ballots when it receives them. In addition, after the Voting Deadline and after tabulation of the ballots received with respect to Registered Debt Securities and Bearer Debt Securities, the Solicitation Agent will forward to the Tabulation Agent the tabulation of the ballots relating to the Registered Debt Securities and Bearer Debt Securities and all such ballots it receives. 6. TABULATION OF BALLOTS: a. DETERMINATION OF AMOUNT OF CLAIMS VOTED: i. BEARER DEBT SECURITIES: With respect to the tabulation of ballots cast by Depositaries and holders of Bearer Debt Securities, the amount that will be used to tabulate acceptance or rejection of the Plan will be the amount shown on the ballot, except as follows: (1) To the extent that the aggregate amount of Bearer Debt Securities voted exceeds the amount outstanding, the Solicitation Agent will attempt to resolve such overvote prior to the date of the Confirmation Hearing. In resolving such overvote, the Solicitation Agent may require Depositaries to provide certificate numbers for all Bearer Debt Securities held by the Depositaries as of the Voting Deadline. (2) In the event that blocked Bearer Debt Securities are "unblocked" (i.e., withdrawn, moved, or otherwise transferred) prior to the Voting Deadline, the Depositary will notify the Solicitation Agent immediately, in writing, by providing the Solicitation Agent with, among other things, the request by the holder to unblock the Bearer Debt Securities, a photocopy of the ballot corresponding to the unblocked Bearer Debt Securities, the account number of the D-14 holder of such unblocked Bearer Debt Securities, and the certificate numbers of the unblocked Bearer Debt Securities. (3) In the event the Solicitation Agent receives conflicting ballots (i.e., ballots received from different holders of Bearer Debt Securities with respect to Bearer Debt Securities having the same certificate numbers) and in the absence of contrary information, the holder submitting the latest-dated ballot, as evidenced by the Depositary's certification (whether by separate certification, prevalidation, or completion of a master ballot), prior to the Voting Deadline shall be deemed to be the holder of the Bearer Debt Securities that are the subject of such conflict for voting purposes. In attempting to resolve such conflict, the Solicitation Agent may require such holders to furnish such evidence as the Solicitation Agent deems reasonably necessary. ii. REGISTERED DEBT SECURITIES: With respect to the tabulation of ballots cast by record holders and beneficial owners of Registered Debt Securities, for purposes of voting, the amount that will be used to tabulate acceptance or rejection of the Plan will be the Record Amount. The following additional rules will apply to the tabulation of ballots cast by record holders and beneficial owners of Registered Debt Securities: (1) Votes cast by beneficial owners holding Registered Debt Securities through a Debt Nominee will be applied against the positions held by such entities in the applicable Registered Debt Securities as of the Voting Record Date, as evidenced by the record and depositary listings. Votes submitted by a Debt Nominee, whether pursuant to a Master Ballot or prevalidated ballots, will not be counted in excess of the Record Amount of Registered Debt Securities held by such Debt Nominee. (2) To the extent that conflicting votes or "overvotes" are submitted by a Debt Nominee, whether pursuant to a Master Ballot or prevalidated ballots, the Solicitation Agent will attempt to resolve the conflict or overvote prior to the Confirmation Hearing. (3) To the extent that overvotes on a Master Ballot or prevalidated ballots are not reconcilable prior to the Confirmation Hearing, the Solicitation Agent will apply the votes to accept and to reject the Plan in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot or prevalidated ballot that contained the overvote, but only to the extent of the Debt Nominee's position in the applicable Registered Debt Security. D-15 (4) Multiple Master Ballots may be completed by a single Debt Nominee and delivered to the Solicitation Agent. Votes reflected by multiple Master Ballots will be counted, except to the extent that they are duplicative of other Master Ballots. If two or more Master Ballots are inconsistent, the latest Master Ballot received prior to the Voting Deadline will, to the extent of such inconsistency, supersede and revoke any prior Master Ballot. (5) For purposes of tabulating votes, each record holder or beneficial owner of a Registered Debt Security will be deemed to have voted the full amount of its Claim relating to such Registered Debt Security. iii. CLAIMS OTHER THAN DEBT SECURITIES, ASBESTOS PROPERTY DAMAGE CLAIMS, ASBESTOS PERSONAL INJURY CLAIMS, ENVIRONMENTAL CLAIMS, AND LEAD PERSONAL INJURY CLAIMS: With respect to the tabulation of ballots for all Claims other than (a) Registered Debt Securities, (b) Bearer Debt Securities, (c) Asbestos Property Damage Claims, (d) Asbestos Personal Injury Claims, (e) Environmental Claims, and (f) Lead Personal Injury Claims, for purposes of voting, the amount to be used to tabulate acceptance or rejection of the Plan is as follows (in order of priority): (1) If, prior to the Voting Deadline, (i) the Bankruptcy Court enters an order fully or partially allowing a Claim, whether for all purposes or for voting purposes only, (ii) a Claim is fully or partially allowed for all purposes in accordance with the Claims Settlement Guidelines, or (iii) the Debtors and the holder of a Claim agree to fully or partially allow such Claim for voting purposes only and no objection to such allowance is received by the Debtors within seven (7) days after service by first-class mail of notice of such agreement to the Primary Recipients' List (as such term is defined in the First Amended Case Management Order, entered on November 20, 1991, as amended from time to time), the amount allowed thereunder. (2) The liquidated amount specified in a proof of claim timely filed in accordance with the General Bar Date Order, so long as such proof of claim has not been disallowed by the Bankruptcy Court and is not the subject of an objection pending as of the Voting Record Date. (3) The Claim amount listed in the Schedules as unliquidated, undisputed, and not contingent. D-16 (4) If a proof of claim has been timely filed in accordance with the General Bar Date Order and such Claim is wholly contingent or unliquidated, the Claim amount, for voting purposes only, shall be $1.00 so long as such proof of claim has not been disallowed by the Court and is not the subject of an objection pending as of the Voting Record Date. iv. ASBESTOS PROPERTY DAMAGE CLAIMS, ASBESTOS PERSONAL INJURY CLAIMS, AND LEAD PERSONAL INJURY CLAIMS: With respect to the tabulation of ballots for all Asbestos Property Damage Claims, Asbestos Personal Injury Claims and Lead Personal Injury Claims, for voting purposes only, the amount to be used to tabulate acceptance or rejection of the Plan will be $1.00 for each Asbestos Property Damage Claim, Asbestos Personal Injury Claim, and Lead Personal Injury Claim proof of which was filed in accordance with the General Bar Date Order or, in the case of Primary Asbestos Personal Injury Claims and Asbestos Property Damage Claims, the Asbestos Bar Date Order, so long as any such Claim is not the subject of an objection that is pending as of the Voting Record Date. With respect to Claims filed by representatives of classes of Asbestos Property Damage Claims that have been certified or conditionally certified in pending federal or state court actions, each of the class members that is selected in accordance with section of these Voting Procedures shall have votes in the aggregate amount of $1.00 times the number of members in the class of Asbestos Property Damage Claims of which such Claimant is a member divided by 100. v. ENVIRONMENTAL CLAIMS: With respect to the tabulation of ballots for Environmental Claims, for voting purposes only, the amount to be used to tabulation acceptance or rejection of the Plan will be (i) as to each holder of an Environmental Claim that is a party to the Environmental Settlement Agreement, the amount of the claim allowed to each such holder on account of the Liquidated Sites (as such term is defined in the Environmental Settlement Agreement) and (ii) as to any other holder of an Environmental Claim, the amount of any liquidated claim allowed pursuant to the settlement agreement between any of the Debtors and such holder plus the amount of any additional claims that such holder, pursuant to such agreement, may be entitled to assert in the future. D-17 b. DETERMINATION OF NUMBER OF CLAIMS VOTED: i. SPECIFIC RULES RELATING TO REGISTERED DEBT SECURITIES AND BEARER DEBT SECURITIES: Each beneficial owner of Registered Debt Securities or Bearer Debt Securities is entitled to one (1) vote on account of its holdings of Registered Debt Securities and Bearer Debt Securities. ii. SPECIFIC RULES RELATING TO CLASS ASBESTOS PROPERTY DAMAGE CLAIMS: With respect to Claims filed by representatives of classes of Asbestos Property Damage Claims that have been certified or conditionally certified in pending federal or state court actions, each of the class members that is selected in accordance with section of these Voting Procedures shall have a number of votes equal to the number of members in the class of Asbestos Property Damage Claims of which such Claimant is a member divided by 100. The ballot to be supplied to such members will allow them to specify how many votes they are voting to accept the plan and how many votes they are voting to reject the Plan. c. BALLOTS EXCLUDED: A ballot will not be counted if any of the following applies to such ballot: i. The holder submitting the ballot is not entitled to vote, pursuant to section 5.a. ii. The ballot is not ACTUALLY RECEIVED at the Eagle-Picher Ballot Tabulation Center or by the Solicitation Agent, as the case may be, in the manner set forth in section 5.b hereof by the Voting Deadline. iii. A ballot that is not completed - including, without limitation, a master ballot with respect to a Primary Asbestos Personal Injury Claim on which the attorney fails to make the required certification - but other than a ballot that is otherwise complete but on which the acceptance or rejection of the Plan is not noted. d. GENERAL VOTING PROCEDURES AND STANDARD ASSUMPTIONS: In addition, the following voting procedures and standard assumptions will be used in tabulating ballots: D-18 i. Each holder of Claims will be deemed to have voted the full amount of its Claims in each class in which it submits a ballot. ii. If multiple ballots are received for a holder of Claims, the last ballot received from such holder prior to the Voting Deadline will be the ballot that is counted. iii. If multiple ballots are received from different holders purporting to hold the same Claim, in the absence of contrary information establishing which claimant held such Claim as of the Voting Deadline or, in the case of Registered Debt Securities, the Voting Record Date, the latest-dated ballot that is received prior to the Voting Deadline will be the ballot that is counted. iv. If multiple ballots are received from a holder of a Claim and someone purporting to be his, her, or its attorney or agent, the ballot received from the holder of the Claim will be the ballot that is counted, and the vote of the purported attorney or agent will not be counted. v. A ballot that is completed, but on which the claimant did not note whether to accept or reject the Plan shall be counted as a vote to accept the Plan. D-19 [THIS PAGE LEFT BLANK INTENTIONALLY] UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - ------------------------------------) EXHIBIT "E" THE DEBTORS' LIQUIDATION ANALYSIS [THIS PAGE LEFT BLANK INTENTIONALLY] EAGLE-PICHER INDUSTRIES, INC. LIQUIDATION ANALYSIS The Liquidation Analysis reflects the Debtors' estimate of the proceeds that would be realized if the Debtors were to be liquidated under chapter 7 of the Bankruptcy Code. Underlying the Liquidation Analysis are a number of estimates and assumptions that, although developed and considered reasonable by Management, are inherently subject to significant business, economic and competitive uncertainties and contingencies beyond the control of the Debtors and their Management, and upon assumptions with respect to the liquidation decisions which could be subject to change. THERE CAN BE NO ASSURANCE THAT THE VALUES REFLECTED IN THE LIQUIDATION ANALYSIS WOULD BE REALIZED IF THE DEBTORS WOULD UNDERGO SUCH A LIQUIDATION, AND ACTUAL RESULTS COULD VARY MATERIALLY FROM THOSE SHOWN HERE. For the purposes of preparing the Liquidation Analysis, the liquidation was assumed to commence on December 1, 1996 and the sales of the Operating Businesses (as defined below) were assumed to be completed within six months of that date. At that point, on May 31, 1997 (the "Liquidation Distribution Date"), distributions would be made to unsecured creditors. Any funds received subsequent to the Liquidation Distribution Date would be applied to separate accounts set up to fund the Debtors' liabilities for workers' compensation, postretirement benefits and indemnification liabilities resulting from the sales of the Operating Businesses. Depending on actual circumstances, the six-month sale and liquidation period ("Liquidation Period") could be significantly longer or, while the Debtors believe it highly unlikely, shorter. The Debtors have assumed, for purposes of making distributions to the PI Trust, in the Liquidation Analysis, that the aggregate value of Asbestos Personal Injury Claims and Lead Personal Injury Claims that would be allowed in a chapter 7 case is equal to the $2.5 billion that was ruled to be the aggregate value by the Bankruptcy Court. The Debtors also have assumed, in the Liquidation Analysis, that in a chapter 7 case the value of the Environmental Claims addressed in the Environmental Settlement Agreement would be as reflected therein. There can be no assurance that the EPA, the DOI, and the states listed therein would agree to the liquidated amounts of their claims set forth in the Environmental Settlement Agreement in the context of a chapter 7 liquidation. The following notes describe the significant assumptions used in the Liquidation Analysis. A. ESTIMATED LIQUIDATION PROCEEDS The businesses of the Debtors are conducted through various subsidiaries and divisions (the "Operating Businesses"). For E-1 purposes of the Liquidation Analysis, it is assumed that the assets of the subsidiaries and divisions would be sold on a going concern basis. It is believed that the sales of the Operating Businesses on a going concern basis would result in greater proceeds than liquidating the assets of the Operating Businesses themselves. There can be no assurance, however, that any such going concern sales could be consummated. The Debtors' financial advisors, McDonald & Co., estimated the potential proceeds from such dispositions of the Operating Businesses. The following information and factors, not listed in any order of importance, were, among others, considered by McDonald & Co. in estimating the proceeds which might be received from the sale of the Operating Businesses: 1) The historical financial statements, relevant historical operating information and projected financial operating performance of the Operating Businesses; 2) Market valuations of public companies in the same or similar businesses as the Operating Businesses; 3) The product lines, manufacturing expertise, operating advantages and disadvantages of the Operating Businesses; 4) The limited base of potential buyers for certain Operating Businesses; 5) The potential impact of a chapter 7 proceeding upon the Operating Businesses themselves and upon potential buyers' pricing strategies; 6) The relatively short period of time in which the sales of the Operating Businesses would take place; and 7) The point in the economic cycle in which the sales of the Operating Businesses would take place. General economic conditions as well as current conditions in the Operating Business' industries were also considered in estimating the liquidation proceeds. However, significant uncertainties exist, such as the cyclical nature of the automotive industry and the political nature of defense funding. Just as these items could have an adverse effect on sales and operating income, they could also adversely affect the price which could be realized in the short-term from the dispositions of Operating Businesses depending on the timing of these dispositions. Transaction costs on the sales of the Operating Businesses were estimated to be 5% of the gross proceeds. E-2 For purposes of the Liquidation Analysis, it has been assumed that all subsidiary and division level employees will be retained by the buyers of the respective Operating Businesses. In the event of actual sale, it is likely that substantial employee severance costs would reduce sale proceeds. B. NOTES RECEIVABLE Eagle-Picher is holding several notes receivable received as partial consideration for the sale of assets previously consummated. Those that are due after the Liquidation Distribution Date would be used to fund the indemnification liability resulting from the sales of the Operating Businesses. C. INCOME TAXES Sale of the Operating Businesses will trigger taxable gains for Eagle-Picher, and Eagle-Picher will receive tax deductions for cash paid to unsecured creditors on the Liquidation Distribution Date. The resulting tax net operating loss will be fully absorbed by carryback to years in which income is available for carryback, resulting in income tax refunds of $70.9 million. Since these refunds will not be available until after the Liquidation Distribution Date, they will be assigned to the accounts for Indemnification. The present value of such refunds is $56.7 million. Since Eagle-Picher will cease to exist under this scenario, the tax benefit for deferred deductions for workers' compensation, postretirement benefits and indemnification liabilities will expire. D. CLAIMS AND EXPENSES PAID AT THE EFFECTIVE DATE Under the Liquidation Analysis, it has been assumed that all Administrative Expenses (including expenses of a chapter 7 trustee and any related professional fees) and Priority Claims aggregating $8.8 million are paid in full. It is also assumed that Secured Claims totaling $21.8 million are repaid in full from proceeds of the collateral securing such sums. E. ASBESTOS PROPERTY DAMAGE CLAIMS It has been assumed that the Court values Asbestos Property Damage Claims in the aggregate approximate amount of $12.0 million. F. CASHFLOW FROM OPERATIONS DURING THE LIQUIDATION PERIOD The Debtors estimate that there will be a decrease in cash from operations of approximately $5 million resulting from adverse effects of a chapter 7 situation. Interest income expected to be E-3 earned on excess cash held during the Liquidation Period is included in this estimate. G. OVERHEAD COSTS OF LIQUIDATION It has been assumed that overhead costs of a liquidation, including severance costs associated with general office personnel, will approximate $8 million. Terminations would take place as reduction of properties permitted. H. WORKERS' COMPENSATION OBLIGATIONS The Debtors estimate workers' compensation obligations to be approximately $20 million. This includes existing liabilities and liabilities that will not be assumed by buyers when the Operating Businesses are sold. The Debtors have assumed that any buyer of an Operating Business would not assume any obligations for workers' compensation claims for injuries occurring prior to the date a sale of the Operating Business is consummated. I. PENSION AND POSTRETIREMENT BENEFIT OBLIGATIONS The Debtors currently make health care and life insurance benefits available to certain retired employees on a limited basis. In most cases, retirees are required to contribute to the cost of their health insurance coverage. These benefits are funded on a pay-as-you-go basis. For purposes of this Liquidation Analysis, it has been assumed that the Debtors' policy would be amended to exclude current active employees from this benefit. Therefore, the Debtors would be liable only for the portion of this liability relating to current retirees and those eligible for retirement. The pension plans are currently over funded. It is unlikely, however, that there would be excess funds available to the Debtors in the event of a liquidation after transfers of pension assets and related liabilities were made to pension plans of buyers of the Operating Businesses. J. CANCELLATION OF LEASE OBLIGATIONS It has been assumed that the Debtors will be liable for claims associated with the cancellation of certain lease obligations, primarily that of the General Office in Cincinnati, Ohio. It has also been assumed that the leases of operating plants would be assumed by buyers of the respective Operating Businesses. K. INDEMNIFICATION OF THE SALE OF THE OPERATING BUSINESSES It has been assumed that the buyer of any Operating Business would require certain amounts held in escrow for the indemnification of existing and potential liabilities at the date of the sale. Potential indemnification items include environmental liabilities E-4 and warranty obligations for incidents occurring prior to the date the Operating Businesses were sold. E-5 EAGLE-PICHER INDUSTRIES, INC. LIQUIDATION PROCEEDS COMPUTATION AS OF DECEMBER 1, 1996 (IN THOUSANDS - UNAUDITED)
LIQUIDATION PROCEEDS: Proceeds from asset sales $ 496,000 Less transaction costs (24,800) --------- Net liquidation proceeds 471,200 Add: Cash and cash equivalents 118,200 Notes receivable and other investments 7,500 Present value of tax refunds receivable 56,700 --------- Cash available 653,600 Less distributions: Priority claims 3,000 Administrative expenses 5,800 Secured debt 21,800 After-tax net decrease in cash from operations during six-month disposition period 5,000 Corporate payroll and overhead costs of liquidation 8,000 Worker's compensation obligation 20,000 Postretirement benefit obligation 13,700 Cancelation of lease obligations 700 Indemnification resulting from disposition of businesses 50,000 --------- Total distributions 128,000 --------- Net estimated liquidation proceeds available to unsecured creditors $ 525,600 =========
PAYMENT OF PREPETITION UNSECURED CLAIMS: Percentage Claims Proceeds Recovery ---------- -------- ---------- Asbestos and lead personal injury claims $2,502,511 $493,547 20% Unsecured claims 150,521 29,686 20% Asbestos property damage claims 12,000 2,367 20% Equity interests 0 0 0%
E-6 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - ------------------------------------) EXHIBIT "F" THE DEBTORS' SUBSIDIARIES AND DIVISIONS [THIS PAGE LEFT BLANK INTENTIONALLY] 7/15/96 ================================================================================ EAGLE-PICHER INDUSTRIES, INC. - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- WHOLLY-OWNED SUBSIDIARIES - ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC FOREIGN - ---------------------------------------------------------------------------------------------------------------------------------- CINCINNATI INDUSTRIAL MACHINERY SALES COMPANY EAGLE-PICHER ESPANA, S.A. - ---------------------------------------------------------------------------------------------------------------------------------- DAISY PARTS, INC. EAGLE-PICHER FLUID SYSTEMS LTD - ---------------------------------------------------------------------------------------------------------------------------------- EDI, INC. EAGLE-PICHER HILLSDALE LIMITED - ---------------------------------------------------------------------------------------------------------------------------------- EAGLE-PICHER DEVELOPMENT COMPANY, INC. EAGLE-PICHER HOLDING B.V. - ---------------------------------------------------------------------------------------------------------------------------------- EAGLE-PICHER EUROPE, INC. EAGLE-PICHER INDUSTRIES OF CANADA LIMITED - ---------------------------------------------------------------------------------------------------------------------------------- EAGLE-PICHER FAR EAST, INC. EAGLE-PICHER, INC. - ---------------------------------------------------------------------------------------------------------------------------------- EAGLE-PICHER FLUID SYSTEMS, INC. EAGLE-PICHER INDUSTRIES GMBH - ---------------------------------------------------------------------------------------------------------------------------------- EAGLE-PICHER MINERALS, INC. EAGLE-PICHER INDUSTRIES EUROPE GMBH - ---------------------------------------------------------------------------------------------------------------------------------- HILLSDALE TOOL & MANUFACTURING CO. EAGLE-PICHER INDUSTRIES MATERIALS GMBH - ---------------------------------------------------------------------------------------------------------------------------------- MICHIGAN AUTOMOTIVE RESEARCH CORPORATION EAGLE-PICHER MINERALS INTERNATIONAL S.A.R.L. - ---------------------------------------------------------------------------------------------------------------------------------- TRANSICOIL INC. EAGLE-PICHER UK LIMITED - ---------------------------------------------------------------------------------------------------------------------------------- EPTEC, S.A. DE C.V. - ---------------------------------------------------------------------------------------------------------------------------------- EQUIPOS DE ACUNA, S.A. DE C.V. - ---------------------------------------------------------------------------------------------------------------------------------- TRANSICOIL (MALAYSIA) SDN. BHD. - ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- PARTIALLY-OWNED SUBSIDIARIES - ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC FOREIGN - ---------------------------------------------------------------------------------------------------------------------------------- NONE DIEHL & EAGLE-PICHER GMBH - ---------------------------------------------------------------------------------------------------------------------------------- DONG YANG EAGLE-PICHER LIMITED - ---------------------------------------------------------------------------------------------------------------------------------- UNITED MINERALS VERWALTUNGS- UND BETEILIGUNGS GMBH - ---------------------------------------------------------------------------------------------------------------------------------- UNITED MINERALS GMBH & CO. KG - ---------------------------------------------------------------------------------------------------------------------------------- YAMANAKA EP CORPORATION - ----------------------------------------------------------------------------------------------------------------------------------
F-1 ================================================================================ EAGLE-PICHER INDUSTRIES, INC. - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- PARTIALLY-OWNED PARTNERSHIPS - ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC FOREIGN - ---------------------------------------------------------------------------------------------------------------------------------- CREATIVE INVESTMENTS ASSOCIATES NONE - ----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- NAMEHOLDER SUBSIDIARIES - ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC FOREIGN - ---------------------------------------------------------------------------------------------------------------------------------- FABRICON CORPORATION NONE - ---------------------------------------------------------------------------------------------------------------------------------- FABRICON PRODUCTS CORPORATION OF PENNSYLVANIA - ---------------------------------------------------------------------------------------------------------------------------------- ROSS ALUMINUM FOUNDRIES, INC. - ---------------------------------------------------------------------------------------------------------------------------------- WOLVERINE FABRICATING AND MANUFACTURING COMPANY - ---------------------------------------------------------------------------------------------------------------------------------- WOLVERINE GASKET AND MANUFACTURING COMPANY - ----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- DIVISIONS - -------------------------------------------------------------------------------- CINCINNATI INDUSTRIAL MACHINERY CONSTRUCTION EQUIPMENT FABRICON PRODUCTS PLASTICS ROSS ALUMINUM FOUNDRIES RUBBER MOLDING SUSPENSION SYSTEMS TECHNOLOGIES TRIM WOLVERINE GASKET ================================================================================ F-2 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re ) Consolidated Case No. 1-91-00100 ) ) EAGLE-PICHER INDUSTRIES, ) Chapter 11 INC., et al., ) ) JUDGE PERLMAN Debtors. ) ) - ------------------------------------) EXHIBIT "G" THE DIRECTORS AND OFFICERS OF THE DEBTORS (OTHER THAN EAGLE-PICHER) EAGLE-PICHER SUBSIDIARIES WHICH FILED BANKRUPTCY-OFFICERS & DIRECTORS 9/9/1996
NAME- DIRECTORS- PRESIDENT SR.V.P. V.P. V.P. - --------------------------- ----------------- -------------------- -------------- ---------------- --------------- DAISY PARTS, INC. WAYNE R. WICKENS MICHAEL E. ASLANIAN STEPHEN M. ROSS WAYNE R. WICKENS JAMES A. RALSTON HARRY A. NEELY EAGLE-PICHER MINERALS, INC. ANDRIES RUIJSSENAARS WESLEY D. LEE JAMES A. RALSTON HARRY A. NEELY JAMES A. RALSON HARRY A. NEELY EDI, INC. WAYNE R. WICKENS MICHAEL J. BOERMA TERENCE J. RHOADES HARRY A. NEELY MICHAEL J. BOERMA JAMES A. RALSTON HILLSDALE TOOL & HARRY A. NEELY MICHAEL E. ASLANIAN STEPHEN M. ROSS WAYNE R. WICKENS MANUFACTURING CO. WAYNE R. WICKENS JAMES A. RALSTON MICHIGAN AUTOMOTIVE WAYNE R. WICKENS MICHAEL J. BOERMA TERENCE J. RHOADES HARRY A. NEELY RESEARCH CORPORATION MICHAEL J. BOERMA JAMES A. RALSTON TRANSICOIL INC. ANDRIES RUIJSSENAARS ROBERT N. CARLSON MARK M. JOHNSON HARRY A. NEELY JAMES A. RALSTON HARRY A. NEELY NAME- TREASURER V.P.1 SECRETARY ASST.TREAS. ASST.SEC. OTHER - -------------------------- ------------------- --------------- ------------------- ----------- --------------- ------- DAISY PARTS, INC. HARRY A. NEELY HARRY A. NEELY JAMES A. RALSTON EAGLE-PICHER MINERALS, INC. HARRY A. NEELY DAVID N. EVANS JAMES A. RALSTON EDI, INC. TERENCE J. RHOADES TERENCE J. RHOADES JAMES A. RALSTON HILLSDALE TOOL & HARRY A. NEELY HARRY A. NEELY JAMES A. RALSTON MANUFACTURING CO. MICHIGAN AUTOMOTIVE TERENCE J. RHOADES TERENCE J. RHOADES JAMES A. RALSTON RESEARCH CORPORATION TRANSICOIL INC. HARRY A. NEELY MARK M. JOHNSON JAMES A. RALSTON
G-1 [THIS PAGE LEFT BLANK INTENTIONALLY] [THIS PAGE LEFT BLANK INTENTIONALLY] PLEASE CALL HILL AND KNOWLTON, INC., AT (212) 885-0555, IF YOU HAVE ANY QUESTIONS ABOUT THIS DISCLOSURE STATEMENT, THE VOTING PROCEDURES, OR THE PLAN. EX-3.1 4 EXHIBIT 3.1 CERTIFICATE OF ADOPTION OF AMENDMENT TO ARTICLES OF INCORPORATION OF EAGLE-PICHER INDUSTRIES, INC. James A. Ralston, Vice President, General Counsel and Secretary of Eagle-Picher Industries, Inc., an Ohio corporation, with its principal office located in Cincinnati, Hamilton County, Ohio (the "Corporation"), does hereby certify that the following resolution was duly adopted pursuant to Sections 1701.71 and 1701.54 of the Ohio General Corporation Law by the written consent of the Corporation's sole shareholder dated December 12, 1997: "RESOLVED, that the Amended and Restated Articles of Incorporation of the Corporation (the "Articles") be amended to delete Article Sixth thereof, and that the proper officers of the Corporation be and hereby are authorized and directed to execute and file with the Secretary of State of the State of Ohio, in the name of the Corporation, a Certificate of Amendment to the Articles (and any documents ancillary thereto) setting forth this Resolution." IN WITNESS WHEREOF, James A. Ralston, Vice President, General Counsel and Secretary of Eagle-Picher Industries, Inc. has hereunto subscribed his name this 2nd day of February, 1998. /s/ James A. Ralston ---------------------------- James A. Ralston Vice President, General Counsel and Secretary CERTIFICATE OF REORGANIZATION OF EAGLE-PICHER INDUSTRIES, INC. The undersigned, Thomas E. Petry, Chairman of the Board and Chief Executive Officer, and James A. Ralston, Vice President, General Counsel and Secretary, of Eagle-Picher Industries, Inc. (the "Corporation"), do hereby certify that: (1) the Corporation is the Debtor in that certain Chapter 11 case identified as Consolidated Case No. 1-91-00100 in the United States Bankruptcy Court for the Southern District of Ohio, Western Division (the "Case"), (2) in the Case, the Corporation has filed a Consolidated Plan of Reorganization that provides for the adoption of Amended and Restated Articles of Incorporation for the Corporation in the form set forth as Exhibit A to this Certificate, (3) the Consolidated Plan of Reorganization, including the Amended and Restated Articles of Incorporation that are Exhibit A hereto, was confirmed by the order of the United States District Court for the Southern District of Ohio, Western Division, and the United States Bankruptcy Court for the Southern District of Ohio, Western Division, entered on November 18, 1996, and (4) such order remains in full force and effect at the date hereof. The Amended and Restated Articles of Incorporation annexed hereto may be certified by the office of the Secretary of State of Ohio separately from this Certificate of Reorganization. IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief Executive Officer and Vice President, General Counsel and Secretary of Eagle-Picher Industries, Inc., have executed this Certificate of Reorganization this 29th day of November, 1996. /s/ THOMAS E. PETRY ----------------------------------- Name: Thomas E. Petry Title: Chairman of the Board and Chief Executive Officer /s/ JAMES A. RALSTON ----------------------------------- Name: James A. Ralston Title: Vice President, General Counsel and Secretary EXHIBIT A CERTIFICATE OF AMENDED AND RESTATED ARTICLES OF INCORPORATION OF EAGLE-PICHER INDUSTRIES, INC. The undersigned, Thomas E. Petry, Chairman of the Board and Chief Executive Officer, and James A. Ralston, Vice President, General Counsel and Secretary, of Eagle-Picher Industries, Inc. (the "Corporation"), do hereby certify that in connection with a Plan of Reorganization confirmed by the United States District Court for the Southern District of Ohio, Western Division, and the United States Bankruptcy Court for the Southern District of Ohio, Western Division, in the chapter 11 case of the Corporation (the "Plan"), the Articles of the Corporation were amended and restated, pursuant to such Plan and the authority granted by Section 1701.75 of the Ohio Revised Code ("O.R.C."), to read as follows: FIRST: The name of the Corporation is Eagle-Picher Industries, Inc. SECOND: The place in Ohio where the principal office of the Corporation is to be located is Cincinnati, Hamilton County, Ohio. THIRD: The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be formed under Sections 1701.01 to 1701.98 inclusive, of the O.R.C. FOURTH: (a) All shares of the Corporation that are authorized for issuance immediately prior to the time as of which these Amended and Restated Articles of Incorporation become effective (the "Effective Time") are hereby canceled. As of the Effective Time, the number of shares that the Corporation is authorized to have outstanding is 20,000,000 common shares, without par value (the "Common Stock"). (b) Pursuant to the requirements of Section 1123(a)(6) of the Bankruptcy Code, the Corporation shall not issue nonvoting equity securities, subject, however, to further amendment of these Amended and Restated Articles of Incorporation as and to the extent permitted by applicable law. FIFTH: The Corporation, by action of its Board of Directors, may purchase its own shares at any time and from time-to-time to the extent permitted by law. 2 SIXTH: The shares of the Corporation's Common Stock, other rights or options to purchase shares of the Corporation's Common Stock and any other interests that would be treated as "stock" of the Corporation under Section 382 of the Internal Revenue Code (collectively, the "Corporate Securities") are subject to the following restrictions: 1. During the period beginning on the Effective Time and ending twenty-five (25) months thereafter, any attempted sale, purchase, transfer, assignment, conveyance, pledge or other disposition of any share or shares of Corporate Securities ("Transfer") to any person or entity or to any group of persons or entities acting in concert ("Transferee") who directly or indirectly owns, or is treated as owning (within the meaning of the attribution rules applicable under Section 382 of the Internal Revenue Code ("Own")), 4.75% or more of any class of Corporate Securities, or after giving effect to the Transfer, would directly or indirectly Own more than 4.75% of the outstanding shares of any class of Corporate Securities, shall be void AB INITIO and shall not be effective to Transfer any of such shares to the extent the Transfer increases the Transferee's direct or indirect ownership of the Corporate Securities above 4.75% of the total outstanding shares of such class of Corporate Securities; provided, however, that the foregoing restriction shall not apply to the original issuance of 10,000,000 shares of the Corporation's Common Stock pursuant to the Plan. Similarly, any Transfer by a transferor who directly or indirectly Owns 5% or more of the outstanding shares of any class of Corporate Securities shall be void AB INITIO and shall not be effective to Transfer any of such shares to the purported Transferee. 2. (a) If the Board of Directors of the Corporation determines that a Transfer of Corporate Securities constitutes a Transfer prohibited by Section 1 hereof (a "Prohibited Transfer"), then upon written demand made by any officer of the Corporation, the purported Transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of Corporate Securities that are the subject of the Prohibited Transfer ("Prohibited Securities"), together with any dividends or other distributions that were received by the Transferee from the Corporation with respect to such Prohibited Securities ("Prohibited Distributions"), to an agent designated by the Board of Directors of the Corporation (the "Agent"). The Agent shall then sell to a buyer or buyers the Prohibited Securities so transferred to it. If, before receiving the demand of the Corporation to transfer the Prohibited Securities to the Agent, the purported Transferee has resold the Prohibited Securities, the purported Transferee shall be deemed to have sold the Prohibited Securities for and on behalf of the Agent and, in lieu of transferring the Prohibited Securities to the Agent, shall transfer to the Agent any Prohibited Distributions and the proceeds of such sale. If the purported Transferee fails to surrender the Prohibited Securities or the proceeds of a sale 3 thereof, together with any Prohibited Distributions, to the Agent within thirty (30) business days from the date on which the Corporation makes its demand for surrender hereunder, the Corporation shall institute legal proceedings to compel the surrender. The costs of any such proceeding in which the court shall compel such surrender or award damages shall be borne by the purported Transferee. (b) Upon the receipt of the proceeds of any sale of Prohibited Securities by the Agent or, upon the receipt from the purported Transferee thereof of the proceeds from any previous sale of such Prohibited Securities by such Transferee, the amount so received shall be applied by the Agent as follows: (i) first, to the payment of the reasonable expenses of the Agent incurred in connection with the performance of its duties hereunder; (ii) second, to the purported Transferee up to the amount paid by the purported Transferee for the Prohibited Securities, which amount shall be determined by the Board of Directors of the Corporation in its sole discretion; and (iii) third, to one or more organizations that shall then be qualified under Section 501(c)(3) of the Internal Revenue Code as selected by the Board of Directors of the Corporation. 3. Neither the Corporation nor any transfer agent or other person on its behalf shall effect a Prohibited Transfer on the stock record books of the Corporation and the purported Transferee thereof shall not be recognized as a shareholder of the Corporation for any purpose whatsoever in respect of the Prohibited Securities. Until the Prohibited Securities are acquired by another person in a Transfer that is not a Prohibited Transfer, the purported Transferee shall not be entitled with respect to such Prohibited Securities to any rights of shareholders of the Corporation, including, without limitation, the right to vote such Prohibited Securities and to receive dividend distributions, whether liquidating or otherwise, in respect thereof, if any. Once the Prohibited Securities have been acquired in a Transfer that is not a Prohibited Transfer, the Corporate Securities shall cease to be Prohibited Securities. 4. All certificates evidencing any Corporate Securities issued by the Corporation after the Effective Time, shall bear a conspicuous legend reading substantially as follows: THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO RESTRICTION PURSUANT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF REORGANIZED EAGLE-PICHER, WHICH RESTRICTION IS REPRINTED IN ITS ENTIRETY ON THE BACK OF THIS CERTIFICATE. With respect to any Corporate Securities that are not evidenced by a certificate, but are uncertificated securities, the foregoing legend shall be set forth in the initial transaction statement 4 required for restrictions on transfer by Section 1308.11 of the O.R.C. 5. Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or the Regulations of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, these Amended and Restated Articles of Incorporation or the Regulations), the affirmative vote of the holders of 80% or more of the outstanding shares, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with this Article Sixth; provided, however, that shareholder action without a meeting shall require the unanimous written consent of all shareholders entitled to vote thereon. SEVENTH: These Amended and Restated Articles of Incorporation supersede and take the place of all prior Articles of Incorporation of the Corporation. IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief Executive Officer and Vice President, General Counsel and Secretary of Eagle-Picher Industries, Inc. have executed this Certificate this 29th day of November, 1996. EAGLE-PICHER INDUSTRIES, INC. By /s/ THOMAS E. PETRY ----------------------------- Name: Thomas E. Petry Title: Chairman of the Board and Chief Executive Officer /s/ JAMES A. RALSTON ------------------------------- Name: James A. Ralston Title: Vice President, General Counsel and Secretary 5 EX-3.2 5 EXHIBIT 3.2 REGULATIONS OF EAGLE-PICHER INDUSTRIES, INC. (THE "CORPORATION") (AMENDED AS OF APRIL 14, 1997) ARTICLE I SHAREHOLDERS SECTION 1.1. PLACE OF MEETINGS. Meetings of shareholders, whether annual or special, shall be held at such place within or outside of the State of Ohio as shall be determined by the Board of Directors. In the absence of such determination, meetings shall be held at the principal office of the Corporation. SECTION 1.2. ANNUAL MEETING. The annual meeting of shareholders of the Corporation shall be held on such date as shall be designated by the Board of Directors. In the absence of such designation, the annual meeting shall be held at 2:00 P.M. on the fourth Tuesday of March in each year if not a legal holiday, and, if a legal holiday, then on the next day not a legal holiday. At the annual meeting, directors shall be elected, reports of the affairs of the Corporation shall be considered, and such other business shall be transacted as may properly be brought before the meeting. SECTION 1.3. SPECIAL MEETINGS. Special meetings of the shareholders may be called at any time by any of the following: (i) the Chairman of the Board or the President, or in case of the President's absence, death or disability, the Vice President authorized to exercise the President's authority; (ii) the Board of Directors by action at a meeting or by a majority of the directors acting without a meeting; (iii) the Secretary or Assistant Secretary of the Corporation; or (iv) at the request of persons holding twenty-five percent of all outstanding shares entitled to vote. SECTION 1.4. ACTIONS WITHOUT MEETING. Any action that may be authorized or taken at a meeting of the shareholders may be authorized or taken without a meeting with the affirmative vote or approval of, and in a writing or writings signed by, all the shareholders who would be entitled to vote at a meeting of the 1 shareholders held for such purpose, which writing or writings shall be filed with or entered upon the records of the Corporation. SECTION 1.5. NOTICE OF MEETINGS. Written notice of each meeting of shareholders, stating the time, place and purposes of the meeting, shall be given not less than ten nor more than sixty days before the date of the meeting by or at the direction of the President, the Secretary or any other officer designated by the Board of Directors. Notice of adjournment of a meeting need not be given if the time and place to which it is adjourned are fixed and announced at the meeting. SECTION 1.6. WAIVER OF NOTICE. Notice of the time, place and purposes of any meeting of shareholders may be waived in writing by any shareholder, either before or after the holding of such meeting. Such writing shall be filed with or entered upon the records of the meeting. The attendance of any shareholder at any meeting without protesting, prior to or at the commencement of the meeting, the lack of proper notice shall be deemed to be a waiver by the shareholder of notice of the meeting. SECTION 1.7. QUORUM. The holders of a majority of the shares of the Corporation, present in person or by proxy, shall constitute a quorum at such meetings. If a quorum is not present at a meeting of the shareholders, those shareholders present in person or by proxy shall have the power to adjourn the meeting without notice other than announcement at the meeting of the place, date and hour of the adjourned meeting, until a quorum is present in person or by proxy at the adjourned meeting. At an adjourned meeting at which a quorum is present in person or by proxy, the Corporation may transact any business which might have been transacted at the original meeting. SECTION 1.8. VOTING. When a quorum is present at any meeting, except as otherwise expressly required by statute, the Articles of Incorporation or these Regulations, a majority of the votes cast at a meeting of shareholders shall control. Unless the express terms of the shares of the Corporation provide otherwise, each share shall entitle the holder of such share to one vote upon each matter properly submitted to the shareholders for their vote at a meeting of shareholders. SECTION 1.9. PROXIES. Persons entitled to vote shares or to act with respect to shares may vote or act in person or by proxy. The person appointed as a proxy need not be a shareholder. A proxy must be appointed in a writing signed by the shareholder. No appointment of a proxy is valid after the expiration of eleven months after it is made, unless the writing specifies the date on which it is to expire or the length of time for which it is to continue in force. Every appointment of a proxy shall be revocable, unless the appointment is coupled with an interest. 2 ARTICLE II DIRECTORS SECTION 2.1. GENERAL POWERS. All of the authority of the Corporation shall be exercised by or under the direction of the Board of Directors, subject to limitations imposed by law, the Articles of Incorporation or these Regulations. SECTION 2.2. NUMBER, CLASSES AND ELECTION. The election of directors shall take place at the annual meeting of shareholders or at a special meeting called for that purpose. The number of directors of the Corporation shall be five, which number may be adjusted, as determined from time to time by action of the Board of Directors of the Corporation; provided, however, that in no event shall the number of directors of the Corporation be less than three. SECTION 2.3 VACANCIES. All vacancies in the Board of Directors, whether caused by resignation, death or removal of any director, or by the failure of the shareholders at any time to elect the whole authorized number of directors, may be filled by a majority of the remaining directors. A director thus elected to fill any vacancy shall hold office for the unexpired term of such director's predecessor. SECTION 2.4 REMOVAL. Any director may be removed from office as provided by law. SECTION 2.5. PLACE OF MEETINGS. All meetings of the Board of Directors shall be held at the principal office of the Corporation or at such place, within or outside of the State of Ohio, as may be designated from time to time by a majority of the directors, or as may be designated in the notice or in the waiver of notice of such meeting. SECTION 2.6. ORGANIZATIONAL MEETINGS. An organizational meeting of the Board of Directors may be held, without call or notice, immediately following each annual meeting of the shareholders of this Corporation or at such alternative time as may be provided in a notice of meeting. SECTION 2.7. OTHER MEETINGS; NOTICE. Other meetings of the Board of Directors may be held at any time on the call of the Chairman of the Board, the President, any Vice President or any two directors. Written notice of any such meeting, unless waived, shall be given not less than two days prior to the day of the meeting. Notice also may be given personally or by telephone at least two days prior to such meeting. The notice shall state the time and place, but need not state the purposes, of the meeting. If the Secretary fails or refuses to give such notice promptly, the notice may be given by the person who called the meeting. Notice 3 of adjournment of a meeting of the Board of Directors need not be given if the time and place to which it is adjourned are fixed and announced at such meeting. SECTION 2.8. WAIVER OF NOTICE. Notice of the time and place of any meeting of the Board of Directors may be waived in writing, either before or after the meeting takes place, by any director, which writing shall be filed with or entered upon the records of the meeting. The attendance of any director at any meeting without protesting, prior to or at the commencement of the meeting, the lack of proper notice, shall be deemed to be a waiver by such director of notice of the meeting. SECTION 2.9. QUORUM. A majority of the whole authorized number of directors is necessary to constitute a quorum for a meeting of the Board of Directors, except that a majority of the directors in office constitutes a quorum for filling a vacancy in the Board of Directors. The act of a majority of the directors present at a meeting at which a quorum is present is the act of the Board of Directors, except as otherwise provided by law, the Articles of Incorporation or these Regulations. SECTION 2.10. TELEPHONIC MEETINGS. Meetings of the directors may be held by means of any communications equipment if all persons participating can hear each other, and participation in a meeting in such manner shall constitute presence at such meeting. SECTION 2.11. ACTIONS WITHOUT MEETING. Any action that may be authorized or taken at a meeting of the Board of Directors of the Corporation may be authorized or taken without a meeting with the affirmative vote or approval of, and in a writing or writings signed by, all the directors, which writing or writings shall be filed with or entered upon the records of the Corporation. SECTION 2.12. EXECUTIVE AND OTHER COMMITTEES. When the number of directors authorized pursuant to Section 2.2 is greater than three, the Board of Directors may create an executive committee and/or other committees, of the Board, each of which shall consist of no fewer than three members. Such committees shall have and may exercise such powers of the Board of Directors in the management of the Corporation as may be conferred or authorized by the resolutions appointing them; however, no committee shall have the power to fill vacancies among the directors or in any committee. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to discharge any such committee. All such committees shall be discharged and shall cease to function at such time as the authorized number of directors is three or less. Such committees shall act only during the intervals between meetings of the Board of Directors and subject to the direction of the Board of Directors. Acts of any committee within 4 the authority delegated to it shall be effective for all purposes as the act or authorization of the directors. A majority of the members of any committee may fix the time and place of its meetings. Committee members may participate at meetings by means of communications equipment if all participants can hear each other, and such participation shall constitute presence at the meeting. Such committees may act by a majority of their respective members at meetings or by a writing or writings signed by all members of such committee. ARTICLE III OFFICERS SECTION 3.1. OFFICERS; TERMS; DUTIES. The officers of the Corporation shall consist of a President, Secretary and Treasurer; and the Board of Directors may, in its discretion, elect a Chairman of the Board and such Vice Presidents, Assistant Secretaries, Assistant Treasurers, a Controller and such other officers and agents as the Board of Directors may determine. All officers shall be elected by the Board of Directors, and they shall hold office for such period, exercise such authority and perform such duties as the Board of Directors may from time to time determine. Any two or more offices may be held by the same person, but no officers shall execute, acknowledge, or verify any instrument in more than one capacity if such instrument is required by law, the Articles of Incorporation or these Regulations to be executed, acknowledged or verified by two or more officers. SECTION 3.2. ELECTION, TERM, ELIGIBILITY AND REMOVAL. The officers of the Corporation shall be elected annually by the Board of Directors at its organizational meeting held pursuant to Section 2.6 or at a special meeting held for such purpose. New or additional officers may be elected at any meeting of the Board of Directors. Each officer shall serve at the pleasure of the Board of Directors, and each officer shall hold office until his or her successor is chosen or until his or her death, resignation or removal. Only the Chairman of the Board need be a member of the Board of Directors. Any officer may be removed, with or without cause, by the Board of Directors without prejudice to the contract rights of such officer. SECTION 3.3. VACANCIES. If any office shall become vacant by reason of death, resignation, removal or otherwise, the Board of Directors shall elect a successor to fill such office. SECTION 3.4. DELEGATION OF DUTIES. In case of the absence of any officer of the Corporation or for any other reason that may seem sufficient to the Board of Directors, the Board of Directors may, for such time as the Board of Directors determines, delegate powers and duties of such officer to any other officer or to any director. 5 ARTICLE IV SHARES SECTION 4.1. SHARE CERTIFICATES. Certificates for shares of the Corporation shall be in such form and style as the Board of Directors may determine, and each certificate shall set forth the following: (a) the name of the Corporation and that the Corporation is organized under the laws of the State of Ohio; (b) the name of the holder of the shares represented by the certificate; (c) the number of shares represented by such certificate; (d) a statement that such shares are without par value; and (e) any restrictions upon transfer of the shares represented by such certificate. Certificates for shares of the Corporation shall be numbered serially as they are issued, and shall be signed by any of the Chairman of the Board, the President or a Vice President, and by any of the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer. When the certificate is countersigned by an incorporated transfer agent or registrar, the signature of any officer may be facsimile, engraved, stamped or printed. SECTION 4.2. UNCERTIFICATED SHARES. The Board of Directors may provide by resolution that some or all of the shares of the Corporation shall be uncertificated shares, provided that such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation as provided in division (B) of Section 1308.43 of the Ohio Revised Code, and that such resolution shall not apply to a certificated security issued in exchange for an uncertificated security as provided in division (C) of Section 1308.43 of the Ohio Revised Code. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner a written notice containing the information described in Section 4.1 hereof. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class shall be identical. SECTION 4.3. LOST CERTIFICATE. Any shareholder claiming that a certificate for shares has been lost, stolen or destroyed may make an affidavit or affirmation of the fact. Subject to any requirement established by the Board of Directors, a new certificate may be issued of the same tenor and representing the 6 same number of shares, or any combination thereof, as were represented by the certificate alleged to have been lost, stolen or destroyed. ARTICLE V INDEMNIFICATION SECTION 5.1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Any person who is a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that he or she is or was a director or officer of the Corporation or, as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including service with respect to employee benefit plans), whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity (and whether or not he or she continues as such director or officer), shall be indemnified and held harmless by the Corporation to the fullest extent authorized by law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys' fees, and, in respect of claims not made by or in the right of the Corporation, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) actually and reasonably incurred by such person in connection with the Proceeding; PROVIDED, HOWEVER, that the Corporation shall indemnify any person seeking indemnity in connection with a Proceeding initiated by such person only if such Proceeding was authorized by the Board of Directors. SECTION 5.2. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to such extent and in such manner as is determined by the Board of Directors, but in no event to an extent greater than is permitted by the General Corporation Law of Ohio, indemnify any employees and agents of the Corporation and any other persons permitted to be indemnified by the General Corporation Law of Ohio, but whose right to indemnification is not covered by Section 5.1, above. SECTION 5.3. ADVANCEMENT OF EXPENSES. Unless the only liability asserted against a director in an action, suit or proceeding governed by this Article V or applicable law is pursuant to Section 1701.95 of the Ohio Revised Code, expenses, including attorneys' fees, incurred by a director or officer in defending the action, suit or proceeding shall be paid by the Corporation as they are incurred, in advance of the final disposition of the action, 7 suit or proceeding, upon receipt of a written undertaking by which the director agrees to do both of the following: (i) repay the amount or amounts advanced if it is proved by clear and convincing evidence in a court of competent jurisdiction that his action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Corporation or undertaken with reckless disregard for the best interests of the Corporation; and (ii) reasonably cooperate with the Corporation concerning the action, suit or proceeding. Expenses, including attorneys' fees, incurred by a director, officer, employee or agent in defending any action, suit or proceeding governed by this Article V or applicable law may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding, as authorized by the Board of Directors in the specific case, upon receipt of a written undertaking by which the director, officer, employee or agent agrees to repay the amount or amounts if it is ultimately determined that he or she is not entitled to be indemnified by the Corporation. SECTION 5.4. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 5.1 hereof is not paid in full by the Corporation within 30 days after a written claim therefor has been received by the Corporation, the claimant may bring suit against the Corporation to recover the unpaid amount of the claim. If the claimant is successful in whole or in part, he or she also shall be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in a Proceeding in advance of its final disposition where the required undertaking has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the applicable law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including the Board of Directors, independent legal counsel, or the shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct, nor an actual determination by the Corporation (including the Board of Directors, independent legal counsel, or the shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. SECTION 5.5. CONTRACTUAL RIGHTS. The right to be indemnified 8 under Section 5.1 (but not Section 5.2), including any right to the reimbursement or advancement of expenses pursuant thereto, (i) is a contract right based upon good and valuable consideration, pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Corporation and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. SECTION 5.6. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this Article V shall not be exclusive, and shall be in addition to, any other right of indemnification or reimbursement which such person may have under any statute, provision of the Articles of Incorporation of the Corporation, agreement, vote of shareholders or disinterested directors or otherwise. SECTION 5.7. INSURANCE. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation against expenses, liability or loss incurred in respect of the Proceeding, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Ohio General Corporation Law. SECTION 5.8. DETERMINATIONS. Any determination to be made under this Article V by the Board of Directors shall be made as follows: (a) by a majority vote of a quorum consisting of directors of the Corporation who were not and are not parties to or threatened with any such action, suit, or proceeding; (b) if the quorum described in paragraph (a) of this Section 5.7 is not obtainable or if a majority vote of a quorum of disinterested directors so directs, in a written opinion by independent legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the Corporation or any person to be indemnified within the past five years; (c) by the shareholders; or (d) by the court of common pleas or the court in which such action, suit, or proceeding was brought. 9 ARTICLE VI NOTICE Whenever provisions of law, the Articles of Incorporation or these Regulations require notice to be given to any director or shareholder, personal or hand delivery of such notice shall not be required. Any such notice may be given in writing, by mail (by deposit in a post office or letter box, in an envelope with postage affixed), by courier, by overnight package delivery, by telegraph or by telecopier, in any case addressed to such director or shareholder at such address as appears on the records of the Corporation. Notice given by any one of the above methods shall be sufficient, and the method of giving notice to all directors or to all shareholders, as the case may be, need not be uniform. If otherwise permitted by these Regulations, notice to directors may also be given by telephone call. Such notice shall be deemed to be given at the time when it is so mailed, or delivered to a courier, an overnight package delivery company or a telegraph company, or, in the case of a telecopy, when transmission has been confirmed. Notice given by telephone shall be deemed to have been given only when communicated directly to the person to whom such notice is to be given (and not when left by voice mail or other recording device). In computing the period of time for the giving of notice, the day on which notice is given shall be excluded, and the day when the act for which notice is given is to be done is included, unless the instrument calling for the notice otherwise provides. ARTICLE VII SEAL A corporate seal shall not be required. If the Board of Directors elects to provide a seal, failure to affix such seal to any document shall not affect the validity thereof. ARTICLE VIII AMENDMENT These Regulations may be altered, amended or repealed, or new Regulations may be adopted, (i) at any annual or special meeting of the shareholders called for that purpose, by the affirmative vote of the holders of shares entitling them to exercise a majority of the voting power of the Corporation on the proposal, or (ii) without a meeting by the written consent of the holders of the Corporation's common shares entitling them to exercise two-thirds of the voting power of the Corporation on such proposal. 10 EX-3.3 6 EXHIBIT 3.3 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EAGLE-PICHER HOLDINGS, INC. It is hereby certified that Eagle-Picher Holdings, Inc. (the "Corporation"), existing pursuant to the provisions of the Delaware General Corporation Law, as from the time amended (the "Act"), hereby is amending its Certificate of Incorporation, as amended, by amending and restating the original Certificate of Incorporation in its entirety, and further certifies as follows: The original Certificate of Incorporation was filed on December 5, 1997 under the name of E-P Holdings, Inc., and was subsequently amended by an amendment filed on February 6, 1998. The exact text of the entire Certificate of Incorporation, as amended and restated (the "Certificate"), is set forth in its entirety below: 1. Name. The name of the Corporation is Eagle-Picher Holdings, Inc. 2. Address. The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. Purpose. The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Act. 4. Capital Stock. The total number of shares of capital stock which the Corporation is authorized to issue is (i) 1,000,000 shares of common stock having a par value of $0.01 per share (the "Common Stock"), of which 625,001 of such shares shall be Class A Common Stock, par value $0.01 per share (the "Class A Common Stock") and 374,999 of such shares shall be Class B Common Stock, par value $0.01 per share (the "Class B Common Stock") and (ii) 50,000 shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock"), which Preferred Stock the Board of Directors of the Corporation is hereby expressly authorized to issue from time to time in one or more series, each series having such voting powers, dividends, designations, preferences and other rights, qualifications, limitations and restrictions as designated by the Board of Directors from time to time. The holders of shares of Class A Common Stock shall be entitled to one vote per share on all matters which may be submitted to the holders of common stock of the Corporation. Each share of Class B Common Stock shall be identical to each share of Class A Common Stock except that the holders of shares of Class B Common Stock shall have no voting rights, other than any voting rights provided by law. 5. In furtherance and not in limitation of the powers conferred by statute, the board of directors of the Corporation is expressly authorized to adopt, amend or repeal by-laws of the Corporation. 6. Meetings of stockholders may be held within or outside of the State of Delaware, as the by-laws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such places as may be designated from time to time by the board of directors or in the by-laws of the Corporation. Election of directors need not be by written ballot except and to the extent provided in the by-laws of the Corporation. 7. Any director or the entire board of directors of the Corporation may be removed, with or without cause, by the holders of a majority of the shares at the time entitled to vote at an election of directors, whether or not the board of directors is classified as provided in Section 141(d) of the Delaware General Corporation Law. 8. To the fullest extent permitted by the Act as currently in effect or as the same may hereafter be amended, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment, modification or repeal of this Article 9 shall adversely affect any right or protection of a director that exists at the time of such amendment, modification or repeal. 9. The Corporation expressly elects not to be governed by Section 203 of the Act. 10. The Corporation reserves the right to amend, alter, restate, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed herein and by the laws of the State of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation. This Certificate has been duly adopted in accordance with the provisions of Section 242 and 245 of the Act. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed pursuant to Section 103(a)(2) of the Act by the undersigned duly authorized officer of the Corporation on this 23rd day of February, 1998. EAGLE-PICHER HOLDINGS, INC By: /s/ Joel P. Wyler ___________________________ Name: Joel P. Wyler Title: Chairman and President EX-3.4 7 EXHIBIT 3.4 BY-LAWS OF E-P Holdings, Inc ARTICLE I Stockholders Section 1.1. Annual Meetings. An annual meeting of stockholders of E-P Holdings, Inc. (the "Corporation") shall be held for the election of directors at such date, time and place either within or without the State of Delaware as may be designated by the Board of Directors from time to time. Any other proper business may be transacted at the annual meeting. Section 1.2. Special Meetings. Special meetings of stockholders may be called at any time by the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President or the Board of Directors, to be held at such date, time and place either within or without the State of Delaware as may be stated in the notice of the meeting. A special meeting of stockholders shall be called by the Secretary upon the written request, stating the purpose of the meeting, of stockholders who together own of record a majority of the outstanding shares of each class of stock entitled to vote at such meeting. Section 1.3. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation. Section 1.4. Adjournments. Any meeting of stockholders, annual or special, may be adjourned from time to time, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.5. Quorum. At each meeting of stockholders, except where otherwise provided by law or the certificate of incorporation or these by-laws, the holders of a majority of the outstanding shares of stock entitled to vote on a matter at the meeting, present in person or represented by proxy, shall constitute a quorum. For purposes of the foregoing, where a separate vote by class or classes is required for any matter, the holders of a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum to take action with respect to that vote on that matter. Two or more classes or series of stock shall be considered a single class if the holders thereof are entitled to vote together as a single class at the meeting. In the absence of a quorum of the holders of any class of stock entitled to vote on a matter, the holders of such class so present or represented may, by majority vote, adjourn the meeting of such class from time to time in the manner provided by Section 1.4 of these by-laws until a quorum of such class shall be so present or represented. Shares of its own capital stock belonging on the record date for the meeting to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither by entitled to vote nor be counted for quorum purposes; provided, that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. Section 1.6. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the President, or in the absence of the President by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 1.7. Voting; Proxies. Unless otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. If the certificate of incorporation provides for more or less than one vote for any share on any matter, every reference in these by-laws to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. 2 Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or represented by proxy at such meeting shall so determine. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. In all other matters, unless otherwise provided by law or by the certificate of incorporation or these by-laws, the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Where a separate vote by class or classes is required, the affirmative vote of the holders of a majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class, except as otherwise provided by law or by the certificate of incorporation or these by-laws. Section 1.8. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. 3 In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the certificate of incorporation or by law, any action required by law to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to (a) its registered office in the State of Delaware by hand or by certified mail or registered mail, return receipt requested, (b) its principal place of business, or (c) an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this by-law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to (a) its registered office in the State of Delaware by hand or by certified or registered mail, return receipt requested, (b) its principal place of business, or (c) an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 4 ARTICLE II Board of Directors Section 2.1. Powers; Number; Qualifications. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the certificate of incorporation. The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by the Board. Directors need not be stockholders. Section 2.2. Election; Term of Office; Resignation; Removal; Vacancies. Each director shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any director may resign at any time upon written notice to the Board of Directors or to the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of any class or series of stock are entitled to elect one or more directors by the certificate of incorporation, the provisions of the preceding sentence shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Unless otherwise provided in the certificate of incorporation or these by-laws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class or from any other cause may be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by the sole remaining director so elected. Section 2.3. Regular Meetings. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board may from time to time determine, and if so determined notice thereof need not be given. Section 2.4. Special Meetings. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, if any, by the Vice Chairman of the Board, if any, by the President or by any two directors. Reasonable notice thereof shall be given by the person or persons calling the meeting. Section 2.5. Participation in Meetings by Conference Telephone Permitted. Unless otherwise expressly restricted by the certificate of incorporation or these by-laws, members of the Board of Directors, or any committee designated by the Board, may participate in 5 a meeting of the Board or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting. Section 2.6. Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the entire Board shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board unless the certificate of incorporation or these by-laws shall require a vote of a greater number. In case at any meeting of the Board a quorum shall not be present, the members of the Board present may adjourn the meeting from time to time until a quorum shall be present. Section 2.7. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the President, or in their absence by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 2.8. Action by Directors Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 2.9. Compensation of Directors. Unless otherwise restricted by the certificate of incorporation or these by-laws, the Board of Directors shall have the authority to fix the compensation of directors. 6 ARTICLE III Committees Section 3.1. Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors or in these by-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, removing or indemnifying directors or amending these by-laws; and, unless the resolution, these by-laws or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger. Section 3.2. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these by-laws. 7 ARTICLE IV Officers Section 4.1. Officers; Election. As soon as practicable after the annual meeting of stockholders in each year, the Board of Directors shall elect a President and a Secretary, and it may, if it so determines, elect from among its members a Chairman of the Board and a Vice Chairman of the Board. The Board may also elect one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as the Board may deem desirable or appropriate and may give any of them such further designations or alternate titles as it considers desirable. Any number of offices may be held by the same person unless the certificate of incorporation or these by-laws otherwise provide. Section 4.2. Term of Office; Resignation; Removal; Vacancies. Unless otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the Board or to the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. The Board may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board at any regular or special meeting. Section 4.3. Powers and Duties. The officers of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in these by-laws or in a resolution of the Board of Directors which is not inconsistent with these by-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board. Section 4.4. Chairman of the Board. The Chairman of the Board, if any, shall preside at all meeting of the Board of Directors and of the stockholders at which he or she shall be present and shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board or as may be provided by law. Section 4.5. Vice Chairman of the Board. In the absence of the Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present and shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board or as may be provided by law. 8 Section 4.6. President. In the absence of the Chairman of the Board and Vice Chairman of the Board, the President shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. The President shall be the chief executive officer and shall have general charge and supervision of the business of the Corporation and, in general, shall perform all duties incident to the office of president of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or as may be provided by law. Section 4.7. Vice Presidents. The Vice President or Vice Presidents, at the request or in the absence of the President or during the President's inability to act, shall perform the duties of the President, and when so acting shall have the powers of the President. If there be more than one Vice President, the Board of Directors may determine which one or more of the Vice Presidents shall perform any of such duties; or if such determination is not made by the Board, the President may make such determination; otherwise any of the Vice Presidents may perform any of such duties. The Vice President or Vice Presidents shall have such other powers and shall perform such other duties as may, from time to time, be assigned to him or her or them by the Board or the President or as may be provided by law. Section 4.8. Secretary. The Secretary shall have the duty to record the proceedings of the meetings of the stockholders, the Board of Directors and any committees in a book to be kept for that purpose, shall see that all notices are duly given in accordance with the provisions of these by-laws or as required by law, shall be custodian of the records of the Corporation, may affix the corporate seal to any document the execution of which, on behalf of the Corporation, is duly authorized, and when so affixed may attest the same, and, in general, shall perform all duties incident to the office of secretary of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or the President or as may be provided by law. Section 4.9. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation and shall deposit or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by or under authority of the Board of Directors. If required by the Board, the Treasurer shall give a bond for the faithful discharge of his or her duties, with such surety or sureties as the Board may determine. The Treasurer shall keep or cause to be kept full and accurate records of all receipts and disbursements in books of the Corporation, shall render to the President and to the Board, whenever requested, an account of the financial condition of the Corporation, and, in general, shall perform all the duties incident to the office of treasurer of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or the President or as may be provided by law. Section 4.10. Other Officers. The other officers, if any, of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in a resolution of the Board of Directors which is not inconsistent with these by-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the 9 Board. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties. Section 4.11. Fidelity Bonds. If required by the Board of Directors, any officer shall give the Corporation a bond in a sum and with one or more sureties satisfactory to the Board, for the faithful performance of the duties of his or her office, and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation. ARTICLE V Stock Section 5.1. Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice Chairman of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares of stock in the Corporation owned by such holder. If such certificate is manually signed by one officer or manually countersigned by a transfer agent or by a registrar, any other signature on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Each certificate representing shares shall state upon the face thereof that the Corporation is formed under the laws of the State of Delaware, the name of the person or persons to whom such shares have been issued and the number and class of such shares, and the designation of the class or series, if any, which such certificate represents. If the Corporation is authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock; provided, that, except as otherwise provided by law, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 10 Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner's legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. Section 5.3. Transfers of Stock. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by his attorney, lawfully constituted in writing, and upon surrender of the certificate therefor, together with such evidence of the payment of transfer taxes and compliance with other provisions of law as the Corporation or its transfer agent may require. Section 5.4. Registered Stockholders. The Corporation may treat the holder of record of any share or shares of stock as the holder thereof, and shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of Delaware. ARTICLE VI Miscellaneous Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors. Section 6.2. Seal. The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors and Committees. Whenever notice is required to be given by law or under any provision of the certificate of incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or these by-laws. 11 Section 6.4. Indemnification of Directors, Officers and Employees. The Corporation shall indemnify to the full extent permitted by law any person made or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person or such person's testator or intestate is or was a director, officer or employee of the Corporation or serves or served at the request of the Corporation any other enterprise as a director, officer or employee. Expenses incurred by any such person in defending any such action, suit or proceeding shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of such person to repay such expenses if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation. The rights provided to any person by this by-law shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as a director, officer or employee as provided above. No amendment of this by-law shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment. For purposes of this by-law, the term "Corporation" shall include any predecessor of the Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term "other enterprise" shall include any corporation, partnership, joint venture, trust or employee benefit plan; service "at the request of the Corporation" shall include service as a director, officer or employee of the Corporation which imposes duties on, or involves services by, such director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to an employee benefit plan which such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation. Section 6.5. Interested Directors; Quorum. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if: (1) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 12 Section 6.6. Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. Section 6.7. Amendment of By-Laws. These by-laws may be amended or repealed, and new by-laws adopted, by the Board of Directors, but the stockholders entitled to vote may adopt additional by-laws and may amend or repeal any by-law whether or not adopted by them. ARTICLE VII Offices Section 7.1. Registered Office. The registered office of the Corporation in the State of Delaware shall be at 1209 Orange Street, City of Wilmington, County of New Castle, and the registered agent in charge thereof shall be The Corporation Trust Company. Section 7.2. Other Offices. The Corporation may also have an office or offices at other places within or without the State of Delaware. 13 EX-4.1 8 EXHIBIT 4.1 E-P ACQUISITION, INC. AS ISSUER THE GUARANTORS NAMED HEREIN AND THE BANK OF NEW YORK AS TRUSTEE $220,000,000 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 INDENTURE Dated as of February 24, 1998 TABLE OF CONTENTS ---------------------- PAGE ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions.....................................................1 SECTION 1.02. Other Definitions..............................................23 SECTION 1.03. Incorporation by Reference of TIA..............................24 SECTION 1.04. Rules of Construction..........................................24 ARTICLE 2 THE NOTES SECTION 2.01. Form and Dating................................................24 SECTION 2.02. Execution and Authentication; Authentication Agent.............28 SECTION 2.03. Registrar and Paying Agent.....................................28 SECTION 2.04. Paying Agent to Hold Money in Trust............................29 SECTION 2.05. Holder Lists...................................................29 SECTION 2.06. Transfer and Exchange..........................................29 SECTION 2.07. Book-entry Provisions for Global Notes.........................31 SECTION 2.08. Special Transfer Provisions....................................32 SECTION 2.09. Replacement Notes..............................................35 SECTION 2.10. Outstanding Notes..............................................35 SECTION 2.11. Treasury Notes.................................................36 SECTION 2.12. Temporary Notes................................................36 SECTION 2.13. Cancellation...................................................36 SECTION 2.14. Defaulted Interest.............................................36 SECTION 2.15. Record Date....................................................37 SECTION 2.16. CUSIP and CINS Numbers.........................................37 ARTICLE 3 REDEMPTIONS AND OFFERS TO PURCHASE SECTION 3.01. Notices to Trustee.............................................37 SECTION 3.02. Selection of Notes to Be Redeemed or Purchased.................38 SECTION 3.03. Notice of Redemption...........................................38 SECTION 3.04. Effect of Notice of Redemption.................................39 SECTION 3.05. Deposit of Redemption Price....................................39 SECTION 3.06. Notes Redeemed in Part.........................................39 SECTION 3.07. Redemption Provisions..........................................39 SECTION 3.08. Mandatory Offers...............................................40 i PAGE ---- ARTICLE 4 COVENANTS SECTION 4.01. Payment of Notes...............................................42 SECTION 4.02. Reports........................................................43 SECTION 4.03. Compliance Certificate.........................................43 SECTION 4.04. Stay, Extension and Usury Laws.................................44 SECTION 4.05. Limitation on Restricted Payments..............................44 SECTION 4.06. Corporate Existence............................................46 SECTION 4.07. Limitations on Additional Indebtedness.........................47 SECTION 4.08. Limitation on the Issuance of Capital Stock of Restricted Subsidiaries................................................47 SECTION 4.09. Limitations on Layering Debt...................................47 SECTION 4.10. Limitation on Transactions with Affiliates.....................47 SECTION 4.11. Limitations on Liens...........................................48 SECTION 4.12. Taxes..........................................................49 SECTION 4.13. Limitations on Restrictions on Distributions from Restricted Subsidiaries................................................49 SECTION 4.14. Maintenance of Office or Agencies..............................50 SECTION 4.15. Change of Control..............................................50 SECTION 4.16. Limitations on Asset Sales.....................................51 SECTION 4.17. Additional Note Guarantees.....................................53 ARTICLE 5 SUCCESSORS SECTION 5.01. Limitations on Mergers and Certain Other Transactions..........53 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default..............................................54 SECTION 6.02. Acceleration...................................................56 SECTION 6.03. Other Remedies.................................................56 SECTION 6.04. Waiver of Past Defaults........................................56 SECTION 6.05. Control by Majority of Holders.................................57 SECTION 6.06. Limitations on Suits by Holders................................57 SECTION 6.07. Rights of Holders to Receive Payment...........................57 SECTION 6.08. Collection Suit by Trustee.....................................57 SECTION 6.09. Trustee May File Proofs of Claim...............................57 ii PAGE ---- SECTION 6.10. Priorities.....................................................58 SECTION 6.11. Undertaking for Costs..........................................59 SECTION 6.12. Willful Default................................................59 ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee..............................................59 SECTION 7.02. Rights of Trustee..............................................60 SECTION 7.03. Individual Rights of Trustee...................................61 SECTION 7.04. Trustee's Disclaimer...........................................61 SECTION 7.05. Notice to Holders of Defaults and Events of Default............61 SECTION 7.06. Reports by Trustee to Holders..................................61 SECTION 7.07. Compensation and Indemnity.....................................61 SECTION 7.08. Replacement of Trustee.........................................62 SECTION 7.09. Successor Trustee by Merger, Etc...............................63 SECTION 7.10. Eligibility; Disqualification..................................63 SECTION 7.11. Preferential Collection of Claims Against Company..............63 ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.01. Discharge of Liability on Notes; Defeasance....................64 SECTION 8.02. Conditions to Defeasance.......................................65 SECTION 8.03. Application of Trust Money.....................................66 SECTION 8.04. Repayment to Company...........................................66 SECTION 8.05. Indemnity for Government Securities............................67 SECTION 8.06. Reinstatement..................................................67 ARTICLE 9 AMENDMENTS SECTION 9.01. Amendments and Supplements Permitted without Consent of Holders.....................................................67 SECTION 9.02. Amendments and Supplements Requiring Consent of Holders........68 SECTION 9.03. Compliance with TIA............................................68 SECTION 9.04. Revocation and Effect of Consents..............................68 SECTION 9.05. Notation or Exchange of Notes..................................69 SECTION 9.06. Trustee Protected..............................................69 iii PAGE ---- ARTICLE 10 SUBORDINATION SECTION 10.01. Agreement to Subordinate......................................70 SECTION 10.02. Liquidation; Dissolution; Bankruptcy..........................70 SECTION 10.03. No Payment on Notes in Certain Circumstances..................70 SECTION 10.04. Acceleration of Notes.........................................71 SECTION 10.05. When Distributions Must Be Paid Over..........................72 SECTION 10.06. Notice........................................................72 SECTION 10.07. Subrogation...................................................73 SECTION 10.08. Relative Rights...............................................73 SECTION 10.09. The Company, Guarantors and Holders May Not Impair Subordination...............................................74 SECTION 10.10. Distribution or Notice to Representative......................74 SECTION 10.11. Rights of Trustee and Paying Agent............................75 SECTION 10.12. Authorization to Effect Subordination.........................75 ARTICLE 11 GUARANTEE SECTION 11.01. Guarantee.....................................................75 SECTION 11.02. Trustee to Include Paying Agent...............................76 SECTION 11.03. Subordination of Guarantee....................................76 SECTION 11.04. Senior Subordinated Debt of Guarantor.........................77 SECTION 11.05. Limits of Guarantee...........................................77 ARTICLE 12 MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls..................................77 SECTION 12.02. Notices.......................................................77 SECTION 12.03. Communication by Holders with Other Holders...................78 SECTION 12.04. Certificate and Opinion As to Conditions Precedent............78 SECTION 12.05. Statements Required in Certificate or Opinion.................79 SECTION 12.06. Rules by Trustee and Agents...................................79 SECTION 12.07. Legal Holidays................................................79 SECTION 12.08. No Recourse Against Others....................................79 SECTION 12.09. Counterparts..................................................79 SECTION 12.10. Initial Appointments, Compliance Certificates.................79 SECTION 12.11. Governing Law.................................................79 SECTION 12.12. No Adverse Interpretation of Other Agreements.................80 SECTION 12.13. Successors....................................................80 iv PAGE ---- SECTION 12.14. Severability..................................................80 SECTION 12.15. Third Party Beneficiaries.....................................80 SECTION 12.16. Table of Contents, Headings, Etc..............................80 v INDENTURE, dated as of February 24, 1998, is by and among E-P Acquisition, Inc. (as further defined below, the "Company"), the Guarantors and The Bank of New York, a New York banking corporation, as trustee (the "TRUSTEE"). The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the holders of the Notes: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. "ACQUIRED INDEBTEDNESS" means (a) with respect to any Person that becomes a Restricted Subsidiary after the date of this Indenture, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary that was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (b) with respect to the Company or any of its Restricted Subsidiaries, any Indebtedness of a Person (other than the Company or a Restricted Subsidiary) existing at the time such Person is merged with or into the Company or a Restricted Subsidiary, or Indebtedness assumed by the Company or any of its Restricted Subsidiaries in connection with the acquisition of an asset or assets from another Person, which Indebtedness was not, in any case, incurred by such other Person in connection with, or in contemplation of, such merger or acquisition. "ACQUISITION" means the acquisition by E-P Acquisition, Inc. and Parent of Eagle Picher Industries, Inc., from Eagle-Picher Industries, Inc. Personal Injury Settlement Trust (the "SETTLEMENT TRUST") as contemplated under the Merger Agreement, dated as of December 23, 1997 (the "MERGER AGREEMENT"), among the Settlement Trust, Eagle-Picher Industries, Inc., E-P Acquisition, Inc. and Parent. "ACQUISITION MERGER" means the merger upon the closing of the Acquisition between E- P Acquisition, Inc. and Eagle-Picher Industries, Inc., with Eagle-Picher Industries, Inc. as the surviving corporation. "AFFILIATE" of any Person means any Person (i) which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person, (ii) which beneficially owns or holds, directly or indirectly, 10% or more of any class of the Voting Stock, or more than 20% of all classes of Capital Stock (other than preferred stock) in the aggregate, of the referent Person, (iii) of which 10% or more of the Voting Stock, or more than 20% of all classes of Capital Stock (other than preferred stock) in the aggregate, is beneficially owned or held, directly or indirectly, by the referent Person or (iv) with respect to an individual, any immediate family member of such Person. For purposes of this definition, control of a Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. "AGENT" means any Registrar, Paying Agent, or co-registrar appointed pursuant to Section 2.03. "ASSET SALE" means any sale, issuance, conveyance, transfer, lease, assignment or other disposition to any Person other than the Company or any of its Restricted Subsidiaries (including, without limitation, by means of a Sale and Leaseback Transaction or a merger or consolidation) (collectively, for purposes of this definition, a "transfer"), directly or indirectly, in one transaction or a series of related transactions, of (a) any Capital Stock of any Subsidiary or (b) any other properties or assets of the Company or any of its Subsidiaries other than transfers of cash, Cash Equivalents, accounts receivable, inventory or other properties or assets in the ordinary course of business. For the purposes of this definition, the term "Asset Sale" shall not include any of the following: (i) any transfer of properties or assets (including Capital Stock) that is governed by, and made in accordance with, the provisions of Article 5; (ii) any transfer of properties or assets to an Unrestricted Subsidiary, if permitted under Section 4.05; (iii) sales of damaged, worn-out or obsolete equipment or assets that, in the Company's reasonable judgment, are either no longer used or useful in the business of the Company or its Subsidiaries, provided that the proceeds thereof are used to purchase replacement or similar assets for use in the business of the Company and its Subsidiaries; and (iv) any transfers that, but for this clause (iv), would be Asset Sales, if after giving effect to such transfers, the aggregate Fair Market Value of the properties or assets transferred in such transaction or any such series of related transactions does not exceed $500,000. "ATTRIBUTABLE INDEBTEDNESS," when used with respect to any Sale and Leaseback Transaction, means, as at the time of determination, property subject to such Sale and Leaseback Transaction and the present value (discounted at a rate equivalent to the Company's then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such Sale and Leaseback Transaction. "BANKRUPTCY CODE" means Title 11 of the United States Code, as amended. "BANKRUPTCY LAW" means the Bankruptcy Code or any similar federal or state law for the relief of debtors. "BOARD OF DIRECTORS" means, with respect to any Person, the Board of Directors of such Person, or any authorized committee of the Board of Directors of such Person. "BOARD RESOLUTION" means a duly adopted resolution of the Board of Directors of the Company. 2 "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which banking institutions in the City of New York, the State of Ohio or at a place of payment are authorized by law, regulation or executive order to remain closed. "CAPITAL STOCK" of any Person means (i) any and all shares or other equity interests (including without limitation common stock, preferred stock and partnership interests) in such Person and (ii) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person. "CAPITALIZED LEASE OBLIGATIONS" of any Person means the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. "CASH EQUIVALENTS" means (i) marketable obligations with a maturity of 360 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) U.S. dollar denominated time deposits and certificates of deposit of any financial institution (a) that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million or (b) whose short-term commercial paper rating or that of its parent company is at least A-1 or the equivalent thereof from S&P or P-1 or the equivalent thereof from Moody's (any such bank, an "APPROVED BANK"), in each case with a maturity of 360 days or less from the date of acquisition; (iii) commercial paper issued by any Approved Bank or by the parent company of any Approved Bank and commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or guaranteed by any industrial company with a long term unsecured debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as the case may be, and in each case maturing no more than 360 days from the date of acquisition; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any commercial bank meeting the specifications of clause (ii)(a) above; (v) investments in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (i) through (iv) above; and (vi) time deposits and certificates of deposit of any commercial bank of recognized standing having capital and surplus in excess of the local currency equivalent of $100,000,000 incorporated in a country where the Company has one or more locally operating Foreign Subsidiaries, and that is, as of the Issue Date, providing banking services to the Company or any of its Foreign Subsidiaries. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the consummation of any transaction the result of which is (x) if such transaction occurs prior to the first sale of Voting Stock of Parent or the Company pursuant to a registration statement under the 3 Securities Act that results in at least 20% of the then outstanding Voting Stock of Parent or the Company having been sold to the public, that either (A) Control Group Members beneficially own, directly or indirectly, less than 51% of the Voting Stock of the Company or Parent (such percentage determined, for purposes of this definition, as a percentage of the total voting power of all Voting Stock of the relevant Person) or (B) any other Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of 51% of the Voting Stock of the Company or Parent (including in any event through direct or indirect beneficial ownership of Capital Stock of Control Group Members referred to in clause (ii) of the definition thereof) and (y) if such transaction occurred thereafter, that any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than Control Group Members), is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of 40% of the Voting Stock of the Company or Parent at any time at which Control Group Members do not beneficially own, directly or indirectly, at least 51% of the Voting Stock of the Company and Parent, (ii) the Company or Parent consolidates with, or merges with or into, another Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the assets of the Company or Parent and their Subsidiaries, in either case taken as a whole, to any Person, or any Person consolidates with, or merges with or into, the Company or Parent, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company or Parent, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction where the outstanding Voting Stock of the Company or Parent, as the case may be, is converted into or exchanged for Voting Stock (other than Disqualified Capital Stock) of the surviving or transferee corporation and the beneficial owners of the Voting Stock of the Company or Parent, as the case may be, immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving or transferee corporation immediately after such transaction, or (iii) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company or Parent (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company or Parent, as the case may be, was approved by either (i) a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved or (ii) a Control Group Member) cease for any reason to constitute a majority of the Board of Directors of the Company or Parent, as the case may be, then in office. "CLOSING DATE" means the Issue Date. "COMPANY" means E-P Acquisition, Inc., a Delaware corporation, and its successor Eagle-Picher Industries, Inc., an Ohio corporation, as survivor of the Acquisition Merger, unless and until a subsequent successor replaces it in accordance with Article 5 and thereafter means such successor. "CONSOLIDATED AMORTIZATION EXPENSE" for any period means the amortization expense of the Company and its Restricted Subsidiaries for such period (to the extent included in the 4 computation of Consolidated Net Income), determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED DEPRECIATION EXPENSE" for any period means the depreciation expense of the Company and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income), determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED INCOME TAX EXPENSE" for any period means the provision for taxes based on income and profits of the Company and its Restricted Subsidiaries to the extent such income or profits were included in computing Consolidated Net Income for such period. "CONSOLIDATED INTEREST COVERAGE RATIO" means, with respect to any determination date, the ratio of (a) EBITDA for the four full fiscal quarters immediately preceding the determination date (for any determination, the "Reference Period"), to (b) Consolidated Interest Expense for such Reference Period. In making such computations, (i) EBITDA and Consolidated Interest Expense shall be calculated on a pro forma basis assuming that (A) the Indebtedness to be incurred or the Disqualified Capital Stock to be issued (and all other Indebtedness incurred or Disqualified Capital Stock issued after the first day of such Reference Period referred to in Section 4.07, through and including the date of determination), and (if applicable) the application of the net proceeds therefrom (and from any other such Indebtedness or Disqualified Capital Stock), including the refinancing of other Indebtedness, had been incurred on the first day of such Reference Period and, in the case of Acquired Indebtedness, on the assumption that the related transaction (whether by means of purchase, merger or otherwise) also had occurred on such date with the appropriate adjustments with respect to such acquisition being included in such pro forma calculation and (B) any acquisition or disposition by the Company or any Restricted Subsidiary of any properties or assets outside the ordinary course of business or any repayment of any principal amount of any Indebtedness of the Company or any Restricted Subsidiary prior to the stated maturity thereof, in either case since the first day of such Reference Period through and including the date of determination, had been consummated on such first day of such Reference Period; (ii) the Consolidated Interest Expense attributable to interest on any Indebtedness required to be computed on a pro forma basis in accordance with Section 4.07 and (A) bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period and (B) which was not outstanding during the period for which the computation is being made but which bears, at the option of the Company, a fixed or floating rate of interest, shall be computed by applying, at the option of the Company, either the fixed or floating rate; (iii) the Consolidated Interest Expense attributable to interest on any Indebtedness under a revolving credit facility required to be computed on a pro forma basis in accordance with Section 4.07 shall be computed based upon the average daily balance of such Indebtedness during the applicable period, provided that such average daily balance shall be reduced by the amount of any repayment of Indebtedness under a revolving credit facility during the applicable period, which repayment permanently reduced the commitments or amounts available to be reborrowed under such facility; (iv) notwithstanding the 5 foregoing clauses (ii) and (iii), interest on Indebtedness determined on a floating rate basis, to the extent such interest is covered by agreements relating to Hedging Obligations, shall be deemed to have accrued at the rate per annum resulting after giving effect to the operation of such agreements; and (v) if after the first day of the applicable Reference Period and before the date of determination, the Company has permanently retired any Indebtedness out of the net proceeds of the issuance and sale of shares of Capital Stock (other than Disqualified Capital Stock) of the Company within 60 days of such issuance and sale, Consolidated Interest Expense shall be calculated on a pro forma basis as if such Indebtedness had been retired on the first day of such period. "CONSOLIDATED INTEREST EXPENSE" for any period means the sum, without duplication, of the total interest expense of the Company and its consolidated Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and including, without limitation (i) imputed interest on Capitalized Lease Obligations and Attributable Indebtedness, (ii) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations and bankers' acceptance financing, (iii) the net costs associated with Hedging Obligations, (iv) amortization of other financing fees and expenses, (v) the interest portion of any deferred payment obligations, (vi) amortization of debt discount or premium, if any, (vii) all other non-cash interest expense, (viii) capitalized interest, (ix) all cash dividend payments (and non-cash dividend payments in the case of a Restricted Subsidiary) on any series of preferred stock of the Company or any Restricted Subsidiary (x) all interest payable with respect to discontinued operations, and (xi) all interest on any Indebtedness of any other Person guaranteed by the Company or any Restricted Subsidiary. "CONSOLIDATED NET INCOME" for any period means the net income (or loss) of the Company and its consolidated Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication (i) the net income (or loss) of any Person (other than a Restricted Subsidiary) in which any Person other than the Company and its Restricted Subsidiaries has an ownership interest, except to the extent that any such income has actually been received by the Company and its Restricted Subsidiaries in the form of cash dividends during such period; (ii) except to the extent includible in the consolidated net income of the Company pursuant to the foregoing clause (i), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any Restricted Subsidiary or (b) the assets of such Person are acquired by the Company or any Restricted Subsidiary; (iii) the net income of any Restricted Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income (a) is not 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 during such period or (b) would be subject to any taxes payable on such dividend or distribution; (iv) any gain (or, only in the case of a determination of Consolidated Net Income as used in EBITDA, any loss), together with any related provisions for taxes on any such gain (or, if applicable, the tax effects 6 of such loss), realized during such period by the Company or any Restricted Subsidiary upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the Company or any Restricted Subsidiary or (b) any Asset Sale by the Company or any of its Restricted Subsidiary; (v) any extraordinary gain (or, only in the case of a determination of Consolidated Net Income as used in EBITDA, any extraordinary loss), together with any related provision for taxes on any such extraordinary gain (or, if applicable, the tax effects of such extraordinary loss), realized by the Company or any Restricted Subsidiary during such period; (vi) any non-cash loss during the fiscal year ended November 30, 1998 reflecting the decrease in deferred tax assets resulting from the Acquisition and transactions consummated in connection therewith; and (vii) in the case of a successor to the Company by consolidation, merger or transfer of its assets, any earnings of the successor prior to such merger, consolidation or transfer of assets; and provided, further, that (A) any gain referred to in clauses (iv) and (v) above that relates to a Restricted Investment and which is received in cash by the Company or a Restricted Subsidiary during such period shall be included in the consolidated net income of the Company, (B) to the extent deducted in determining consolidated net income for such period and not otherwise added back pursuant to the foregoing clauses of this definition, the amount of expenses in respect of Specified Transaction Payments attributable to such period shall be added back in determining Consolidated Net Income for such period, and (C) to the extent not otherwise deducted in determining such consolidated net income for any period, all payments made to Parent pursuant to any Tax Sharing Agreement or otherwise (including pursuant to Section 4.05) in respect of taxes for such period shall be deducted from the consolidated net income of the Company. "CONSOLIDATED NET WORTH" means, with respect to any Person as of any date, the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date, less all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within twelve months after the acquisition of such business) subsequent to the date of this Indenture in the book value of any asset owned by such Person or a Subsidiary of such Person. "CONTROL GROUP MEMBERS" means (i) the natural person or persons who are the ultimate beneficial owners of Granaria Holdings N.V. on the Issue Date, as disclosed under "Security Ownership and Certain Beneficial Owners and Management of Parent" in the Offering Memorandum and members of their immediate families and any spouse, parent or descendant of any such person, or a trust the beneficiaries of which include only any of the foregoing, and any corporation or other entity all of the Capital Stock of which (other than directors' qualifying shares) is owned by any of the foregoing or (ii) any corporation or other entity at least 51% of the Voting Stock of which is owned by any of the Persons referred to in clause (i). "CORPORATE TRUST OFFICE" shall be at the address of the Trustee specified in Section 12.02 or such other address as the Trustee may give notice to the Company. "COVERAGE RATIO INCURRENCE CONDITION" would be met at any specified time only if the Company (or its Successor, as the case may be) would be able to incur $1.00 of additional 7 Indebtedness at such specified time pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 4.07. "CREDIT FACILITY AGENT" means ABN AMRO Bank N.V. in its capacity as agent for the lenders who are party to the New Credit Agreement, or any successor or successors thereto of whom the Trustee has received notice. "CUSTODIAN" means any custodian, receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. "DEFAULT" means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default. "DEPOSITARY" means, with respect to the Notes issuable or issued in whole or in part in global form, The Depository Trust Company, until a successor shall have been appointed and becomes such Depositary, and, thereafter, "Depositary" shall mean or include such successor. "DESIGNATED SENIOR INDEBTEDNESS" means (i) Indebtedness under the New Credit Agreement (whether incurred pursuant to the definition of Permitted Indebtedness or pursuant to the provisions of Section 4.07 ) and (ii) any other Indebtedness constituting Senior Indebtedness that at the date of determination, has an aggregate principal amount outstanding of at least $25.0 million and that is specifically designated by the Company, in the instrument creating or evidencing such Senior Indebtedness or in an Officers' Certificate delivered to the Trustee, as "Designated Senior Indebtedness." "DISQUALIFIED CAPITAL STOCK" means any Capital Stock of such Person or any of its Subsidiaries that, by its terms, by the terms of any agreement related thereto or by the terms of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed or repurchased by such Person or any to its Subsidiaries, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the final maturity date of the Notes; provided, however, that any class of Capital Stock of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Capital Stock that is not Disqualified Capital Stock, and that is not convertible, puttable or exchangeable for Disqualified Capital Stock or Indebtedness, shall not be deemed to be Disqualified Capital Stock so long as such Person satisfies its obligations with respect thereto solely by the delivery of Capital Stock that is not Disqualified Capital Stock. "DOLLARS" and "$" means lawful money of the United States of America. 8 "EBITDA" for any period mean without duplication, the sum of the amounts for such period of (i) Consolidated Net Income plus (ii) in each case to the extent deducted in determining Consolidated Net Income for such period (and without duplication), (A) Consolidated Income Tax Expense, (B) Consolidated Amortization Expense (but only to the extent not included in Consolidated Interest Expense), (C) Consolidated Depreciation Expense, (D) Consolidated Interest Expense and (E) all other non-cash items reducing the Consolidated Net Income (excluding any such non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period, in each case determined on a consolidated basis in accordance with GAAP and minus (iii) the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such Period. "ELIGIBLE JUNIOR SECURITIES" means (a) the common stock of Parent and (b) any preferred stock of Parent that (i) has a maturity date or mandatory redemption date not earlier than March 1, 2009, (ii) has no remedies for missed dividends other than accrual on a cumulative basis and appointment of not more than two directors to the Board of Directors of Parent, (iii) is not convertible, puttable or exchangeable into any other security of Parent other than common stock and (iv) is not, by its terms, by the terms of any agreement related thereto or by the terms of any security into which it is convertible, puttable or exchangeable, and upon the happening of any event or the passage of time would not be, required to be redeemed or repurchased by such Person or any of its Subsidiaries, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to March 1, 2009. "EQUITY OFFERING" means a primary offering of Eligible Junior Securities of Parent pursuant to a registration statement filed with the Commission in accordance with the Securities Act, or pursuant to a private placement pursuant to an available exemption from registration and, in the case of any such private placement, a majority of such placement of which is sold to Persons that are not then and were not at the Issue Date Affiliates of Granaria Holdings. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE DEBENTURES" means the 11 3/4% Exchange Debentures due 2008 of Parent, if issued by Parent in exchange for the Senior Preferred Stock. "EXCHANGE OFFER" means the offer that may be made by the Company pursuant to the Registration Rights Agreement to exchange New Notes for the Notes. "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean a registration statement relating to an Exchange Offer on an appropriate form and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 9 "EXISTING INDEBTEDNESS" means all of the Indebtedness of the Company and its Subsidiaries that is outstanding on the Issue Date. "FAIR MARKET VALUE" of any asset or items means the fair market value of such asset or items as determined in good faith by the Board of Directors and evidenced by a Board Resolution. "FOREIGN SUBSIDIARY" means any Subsidiary of the Company that is not incorporated or organized in the United States or in any State thereof. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date. "GLOBAL NOTE" means a global note, without coupons, representing all or a portion of the Notes deposited with, or on behalf of, the Depositary substantially in the form of Exhibit A attached hereto. "GOVERNMENT SECURITIES" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged. "GRANARIA HOLDINGS" means Granaria Holdings N.V., a Dutch corporation, and its successors. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "GUARANTORS" means each of the Subsidiary Guarantors and Parent, and "GUARANTOR" means any one of the foregoing. "HEDGING OBLIGATIONS" of any Person means the obligations of such Person pursuant to (i) any interest rate swap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in interest rates, (ii) agreements or arrangements designed to protect such Person against fluctuations in foreign currency exchange rates in the conduct of its operations, or (iii) any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices, in each case, entered into in the 10 ordinary course of business for bona fide hedging purposes and not for the purpose of speculation. "HOLDER" means a Person in whose name a Note is registered on the Registrar's books. "IMMATERIAL SUBSIDIARY" means (i) any Subsidiary of the Company which does not own assets in excess of $50,000, (ii) any Name Holder Subsidiary, and (iii) Eagle-Picher Inc., a Virgin Islands foreign sales corporation. "INCUR" means, with respect to any Indebtedness or Obligation, incur, create, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to such Indebtedness or Obligation; provided that (i) the Indebtedness of a Person existing at the time such Person became a Restricted Subsidiary shall be deemed to have been incurred by such Restricted Subsidiary and (ii) neither the accrual of interest nor the accretion of accreted value shall be deemed to be an incurrence of Indebtedness. "INDEBTEDNESS" of any Person at any date means, without duplication: (i) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof); (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto); (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services, which payable is not overdue by more than 60 days according to the original terms of sale unless such payable is being contested in good faith; (v) the maximum fixed redemption or repurchase price of all Disqualified Capital Stock of such Person; (vi) all Capitalized Lease Obligations of such Person; (vii) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; (viii) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Company or its Subsidiaries that is guaranteed by the Company or the Company's Subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Company and its Subsidiaries on a consolidated basis; (ix) all Attributable Indebtedness; and (x) to the extent not otherwise included in this definition, Hedging Obligations of such Person. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (vii), the lesser of (A) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (B) the amount of the Indebtedness secured. For purposes of the preceding sentence, the "maximum fixed redemption or repurchase price" of any Disqualified Capital Stock that does not have a fixed redemption or repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased or redeemed on any date on which Indebtedness shall be required 11 to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock (or any equity security for which it may be exchanged or converted), such fair market value shall be determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution. "INDENTURE" means this Indenture as amended or supplemented from time to time. "INDEPENDENT DIRECTOR" means a director of the Company who has not and whose Affiliates have not, at any time during the twelve months prior to the taking of any action hereunder, directly or indirectly, received, or entered into any understanding or agreement to receive, any compensation, payment or other benefit, of any type or form, from the Company or any of its Affiliates, other than customary directors fees for serving on the Board of Directors of the Company or any Affiliate and reimbursement of out-of-pocket expenses for attendance at the Company's or Affiliate's board and board committee meetings. "INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Company's Board of Directors, qualified to perform the task for which it has been engaged and disinterested and independent with respect to the Company and its Affiliates. "INTEREST PAYMENT DATE" shall have the meaning set forth in the Notes. "INVESTMENTS" of any Person means (i) all investments by such Person in any other Person in the form of loans, advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business) or similar credit extensions constituting Indebtedness of such Person, and any guarantee of Indebtedness of any other Person, (ii) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Capital Stock or other securities of any other Person and (iii) all other items that would be classified as investments (including without limitation purchases of assets outside the ordinary course of business) on a balance sheet of such Person prepared in accordance with GAAP. "ISSUE DATE" means the date the Notes are initially issued. "LIEN" means, with respect to any asset or property, any mortgage, deed of trust, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect of such asset or property, whether or not filed, recorded or otherwise perfected under applicable law, including without limitation any conditional sale or other title retention agreement, and any lease in the nature thereof, any option or other agreement to sell, and any filing of, or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction (other than cautionary filings in respect of operating leases). 12 "MOODY'S" means Moody's Investors Service, Inc., and its successors. "NAME HOLDER SUBSIDIARY" means any Subsidiary of the Company incorporated and existing solely for the purpose of reserving the corporate name of such Subsidiary and which does not conduct any business or hold any assets other than shares of another Name Holder Subsidiary. "NET AVAILABLE PROCEEDS" means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary), net of (i) brokerage commissions and other fees and expenses (including fees and expenses of legal counsel, accountants and investment banks) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) amounts required to be paid to any Person (other than the Company or any Restricted Subsidiary) owning a beneficial interest in the properties or assets subject to the Asset Sale or having a Lien therein and (iv) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pensions and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officers' Certificate delivered to the Trustee; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Available Proceeds. "NEW CREDIT AGREEMENT" means the Credit Agreement dated as of February 24, 1998 by and among ABN AMRO Bank N.V., as agent, PNC Bank, National Association, as documentation agent, the banks party thereto and the Company, together with the guarantees delivered by the Guarantors on the Issue Date, any additional guarantees by the Guarantors and security agreements, as any of the foregoing may be subsequently amended, restated, refinanced, or replaced from time to time, and shall include agreements in respect of Hedging Obligations designed to protect against fluctuations in interest rates and entered into with respect to loans thereunder. "NEW NOTES" means any notes of the Company to be offered to Holders in exchange for Notes pursuant to the Exchange Offer or otherwise pursuant to a Registration of Notes containing terms identical to the Notes for which they are exchanged (except as set forth in the form of Note attached hereto). "NON-RECOURSE PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company or any of its Subsidiaries incurred (a) to finance the purchase of any assets of the Company or any of its Subsidiaries within 90 days of such purchase, (b) to the extent the amount of 13 Indebtedness thereunder does not exceed 100% of the purchase cost of such assets, (c) to the extent the purchase cost of such assets is or should be included in "additions to property, plant and equipment" in accordance with GAAP, and (d) to the extent that such Indebtedness is non-recourse to the Company or any of its Subsidiaries or any of their respective assets other than the assets so purchased. "NON-U.S. PERSON" means a person that is not a U.S. person, as defined in Regulation S. "NOTES" means the Company's 93/8% Senior Subordinated Notes due 2008 issued under this Indenture, and includes the New Notes. "OBLIGATION" means any principal, interest (including, in the case of Senior Indebtedness, interest accruing subsequent to the filing of a petition in bankruptcy or insolvency at the rate specified in the document relating to such Indebtedness, whether or not such interest is an allowed claim permitted to be enforced against the obligor under applicable law), penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under the documentation governing any Indebtedness. "OFFER" means a Change of Control Offer or an Net Proceeds Offer, as the context requires. "OFFER PERIOD" means a Change of Control Offer Period as an Net Proceeds Offer Period, as the context requires. "OFFERING MEMORANDUM" means the Offering Memorandum dated February 20, 1998, in the form used in connection with the original sale of the Notes. "OFFICER" means any of the following of the Company: the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary. "OFFICERS' CERTIFICATE" means a certificate signed by any two Officers. "OPINION OF COUNSEL" means a written opinion from legal counsel (such counsel may be an employee of or counsel to the Company or the Trustee) that complies with the requirements of this Indenture. "PARENT" means Eagle-Picher Holdings, Inc., a Delaware corporation, and its successors. "PARENT PREFERRED STOCK" means collectively the Series A 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock of Parent and Series B 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock of Parent. 14 "PAYMENT RESTRICTION" with respect to a Subsidiary of any Person, means any encumbrance, restriction of limitation, whether by operation of the terms of its charter or by reason of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation, on the ability of (i) such Subsidiary to (a) pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or advances to such Person or any other Subsidiary or such Person, (c) guarantee any Indebtedness of the Company or any Restricted Subsidiary or (d) transfer any of its properties or assets to such Person or any other Subsidiary of such Person (other than customary restrictions on transfers of property subject to a Lien permitted under this Indenture) or (ii) such Person or any other Subsidiary of such Person to receive or retain any such dividends, distributions or payments, loans or advances, guarantee, or transfer of properties or assets. "PERMITTED INDEBTEDNESS" means any of the following: (i) Indebtedness of the Company and any Subsidiary Guarantor under the New Credit Agreement in an aggregate principal amount at any time outstanding not to exceed (a) under the Senior Secured Term Loan Facility, $225 million, less the amount thereof that has been repaid pursuant to the provision of Section 4.16 and (b) under the Revolving Loan Facility the greater of (x) $175 million and (y) the sum of 80% of the book value of the eligible accounts receivable and 50% of inventory of the Company and its Subsidiaries, calculated on a consolidated basis and in accordance with GAAP; (ii) Indebtedness under the Notes, the Note Guarantees and this Indenture; (iii) Existing Indebtedness; (iv) Indebtedness under Hedging Obligations, provided that (1) such Hedging Obligations are related to payment obligations on Permitted Indebtedness or Indebtedness otherwise permitted by Section 4.07, and (2) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of such Indebtedness to which such Hedging Obligations relate; (v) Indebtedness of the Company to a Subsidiary Guarantor and Indebtedness of any Subsidiary Guarantor to the Company or any other Subsidiary Guarantor; provided, however, that upon either (1) the subsequent issuance (other than directors' qualifying shares), sale, transfer or other disposition of any Capital Stock or any other event which results in any such Subsidiary Guarantor ceasing to be a Subsidiary Guarantor or (2) the transfer or other disposition of any such Indebtedness (except to the Company or a Subsidiary Guarantor), the provisions of this clause (v) shall no longer be applicable to such Indebtedness and such Indebtedness shall be deemed, in each case, to be incurred and shall be treated as an incurrence for purposes Section 4.07 at the time the Subsidiary 15 Guarantor in question ceased to be a Subsidiary Guarantor or the time such transfer or other disposition occurred; (vi) Indebtedness in respect of bid, performance or surety bonds issued for the account of the Company in the ordinary course of business, including guarantees or obligations of the Company with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed); (vii) Indebtedness in respect of Non-Recourse Purchase Money Indebtedness incurred by the Company or any Restricted Subsidiary; (viii) Refinancing Indebtedness; and (ix) Indebtedness, in addition to Indebtedness incurred pursuant to the foregoing clauses of this definition, with an aggregate principal face or stated amount (as applicable) at any time outstanding for all such Indebtedness incurred pursuant to this clause not in excess of $35.0 million; provided, however, that (A) Indebtedness under letters of credit and performance bonds issued for the account of a Foreign Subsidiary pursuant to this clause to finance trade activities or otherwise in the ordinary course of business, and not to support borrowed money or the obtaining of advances or credit, may not exceed $10.0 million in an aggregate stated or face amount for all such letters of credit and performance bonds and (B) the aggregate principal amount at any time outstanding for all other Indebtedness incurred by all Foreign Subsidiaries pursuant to this clause may not exceed $25.0 million. "PERMITTED JUNIOR SECURITIES" means any securities of the Company provided for by a plan of reorganization or readjustment that are subordinated in right of payment to all Senior Indebtedness that may at the time be outstanding to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Indebtedness. "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "PLAN OF LIQUIDATION" with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (i) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (ii) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Capital Stock of such Person. 16 "PURCHASE DATE" means the Change of Control Purchase Date or the Net Proceeds Purchase Date, as the context requires. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "RECORD DATE" has the meaning set forth in the Notes. "REFINANCING INDEBTEDNESS" means Indebtedness of the Company or a Restricted Subsidiary issued in exchange for, or the proceeds from the issuance and sale or disbursement of which are used substantially concurrently to repay, redeem, refund, refinance, discharge or otherwise retire for value, in whole or in part (collectively, "repay"), or constituting an amendment, modification or supplement to or a deferral or renewal of (collectively, an "amendment"), any Indebtedness of the Company or any Restricted Subsidiary (the "Refinanced Indebtedness") in a principal amount not in excess of the principal amount of the Refinanced Indebtedness (or, if such Refinancing Indebtedness refinances Indebtedness under a revolving credit facility or other agreement providing a commitment for subsequent borrowings, with a maximum commitment not to exceed the maximum commitment under such revolving credit facility or other agreement); provided that: (i) the Refinancing Indebtedness is the obligation of the same Person as that of the Refinanced Indebtedness, (ii) if the Refinanced Indebtedness was subordinated to or pari passu with the Note Indebtedness, then such Refinancing Indebtedness, by its terms, is expressly pari passu with (in the case of Refinanced Indebtedness that was pari passu with) the Note Indebtedness, or subordinate in right of payment to (in the case of Refinanced Indebtedness that was subordinated to) the Note Indebtedness at least to the same extent as the Refinanced Indebtedness; (iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes; and (iv) the Refinancing Indebtedness is secured only to the extent, if at all, and by the assets (which may include after-acquired assets), that the Refinanced Indebtedness is secured. "REGISTRATION" means a registered exchange offer for the Notes by the Company or other registration of the Notes under the Securities Act pursuant to and in accordance with the terms of the Registration Rights Agreement. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of the Closing Date, by and among the Company, SBC Warburg Dillon Read Incorporated and ABN AMRO Incorporated, as such agreement may be amended, modified or supplemented from time to time. "REGISTRATION STATEMENT" means the Registration Statement pursuant to and as defined in the Registration Rights Agreement. 17 "REGULATION S" means Regulation S under the Securities Act. "RELATED BUSINESS" means any business in which the Company and its Subsidiaries operate on the Issue Date, or that is closely related to or complements the business of the Company and its Subsidiaries, as such business exists on the Issue Date. "RELATED BUSINESS INVESTMENT" means any Investment directly by the Company or its Subsidiaries in any Related Business. "RELATED PARTY AGREEMENT" means any management or advisory agreements or other arrangements with any Affiliate of the Company or with any other direct or indirect holder of more than 10% of any class of the Company's or Parent's capital stock (except, in any such case, Parent, the Company or any Restricted Subsidiary), but excluding in any event arrangements with ABN AMRO Bank N.V. and its Affiliates or their respective successors (i) under the New Credit Agreement or in connection therewith, (ii) in connection with the offering of the Notes or the Series A Senior Preferred Stock or (iii) pursuant to other banking, financing or underwriting activity entered into in the ordinary course of business. "REPRESENTATIVE" means, with respect to any Senior Indebtedness, the indenture trustee or other trustee, agent or other representative(s), if any, of holders of such Senior Indebtedness. "RESTRICTED DEBT PAYMENT" means any purchase, redemption, defeasance (including without limitation in substance or legal defeasance) or other acquisition or retirement for value, directly or indirectly, by the Company or a Restricted Subsidiary, prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness. "RESTRICTED INVESTMENT" means any Investment by the Company or any Restricted Subsidiary (other than investments in Cash Equivalents) in any Person that is not the Company or a Restricted Subsidiary, including in any Unrestricted Subsidiary. "RESTRICTED PAYMENT" means with respect to any Person: (i) the declaration or payment of any dividend (other than a dividend declared and paid (x) by a Wholly-Owned Restricted Subsidiary to holders of its Capital Stock, or (y) by a Subsidiary (other than a Wholly-Owned Restricted Subsidiary) to its shareholders on a pro rata basis, but only to the extent of the dividends actually received by the Company or a Restricted Subsidiary) or the making of any other payment or distribution of cash, securities or other property or assets in respect of such Person's Capital Stock (except that a dividend payable solely in Capital Stock (other than Disqualified Capital Stock) of such Person shall not constitute a Restricted Payment); (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of (A) the Capital Stock of the Company or (B) the Capital Stock of any Restricted Subsidiary, or any other payment or distribution made in respect thereof, either directly or indirectly (other than a payment solely in Capital Stock that is not Disqualified Capital Stock, and excluding any such 18 payment to the extent actually received by the Company or a Restricted Subsidiary); (iii) any Restricted Investment; (iv) any Restricted Debt Payment; or (v) payments by the Company or its Restricted Subsidiaries in respect of any Related Party Agreement. "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "REVOLVING LOAN FACILITY" means the revolving loan facility provided under the New Credit Agreement. "RULE 144A" means Rule 144A under the Securities Act. "S&P" means Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors. "SALE AND LEASEBACK TRANSACTIONS" means with respect to any Person an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the leasing by such Person of any property or asset of such Person which has been or is being sold or transferred by such Person to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or asset. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the U.S. Securities Act of 1933, as amended. "SENIOR INDEBTEDNESS" means all Indebtedness and other Obligations specified below payable directly or indirectly by the Company or any Guarantor, as the case may be, whether outstanding on the Issue Date or thereafter created, incurred or assumed by the Company or such Guarantor: (i) the principal of and interest on and all other Indebtedness under and Obligations related to the New Credit Agreement (including, without limitation, all loans, letters of credit and unpaid drawings with respect thereto and other extensions of credit under the New Credit Agreement, and all expenses, fees, reimbursements, indemnities and other amounts owing pursuant to the New Credit Agreement), (ii) amounts payable in respect of any Hedging Obligations, (iii) in addition to the amounts described in (i) and (ii), all Indebtedness not prohibited by Section 4.07 that is not expressly pari passu with, or subordinated to, the Notes or the Note Guarantees, as the case may be, (iv) all Capital Lease Obligations outstanding on the Issue Date, and (v) all Refinancing Indebtedness permitted under this Indenture. Notwithstanding anything to the contrary in the foregoing Senior Indebtedness will not include (a) any Indebtedness which by the express terms of the agreement or instrument creating, evidencing or governing the same is junior or subordinate in right of payment to any item of Senior Indebtedness, (b) any trade payable arising from the purchase of goods or materials or for services obtained in the ordinary course of business, (c) Indebtedness incurred (but only to the 19 extent incurred) in violation of this Indenture as in effect at the time of the respective incurrence, (d) any Indebtedness of the Company that, when incurred, was without recourse to the Company, (e) any Indebtedness to any employee of the Company or any of its respective Subsidiaries or (f) any liability for taxes owned or owing by the Company. "SENIOR PREFERRED STOCK" means, collectively, the Series A Senior Preferred Stock and Series B Senior Preferred Stock. "SENIOR SECURED TERM LOAN FACILITY" means the term loan facility providing for the senior secured term loans under the New Credit Agreement. "SENIOR SUBORDINATED INDEBTEDNESS" of the Company means the Notes and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of any Guarantor has a correlative meaning. "SERIES A SENIOR PREFERRED STOCK" means the 11 3/4% Series A Cumulative Redeemable Exchangeable Preferred Stock of Parent. "SERIES B SENIOR PREFERRED STOCK" means the 11 3/4% Series B Cumulative Redeemable Exchangeable Preferred Stock of Parent. "SHELF REGISTRATION STATEMENT" shall mean a Shelf Registration Statement of the Company pursuant to the Registration Rights Agreement. "SIGNIFICANT SUBSIDIARY" means any Subsidiary of the Company that would be a "Significant Subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date, except all references to "10 percent" in such definition shall be changed to "2 percent". "SPECIAL INTEREST" has the meaning set forth in the Notes. "SPECIFIED TRANSACTION PAYMENTS" means the following payments made to or for the benefit of present or future officers and employees of the Company and its Affiliates, or to Granaria Holdings and its Affiliates, in each case in connection with the Acquisition and on terms (including without limitation the amount thereof) substantially as described in the Offering Memorandum, but only to the extent that the aggregate amount thereof does not exceed $43.2 million for all periods from and after the Issue Date: (i) payments to finance or refinance the purchase by such officers and employees (or a trust for their benefit) of capital stock of Parent or its parent company, the grant or vesting of any award of such capital stock and the payment by such officers and employees of income taxes in respect thereof, (ii) "stay put" and other incentive bonuses, (iii) severance payments and (iv) transaction fees paid to Granaria Holdings. 20 "SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company or any Restricted Subsidiary that is subordinated in right of payment to the Notes or the Note Guarantee of such Restricted Subsidiary, respectively. "SUBSIDIARY" of any Person means (i) any corporation of which at least a majority of the aggregate voting power of all classes of the Voting Stock is owned by such Person directly or through one or more other Subsidiaries of such Person and (ii) any entity other than a corporation in which such Person, directly or indirectly, owns at least a majority of the Voting Stock of such entity entitling the holder thereof to vote or otherwise participate in the selection of the governing body, partners, managers or others that control the management and policies of such entity. Unless otherwise specified, "Subsidiary" means a Subsidiary of the Company. "SUBSIDIARY GUARANTOR" means each domestic Restricted Subsidiary of the Company (other than an Immaterial Subsidiary) and each other person who is required to become (or whom the Company otherwise causes to become) a Subsidiary Guarantor by the terms of this Indenture. "TAX SHARING AGREEMENT" means any tax sharing agreement or arrangement entered or to be entered into by Parent, the Company and its Subsidiaries, providing for payments by or to Parent, the Company and its Subsidiaries that, in each case, are not in excess of the tax liabilities that would have been payable by such Person on a stand-alone basis. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the Closing Date (except as otherwise provided in Section 1.03 hereof). "TRUSTEE" means The Bank of New York until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means such successor. "TRUST OFFICER" when used with respect to the Trustee means the chairman or vice chairman of the board of directors, the chairman or vice chairman of the executive committee of the board of directors, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller and any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary, and any such designation shall be deemed to be a Restricted Investment at the time of and immediately upon such designation by the Company and its Restricted Subsidiaries in the 21 amount of the Consolidated Net Worth of such designated Subsidiary and its consolidated Subsidiaries at such time, provided that such designation shall be permitted only if (A) the Company and its Restricted Subsidiaries would be able to make the Restricted Investment deemed made pursuant to such designation at such time, (B) no portion of the Indebtedness or any other obligation (contingent or otherwise) of such Subsidiary (x) is Guaranteed by the Company or any Restricted Subsidiary, (y) is recourse to the Company or any Restricted Subsidiary or (z) subjects any property or asset of the Company or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof and (C) no default or event of default with respect to any Indebtedness of such Subsidiary would permit any holder of any Indebtedness of the Company or any Restricted Subsidiary to declare such Indebtedness of the Company or any restricted Subsidiary due and payable prior to its maturity. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary, and any such designation shall be deemed to be an incurrence by the Company and its Subsidiaries of the Indebtedness (if any) of such Subsidiary so designated for purposes of Section 4.07 as of the date of such designation, provided that such designation shall be permitted only if immediately after giving effect to such designation and the incurrence of any such additional Indebtedness deemed to have been incurred thereby (x) the Company would meet the Coverage Ratio Incurrence Condition and (y) no Default or Event of Default shall be continuing. Any such designation by the Board of Directors described in the two preceding sentences shall be evidenced to the Trustee by the filing with the Trustee of a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and setting forth the underlying calculations of such certificate. "U.S. PERSON" has the meaning ascribed to it in Regulation S. "VOTING STOCK" with respect to any Person, means securities of any class of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock or other relevant equity interest has voting power by reason of any contingency) to vote in the election of members of the board of directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY", when applied to any Indebtedness at any date, means the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness. "WHOLLY-OWNED RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of which 100% of the Capital Stock (except for directors' qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, 22 but which interest is not in excess of what is required for such purpose) is owned directly by the Company or through one or more Wholly-Owned Restricted Subsidiaries. SECTION 1.02. Other Definitions.
DEFINED IN TERM SECTION "AFFILIATE TRANSACTION"............................................. 4.10 "AGENT MEMBERS"..................................................... 2.07 "ASSET SALE OFFER".................................................. 4.14 "ASSET SALE OFFER AMOUNT"........................................... 4.14 "ASSET SALE OFFER PERIOD"........................................... 4.14 "ASSET SALE PAYMENT"................................................ 4.14 "AGENT MEMBERS"..................................................... 2.07(a)(iii) "ASSET SALE TRIGGER DATE"........................................... 4.16(c) "CEDEL BANK"........................................................ 2.01(a) "CERTIFICATED NOTE"................................................. 2.01(a) "CHANGE OF CONTROL OFFER"........................................... 4.15(b)(ii) "CHANGE OF CONTROL OFFER PERIOD".................................... 4.15(c) "CHANGE OF CONTROL PURCHASE DATE"................................... 4.15(c) "CHANGE OF CONTROL PURCHASE PRICE".................................. 4.15(a) "CHANGE OF CONTROL TRIGGER DATE".................................... 4.15(a) "CINS".............................................................. 2.16 "COMMISSION"........................................................ 4.02 "COVENANT DEFEASANCE"............................................... 8.01(b)(ii) "CUSIP"............................................................. 2.16 "EVENT OF DEFAULT".................................................. 6.01(a) "EUROCLEAR"......................................................... 2.01(a) "EXCESS PROCEEDS"................................................... 4.16(b)(ii) "GLOBAL NOTE HOLDER"................................................ 2.01(a) "INSOLVENCY OR LIQUIDATION PROCEEDING".............................. 10.02(a) "LEGAL DEFEASANCE".................................................. 8.01(b)(i) "NET PROCEEDS DEFICIENCY"........................................... 4.16(c)(ii) "NET PROCEEDS OFFER"................................................ 4.16(c)(i) "NET PROCEEDS OFFER PERIOD"......................................... 4.16(c)(iii) "NET PROCEEDS PURCHASE DATE"........................................ 4.16(c)(iii) "NON-PAYMENT DEFAULT"............................................... 10.03(b) "NOTE GUARANTEE".................................................... 11.01(a) "NOTE INDEBTEDNESS"................................................. 10.01 "NOTICE OF DEFAULT"................................................. 6.01(a) "OFFERED PRICE"..................................................... 4.16(c)(ii) "OFFSHORE CERTIFICATED NOTE"........................................ 2.01(a) "PAYING AGENT"...................................................... 2.03
23
DEFINED IN TERM SECTION "PAYMENT AMOUNT".................................................... 4.16(c)(i) "PAYMENT BLOCKAGE NOTICE"........................................... 10.03(b) "PAYMENT BLOCKAGE PERIOD"........................................... 10.03(b) "PAYMENT DEFAULT"................................................... 10.03(a) "REGULATION S GLOBAL NOTE".......................................... 2.01(a) "REGULATION S NOTES"................................................ 2.01(a) "REGULATION S PERMANENT GLOBAL NOTE"................................ 2.01(a) "REGULATION S TEMPORARY GLOBAL NOTE"................................ 2.01(a) "REPLACEMENT FACILITY".............................................. 4.13(b) "RESTRICTED GLOBAL NOTE"............................................ 2.01(a) "REGISTRAR"......................................................... 2.03 "RULE 144A NOTES"................................................... 2.01(a) "SECURITIES ACT LEGEND"............................................. 2.01(a) "SUCCESSOR"......................................................... 5.01(a)(ii) "TRUSTEE EXPENSES".................................................. 6.08(a)(iii)
SECTION 1.03. Incorporation by Reference of TIA. Whenever this Indenture refers to a provision of the TIA, the portion of the provision required to be incorporated herein in order for this Indenture to be qualified under the TIA is incorporated by reference in, and made a part of, this Indenture. Any terms incorporated by reference in this Indenture that are defined by the TIA, defined by the TIA by reference to another statute or defined by the SEC in a rule under the TIA have the meanings so assigned to them therein. SECTION 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it in this Indenture; (2) an accounting term not otherwise defined herein has the meaning assigned to it under GAAP; (3) "OR" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) any reference to a Section or Article refers to such Section or Article of this Indenture. ARTICLE 2 THE NOTES SECTION 2.01. Form and Dating. (a) The Notes and the certificate of authentication of the Trustee or an authenticating agent appointed on its behalf pursuant to Section 2.02 shall be substantially in the form of Exhibit A hereto, bearing such legends as are required pursuant to this Section 2.01. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 principal amount and integral multiples thereof. 24 The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Notes offered and sold to QIBs in reliance on Rule 144A ("RULE 144A NOTES") shall be issued initially in the form of one or more Global Notes in definitive, fully registered form, without interest coupons, substantially in the form of Exhibit A hereto, bearing such legends as are required pursuant to this Section 2.01 (the "RESTRICTED GLOBAL NOTES"), will be deposited on the Issue Date with, or on behalf of, the Depositary and registered in the name of Cede & Co., as nominee of the Depositary (such nominee being referred to herein as the "GLOBAL NOTE HOLDER"), duly executed by the Company and authenticated by the Trustee as herein provided. The aggregate principal amount of the Restricted Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. Notes sold in offshore transactions in reliance on Regulation S under the Securities Act ("REGULATION S NOTES") will initially be represented by one or more temporary Global Notes in definitive, fully registered form without interest coupons substantially in the form set forth in Exhibit A (each a "REGULATION S TEMPORARY GLOBAL NOTE") and will be deposited with the Trustee as custodian for, and registered in the name of Cede & Co., as nominee of the Depositary for the accounts of Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("EUROCLEAR"), and Cedel Bank, societe anonyme ("CEDEL BANK"). At any time on or after the 40th day following the latest of the commencement of the offering of the Notes and the Issue Date, upon receipt by the Trustee and the Company of a certificate substantially in the Form of Exhibit B hereto, one or more permanent global Notes in registered form substantially in the form set forth in Exhibit A (each a "REGULATION S PERMANENT GLOBAL NOTE" and together with the Regulation S Temporary Global Notes, the "REGULATION S GLOBAL NOTES") duly executed by the Company and authenticated by the Trustee as hereinafter provided shall be deposited with the Trustee, as custodian for the Depositary, in exchange for the principal amount of the beneficial interest in the Regulation S Temporary Global Notes to be exchanged, and the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Regulation S Temporary Global Notes in an amount equal to the principal amount of the beneficial interest in the Regulation S Temporary Global Notes so exchanged. Prior to such 40th day, beneficial interests in a Regulation S Temporary Global Note may be held only through Euroclear or Cedel Bank. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the nominee of the Depositary for the Regulation S Global Notes, for the accounts of Euroclear and Cedel Bank, as hereinafter provided. Any person having a beneficial interest in any Restricted Global Note may, upon request to the Trustee, exchange such beneficial interest for Notes in definitive form (each a "U.S. CERTIFICATED NOTE"). Any person having a beneficial interest in any Regulation S Permanent 25 Global Note may, upon request to the Trustee, exchange such beneficial interest for Notes in definitive form (each an "OFFSHORE CERTIFICATED NOTE"). The Offshore Certificated Notes and the U.S. Certificated Notes are sometimes collectively referred to as the "CERTIFICATED NOTES." Upon any such issuance, the Trustee is required to register such Notes in the name of, and cause the same to be delivered to, such persons or persons (or the nominee of any thereof). Such Notes will be issued in fully registered form and will be subject to transfer restrictions. In addition, if (i) the Company notifies the Trustee in writing that the Depositary is no longer willing or able to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Certificated Notes, then, upon surrender by the relevant Global Note Holder of its Global Note, Notes in such form will be issued to each person that such Global Note Holder and the Depositary identifies as being the beneficial owner of the related Notes. Unless and until a Note is exchanged for a New Note in connection with an effective Registration pursuant to the Registration Rights Agreement, each Restricted Global Note, each Temporary Regulation S Global Note and each U.S. Certificated Note shall bear the legend the "SECURITIES ACT LEGEND" set forth below on the face thereof: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY (1) BY ITS ACQUISITION HEREOF REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND (2) IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (X) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) 26 OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (ii) TO THE COMPANY OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (Y) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (X) ABOVE." (b) Each Global Note, whether or not a New Note, shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 2.06, 2.07 AND 2.08 OF THE INDENTURE. (c) Each Temporary Regulation S Global Note shall bear the following legend on the face thereof: 27 THIS NOTE IS A TEMPORARY GLOBAL SECURITY. PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON WHO PURCHASED SUCH INTEREST IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR DEFINITIVE SECURITIES. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT. SECTION 2.02. Execution and Authentication; Authentication Agent. Two Officers of the Company shall sign each Note for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee, and the Trustee's signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The form of Trustee's certificate of authentication to be borne by the Notes shall be substantially as set forth in Exhibit A. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate the Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or any of its Affiliates. If an appointment of an authenticating agent is made pursuant to this Section 2.02, the Notes may have endorsed thereon, in lieu of the Trustee's certificate of authentication, an alternative certificate of authentication substantially in the form set forth in Exhibit A. The Trustee shall, upon receipt of a written order signed by two Officers of the Company, authenticate Notes for issuance on the Issue Date in the aggregate principal amount of up to $220,000,000 (notwithstanding anything to the contrary contained in this Indenture, the Notes or otherwise, the aggregate principal amount of outstanding Notes may not exceed that amount at any time, except as provided in Section 2.10). SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency (the "REGISTRAR") where Notes may be presented for registration of transfer or for exchange (subject to Sections 2.06, 2.07 and 2.08) and an office or agency (the "PAYING AGENT") where Notes may be presented for payment and an office or agency where notices to or upon the Company in respect of the Notes or this Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company may change the Paying Agent, Registrar or co-registrar without prior notice to any Holder. The Company shall notify the Trustee and the Trustee shall 28 notify the Holders of the name and address of any Agent not a party to this Indenture. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, and such agreement shall incorporate the provisions of the TIA and implement the provisions of this Indenture that relate to such Agent. The Company initially appoints the Trustee as Registrar (subject to Section 2.06), Paying Agent and agent for service of notices and demands in connection with the Notes. The Company or any of its Affiliates may act as Paying Agent, Registrar or co-registrar. If the Company fails to appoint or maintain a Registrar and/or Paying Agent, subject to Section 2.06, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.07. SECTION 2.04. Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the Holders' benefit or the Trustee all money the Paying Agent holds for the redemption or purchase of the Notes or for the payment of principal of, or premium, if any, or interest (including Special Interest, if any) on the Notes, and will notify the Trustee of any default by the Company in providing the Paying Agent with sufficient funds to redeem or purchase Notes or make any payment on the Notes as and to the extent required to be redeemed, purchased or paid under the terms of this Indenture. While any such default continues, the Trustee may require the Paying Agent to pay all money it holds to the Trustee and account for any funds disbursed. The Company at any time may require the Paying Agent to pay all money it holds to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or any of its Affiliates) shall have no further liability for the money it delivered to the Trustee. If the Company or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the Holders' benefit all money it holds as Paying Agent. SECTION 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with section 312(a) of the TIA. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, at least 7 Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require that sets forth the names and addresses of, and the aggregate principal amount of Notes held by, each Holder, and the Company shall otherwise comply with section 312(a) of the TIA. SECTION 2.06. Transfer and Exchange. (a) The Company appoints the Trustee as transfer and exchange agent for the purpose of any transfer or exchange of the Notes. (b) Neither the Trustee nor the Registrar shall be required to issue, register the transfer of or exchange any Note (i) to register the transfer of or exchange any Note selected for redemption, (ii) to register the transfer of or exchange any Note for a period of 15 days before the mailing of a notice of redemption and ending on the date of such mailing, (iii) to register the 29 transfer or exchange of a Note between a record date and the next succeeding interest payment date. (c) No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Registrar may require a Holder to furnish appropriate endorsements and transfer documents and payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Section 2.12, 3.06 or 9.05, which the Company shall pay). (d) Prior to due presentment for registration of transfer of any Note to the Trustee, the Trustee, any Agent and the Company shall deem and treat the Person in whose name any Note is registered as the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing on such Note made by anyone other than the Company, the Registrar, or any co-registrar) for the purpose of receiving payment of principal of, premium, if any, interest (including Special Interest, if any) on such Note and for all other purposes, and notice to the contrary shall not affect the Trustee, any Agent or the Company. (e) A Holder may transfer a Note only by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Indenture. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Holder only upon, final acceptance and registration of the transfer by the Registrar. Prior to the registration of any transfer by a Holder as provided herein, the Company, the Trustee, and any agent of the Company shall treat the person in whose name the Note is registered as the absolute owner thereof for all purposes whether or not the Note shall be overdue, and neither the Company, the Trustee, nor any such agent shall be affected by notice to the contrary. Furthermore, any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected through a book entry system maintained by the Holder of such Global Note (or its agent) and that ownership of a beneficial interest in the Note shall be required to be reflected in a book entry. When Notes are presented to the Registrar or a co-registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other authorized denominations (including an exchange of Notes for New Notes), the Registrar or co-registrar, as relevant, shall register the transfer or make the exchange as requested if the requirements for such transactions set forth herein are met; provided that no exchanges of Notes for New Notes shall occur until a Registration Statement shall have been declared effective by the SEC and provided further that any Notes that are exchanged for New Notes shall be cancelled by the Trustee. To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's request. 30 All Notes issued upon any transfer or exchange of Notes shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. SECTION 2.07. Book-entry Provisions for Global Notes. (a) The Restricted Global Notes and Regulation S Global Notes initially shall (i) be registered in the name of the Depositary for such Global Notes or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear legends as set forth in Section 2.01. Members of, or participants in, the Depositary ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian, or under such Global Note, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in a Restricted Global Note or Regulation S Global Note may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 2.08. In addition, U.S. Certificated Notes and Offshore Certificated Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in the Restricted Global Notes or the Regulation S Global Notes, respectively, if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the Restricted Global Notes or the Regulation S Global Notes, as the case may be, and a successor depositary is not appointed by the Company within 90 days of such notice or (ii) an Event of Default of which the Trustee has actual notice has occurred and is continuing and the Registrar has received a request from the Depositary to issue such U.S. Certificated Notes and Offshore Certificated Notes. (c) Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in the other Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. (d) In connection with any transfer of a portion of the beneficial interests in the Global Notes to beneficial owners pursuant to paragraph (b) of this Section, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Global Notes in an amount equal to the principal amount of the beneficial interest in the Global Notes to be 31 transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Certificated Notes of like tenor and amount. (e) In connection with the transfer of all of the Restricted Global Notes or Regulation S Global Notes to beneficial owners pursuant to paragraph (b) of this Section, the Restricted Global Notes or Regulation S Global Notes, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the Restricted Global Notes or Regulation S Global Notes, as the case may be, an equal aggregate principal amount of U.S. Certificated Notes or Offshore Certificated Notes, as the case may be, of authorized denominations. (f) Any U.S. Certificated Notes delivered in exchange for an interest in any Restricted Global Notes pursuant to paragraph (b) or (d) of this Section shall, except as otherwise provided by paragraph (e) of Section 2.08, bear the legend regarding transfer restrictions applicable to the U.S. Certificated Notes set forth in Section 2.01. (g) Any Offshore Certificated Note delivered in exchange for an interest in any Regulation S Global Note pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (e) of Section 2.08, bear the legend regarding transfer restrictions applicable to the Offshore Certificated Note set forth in Section 2.01. (h) The registered holder of a Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. SECTION 2.08. Special Transfer Provisions. Unless and until a Note is exchanged for a New Note in connection with an effective Registration pursuant to the Registration Rights Agreement, the following provisions shall apply: (a) TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a U.S. Certificated Note or an interest in a Restricted Global Note to a QIB (excluding Non-U.S. Persons): (i) If the Note to be transferred consists of (x) U.S. Certificated Notes, the Registrar shall register the transfer, if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is 32 being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representation in order to claim the exemption from registration provided for by Rule 144A or (y) an interest in the Restricted Global Note, the transfer of such interest may be effected only through the book entry system maintained by the Depositary. (ii) If the proposed transferee is an Agent Member, and the Note to be transferred consists of U.S. Certificated Notes, upon receipt by the Registrar of the documents referred to in clause (i) and instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Restricted Global Notes in an amount equal to the principal amount of the U.S. Certificated Notes to be transferred and the Trustee shall cancel the U.S. Certificated Notes so transferred. (b) TRANSFERS OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTES. The following provisions shall apply with respect to registration of any proposed transfer of interests in any Regulation S Temporary Global Note: (i) The Registrar shall register the transfer of any Note (x) if the proposed transferee is a Non-U.S. Person and the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit C hereto or (y) if the proposed transferee is a QIB and the proposed transferor has checked the box provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) If the proposed transferee is an Agent Member, upon receipt by the Registrar of the documents referred to in clause (i)(y) above and instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Restricted Global Notes, in an amount equal to the principal amount of the Regulation S Temporary Global Notes to be transferred, and the Trustee shall decrease the amount of the Regulation S Temporary Global Note. 33 (c) TRANSFERS OF INTERESTS IN THE REGULATION S PERMANENT GLOBAL NOTES OR OFFSHORE CERTIFICATED NOTES TO U.S. PERSONS. The following provisions shall apply with respect to any transfer of interests in any Regulation S Permanent Global Note or Offshore Certificated Notes to U.S. Persons: (i) prior to the removal of the Securities Act Legend from any Regulation S Global Note or Offshore Certificated Notes in accordance with Section 2.01, the Registrar shall refuse to register such transfer; and (ii) after such removal, the Registrar shall register the transfer of any such Note without requiring any additional certification. (d) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any transfer of a Note to a Non-U.S. Person: (i) Prior to 40 days after the date hereof, the Registrar shall register any proposed transfer of a Note to a Non-U.S. Person upon receipt of a certificate substantially in the form of Exhibit C hereto from the proposed transferor. (ii) On and after 40 days after the date hereof, the Registrar shall register any proposed transfer to any Non-U.S. Person if the Note to be transferred is a U.S. Certificated Note or an interest in the Restricted Global Note, upon receipt of a certificate substantially in the form of Exhibit C from the proposed transferor. (iii) (A) If the proposed transferor is an Agent Member holding a beneficial interest in a Restricted Global Note, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (ii) and (y) instructions in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Restricted Global Notes in an amount equal to the principal amount of the beneficial interest in the Restricted Global Notes to be transferred, and (B) if the proposed transferee is an Agent Member, upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Regulation S Global Notes in an amount equal to the principal amount of the U.S. Certificated Notes or the Restricted Global Notes, as the case may be, to be transferred, and the Trustee shall cancel the Certificated Notes, if any, so transferred or decrease the amount of the Restricted Global Notes, as the case may be. (e) Securities Act Legend. Upon the transfer, exchange or replacement of Notes not bearing the Securities Act Legend, the Registrar shall deliver Notes that do not bear the Securities Act Legend. Upon the transfer, exchange or replacement of Notes bearing the Securities Act Legend, the Registrar shall deliver only Notes that bear the Securities Act Legend 34 unless there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (f) General. By its acceptance of any Note bearing the Securities Act Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Securities Act Legend and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions on transfer of such Note set forth in this Indenture. In connection with any transfer of Notes, each Holder agrees by its acceptance of the Notes to furnish the Registrar or the Company such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine (but may rely on a determination made by the Company with respect to) the sufficiency of any such certifications, legal opinions or other information. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.07 or this Section 2.08. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. SECTION 2.09. Replacement Notes. Holders shall surrender mutilated Notes to the Trustee. If any mutilated Note is surrendered to the Trustee, or if the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee shall authenticate, a replacement Note if the Trustee's requirements are met, and each such replacement Note shall be an additional obligation of the Company. If the Trustee or the Company requires, the Holder must supply an indemnity bond that is sufficient, in the reasonable judgment of the Trustee and the Company, to protect the Company, the Trustee, any Agent or any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company and the Trustee may charge for its reasonable expenses in replacing a Note. SECTION 2.10. Outstanding Notes. The Notes outstanding at any time are all the Notes the Trustee has authenticated except for those it has cancelled, those delivered to it for cancellation, and those described in this Section 2.10 as not outstanding. If a Note is replaced pursuant to Section 2.09, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that a bona fide purchaser holds the replaced Note. If the entire principal of, premium, if any, and accrued interest (including Special Interest, if any) on any Note is considered paid under Section 2.04, it ceases to be outstanding and interest on it ceases to accrue. Subject to Section 2.11, a Note does not cease to be outstanding because the Company or any Affiliate of the Company holds such Note. 35 SECTION 2.11. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or any Affiliate of the Company shall be considered as though they are not outstanding; provided, however, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. Notwithstanding the foregoing, Notes that the Company or any Affiliate of the Company offers to purchase or acquires pursuant to an exchange offer, tender offer or otherwise shall not be deemed to be owned by the Company or any Affiliate of the Company until legal title to such Notes passes to the Company or such Affiliate, as the case may be. SECTION 2.12. Temporary Notes. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee on its behalf shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee on its behalf, upon receipt of a written order signed by two Officers of the Company, shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes. SECTION 2.13. Cancellation. Holders shall surrender Notes for cancellation to the Trustee. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar, any co-registrar, the Paying Agent, the Company and its Subsidiaries shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange, replacement, payment (including all Notes called for redemption and all Notes accepted for payment pursuant to an Offer) or cancellation, and the Trustee shall cancel all such Notes and shall return all cancelled Notes to the Company. The Company may not issue new Notes to replace any Notes that have been cancelled by the Trustee or that have been delivered to the Trustee for cancellation. If the Company or any Affiliate of the Company acquires any Notes (other than by redemption pursuant to Section 3.07 or an Offer pursuant to Section 4.15 or 4.16), such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until such Notes are delivered to the Trustee for cancellation. SECTION 2.14. Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to Holders on a subsequent special record date, in each case at the rate provided in the Notes and Section 4.01. The Company shall, with the Trustee's consent, fix or cause to be fixed each such special record date and payment date. At least 15 days before the special record date, the Company (or, at the request of the Company, the Trustee in the name of, and at the expense of, the Company) shall mail a notice that states the special record date, the related payment date and the amount of interest to be paid. 36 SECTION 2.15. Record Date. The record date for purposes of determining the identity of holders of Notes entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in section 316(c) of the TIA. SECTION 2.16. CUSIP and CINS Numbers. A "CUSIP" or "CINS" number will be printed on the Notes and the Trustee shall use CUSIP or CINS numbers, as the case may be, in notices of redemption, purchase or exchange as a convenience to Holders, provided that any such notice may state that no representation is made as to the correctness or accuracy of such numbers printed in the notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes. The Company will promptly notify the Trustee of any change in the CUSIP or CINS number, as the case may be. ARTICLE 3 REDEMPTIONS AND OFFERS TO PURCHASE SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to Section 3.07, it shall furnish to the Trustee, at least 15 but not more than 30 days before notice of any redemption is to be mailed to Holders (or such shorter time as may be satisfactory to the Trustee), (x) an Officers' Certificate stating (i) that the Company has elected to redeem Notes pursuant to Section 3.07(a) or (b), as the case may be, (ii) the date notice of redemption is to be mailed to Holders, (iii) the redemption date, (iv) the aggregate principal amount of Notes to be redeemed, (v) the redemption price for such Notes and (vi) the amount, if any, of accrued and unpaid interest (including Special Interest, if any) on such Notes as of the redemption date and (y) an Opinion of Counsel that the Company is entitled to redeem the Notes pursuant to Section 3.07. If the Trustee is not the Registrar, the Company shall, concurrently with delivery of its notice to the Trustee of a redemption, cause the Registrar to deliver to the Trustee a certificate (upon which the Trustee may rely) setting forth the name of, and the aggregate principal amount of the Notes held by, each Holder. If the Company is required to offer to purchase Notes pursuant to Section 4.15 or 4.16, it shall furnish to the Trustee, at least 2 Business Days before notice of the Offer is to be mailed to Holders, an Officers' Certificate setting forth (i) that the Offer is being made pursuant to Section 4.15 or 4.16, as the case may be, (ii) the Purchase Date, (iii) the maximum principal amount of Notes the Company is offering to purchase pursuant to the Offer, (iv) the purchase price for such Notes and (v) the amount, if any, of accrued and unpaid interest (including Special Interest, if any) on such Notes as of the Purchase Date. The Company will also provide the Trustee with any additional information that the Trustee reasonably requests in connection with any redemption or Offer. 37 SECTION 3.02. Selection of Notes to Be Redeemed or Purchased. If less than all outstanding Notes are to be redeemed or if less than all Notes tendered pursuant to an Offer are to be accepted for payment, the Trustee shall select the outstanding Notes to be redeemed or accepted for payment on a pro rata basis, by lot or by any other method that the Trustee deems fair and appropriate. If the Company elects to mail notice of a redemption to Holders, the Trustee shall at least 15 days prior to the date notice of redemption is to be mailed (i) select the Notes to be redeemed from Notes outstanding not previously called for redemption in the manner specified by the Trustee and (ii) notify the Company of the names of each Holder of Notes selected for redemption, the principal amount of Notes held by each such Holder and the principal amount of such Holder's Notes that are to be redeemed. If less than all Notes tendered pursuant to an Offer are to be accepted for payment, the Trustee shall select on or prior to the Purchase Date for such Offer the Notes to be accepted for payment. The Trustee shall select for redemption or purchase Notes or portions of Notes in principal amounts at maturity of $1,000 or integral multiples thereof; except that if all of the Notes of a Holder are selected for redemption or purchase, the aggregate principal amount of the Notes held by such Holder, even if not an integral multiple of $1,000, may be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or tendered pursuant to an Offer also apply to portions of Notes called for redemption or tendered pursuant to an Offer. The Trustee shall notify the Company promptly of the Notes or portions of Notes to be called for redemption or selected for purchase. SECTION 3.03. Notice of Redemption. (a) At least 30 days but not more than 60 days before any redemption date the Company shall mail by first class mail a notice of redemption to the Trustee. With respect to any redemption of Notes, the notice shall identify the Notes or portions thereof to be redeemed, including CUSIP or CINS numbers, and shall state: (1) the redemption date; (2) the redemption price for the Notes and the amount, if any, of unpaid and accrued interest on such Notes as of the date of redemption and the premium, if any, and Special Interest, if any, on the Notes as of the date of redemption; (3) the section of this Indenture pursuant to which the Notes called for redemption are being redeemed; (4) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued; (5) the name and address of the Paying Agent; (6) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price for, and any accrued and unpaid interest (including Special Interest, if any) on such Notes as of the date of redemption; (7) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrete or accrue, as the case may be, on, and after the redemption date; and (8) that no representation is made as to the correctness or accuracy of the CUSIP or CINS number (as applicable) listed in such notice and printed on the Notes. (b) The Trustee shall (at the Company's expense and in the Company's name) give the notice of any redemption to Holders; provided, however, that the Company shall deliver to the Trustee, at least 45 days prior to the date of redemption and at least 15 days prior to the date that 38 notice of the redemption is to be mailed to Holders, an Officers' Certificate that (i) requests the Trustee to give notice of the redemption to Holders, (ii) sets forth the information to be provided to Holders in the notice of redemption, as set forth in the preceding paragraph, and (iii) sets forth the aggregate principal amount of Notes to be redeemed and the amount, if any, of accrued and unpaid interest (including Special Interest, if any) thereon as of the date of redemption. If the Trustee is not the Registrar, the Company shall, concurrently with any such request, cause the Registrar to deliver to the Trustee a certificate (upon which the Trustee may rely) setting forth the name of, the address of, and the aggregate principal amount of Notes held by, each Holder; provided further that any such Officers' Certificate may be delivered to the Trustee on a date later than permitted under this Section 3.03(b) if such later date is acceptable to the Trustee. SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed, Notes called for redemption become due and payable on the redemption date at the price set forth in the Note. SECTION 3.05. Deposit of Redemption Price. (a) Prior to 10:00 a.m. on any redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of, and the amount, if any, of accrued interest and unpaid interest (including Special Interest, if any) on all Notes to be redeemed in immediately available funds as of the date of redemption. After any redemption date, the Paying Agent shall promptly return to the Company any money that the Company deposited with the Paying Agent in excess of the amounts necessary to pay the redemption price of, and any accrued interest (including Special Interest, if any) on all Notes to be redeemed. (b) If the Company complies with the preceding paragraph, interest on the Notes to be redeemed will cease to accrete or accrue, as the case may be, on such Notes on the applicable redemption date, whether or not such Notes are presented for payment. If a Note is redeemed on an interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on the related interest record date, in all other circumstances, such interest shall be paid to the Holder of such Note. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest will be paid on the unpaid principal, premium, if any, and unpaid interest (including Special Interest, if any) which has accrued to the redemption date, from the redemption date until such amounts are paid, at the rate of interest provided in the Notes and Section 4.01. SECTION 3.06. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder at the Company's expense a new Note equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.07. Redemption Provisions. (a) The Notes will not be redeemable at the Company's option prior to March 1, 2003 except as described below, with the proceeds of an 39 Equity Offering. Thereafter, the Notes will be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest (including Special Interest, if any) thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on March 1 of the years indicated below: YEAR PERCENTAGE -------------------------------------- ---------- 2003.................................. 104.688% 2004.................................. 103.125% 2005.................................. 101.563% 2006 and thereafter................... 100.000% (b) In addition to the Company's right to redeem the Notes as set forth in subsection (a), above, at any time prior to March 1, 2001, the Company may (but will not have the obligation to) redeem up to 35% of the aggregate principal amount of the Notes outstanding on the Closing Date at a redemption price of 109.375% of the principal amount thereof, in each case plus accrued and unpaid interest (including Special Interest, if any) thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least $100 million aggregate principal amount of Notes remain outstanding immediately after the occurrence of such redemption; and provided, further that such redemption will occur within 60 days of the date of the closing of any such Equity Offering. SECTION 3.08. Mandatory Offers. (a) Within 30 days after any Change of Control Trigger Date or Asset Sale Trigger Date, the Company shall mail to the Trustee (who shall mail to each Holder at the Company's expense) a notice stating: (1) that an Offer is being made pursuant to Section 4.15 or 4.16, as the case may be, and describing the transaction or transactions that constitute the change of control or Asset Sale, as the case may be, and the length of time the Offer shall remain open and the maximum aggregate principal amount of Notes that the Company is offering to purchase pursuant to such Offer; (2) the purchase price for the Notes (as set forth in Section 4.15 or 4.16, as the case may be), the amount (if any) of accrued and unpaid interest on such Notes as of the Purchase Date, and the Purchase Date; (3) that any Note not accepted for payment will continue to accrue interest; (4) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Offer will cease to accrue interest after the relevant Purchase Date; (5) that Holders may tender all or any portion of the Notes registered in the name of such Holder and that any portion of a Note tendered must be tendered in a principal amount of $1,000 or an integral multiple thereof; (6) that Holders electing to tender any Note or portion thereof will be required to surrender their Note, with the form therein entitled "Option of Holder to Elect Purchase" completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days prior to the Purchase Date; (7) that Holders will be entitled to withdraw their election to tender Notes if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the close of business on the last day of 40 the relevant Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have such Note purchased; and (8) that Holders whose Notes are accepted for payment in part will be issued new Notes equal in principal amount to the unpurchased portion of Notes surrendered, provided that only Notes in a principal amount of $1,000 or integral multiples thereof will be accepted for payment in part. (b) On the Purchase Date for any Offer, the Company will (i) to the extent lawful, (x) in the case of an Offer resulting from a Change of Control, accept for payment all Notes or portions thereof properly tendered pursuant to such Offer and (y) in the case of an Offer resulting from one or more Asset Sales, accept for payment, on a pro rata basis to the extent necessary, the Payment Amount of Notes or portions thereof pursuant to the Net Proceeds Offer, or if less than the Payment Amount has been tendered, all Notes tendered, and will deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of Sections 3.08 and 4.16, (ii) deposit with the Paying Agent in immediately available funds the aggregate purchase price of all Notes or portions thereof accepted for payment and any accrued and unpaid interest (including Special Interest, if any) on such Notes as of the Purchase Date, and (iii) deliver, or cause to be delivered, to the Trustee all Notes or portions thereof so accepted together with an Officers' Certificate setting forth the name of each Holder that tendered Notes and the principal amount of the Notes, as the case may be, or portions thereof tendered by each such Holder. (c) With respect to any Offer, (i) if less than all of the Notes tendered pursuant to an Offer are to be accepted for payment by the Company for any reason, the Trustee shall select on or prior to the Purchase Date the Notes or portions thereof to be accepted for payment pursuant to Section 3.02, and (ii) if the Company deposits with the Paying Agent on the Purchase Date an amount sufficient to purchase all Notes accepted for payment, interest shall cease to accrue on such Notes on the Purchase Date; provided, however, that if the Company fails to deposit an amount sufficient to purchase all Notes accepted for payment, the deposited funds shall be used to purchase on a pro rata basis all Notes accepted for payment and interest shall continue to accrue, as the case may be, on all Notes not purchased. (d) Promptly after consummation of an Offer, (i) the Paying Agent shall mail to each Holder of Notes or portions thereof accepted for payment an amount equal to the Change of Control Purchase Price or Offered Price, as the case may be, (ii) with respect to any tendered Note not accepted for payment in whole or in part, the Trustee shall return such Note to the Holder thereof, and (iii) with respect to any Note accepted for payment in part, the Company shall issue and the Trustee shall authenticate and mail to each such Holder a new Note equal in principal amount to the unpurchased portion of the tendered Note. (e) The Company will (i) publicly announce the results of the Offer to Holders on or as soon as practicable after the Purchase Date, and (ii) comply with Rule 14e-1 under the Exchange 41 Act and any other securities laws and regulations to the extent such laws and regulations are applicable to any Offer. (f) If any of this Section 3.08, Section 4.15 or Section 4.16 conflict with duties imposed upon the Company or the Guarantors by virtue of any applicable United States securities laws or regulations, the Company or such Guarantor, as the case may be, shall comply with such securities laws or regulations and will not be deemed to have breached its obligations under this Indenture. ARTICLE 4 COVENANTS SECTION 4.01. Payment of Notes. Subject to the provisions of Article 10, the Company shall pay the principal of, and premium, if any, and interest (including Special Interest, if any) on the Notes on the dates and in the manner provided in the Notes. Holders must surrender their Notes to the Paying Agent to collect principal payments. The Notes will be payable as to principal, premium, if any, and interest (including Special Interest, if any) at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, by wire transfer of immediately available funds or, in the case of U.S. Certificated Notes or Offshore Certificated Notes only, by mailing a check to the registered address of the Holder. So long as the Global Note Holder is the registered owner of any Notes, the Global Note Holder will be considered the sole holder of outstanding Notes represented by such Global Notes under this Indenture. Payments in respect of the principal of, premium, if any, and interest (including Special Interest, if any), if any, on any Notes registered in the name of a Global Note Holder on the applicable record date will be payable by the Trustee to or at the direction of such Global Note Holder in its capacity as the registered holder under this Indenture. None of the Company, the Guarantors or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by the Depositary, or for maintaining, supervising or reviewing any records of the Depositary relating to such Notes. Principal, premium or interest (including Special Interest, if any) shall be considered paid on the date due if, by 3 p.m. Eastern Standard Time on the Business Day immediately preceding such date, the Company has deposited with the Paying Agent money in immediately available funds designated for and sufficient to pay such principal, premium or interest (including Special Interest, if any); provided, however, that principal, premium or interest (including Special Interest, if any) shall not be considered paid within the meaning of this Section 4.01 if money intended to pay such principal, premium or interest (including Special Interest, if any) is held by the Paying Agent for the benefit of holders of Senior Indebtedness of the Company pursuant to the provisions of Article 10. The Paying Agent shall return to the Company, no later than five 42 days following the date of payment, any money that exceeds the amount then due and payable on the Notes. SECTION 4.02. Reports. Whether or not required by the rules and regulations of the Securities and Exchange Commission (the "COMMISSION"), so long as any Notes are outstanding, the Company and the Guarantors will file with the Commission, to the extent such filings are accepted by the Commission, and will furnish (within 15 days after such filing) to the Trustee and the Holders of Notes all quarterly and annual reports and other information, documents and reports that would be required to be filed with the Commission pursuant to Section 13 of the Exchange Act if the Company and the Guarantors were required to file under such section. In addition, the Company and the Guarantors will make such information available to prospective purchasers of the Notes, securities analysts and broker-dealers who request it in writing. The Company and the Guarantors have agreed that, for so long as any Notes remain outstanding, they will furnish to the Holders and beneficial holders of Notes and to prospective purchasers of Notes designated by the holders and to broker dealers, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. SECTION 4.03. Compliance Certificate. The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company, an Officers' Certificate stating that (i) a review of the activities of the Company and its Subsidiaries during the preceding fiscal year without regard to any grace period has been made to determine whether the Company has kept, observed, performed and fulfilled all of its obligations under this Indenture and the Notes, (ii) such review was supervised by the Officers of the Company signing such certificate, and (iii) that to the best knowledge of each Officer signing such certificate, (a) the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default occurred, describing all such Defaults or Events of Default of which each such Officer may have knowledge and what action the Company has taken or proposes to take with respect thereto), and (b) no event has occurred and remains in existence by reason of which payments on account of the principal of, or premium, if any, or interest (including Special Interest, if any) on the Notes are prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the annual financial statements delivered pursuant to Section 4.02 shall be accompanied by a written statement of the Company's independent public accountants (which shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Sections 4.01, 4.05, 4.07, 4.08, 4.09, 4.10, 4.13, 4.15, 4.16, 4.17, or Article 5 or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants 43 shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. The Company will, so long as any of the Notes are outstanding, deliver to the Trustee, promptly after any Officer of the Company becomes aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.04. Stay, Extension and Usury Laws. Each of the Company and the Guarantors covenant (to the extent that they may lawfully do so) that they will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that might affect the covenants or the performance of their obligations under this Indenture and Notes; and each of the Company and the Guarantors (to the extent they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Trustee pursuant to this Indenture, but will suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.05. Limitation on Restricted Payments. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment (except as permitted below) if at the time of such Restricted Payment: (i) a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; (ii) the Company would be unable to meet the Coverage Ratio Incurrence Condition; or (iii) the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments (except as expressly provided in the second following paragraph) made after the Issue Date, exceeds the sum of (A) 50% of the Company's Consolidated Net Income (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the Company's most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, if such aggregate Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit) plus (B) the net cash proceeds from the issuance and sale (other than to a Subsidiary of the Company) after the Issue Date of (1) the Company's Capital Stock that is not Disqualified Capital Stock or (2) debt securities of the Company that have been converted into the Company's Capital Stock that is not Disqualified Capital Stock and that is not held by a Subsidiary of the Company, plus (C) to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, the lesser of (x) the 44 cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (y) the initial amount of such Restricted Investment plus (D) the amount of Restricted Investment outstanding in an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary of the Company in accordance with the definition of "Unrestricted Subsidiary". The foregoing provisions will not prohibit (1) the payment of any dividend by the Company or any Restricted Subsidiary within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (2) the redemption, repurchase, retirement or other acquisition of any Capital Stock of the Company in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of other Capital Stock of the Company (other than any Disqualified Capital Stock); (3) the defeasance, redemption, repurchase or other retirement of Subordinated Indebtedness in exchange for, or out of the proceeds of, the substantially concurrent issue and sale of Capital Stock of the Company (other than (x) Disqualified Capital Stock, (y) Capital Stock sold to a Subsidiary of the Company and (z) Capital Stock purchased with the proceeds of loans from the Company or any of its Subsidiaries); (4) the making of a Related Business Investment in joint ventures or Unrestricted Subsidiaries out of the proceeds of the substantially concurrent issue and sale of Capital Stock of the Company (other than (x) Disqualified Capital Stock, (y) Capital Stock sold to a Subsidiary of the Company and (z) Capital Stock purchased with the proceeds of loans from the Company or any of its Subsidiaries); (5) Specified Transaction Payments; (6) payments of up to $1.75 million to Granaria Holdings or any of its Affiliates in the aggregate in any fiscal year pursuant to any Related Party Agreement entered into between Granaria Holdings or any of its Affiliates and the Company or its Subsidiaries to provide management and similar services to any such Persons or to Parent; (7) the payments of dividends or distributions to Parent solely in amounts and at the times necessary to permit Parent to purchase, redeem, acquire, cancel or otherwise retire for value Capital Stock of Parent, or permit payments of dividends or distributions by Parent to its shareholders solely in amounts and at the times necessary to permit such shareholders to (or permit subsequent distributions to permit their respective shareholders to) purchase, redeem, acquire, cancel or otherwise retire for value Capital Stock of such shareholders, in each case held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates), or a trust established for the benefit of any of the foregoing of Parent, the Company or its Subsidiaries, upon death, disability, retirement, severance or termination of employment or service or pursuant to any agreement under which such Capital Stock or related rights were issued; provided that the amount of such payments under this clause (7) after the Issue Date does not exceed in the aggregate $5.0 million; (8) the payment of dividends or distributions of amounts to Parent in amounts and at such times as are sufficient to pay the scheduled interest or dividends owed by Parent on the Parent Preferred Stock or Exchange Debentures so long as (x) Parent is the direct Parent of the Company owning 100% of the Capital Stock of the Company and (y) such Parent Preferred Stock or Exchange Debentures contains no scheduled requirement for the payment of cash interest or dividends, as applicable, until at least five years from the date of their original issuance, provided that at the time of such 45 Restricted Payment and after giving effect thereto, either (A) Company would be able to meet the Coverage Ratio Incurrence Condition or (B) the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments made after the Issue Date, does not exceed the sum referred to in clause (iii) of the next preceding paragraph; (9) Restricted Investments the amount of which, together with the amount of all other Restricted Investments made pursuant to this clause (9) after the Issue Date, does not exceed $10.0 million, provided that, in the case of clauses (8) and (9), no Default or Event of Default shall have occurred and be continuing or occur as a consequence of the actions or payments set forth therein; or (10) during any period in which Parent files consolidated income tax returns that include the Company, payments to Parent in amounts not in excess of the amount that the Company would have paid if it had filed consolidated tax returns on a separate-company basis, in each case solely in amounts and at the times necessary to permit Parent to pay its consolidated income taxes. Each Restricted Payment permitted pursuant to the preceding paragraph (other than the Restricted Payments referred to in clauses (2) through (5) or (10) thereof, and, to the extent deducted in determining Consolidated Net Income in any period, the Restricted Payments referred to in clauses (6) and (7) thereof) shall be included once in calculating whether the conditions of clause (iii) of the second preceding paragraph have been met with respect to any subsequent Restricted Payments. For purposes of determining compliance with this Section 4.05, in the event that a transaction meets the criteria of more than one of the types of Restricted Payments described in the clauses of the immediately preceding paragraph or of the clauses of the definition of "Restricted Payment," the Company, in its sole discretion, shall classify such transaction and only be required to include the amount and type of such transaction in one of such clauses. If an issuance of Capital Stock of the Company is applied to make a Restricted Payment pursuant to clause (2), (3) or (4) above, then, in calculating whether the conditions of clause (iii) of the second preceding paragraph have been met with respect to any subsequent Restricted Payments, the proceeds of any such issuance shall be included under such clause (iii) only to the extent such proceeds are not applied as so described in this sentence. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by Section 4.05 were computed, which calculations shall be based upon the Company's latest available financial statements. SECTION 4.06. Corporate Existence. Subject to Section 4.16 and Article 5, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each of its Subsidiaries in accordance with the respective organizational documents of each of its Subsidiaries and the rights (charter and statutory), licenses and franchises of the Company and each of its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any Subsidiary, if the Board of Directors of the Company shall determine that the preservation thereof is no longer 46 desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders. SECTION 4.07. Limitations on Additional Indebtedness. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, to incur any Indebtedness (including without limitation Acquired Indebtedness); provided that (i) the Company and its Restricted Subsidiaries may incur Permitted Indebtedness and (ii) the Company may incur additional Indebtedness if, after giving effect thereto, the Company's Consolidated Interest Coverage Ratio on the date thereof would be at least 2.0 to 1, determined on a pro forma basis as if the incurrence of such additional Indebtedness, and the application of the net proceeds therefrom, had occurred at the beginning of the four-quarter period used to calculate the Company's Consolidated Interest Coverage Ratio. SECTION 4.08. Limitation on the Issuance of Capital Stock of Restricted Subsidiaries. The Company will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell any shares of its Capital Stock (including options, warrants or other rights to purchase shares of such Capital Stock) except (i) to the Company or a Wholly-Owned Restricted Subsidiary, (ii) if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary or (iii) to the extent such shares represent directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Wholly-Owned Restricted Subsidiary. The proceeds of any sale of Capital Stock permitted hereunder and referred to in clauses (ii) and (iii) above will be treated as Net Available Proceeds and must be applied in a manner consistent with the provisions of Section 4.16. SECTION 4.09. Limitations on Layering Debt. The Company will not, and will not permit any Subsidiary Guarantor to, incur any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness of the Company or such Subsidiary Guarantor unless such Indebtedness by its terms is pari passu with, or subordinated to, the Notes or the Note Guarantee of such Subsidiary Guarantor, as the case may be. SECTION 4.10. Limitation on Transactions with Affiliates. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, in one transaction or a series of related transactions, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction (or series of related transactions) involving aggregate payments in excess of $1.0 million, an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and a Secretary's Certificate which sets forth and authenticates a resolution that has been adopted by a vote of a majority of the Independent Directors approving such Affiliate 47 Transaction or, if at the time fewer than three Independent Directors are then in office, a Secretary's Certificate which sets forth and authenticates a resolution that has been adopted unanimously by the Company's Board of Directors and (b) with respect to any Affiliate Transaction (or series of related transactions) involving aggregate payments of $5.0 million or more, the certificates described in the preceding clause (a) and an opinion as to the fairness to the Company or such Subsidiary from a financial point of view issued by an Independent Financial Advisor; provided, however, that the following shall not be deemed to be Affiliate Transactions: (i) transactions exclusively between or among (1) the Company and one or more Restricted Subsidiaries or (2) Restricted Subsidiaries, provided, in each case, that no Affiliate of the Company (other than another Restricted Subsidiary) owns Capital Stock of any such Restricted Subsidiary; (ii) transactions between the Company or any Restricted Subsidiary and any qualified employee stock ownership plan established for the benefit of the Company's employees, or the establishment or maintenance of any such plan; (iii) reasonable director, officer and employee compensation and other benefit, and indemnification arrangements approved by a majority of the Independent Directors on the Board of Directors; (iv) transactions permitted under Section 4.05; (v) the pledge of Capital Stock of Unrestricted Subsidiaries to support the Indebtedness thereof; (vi) the entering into of any Tax Sharing Agreement, and any payment pursuant thereto; (vii) the payment on behalf of Parent of ministerial administrative and operating fees and expenses in the ordinary course to Persons other than to Affiliates of Parent or the Company, provided that the aggregate amount thereof in any fiscal year of the Company does not exceed $750,000; (viii) arrangements with ABN AMRO Bank N.V. or any of its Affiliates or their respective successors (x) under the New Credit Agreement or the Notes or in connection therewith, (y) in connection with the offering of the Notes or the Series A Senior Preferred Stock or (z) pursuant to other banking, financing or underwriting activity entered into in the ordinary course of business; (ix) transactions between the Company or any Restricted Subsidiary and any Affiliate of the Company or such Restricted Subsidiary that is a joint venture, provided that no direct or indirect holder of an equity interest in such joint venture (other than the Company or a Restricted Subsidiary) is an Affiliate of the Company or such Restricted Subsidiary; and (x) Specified Transaction Payments. SECTION 4.11. Limitations on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, incur or permit to exist any Lien of any nature whatsoever on any property of the Company or any Restricted Subsidiary (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, which secures Indebtedness that is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with (or if such Lien secures Indebtedness that is subordinated to the Notes, prior to) such Indebtedness for so long as such Indebtedness is secured by a Lien. The foregoing restrictions shall not apply to (i) Liens existing on the Issue Date securing Indebtedness outstanding on the Issue Date; (ii) Liens in favor of the Company or a Subsidiary Guarantor; (iii) Liens to secure Indebtedness that is non-recourse to the Company or any of its Subsidiaries or any of their respective assets other than the assets acquired or improved with such 48 Indebtedness; (iv) Liens securing Acquired Indebtedness permitted to be incurred under this Indenture, provided that the Liens do not extend to property or assets not subject to such Lien at the time of acquisition (other than improvements thereon); (v) Liens on property of a Person existing at the time such Person is acquired or merged with or into or consolidated with the Company or any such Restricted Subsidiary (and not created in anticipation or contemplation thereof); (vi) Liens to secure Refinancing Indebtedness of Indebtedness secured by Liens referred to in the foregoing clauses (iv) and (v), provided that in each case such Liens do not extend to any additional property or assets (other than improvements thereon). SECTION 4.12. Taxes. The Company shall, and shall cause each of its Subsidiaries to, pay prior to delinquency all taxes, assessments and governmental levies the failure of which to pay could reasonably be expected to result in a material adverse effect on the condition (financial or otherwise), business or results of operations of the Company and its Subsidiaries taken as a whole, except for those taxes contested in good faith by appropriate proceedings. SECTION 4.13. Limitations on Restrictions on Distributions from Restricted Subsidiaries. The Company will not, and will not permit any of its Restricted Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual Payment Restriction with respect to any of its Restricted Subsidiaries, except for (a) any such Payment Restriction in effect on the Issue Date under the New Credit Agreement or the Parent Preferred Stock or any similar Payment Restriction under any similar credit facility, or any amendment, restatement, renewal, replacement or refinancing of any of the foregoing, provided that such similar Payment Restrictions are not, taken as a whole, materially more restrictive than the Payment Restrictions in effect on the Issue Date under the New Credit Agreement or the Parent Preferred Stock, (b) any such Payment Restriction in effect on the Issue Date consisting of customary net worth or leverage tests in effect on the Issue Date under any credit facility of any Foreign Subsidiary, or any amendment, restatement, renewal, replacement or refinancing of any of the foregoing (including for purposes of this clause (b), any increase in the principal amount available thereunder) (a "REPLACEMENT FACILITY"), provided that such Payment Restrictions in any such Replacement Facility are not, taken as a whole, materially more restrictive than the Payment Restrictions in effect on the Issue Date under the facility amended, restated, renewed, replaced or refinanced, (c) any such Payment Restriction under any agreement evidencing any Acquired Indebtedness that was permitted to be incurred pursuant to this Indenture in effect at the time of such incurrence and not created in contemplation of such event, provided that such Payment Restriction is not extended to apply to any of the assets of the entities not previously subject thereto, (d) any such Payment Restriction arising in connection with Refinancing Indebtedness; provided that any such Payment Restrictions that arise under such Refinancing Indebtedness are not, taken as a whole, materially more restrictive than those under the agreement creating or evidencing the Indebtedness being refunded or refinanced and (e) any such restriction by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business. 49 SECTION 4.14. Maintenance of Office or Agencies. The Company will maintain an office or an agency (which may be an office of any Agent) where Notes may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of any change in the location of such office or agency. If at any time the Company shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, subject to Section 2.06. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. SECTION 4.15. Change of Control. (a) Upon the occurrence of a Change of Control (the "CHANGE OF CONTROL TRIGGER DATE"), each Holder of Notes may require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below at an offer price in cash equal to 101% of the aggregate principal amount of the Notes thereof plus accrued and unpaid interest (including Special Interest, if any), if any, to the date of repurchase (the "CHANGE OF CONTROL PURCHASE PRICE"). (b) Within 30 days following any Change of Control, the Company will mail to the Trustee (who shall mail to each Holder at the Company's expense) a notice (i) describing the transaction or transactions that constitute the Change of Control, (ii) offering to repurchase, pursuant to the procedures required by Section 3.08 of this Indenture and described in such notice (a "CHANGE OF CONTROL OFFER"), on a date specified in such notice (which shall be a business day not earlier than 30 days or later than 60 days from the date such notice is mailed) and for the Change of Control Purchase Price, all Notes properly tendered by such holder pursuant to such offer to purchase for the Change of Control Purchase Price and (iii) describing the procedures that holders must follow to accept the Change of Control Offer. (c) The Change of Control Offer will remain open for a period of at least 20 Business Days following its commencement (the "CHANGE OF CONTROL OFFER PERIOD"). No later than five Business Days after the termination of the Change of Control Offer Period (the "CHANGE OF CONTROL PURCHASE DATE"), the Company will purchase all Notes tendered in response to the Change of Control Offer. Payment for any Notes so purchased will be made in the same manner as interest payments are made. 50 (d) Prior to complying with the provisions of this Section 4.15, but in any event within 30 days following a Change of Control, the Company will either repay all outstanding Senior Indebtedness or obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of Notes required by this covenant. The Company's obligation to make a Change of Control Offer will be satisfied if a third party makes the Change of Control Offer in the manner and at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer. (e) The Company will comply with the applicable tender offer rules, including the requirements of Rule 14e-1 under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Change of Control Offer. SECTION 4.16. Limitations on Asset Sales. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate any Asset Sale unless (i) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets included in such Asset Sale (evidenced by the delivery by the Company to the Trustee of an Officers' Certificate certifying that such Asset Sale complies with this clause (i)), (ii) immediately before and immediately giving effect to such Asset Sale, no Default or Event of Default shall have occurred and be continuing, and (iii) at least 80% of the consideration received by the Company or such Restricted Subsidiary therefor is in the form of cash paid at the closing thereof. The amount (without duplication) of any (x) Indebtedness (other than Subordinated Indebtedness) of the Company or such Restricted Subsidiary that is expressly assumed by the transferee in such Asset Sale and with respect to which the Company or such Restricted Subsidiary, as the case may be, is unconditionally released by the holder of such Indebtedness, and (y) any Cash Equivalents, or other notes, securities or items of property received from such transferee that are promptly (but in any event within 15 days) converted by the Company or such Restricted Subsidiary to cash (to the extent of the cash actually so received), shall be deemed to be cash for purposes of clause (ii) and, in the case of clause (x) above, shall also be deemed to constitute a repayment of, and a permanent reduction in, the amount of such Indebtedness for purposes of the following paragraph (b). If at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such conversion or disposition shall be deemed to constitute the date of an Asset Sale hereunder and the Net Available Proceeds thereof shall be applied in accordance with this Section 4.16. A transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to a Restricted Subsidiary will not be deemed to be an Asset Sale and a transfer of assets that constitutes a Restricted Investment and that is permitted under Section 4.05 will not be deemed to be an Asset Sale. (b) If the Company or any Restricted Subsidiary engages in an Asset Sale, the Company or any Restricted Subsidiary shall, no later than 360 days after such Asset Sale (i) 51 apply all or any of the Net Available Proceeds therefrom to repay amounts outstanding under the New Credit Agreement or any other Senior Indebtedness; provided, in each case, that the related loan commitment (if any) of any Indebtedness constituting revolving credit debt is thereby permanently reduced by the amount of such Indebtedness so repaid and/or (ii) invest all or any part of the Net Available Proceeds thereof in the purchase of fixed assets to be used by the Company and its Restricted Subsidiaries in a Related Business (together with any short-term assets incidental thereto), or the making of a Related Business Investment. The amount of such Net Available Proceeds not applied or invested as provided in this paragraph will constitute "EXCESS PROCEEDS." (c) When the aggregate amount of Excess Proceeds equals or exceed $5.0 million (such date, the "ASSET SALE TRIGGER DATE"), the Company will be required to make an offer to purchase, from all Holders of the Notes, an aggregate principal amount of Notes equal to the amount of such Excess Proceeds as follows: (i) The Company will make an offer to purchase (a "NET PROCEEDS OFFER") from all holders of the Notes, in accordance with the procedures set forth in Section 3.08, the maximum principal amount (expressed as a multiple of $1,000) of Notes that may be purchased out of the amount (the "PAYMENT AMOUNT") of such Excess Proceeds. (ii) The offer price for the Notes will be payable in cash in an amount equal to 100% of the principal amount of the Notes tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest and Special Interest, if any, to the date such Net Proceeds Offer is consummated (the "OFFERED PRICE"), in accordance with the procedures set forth in this Indenture. To the extent that the aggregate Offered Price of Notes tendered pursuant to a Net Proceeds Offer is less than the Payment Amount relating thereto (such shortfall constituting a "NET PROCEEDS DEFICIENCY"), the Company may use such Net Proceeds Deficiency, or a portion thereof, for general corporate purposes, subject to the limitations in Section 4.05. (iii) If the aggregate Offered Price of Notes validly tendered and not withdrawn by holders thereof exceeds the Payment Amount, Notes to be purchased will be selected on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, will be purchased). The Net Proceeds Offer shall remain open for a period of at least 20 Business Days following its commencement (the "NET PROCEEDS OFFER PERIOD"). No later than five Business Days after the termination of the Offer Period (the "NET PROCEEDS PURCHASE DATE"), the Company will purchase the principal amount of Notes required to be purchased pursuant to this covenant. Payment for any Notes so purchased will be made in the same manner as interest payments are made. 52 (iv) Upon completion of such Net Proceeds Offer in accordance with the foregoing provisions, the amount of Excess Proceeds with respect to which such Net Proceeds Offer was made shall be deemed to be zero. The Company will not permit any Subsidiary to enter into or suffer to exist any agreement that would place any restriction of any kind (other than pursuant to law or regulation or the New Credit Agreement) on the ability of the Company to make a Net Proceeds Offer following any Asset Sale. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, if applicable, in the event that an Asset Sale occurs and the Company is required to purchase Notes as described above. SECTION 4.17. Additional Note Guarantees. If the Company or any of its Subsidiaries shall acquire or create another Subsidiary (other than (x) any Foreign Subsidiary or (y) a Subsidiary that has been designated as an Unrestricted Subsidiary or (z) an Immaterial Subsidiary), then within 10 days after acquiring or creating such Subsidiary, the Company will cause each such Subsidiary to execute and deliver to the Trustee a counterpart of this Indenture as a Subsidiary Guarantor. ARTICLE 5 SUCCESSORS SECTION 5.01. Limitations on Mergers and Certain Other Transactions. (a) The Company will not, in a single transaction or a series of related transactions, (i) consolidate or merge with or into (other than a merger with a Wholly-Owned Restricted Subsidiary solely for the purpose of changing the Company's jurisdiction of incorporation to another State of the United States), or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Company or the Company and its Subsidiaries (taken as a whole), or assign any of its obligations under the Notes and this Indenture, to any Person or (ii) adopt a Plan of Liquidation unless, in either case: (w) the Person formed by or surviving such consolidation or merger (if other than the Company) or to which such sale, lease, conveyance or other disposition or assignment shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the "SUCCESSOR"), is a corporation organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Notes and this Indenture; (x) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (w) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; and (y) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (w) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, 53 (1) the Consolidated Net Worth of the Company or the Successor, as the case may be, would be at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction and (2) the Company or the Successor, as the case may be, could meet the Coverage Ratio Incurrence Condition; and (z) each Subsidiary Guarantor, unless it is the other party to the transactions described above, shall have by amendment to its guarantee confirmed that its guarantee of the Notes shall apply to the obligations of the Company or the Successor under the Notes and this Indenture. For purposes of this covenant, any Indebtedness of the Successor which was not Indebtedness of the Company immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction. (b) No Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), another Person or entity whether or not affiliated with such Subsidiary Guarantor unless: (i) the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantor under the Notes and this Indenture pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee under this Indenture, (ii) immediately after giving effect to such transaction, no Default or Event of Default exists, and (iii) immediately after giving effect to such transaction, the Coverage Ratio Incurrence Condition would be met. (c) Subject to Section 5.01(b), in the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Capital Stock of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, then such Subsidiary Guarantor (in the event of a sale or other disposition of all of the Capital Stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Subsidiary Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that, to the extent applicable, the Net Proceeds of such sale or other disposition are applied in accordance with Section 4.16. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default. (a) Each of the following constitutes an event of default (an "EVENT OF DEFAULT"): 54 (i) failure by the Company to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days; (ii) failure by the Company to pay the principal or premium, if any, on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise; (iii) failure by the Company to comply with any of its agreements or covenants described above under Article 5, or in respect of its obligations to make a Change of Control Offer or a Net Proceeds Offer described in Sections 4.15 and 4.16, respectively; (iv) failure by the Company to comply with any other covenant in this Indenture and continuance of such failure for 60 days after notice of such failure has been given to the Company by the Trustee or by the holders of at least 25% of the aggregate principal amount of the Notes then outstanding; (v) failure by either the Company or any of its Restricted Subsidiaries to make any payment when due after the expiration of any applicable grace period, in respect of any Indebtedness of the Company or any of such Restricted Subsidiaries, or the acceleration of the maturity of such Indebtedness by the holders thereof because of a default, with an aggregate outstanding principal amount for all such Indebtedness under this clause (v) of $10.0 million or more (but excluding in any event any such Indebtedness that is paid when so due after expiration of any applicable grace period, or upon acceleration of the maturity thereof, pursuant to any letter of credit); (vi) one or more final, non-appealable judgments or orders that exceed $10.0 million in the aggregate for the payment of money have been entered by a court or courts of competent jurisdiction against the Company or any Subsidiary of the Company and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered; (vii) except as permitted by Section 5.01, any Note Guarantee ceases to be in full force and effect or any Guarantor repudiates its obligations under any Note Guarantee; (viii) if under any Bankruptcy Law, (A) the Company, Parent or any Significant Subsidiary commences a voluntary case, consents to the entry of an order for relief against it in an involuntary case, consents to the appointment of a Custodian of it or for all or substantially all of its property, or makes a general assignment for the benefit of its creditors, or (B) a court of competent jurisdiction enters an order or decree, and such order or decree remains unstated and in effect for 60 days, that is for relief against the Company, Parent or any Significant Subsidiary in an involuntary case, appoints a Custodian of the Company, Parent or any Significant Subsidiary or for all or substantially 55 all of the property of the Company, Parent or any Significant Subsidiary, or orders the liquidation of the Company, Parent or any Significant Subsidiary. (b) Any notice of default delivered to the Company by the Trustee or by Holders of Notes with a copy to the Trustee must specify the Default, demand that it be remedied and state that the notice is a "NOTICE OF DEFAULT". SECTION 6.02. Acceleration. (a) If an Event of Default (other than an Event of Default under Section 6.01(a)(viii) with respect to the Company) occurs and is continuing under this Indenture, the Trustee, by written notice to the Company, or the holders of at least 25% in aggregate principal amount of the Notes then outstanding by written notice to the Company and the Trustee may declare all amounts owing under the Notes to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal of, premium, if any, and interest on the outstanding Notes shall immediately become due and payable. (b) Notwithstanding anything to the contrary in this Indenture, if an Event of Default arises under Section 6.01(a)(viii) with respect to the Company, the principal amount of and premium on, if any, and any accrued and unpaid interest (including Special Interest, if any) on all outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. (c) The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may rescind any declaration of acceleration of such Notes and its consequences if the rescission would not conflict with any judgment or decree and if all existing Defaults and Events of Default (other than the nonpayment of principal of, or premium, if any, or interest on, the Notes which shall have become due by such declaration) shall have been cured or waived. SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, or premium, if any, or interest (including Special Interest, if any) on, the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of all Holders waive any existing Default or Event of Default and its consequences under this Indenture, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest (including Special Interest, if any) on, any Note (which may only be waived with the consent of each Holder affected). Upon any such waiver, such Default shall cease to exist, and 56 any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; provided that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. SECTION 6.05. Control by Majority of Holders. Subject to Section 7.01(e), the Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it by this Indenture. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of other Holders, or would involve the Trustee in personal liability. The Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. SECTION 6.06. Limitations on Suits by Holders. A Holder may pursue a remedy with respect to this Indenture or the Notes only if: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. Holders of the Notes may not enforce this Indenture or the Notes, except as provided herein. SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, but subject to Article 10, the right of any Holder to receive payment of principal of, and premium, if any, and interest (including Special Interest, if any) on, a Note, on or after a respective due date expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective date, shall not be impaired or affected without the consent of the Holder. SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a)(i) or (a)(ii) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company (or any Guarantor or other obligor under the Notes) for (i) principal, premium, if any, interest, if any, and Special Interest, if any, remaining unpaid on the Notes, (ii) interest on overdue principal and premium, if any, and, to the extent lawful, interest, and (iii) such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel ("TRUSTEE EXPENSES"). SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable to have the claims of the 57 Trustee (including any claim for Trustee Expenses and for amounts due under Section 7.07) and the Holders allowed in any Insolvency or Liquidation Proceeding or other judicial proceeding relative to the Company (or any Subsidiary Guarantor or other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute to Holders any money or other property payable or deliverable on any such claims and each Holder authorizes any Custodian in any such Insolvency or Liquidation Proceeding or other judicial proceeding to make such payments to the Trustee, and if the Trustee shall consent to the making of such payments directly to the Holders any such Custodian is hereby authorized to make such payments directly to the Holders, and to pay to the Trustee any amount due to it hereunder for Trustee Expenses, and any other amounts due the Trustee or any predecessor Trustee under Section 7.07; provided, however, that the Trustee shall not be authorized to (i) consent to, accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder or (ii) vote in respect of the claim of any Holder in any such Insolvency or Liquidation Proceeding or other judicial proceeding. To the extent that the payment of any such Trustee Expenses, and any other amounts due the Trustee under Section 7.07 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, Notes and other properties which the Holders may be entitled to receive in such proceeding, whether in liquidation or under any plan of reorganization or arrangement or otherwise. SECTION 6.10. Priorities. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: First: to the Trustee for all Trustee Expenses and for all amounts due under Section 7.07; Second: to the holders of Senior Indebtedness to the extent required by Article 10; Third: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, interest, Special Interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, interest and Special Interest, if any, respectively; and Fourth: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders. 58 SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.06, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. SECTION 6.12. Willful Default. In the case of an Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes under the provisions of Article 3 and under the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, upon the acceleration of the Notes. If an Event of Default occurs prior to March 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to March 1, 2003, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable, to the extent permitted by law, in an amount equal to 10.0%. ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee. (a) If an Event of Default occurs (and has not been cured) the Trustee shall (i) exercise the rights and powers vested in it by this Indenture, and (ii) use the same degree of care and skill in exercising such rights and powers as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee's duties shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether they conform to this Indenture's requirements. (c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that: (i) this Section 7.01(c) does not 59 limit the effect of Section 7.01(b); (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction it receives pursuant to Section 6.05. (d) Every provision of this Indenture that in any way relates to the Trustee shall be subject to paragraphs (a), (b) and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers or to perform any duty under this Indenture at the request of any Holders unless such Holders shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as it may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any document it believes to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in any such document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it under this Indenture in good faith and in reliance on such advice or opinion. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders, unless such 60 Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee. The Trustee shall at all times comply with Section 310(b) of the TIA as in effect from time to time. Each Agent shall have the same rights as the Trustee under this Section 7.03. SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes; it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement or recital in this Indenture or any statement in the Notes or any other document executed in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. Notice to Holders of Defaults and Events of Default. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to the Holders a notice of the Default or Event of Default within 30 days after the occurrence thereof. Except in the case of a Default or Event of Default in payment of principal or interest or Special Interest, if any, on any Note (including any failure to redeem Notes called for redemption or any failure to purchase Notes that are tendered pursuant to an Offer and that are required to be purchased by the terms of this Indenture), the Trustee may withhold the notice if and so long as a committee of its Trust Officers determines in good faith that withholding such notice is in the Holders' interests. SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each May 15 beginning with May 15, 1998, the Trustee shall mail to the Holders a brief report dated as of such reporting date that complies with section 313(a) of the TIA (but if no event described in section 313(a) of the TIA has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with section 313(b)(2) of the TIA. The Trustee shall also transmit by mail all reports as required by section 313(c) of the TIA. Commencing at the time this Indenture is qualified under the TIA, a copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange on which the Notes are listed. The Company shall notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time such compensation for its services hereunder as the parties shall agree from time to time. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable disbursements, advances and expenses it incurs or makes in addition to the 61 compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee for, from and against any and all losses, liabilities or expenses the Trustee Incurs arising out of or in connection with the acceptance or administration of its duties under this Indenture (including any expenses Incurred in connection with the performance of its duties under Section 6.08), except as set forth below. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity; provided, however, that failure by the Trustee to provide the Company with any such notice shall not relieve the Company of any of its obligations under this Section 7.07 except to the extent that the Company has been prejudiced by such failure. The Company shall defend the claim and the Trustee shall cooperate in the defense of any such claim. If, in the opinion of the Trustee's counsel, the Trustee has an interest adverse to the Company or a potential conflict of interest exists between the Trustee and the Company, the Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company's obligations under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. The Company need not reimburse any expense or indemnify against any loss or liability the Trustee Incurs through the Trustee's negligence or bad faith. To secure payment of the Company's obligations under this Section 7.07, the Trustee shall have a Lien prior to the Notes on all money or property the Trustee holds or collects, except that held in trust to pay principal of, and premium, if any, interest and Special Interest, if any, on, particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee Incurs expenses or renders services after an Event of Default specified in Section 6.01(a)(viii) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute administrative expenses under any Bankruptcy Law without any need to demonstrate substantial contribution under Bankruptcy Law. SECTION 7.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign and be discharged from the trust hereby created by so notifying the Company in writing. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (i) the Trustee fails to comply with Section 7.10; (ii) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (iii) a Custodian or public officer takes charge 62 of the Trustee or its property or (iv) the Trustee becomes incapable of performing the services of the Trustee hereunder. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee, provided that within one year after such appointment the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace any successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its appointment to Holders. The retiring Trustee shall promptly transfer all property it holds as Trustee to the successor Trustee, subject to its rights under Section 7.07 and provided that all sums owing to the retiring Trustee hereunder have been paid. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the retiring Trustee's benefit with respect to expenses and liabilities relating to the retiring Trustee's activities prior to being replaced. SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, subject to Section 7.10, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times (i) be a corporation organized and doing business under the laws of the United States of America, of any state thereof, or the District of Columbia authorized under such laws to exercise corporate trustee power, (ii) be subject to supervision or examination by federal or state authority, (iii) have a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition, and (iv) satisfy the requirements of sections 310(a)(1), (2) and (5) and 310(b) of the TIA. SECTION 7.11. Preferential Collection of Claims Against Company. The Trustee is subject to section 311(a) of the TIA, excluding any creditor relationship listed in section 311(b) 63 of the TIA. A Trustee who has resigned or been removed shall be subject to section 311(a) of the TIA to the extent indicated therein. ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.01. Discharge of Liability on Notes; Defeasance. (a) Subject to Sections 8.01(c) and 8.06, this Indenture shall cease to be of any further effect after (i) either the Company has delivered to the Trustee all outstanding Notes (other than Notes replaced pursuant to Section 2.09) for cancellation or all outstanding Notes have become due and payable and the Company has irrevocably deposited with the Trustee or a Paying Agent money and/or Government Securities in an amount sufficient (without reinvestment thereof) to pay when due all principal of, premium, if any, and interest and Special Interest, if any, on, all outstanding Notes (other than Notes replaced pursuant to Section 2.09), and (ii) the Company pays all other sums payable under this Indenture. (b) Subject to Sections 8.01(c), 8.02, and 8.06, the Company at any time may terminate (i) all its obligations under this Indenture and the Notes ("LEGAL DEFEASANCE"), or (ii) its obligations under Sections 4.02, 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 5.01 ("COVENANT DEFEASANCE"). The Company may exercise Legal Defeasance notwithstanding its prior exercise of Covenant Defeasance. If the Company exercises Legal Defeasance, payment of the Notes may not be accelerated because of an Event of Default. If the Company exercises Covenant Defeasance, payment of the Notes may not be accelerated because of an Event of Default specified in 6.01 (a)(iii), (iv), (v), (vi), (vii) or (viii). Upon satisfaction of the conditions set forth in Section 8.02 and upon the Company's request (and at the Company's expense), the Trustee shall acknowledge in writing the discharge of those obligations that the Company has terminated. Upon discharge of the Company's obligations as a result of the exercise by the Company of its Covenant Defeasance the obligations of the Guarantors under the Note Guarantees and under this Indenture shall terminate. (c) Notwithstanding Sections 8.01(a) and (b), the Company's obligations under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 4.04, 7.07, 7.08, 8.04, 8.05, and 8.06, and the obligations of the Trustee and the Paying Agent under Section 8.04 shall survive until the Notes have been paid in full. Thereafter, the Company's obligations under Sections 7.07 and 8.05 and the obligations of the Company, Trustee and Paying Agent under Section 8.04 shall survive. 64 SECTION 8.02. Conditions to Defeasance. The Company may exercise either Legal Defeasance or Covenant Defeasance only if: (i) the Company irrevocably deposits with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, (x) in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest and Special Interest, if any, on the outstanding Notes on the stated maturity or the date such payments are due in accordance with the terms of the Notes or on the applicable, redemption date, as the case may be, and (y) in the opinion of the Company as stated in an Officers' Certificate, to pay the Trustee Expenses. In addition, the Company specifies whether the Notes are being defeased to maturity or to a particular redemption date, (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee (1) an Opinion of Counsel reasonably acceptable to the Trustee confirming that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred, (2) an Opinion of Counsel to the effect that (x) the deposit of the trust funds does not violate the Investment Company Act of 1940 and (y) after the period ending on the 123rd day after the date of deposit, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a case commenced by or against the Company under either such statute, (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee (1) an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner at the same times as would have been the case if such Covenant Defeasance had not occurred, (2) an Opinion of Counsel to the effect that (x) the deposit of the trust funds does not violate the Investment Company Act of 1940 and (y) after the period ending on the 123rd day after the date of deposit, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a case commenced by or against the Company under either such statute, 65 (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 123rd day after the date of deposit, (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a Default under any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound, (vi) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others and (vii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.03. Application of Trust Money. The Trustee or Paying Agent shall hold in trust money and/or Government Securities deposited with it pursuant to this Article 8. The Trustee or Paying Agent shall apply the deposited money and the money from Government Securities in accordance with this Indenture to the payment of principal of, and premium, if any, interest or Special Interest, if any, on, the Notes. Money deposited with the Trustee or a Paying Agent pursuant to this Article 8 shall not be subject to the provisions of Article 10. SECTION 8.04. Repayment to Company. After the Notes have been paid in full, the Trustee and the Paying Agent shall promptly turn over to the Company any excess money or Notes held by them. Any money deposited with the Trustee or a Paying Agent pursuant to this Article 8 for the payment of the principal of, premium, if any, interest or Special Interest, if any, on, any Note that remains unclaimed for two years after becoming due and payable shall be paid to the Company on its request; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such money shall cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in The New York Times and The Wall Street Journal (National Edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. 66 SECTION 8.05. Indemnity for Government Securities. The Company shall pay and shall indemnify the Trustee and any Paying Agent against any tax, fee or other charge imposed on or assessed against cash and/or Government Securities deposited with it pursuant to this Article 8 or the principal and interest received on such cash and/or Government Securities. SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's Obligations under this Indenture and the Notes and the Guarantors' Obligations under the Note Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or Government Securities in accordance with this Article 8; provided, however, that if the Company or any Guarantor has made any payment of principal of, or premium, if any, interest, or Special Interest, if any, on, any Notes because of the reinstatement of its Obligations under this Indenture and the Notes or the Note Guarantees, the Company or such Guarantor, as the case may be, shall be subrogated to the Holders' rights to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.01. Amendments and Supplements Permitted without Consent of Holders. (a) Notwithstanding Section 9.02, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder to: (i) cure any ambiguity, defect or inconsistency; (ii) provide for uncertificated Notes in addition to or in place of Certificated Notes; (iii) provide for the assumption of the obligations to the Holders of the Company or a Guarantor, as the case may be, in the event of a merger or consolidation; (iv) make any change that (1) would provide any additional rights or benefits to Holders or (2) does not adversely affect the legal rights under this Indenture of any Holder; or (v) comply with the requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. (b) Upon the Company's request, after receipt by the Trustee of a resolution of the Board of Directors of the Company authorizing the execution of any amended or supplemental indenture and the documents described in Section 9.06, the Trustee shall join with the Company and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture, but the Trustee shall not be obligated to enter into an amended or supplemental indenture that adversely affects its own rights, duties or immunities under this Indenture or otherwise. 67 SECTION 9.02. Amendments and Supplements Requiring Consent of Holders. (a) Except as otherwise provided in Sections 9.01(a), this Indenture and the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), and any existing Default or Event of Default or compliance with any provision of this Indenture or the Notes may be waived (other than any continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes) with the consent of Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes); provided that: (i) no such modification or amendment may, without the consent of the holders of 75% in aggregate principal amount of Notes then outstanding, amend or modify the obligations of the Company under Section 4.15 (or the definitions related thereto) that could adversely affect the rights of any holder of the Notes; and (ii) without the consent of each holder affected, the Company and the Trustee may not: (w) extend the maturity of any Note; (x) affect the terms of any scheduled payment of interest on or principal of the Notes (including without limitation any redemption provisions); (y) take any action that would subordinate the Notes or the Note Guarantees to any other Indebtedness of the Company or any of Guarantors, respectively (except as provided in Article 10), or otherwise affect the ranking of the Notes or the Note Guarantees; or (z) reduce the percentage of holders necessary to consent to an amendment, supplement or waiver to this Indenture. (b) It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to each Holder affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver. SECTION 9.03. Compliance with TIA. Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended supplemental indenture that complies with the TIA as then in effect. SECTION 9.04. Revocation and Effect of Consents. (a) Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same Indebtedness as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to his or her Note or portion of a Note if the Trustee receives the notice of revocation before the date on 68 which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount of Notes have consented to the amendment, supplement or waiver. (b) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the holders of Notes entitled to consent to any amendment or waiver. If a record date is fixed, then notwithstanding the provisions of the immediately preceding paragraph, those Persons who were Holders of Notes at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders of Notes after such record date. No consent shall be valid or effective for more than 90 days after such record date unless consents from Holders of the principal amount of Notes required hereunder for such amendment or waiver to be effective shall have also been given and not revoked within such 90-day period. (c) After an amendment or waiver becomes effective, it shall bind every Holder, unless it is of the type described in clause (ii) of Section 9.02(a), in which case the amendment or waiver shall only bind each Holder that consented to it and every subsequent holder of a Note that evidences the same debt as the consenting Holder's Note. SECTION 9.05. Notation or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. Trustee Protected. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment or supplemental indenture, the Trustee shall be entitled to receive and, subject to Section 7.01, shall be fully protected in relying upon, an Officers' Certificate and Opinion of Counsel pursuant to Sections 12.04 and 12.05 as conclusive evidence that such amendment or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon the Company and the Guarantors in accordance with its terms. Neither the Company nor any Guarantor may sign an amendment or supplemental indenture until the Board of Directors of the Company approves it. 69 ARTICLE 10 SUBORDINATION SECTION 10.01. Agreement to Subordinate. The Company and each Guarantor agrees, and each Holder by accepting a Note agrees, that the payment by the Company of principal of, and premium, if any, and interest (including Special Interest, if any) on the Notes, and by each Guarantor of such amounts under its Note Guarantee (collectively, the "NOTE INDEBTEDNESS"), are subordinated to the prior payment in full in cash when due of the principal of, and premium, if any, and accrued and unpaid interest on and all other amounts owing in respect of, all existing and future Senior Indebtedness of the Company and of each Guarantor, as the case may be. SECTION 10.02. Liquidation; Dissolution; Bankruptcy. (a) Upon any payment or distribution to creditors of the Company or any Guarantor of the assets of the Company or the Guarantors of any kind or character in a total or partial liquidation or dissolution of the Company or the Guarantors or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or any Guarantor, whether voluntary or involuntary (including any assignment for the benefit of creditors and proceedings for marshaling of assets and liabilities of the Company or any Guarantor) (a "INSOLVENCY OR LIQUIDATION PROCEEDING"), the holders of all Senior Indebtedness of the Company or any Guarantor then outstanding will be entitled to payment in full in cash (including interest accruing subsequent to the filing of petition of bankruptcy or insolvency at the rate specified in the document relating to the applicable Senior Indebtedness, whether or not such interest is an allowed claim enforceable against the Company or any Guarantor under applicable law) before the Holders of Notes are entitled to receive any payment (other than payments made from a trust previously established pursuant to provisions described Section 8.02) on or with respect to the Note Indebtedness and until all Senior Indebtedness receives payment in full in cash, any distribution to which the Holders of Notes would be entitled will be made to holders of Senior Indebtedness. (b) Notwithstanding anything to the contrary in Section 10.02, Holders of Notes may continue to receive payments from the trust established pursuant to Article 8. SECTION 10.03. No Payment on Notes in Certain Circumstances. (a) Upon the occurrence of any default in the payment of any principal of or interest on or other amounts due on any Designated Senior Indebtedness of the Company or any Guarantor (a "PAYMENT DEFAULT"), no payment of any kind or character shall be made by the Company or a Guarantor (or by any other Person on its or their behalf) with respect to the Note Indebtedness unless and until (i) such Payment Default shall have been cured or waived in accordance with the instruments governing such Indebtedness or shall have ceased to exist, (ii) such Designated Senior Indebtedness has been discharged or paid in full in cash in accordance with the instruments governing such Indebtedness or (iii) the benefits of this sentence have been waived by the holders of such Designated Senior Indebtedness or their representative, including, if applicable, the Agents, immediately after which the Company must resume making any and all required payments, including missed payments, in respect of its obligations under the Notes. 70 (b) Upon (i) the occurrence and continuance of an event of default (other than a Payment Default) relating to Designated Senior Indebtedness, as such event of default is defined therein or in the instrument or agreement under which it is outstanding, which event of default, pursuant to the instruments governing such Designated Senior Indebtedness, entitles the holders (or a specified portion of the holders) of such Designated Senior Indebtedness or their designated representative to immediately accelerate without further notice (except such notice as may be required to effect such acceleration) the maturity of such Designated Senior Indebtedness (whether or not such acceleration has actually occurred) (a "NON-PAYMENT DEFAULT") and (ii) the receipt by the Trustee and the Company or any Guarantor from the trustee or other representative of holders of such Designated Senior Indebtedness of written notice (a "PAYMENT BLOCKAGE NOTICE") of such occurrence, no payment is permitted to be made by the Company or any Guarantor (or by any other Person on its or their behalf) in respect of the Note Indebtedness for a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date of receipt by the Trustee of such notice and ending on the earliest to occur of the following events (subject to any blockage of payments that may then be in effect due to a Payment Default on Designated Senior Indebtedness): (w) such Non-payment Default has been cured or waived or has ceased to exist; (x) a 179-consecutive-day period commencing on the date such written notice is received by the Trustee has elapsed; (y) such Payment Blockage Period has been terminated by written notice to the Trustee from the Trustee or other representative of holders of such Designated Senior Indebtedness, whether or not such Non-payment Default has been cured or waived or has ceased to exist; and (z) such Designated Senior Indebtedness has been discharged or paid in full in cash, immediately after which, in the case of clause (w), (x), (y) or (z), the Company or any Guarantor, as the case may be, must resume making any and all required payments, including missed payments, in respect of its obligations under the Notes. Notwithstanding the foregoing, (A) not more than one Payment Blockage Period may be commenced in any period of 365 consecutive days and (B) no default or event of default with respect to the Designated Senior Indebtedness of the Company or any Guarantor that was the subject of a Payment Blockage Notice which existed or was continuing on the date of the giving of any Payment Blockage Notice shall be or serve as the basis for the giving of a subsequent Payment Blockage Notice whether or not within a period of 365 consecutive days unless such default or event of default shall have been cured or waived for a period of at least 90 consecutive days after such date. Notwithstanding anything in this Indenture to the contrary, there must be 180 consecutive days in any 365-day period in which no Payment Blockage Period is in effect. (c) Notwithstanding the foregoing, Holders of Notes may receive and retain Permitted Junior Securities and payment from the money or the proceeds held in any defeasance trust described under Article 8, and no such receipt or retention will be contractually subordinated in right of payment to any Senior Indebtedness or subject to the restrictions described in this Article 10. SECTION 10.04. Acceleration of Notes. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify the Credit Facility Agent and each holder of the Senior Indebtedness of the Company or any Guarantor of the acceleration. 71 SECTION 10.05. When Distributions Must Be Paid Over. In the event that any payment or distribution of assets of the Company or any Guarantor, whether in cash, property or securities, shall be received by the Trustee or the Holders of Notes at a time when such payment or distribution is prohibited by this Article 10, such payment or distribution shall be segregated from other funds or assets and held in trust for the benefit of the holders of Senior Indebtedness of the Company or such Guarantor, as the case may be, and shall be paid or delivered by the Trustee or such Holders, as the case may be, to the holders of the Senior Indebtedness of the Company or such Guarantor, as the case may be, remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness of the Company or such Guarantor, as the case may be, may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness of the Company or such Guarantor, as the case may be, held or represented by each, for application to the payment of all Senior Indebtedness of the Company or such Guarantor, as the case may be, remaining unpaid, to the extent necessary to pay or to provide for the payment in full in cash of all such Senior Indebtedness after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. With respect to the holders of Senior Indebtedness of the Company or any Guarantor, the Trustee undertakes to perform only such obligations on its part as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to any holders of the Senior Indebtedness of the Company or any Guarantor shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of the Senior Indebtedness of the Company or any Guarantor and shall not be liable to any holders of such Senior Indebtedness if the Trustee shall pay over or distribute to, or on behalf of, Holders or the Company or any other Person, money or assets to which any holders of such Senior Indebtedness are entitled pursuant to this Article 10, except if such payment is made at a time when a Trust Officer has knowledge that the terms of this Article 10 prohibit such payment. SECTION 10.06. Notice. Neither the Trustee nor the Paying Agent shall at any time be charged with the knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee or Paying Agent under this Article 10, unless and until the Trustee or Paying Agent shall have received written notice thereof from the Company or such Guarantor or one or more holders of the Senior Indebtedness of the Company or such Guarantor, as the case may be, or a Representative of any holders of such Senior Indebtedness; and, prior to the receipt of any such written notice, the Trustee or Paying Agent shall be entitled to assume conclusively that no such facts exist. The Trustee shall be entitled to rely on the delivery to it of written notice by a Person representing itself to be a holder of the Senior Indebtedness of the Company or such Guarantor (or a Representative thereof) to establish that such notice has been given. The Company shall promptly notify the Trustee and the Paying Agent in writing of any facts it knows that would cause a payment of principal of, or premium, if any, or interest (including Special Interest, if any) on, the Notes or any other Obligation in respect of the Notes 72 to violate this Article 10, but failure to give such notice shall not affect the subordination of the Notes to the Senior Indebtedness of the Company or any Guarantor provided in this Article 10 or the rights of holders of such Senior Indebtedness under this Article 10. SECTION 10.07. Subrogation. After all Senior Indebtedness of the Company or any Guarantor has been paid in full in cash and until the Notes are paid in full, Holders shall be subrogated (equally and ratably with all other Indebtedness pari-passu with the Notes) to the rights of holders of such Senior Indebtedness to receive distributions applicable to such Senior Indebtedness to the extent that distributions otherwise payable to the Holders have been applied to the payment of such Senior Indebtedness A distribution made under this Article 10 to holders of the Senior Indebtedness of the Company or any Guarantor that otherwise would have been made to Holders is not, as between the Company or such Guarantor, as the case may be, and Holders, a payment by the Company or such Guarantor, as the case may be, on its Senior Indebtedness. SECTION 10.08. Relative Rights. This Article 10 defines the relative rights of Holders and holders of the Senior Indebtedness of the Company or any Guarantor. Nothing in this Indenture shall: (1) impair, as between the Company or a Guarantor, as the case may be, and Holders, the Obligations of the Company or any Guarantor, which are absolute and unconditional, to pay principal of, and premium, if any, and interest (including Special Interest, if any) on the Notes in accordance with their terms; (2) affect the relative rights of Holders and the creditors of the Company or any Guarantor other than their rights in relation to holders of the Senior Indebtedness of the Company or any Guarantor; or (3) prevent the Trustee or any Holder from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders of the Senior Indebtedness of the Company or any Guarantor to receive distributions and payments otherwise payable to Holders. Nothing contained in this Article 10 or elsewhere in this Indenture or in any Note is intended to or shall impair, as between the Company, any Guarantor and the Holders, the Obligations of the Company and the Guarantors, which are absolute and unconditional, to pay to the Holders the principal of, and premium, if any, and interest (including Special Interest, if any) on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company and the Guarantors other than the holders of the Senior Indebtedness of the Company or any Guarantor, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon Default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of such Senior Indebtedness. The failure to make a payment on account of principal of, or interest on the Notes by reason of any provision of this Article 10 shall not be construed as preventing the occurrence of an Event of Default under Section 6.01. 73 SECTION 10.09. The Company, Guarantors and Holders May Not Impair Subordination. (a) No right of any holder of the Senior Indebtedness of the Company or any Guarantor to enforce the subordination as provided in this Article 10 shall at any time or in any way be prejudiced or impaired by any act or failure to act by the Company or any Guarantor or by any noncompliance by the Company or any Guarantor with the terms, provisions and covenants of this Indenture or the Notes or any other agreement regardless of any knowledge thereof with which any such holder may have or be otherwise charged. (b) Without in any way limiting Section 10.09(a), the holders of any Senior Indebtedness of the Company or any Guarantor may, at any time and from time to time to the extent not otherwise prohibited by this Indenture, without the consent of or notice to any Holders, without incurring any liabilities to any Holder and without impairing or releasing the subordination and other benefits provided in this Indenture or the Holders' obligations to the holders of such Senior Indebtedness, even if any Holder's right of reimbursement or subrogation or other right or remedy is affected, impaired or extinguished thereby, do any one or more of the following: (i) amend, renew, exchange, extend, modify, increase or supplement in any manner such Senior Indebtedness or any instrument evidencing or guaranteeing or securing such Senior Indebtedness or any agreement under which such Senior Indebtedness is outstanding (including, but not limited to, changing the manner, place or terms of payment or changing or extending the time of payment of, or renewing, exchanging, amending, increasing or altering, (x) the terms of such Senior Indebtedness, (y) any security for, or any Guarantee of, such Senior Indebtedness, (z) any liability of any obligor on such Senior Indebtedness (including any guarantor) or any liability Incurred in respect of such Senior Indebtedness) (ii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any property pledged, mortgaged or otherwise securing such Senior Indebtedness or any liability of any obligor thereon, to such holder, or any liability Incurred in respect thereof; (iii) settle or compromise any such Senior Indebtedness or any other liability of any obligor of such Senior Indebtedness to such holder or any security therefor or any liability Incurred in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including, without limitation, payment of any of the Senior Indebtedness) in any manner or order; and (iv) fail to take or to record or otherwise perfect, for any reason or for no reason, any lien or security interest securing such Senior Indebtedness by whomsoever granted, exercise or delay in or refrain from exercising any right or remedy against any obligor or any guarantor or any other Person, elect any remedy and otherwise deal freely with any obligor and any security for such Senior Indebtedness or any liability of any obligor to the holders of such Senior Indebtedness or any liability Incurred in respect of such Senior Indebtedness. SECTION 10.10. Distribution or Notice to Representative. Whenever a distribution is to be made, or a notice given, to holders of Senior Indebtedness of the Company or any Guarantor, the distribution may be made and the notice given to their Representative, if any. If any payment or distribution of the Company's assets is required to be made to holders of any of the Senior Indebtedness of the Company or any Guarantor pursuant to this Article 10, the Trustee and the Holders shall be entitled to rely upon any order or decree of any court of competent jurisdiction, 74 or upon any certificate of a Representative of such Senior Indebtedness or a Custodian, in ascertaining the holders of such Senior Indebtedness entitled to participate in any such payment or distribution, the amount to be paid or distributed to holders of such Senior Indebtedness and all other facts pertinent to such payment or distribution or to this Article 10. SECTION 10.11. Rights of Trustee and Paying Agent. The Trustee or Paying Agent may continue to make payments on the Notes unless prior to any payment date it has received written notice of facts that would cause a payment of principal of, or premium, if any, or interest (including Special Interest, if any) on the Notes to violate this Article 10. Only the Company, a Guarantor, a Representative of Senior Indebtedness, or a holder of Senior Indebtedness that has no Representative may give such notice. To the extent permitted by the TIA, the Trustee in its individual or any other capacity may hold Indebtedness of the Company or any Guarantor (including Senior Indebtedness) with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 10.12. Authorization to Effect Subordination. Each Holder of a Note by its acceptance thereof authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Trustee as such Holder's attorney-in-fact for any and all such purposes (including, without limitation, the timely filing of a claim for the unpaid balance of the Note that such Holder holds in the form required in any Insolvency or Liquidation Proceeding and causing such claim to be approved). If a proper claim or proof of debt in the form required in such proceeding is not filed by or on behalf of all Holders prior to 30 days before the expiration of the time to file such claims or proofs, then the holders or a Representative of any Senior Indebtedness of the Company or any Guarantor are hereby authorized, and shall have the right (without any duty), to file an appropriate claim for and on behalf of the Holders. ARTICLE 11 GUARANTEE SECTION 11.01. Guarantee. (a) Each Guarantor hereby unconditionally, jointly and severally, guarantees (each a "NOTE GUARANTEE") to each Holder of a Note authenticated and delivered by the Trustee that: (i) the principal of, premium, interest (including Special Interest, if any) on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest (including Special Interest, if any), and premium, if any, on the Notes, if any, to the extent lawful, and all other Obligations of the Company to the Holders or the Trustee under this Indenture and the Notes will 75 be promptly paid in full, all in accordance with the terms of this Indenture and the Notes; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that the Notes will be promptly paid in full when due in accordance with the terms of such extension or renewal, whether at stated maturity, by acceleration or otherwise. Each Guarantor hereby further agrees that its Obligations under this Indenture and the Notes shall, subject to Section 11.05, be unconditional, regardless of the validity, legality or enforceability of this Indenture or the Notes, the absence of any action to enforce this Indenture or the Notes, any waiver or consent by any Holder with respect to any provisions this Indenture or the Notes, any modification or amendment of, or supplement of, this Indenture or the Notes, the recovery of any judgment against the Company or any action to enforce any such judgment, or any other circumstance that might otherwise constitute a legal or equitable discharge or defense of such Guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that its Note Guarantee will not be discharged except by complete performance by the Company of such Obligations. If any Holder or the Trustee is required by any court or otherwise to return to the Company, such Guarantor or a Custodian of the Company or such Guarantor any amount paid by the Company or such Guarantor to the Trustee or such Holder, its Note Guarantee shall, to the extent previously discharged as a result of any such payment, be immediately reinstated and be in full force and effect. Each Guarantor hereby acknowledges and agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Company's Obligations under this Indenture and the Notes may be accelerated as provided in Article 6 for purposes of its Note Guarantee notwithstanding any stay, injunction or other prohibition preventing such acceleration, and (y) in the event of any declaration of acceleration of the Company's Obligations under this Indenture and the Notes as provided in Article 6, such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purpose of its Note Guarantee. (b) Upon making any payment with respect to the Company hereunder, a Guarantor shall be subrogated to the rights of the payee against the Company with respect to such payment; provided that no Guarantor shall enforce any payment by way of subrogation or contribution until all Obligations of the Company under this Indenture have been paid in full. SECTION 11.02. Trustee to Include Paying Agent. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company, the term "Trustee" as used in this Article 11 shall (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article 11 in place of the Trustee. SECTION 11.03. Subordination of Guarantee. Each Guarantor's Obligations under its Note Guarantee shall be junior and subordinated in right of payment to any Senior Indebtedness of such Guarantor in the same manner and to the same extent as the Notes are subordinated to 76 Senior Indebtedness of the Company pursuant to Article 10. Any Payment Blockage Notice given to the Trustee in respect of the Company's Designated Senior Indebtedness pursuant to Section 10.03 shall be deemed to be a Payment Blockage Notice given to the Trustee in respect of such Guarantor's Designated Senior Indebtedness and any Payment Blockage Notice given to the Trustee in respect of such Guarantor's Designated Senior Indebtedness pursuant to this Section 11.03 shall be deemed to be a Payment Blockage Notice given to the Trustee in respect of the Company's Designated Senior Indebtedness. In the event of a conflict between the provisions of Section 10.03 and the provisions of Section 10.03 as read to apply to such Guarantor's Note Guarantee pursuant to this Section 11.03, the provisions of Section 10.03 shall apply and govern this Indenture. SECTION 11.04. Senior Subordinated Debt of Guarantor. Each Guarantor hereby agrees that it will not Incur, Guarantee or otherwise become liable for any Indebtedness that is subordinated or junior in right of payment to any Senior Indebtedness of such Guarantor unless such Indebtedness is pari passu with or is expressly subordinated in right of payment to the Notes. SECTION 11.05. Limits of Guarantee. (a) Notwithstanding anything to the contrary in this Article 11, the aggregate amount of the Obligations guaranteed under this Indenture by each Guarantor shall be limited in amount to the lesser of (a) the maximum amount that would not render such Guarantor's obligations subject to avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of any applicable state law and (b) the maximum amount that would not render the Note Guarantee an improper corporate distribution by such Guarantor under applicable state law. ARTICLE 12 MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with the duties imposed by operation of Section 318(c) of the TIA, the imposed duties shall control. SECTION 12.02. Notices. Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person, mailed by registered or certified mail, postage prepaid, return receipt requested or delivered by telecopier or overnight air courier guaranteeing next day delivery to the other's address: 77 If to the Company or the Guarantors: Eagle-Picher Industries, Inc. 250 East Fifth Street Cincinnati, Ohio 445202 Telecopier: (513) 721-7010 Attention: President If to the Trustee: The Bank of New York 101 Barclay St. Floor 21 West New York, NY 10286 Telecopier: (212) 815-5915 Attention: Corporate Trust Administration The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) the date receipt is acknowledged, if mailed by registered or certified mail; (iii) when answered back, if telecopied and (iv) the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first-class mail to his or her address shown on the register maintained by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 12.03. Communication by Holders with Other Holders. Holders may communicate pursuant to section 312(b) of the TIA with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and any other Person shall have the protection of section 312(c) of the TIA. SECTION 12.04. Certificate and Opinion As to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate (which shall include the statements set forth in Section 12.05) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel (which shall include the statements set 78 forth in Section 12.05) stating that, in the opinion of such counsel, all such conditions precedent provided for in this Indenture relating to the proposed action have been complied with. SECTION 12.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to section 314(a)(4) of the TIA) shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with, and (4) a statement as to whether, in such Person's opinion, such condition or covenant has been complied with. SECTION 12.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 12.07. Legal Holidays. If a payment date is a not a Business Day at a place of payment, payment may be made at that place on the next succeeding day that is a Business Day , and no interest shall accrue for the intervening period. SECTION 12.08. No Recourse Against Others. No director, officer, employee, incorporator or direct or indirect stockholder or Affiliate of the Company or any Guarantor (other than the Company and any Guarantor), as such, shall have any liability for any obligation of the Company under this Indenture, the Notes Guarantees or the Notes or for any claim based on, in respect of, or by reason of, any such obligation or the creation of any such obligation. Each Holder by accepting a Note waives and releases such Persons from all such liability and such waiver and release is part of the consideration for the Issuance of the Notes. SECTION 12.09. Counterparts. This Indenture may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 12.10. Initial Appointments, Compliance Certificates. The Company initially appoints the Trustee as Paying Agent, Registrar (subject to Section 2.03 and 2.06) and authenticating agent. The first compliance certificate to be delivered by the Company to the Trustee pursuant to Section 4.03 shall be for the fiscal year ending on November 30, 1998. SECTION 12.11. Governing Law. The internal laws of the State of New York shall govern this Indenture and the Notes, without regard to the conflict of laws provisions thereof. 79 SECTION 12.12. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries, and no other indenture, loan or debt agreement may be used to interpret this Indenture. SECTION 12.13. Successors. All agreements of the Company and the Guarantors in this Indenture and the Notes shall bind any successors of the Company and such Guarantors, respectively. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.14. Severability. If any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.15. Third Party Beneficiaries. Holders of Senior Indebtedness are third party beneficiaries of this Indenture, and any of them (or their Representative) shall have the right to enforce the provisions of this Indenture that benefit such holders. SECTION 12.16. Table of Contents, Headings, Etc. The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture, and shall in no way modify or restrict any of the terms or provisions of this Indenture. 80 IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date and year first written above. E-P ACQUISITION, INC. By: /s/ JOEL P. WYLER ---------------------------- Name: Joel P. Wyler Title: President DAISY PARTS, INC. By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER DEVELOPMENT COMPANY, INC. By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: President EAGLE-PICHER HOLDINGS, INC. By: /s/ JOEL P. WYLER ---------------------------- Name: Joel P. Wyler Title: President EAGLE-PICHER FAR EAST, INC. By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER FLUID SYSTEMS, INC. By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER MINERALS, INC. By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER TECHNOLOGIES, LLC By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: Director-Manager HILLSDALE TOOL & MANUFACTURING CO. By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: Authorized Person MICHIGAN AUTOMOTIVE RESEARCH CORPORATION By: /s/ ANDRIES RUIJSSENAARS ---------------------------- Name: Andries Ruijssenaars Title: Authorized Person THE BANK OF NEW YORK as Trustee By: /s/ MARY JANE MORRISSEY ---------------------------- Name: Mary Jane Morrissey Title: Vice President EXHIBIT A (FORM OF FACE OF NOTE) [Legend if Note is a Transfer Restricted Note] THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY (1) BY ITS ACQUISITION HEREOF REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND (2) IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (X) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (ii) TO THE COMPANY OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (Y) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (X) ABOVE. A-1 [Additional Legend if Note is a Global Note] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 2.06, 2.07 AND 2.08 OF THE INDENTURE. [Additional Legend if Note is a Regulation S Temporary Global Note] THIS NOTE IS A TEMPORARY GLOBAL SECURITY. PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON WHO PURCHASED SUCH INTEREST IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR DEFINITIVE SECURITIES. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT. A-2 E-P ACQUISITION, INC. TO BE MERGED INTO EAGLE-PICHER INDUSTRIES, INC. 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 No. ____________ $__________ [CUSIP][CINS] NO. E-P Acquisition, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ______________________, or registered assigns, the principal sum of ___________________ Dollars on March 1, 2008. Interest Payment Dates: March 1 and September 1, commencing March 1, 1998 Record Dates: February 15 and August 15 Pursuant to the Indenture, the payment of principal of and premium, if any, and interest and, if applicable, Special Interest on this Note is unconditionally guaranteed by Eagle-Picher Holdings, Inc., and its successors ("PARENT") and by the Subsidiary Guarantors (as defined in the Indenture) (together with Parent, the "GUARANTORS"), and such other Persons as may from time to time execute and deliver to the Trustee a counterpart of the Indenture as a Subsidiary Guarantor. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof and as more fully specified in the Indenture, which further provisions shall for all purposes have the same effect as if set forth at this place. A-3 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. E-P ACQUISITION, INC. By: ---------------------------- Name: Title: By: ---------------------------- Name: Title: FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION Dated:_______________ This is one of the Notes referred to in the within-mentioned Indenture. THE BANK OF NEW YORK as Trustee By: --------------------------------- Authorized Signatory FORM OF ALTERNATIVE CERTIFICATE OF AUTHENTICATION This is one of the Notes referred to in the within-mentioned Indenture. THE BANK OF NEW YORK as Trustee By: --------------------------------- as Authenticating Agent By: --------------------------------- Authorized Signatory A-4 FORM OF REVERSE OF NOTE 1. INTEREST. E-P Acquisition, Inc. (the "Company") promises to pay interest on the principal amount of this Note at the rate and in the manner specified below. Cash interest will accrue at 9.375% per annum until maturity and will be payable semi-annually in arrears in cash on March 1 and September 1 of each year commencing March 1, 1998, or if any such day is not a Business Day on the next succeeding Business Day (each an "Interest Payment Date"). Interest on this Note will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from the original date of issue. To the extent lawful, the Company shall pay interest on overdue principal, premium, if any, interest and Special Interest, if any, from time to time on demand at the rate of 11.375% per annum, compounded semi-annually. Interest will be computed on the basis of a 360-day year of twelve 30-day months. [In the event that one or more Registration Defaults shall have occurred and be continuing under the Registration Rights Agreement, then Special Interest (as defined therein) (in addition to the interest otherwise due hereon) will accrue on the principal amount of the Notes and the New Notes (in addition to the stated interest on the Notes and the New Notes) from and including the date on which the first such Registration Default shall have occurred to but excluding the date on which all such Registration Defaults have been cured. Special Interest will accrue at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of the first such Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such rate exceed 1.5% per annum in the aggregate as a result of any Registration Default or Defaults. All accrued Special Interest, if any, will be paid by the Company or the Guarantors, in arrears, on each Interest Payment Date, commencing September 1, 1998. Upon the cure of all Registration Defaults, the accrual of Special Interest will cease.](1) [There shall also be payable in respect of this Note all Special Interest that may have accrued on the Note for which this Note was exchanged (as defined in such Note) pursuant to the Exchange Offer or otherwise pursuant to a Registration of such Note, such Special Interest to be payable in accordance with the terms of such Note.](2) 2. METHOD OF PAYMENT. The Company will pay interest on this Note to the Person who is the registered Holder of this Note at the close of business on the record date for the next Interest Payment Date, which record date shall be February 15 and August 15 of each year (each a "Record Date"); notwithstanding the foregoing, the first record date shall be February 24, 1998. Holders must surrender Notes to a Paying Agent, as defined below, to - -------- (1) To be included in Notes but not New Notes. (2) To be included in New Notes. A-5 collect principal payments on such Notes. Principal of, premium, if any, interest and Special Interest, if any, on, the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company by wire transfer of immediately available funds or, in the case of certificated securities only, by mailing a check to the registered address of the Holder. Until otherwise designated by the Company, the Company's office or agency will be the office of the Trustee maintained for such purpose. 3. PAYING AGENT AND REGISTRAR. (a) The Bank of New York (the "Trustee") will initially act as the Paying Agent and Registrar. The Company may appoint additional paying agents or co-registrars, and change the Paying Agent, any additional paying agent, the Registrar or any co-registrar without prior notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. (b) Pursuant to the Indenture, the Company has appointed the Trustee as transfer and exchange agent for the purpose of any transfer or exchange of the Notes. (c) Holders shall present Notes to the Trustee, as transfer and exchange agent. 4. INDENTURE. The Company has issued the Notes under an Indenture, dated as of February 24, 1998 (the "Indenture"), among the Company, as issuer of the Notes, the Guarantors party thereto and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code 'SS''SS' 77aaa-77bbbb) as in effect on the date of the original issuance of the Notes (the "Trust Indenture Act"). The Notes are subject to, and qualified by, all such terms, certain of which are summarized herein, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms (all capitalized terms not defined herein shall have the meanings assigned to them in the Indenture). The Notes are unsecured general obligations of the Company limited to $220,000,000 in aggregate principal amount. 5. REDEMPTION PROVISIONS. (a) The Notes are not subject to any mandatory sinking fund redemption prior to maturity. (b) Except as set forth below in this Section 5, the Notes may not be redeemed at the option of the Company prior to March 1, 2003. On March 1, 2003 and thereafter, the Notes will be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of the principal amount of the Notes) set forth below, together with accrued and unpaid interest if any thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on March 1 of the years indicated below: A-6
YEAR PERCENTAGE ------------------------------------------- ---------- 2003....................................... 104.688% 2004....................................... 103.125% 2005....................................... 101.563% 2006 and thereafter........................ 100.000%
(c) In addition to the Company's right to redeem the Notes as set forth in Section 5(b), at any time prior to March 1, 2001, the Company may redeem up to 35% of the aggregate principal amount of the Notes outstanding on the Issue Date with the net cash proceeds of one or more Equity Offerings at a redemption price equal to 109.375% of the principal amount thereof, plus accrued and unpaid interest (including Special Interest, if any) to the redemption date; provided that (x) at least $100 million aggregate principal amount of the Notes remains outstanding immediately after the occurrence of such redemption and (y) such redemption occurs within 60 days of the date of the closing of any such Equity Offering. (d) If less than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder whose Notes are to be redeemed at the registered address of such holder. On and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. 6. MANDATORY OFFERS. (a) Within 30 days after any Change of Control Trigger Date or Asset Sale Trigger Date, the Company shall mail to the Trustee (who shall mail to each Holder) a notice stating certain details as set forth in Section 3.08 of the Indenture in connection with the Offer that the Company is obligated under the Indenture to make to Holders in such circumstances. (b) Holders may tender all or, subject to Section 8 below, any portion of their Notes by completing the attachment hereto entitled "OPTION OF HOLDER TO ELECT PURCHASE" in an Offer. (c) Upon a Change of Control, any Holder of Notes will have the right to cause the Company to purchase the Notes of such Holder, in whole or in part in integral multiples of aggregate principal amount of $1,000, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest (including Special Interest, if any), if any, to the date of repurchase, as provided in, and subject to the terms of the Indenture. A-7 (d) Upon there being at least $5,000,000 in Excess Proceeds relating to one or more Asset Sales, any Holder of Notes will have the right to cause the Company to purchase the Notes of such Holder, in whole or in part in integral multiples of aggregate principal amount of $1,000, at a purchase price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, and Special Interest, if any, to the date such Net Proceeds Offer is consummated, as provided in, and subject to the terms of the Indenture. (e) Promptly after consummation of an Offer, (i) the Paying Agent shall mail or wire transfer, if permitted under the Indenture, to each Holder of Notes or portions thereof accepted for payment an amount equal to Change of Control Price or Offered Price, as the case may be, (ii) with respect to any tendered Note not accepted for payment in whole or in part, the Trustee shall return such Note to the Holder thereof, and (iii) with respect to any Note accepted for payment in part, the Company shall issue and the Trustee shall authenticate and mail to each such Holder a new Note equal in principal amount to the unpurchased portion of the tendered Note. (f) The Company will (i) announce the results of the Offer to Holders on or as soon as practicable after the Purchase Date, and (ii) comply with Rule 14e-1 under the Securities Exchange Act of 1934, as amended, and any other securities laws and regulations to the extent applicable to any Offer. 7. NOTES TO BE REDEEMED OR PURCHASED. The Notes may be redeemed or purchased in part, but only in multiples of $1,000 principal amount unless all Notes held by a Holder are to be redeemed or purchased. On or after any date on which Notes are redeemed or purchased, interest ceases to accrete or accrue, as the case may be, on the Notes or portions thereof called for redemption or accepted for purchase on such date. 8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form, without coupons, in denominations of $1,000 principal amount of maturity and integral multiples thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. Holders seeking to transfer or exchange their Notes may be required, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Note or portion of a Note selected for redemption or tendered pursuant to an Offer. Neither the Trustee or the Registrar shall be required to issue, register the transfer of or exchange any Note (i) to register the transfer of or exchange any Note selected for redemption, (ii) to register the transfer of or exchange any Note for a period of 15 days before the mailing of a notice of redemption ending on the date of such mailing, (iii) to register the transfer or exchange of a Note between a record date and the next succeeding interest payment date. 9. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be treated as the owner of the Note for all purposes. A-8 10. AMENDMENTS AND WAIVERS. (a) Subject to certain exceptions, the Indenture and the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes), and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes); provided that: (i) no such modification or amendment may, without the consent of the holders of 75% in aggregate principal amount of such series of Notes then outstanding, amend or modify the obligations of the Company under Section 4.15 of the Indenture (or the definitions related thereto) that could adversely affect the rights of any holder of the Notes; and (ii) without the consent of each holder affected, the Company and the Trustee may not: (w) extend the maturity of any Note; (x) affect the terms of any scheduled payment of interest on or principal of the Notes (including without limitation any redemption provisions); (y) take any action that would subordinate the Notes or the Note Guarantees to any other Indebtedness of the Company or any of Guarantors, respectively (except as provided in Article 10), or otherwise affect the ranking of the Notes or the Note Guarantees; or (z) reduce the percentage of holders necessary to consent to an amendment, supplement or waiver to this Indenture. (b) Notwithstanding section 10(a) above, the Company, the Guarantors and the Trustee may amend or supplement the Indenture or the Notes, without the consent of any Holder, to: cure any ambiguity, defect or inconsistency; provide for uncertificated Notes in addition to or in place of certificated Notes; provide for the assumption of the obligations to the Holders of the Company, or the Guarantors, as the case may be, in the event of any merger or reorganization involving the Company, or a Guarantor, as the case may be, that is permitted under Article 5 of the Indenture; make any change that would provide any additional rights or benefits to Holders or does not adversely affect the legal rights under the Indenture of any Holder; comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 11. DEFAULTS AND REMEDIES. Events of Default include: (i) failure by the Company to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days; (ii) failure by the Company to pay the principal or premium, if any, on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise; (iii) failure by the Company to comply with any of its agreements or covenants described under Article 5 of the Indenture, or in respect of its obligations to make a Change of Control Offer or a Net Proceeds Offer described in Section 4.15 and 4.16 of the Indenture, respectively; (iv) failure by the Company to comply with any other covenant in the Indenture and continuance of such failure for 60 days after notice of such failure has been given to the Company by the Trustee or by the holders of A-9 at least 25% of the aggregate principal amount of the Notes then outstanding; (v) failure by either the Company or any of its Restricted Subsidiaries to make any payment when due after the expiration of any applicable grace period, in respect of any Indebtedness of the Company or any of such Restricted Subsidiaries, or the acceleration of the maturity of such Indebtedness by the holders thereof because of a default, with an aggregate outstanding principal amount for all such Indebtedness under this clause (v) of $10.0 million or more (but excluding in any event any such Indebtedness that is paid when so due after expiration of any applicable grace period, or upon acceleration of the maturity thereof, pursuant to any letter of credit); (vi) one or more final, non-appealable judgments or orders that exceed $10.0 million in the aggregate for the payment of money have been entered by a court or courts of competent jurisdiction against the Company or any Subsidiary of the Company and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered; (vii) certain events of bankruptcy, insolvency or reorganization involving the Parent, the Company or any Significant Subsidiary; and (viii) except as permitted by the Indenture, any Note Guarantee ceases to be in full force and effect or any Guarantor repudiates its obligations under any Note Guarantee. If an Event of Default (other than an Event of Default specified in clause (vii) above with respect to the Company), shall have occurred and be continuing under the Indenture, the Trustee, by written notice to the Company, or the holders of at least 25% in aggregate principal amount of the Notes then outstanding by written notice to the Company and the Trustee may declare all amounts owing under the Notes to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal of, premium, if any, and interest on the outstanding Notes shall immediately become due and payable. If an Event of Default results from bankruptcy, insolvency or reorganization with respect to the Company, all outstanding Notes shall become due and payable without any further action or notice. In certain cases, the holders of a majority in aggregate principal amount of the Notes then outstanding may waive an existing Default or Event of Default and its consequences, except a default in the payment of principal of, premium, if any, and interest on the Notes. In the case of an Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes under the provisions of Article 3 of the Indenture and under the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, upon the acceleration of the Notes. If an Event of Default occurs prior to March 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to March 1, 2003, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable, to the extent permitted by law, in an amount equal to 10.0%. A-10 The holders may not enforce the provisions of the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power; provided however, that such direction does not conflict with the terms of the Indenture. The Trustee may withhold from the holders notice of any continuing Default or Event of Default (except any Default or Event of Default in payment of principal of, premium, if any, or interest on the Notes) if the Trustee determines that withholding such notice is in the holders' interest. 12. GUARANTEE. Each Guarantor unconditionally, jointly and severally, guarantees (each a "NOTE GUARANTEE") to each Holder of a Note authenticated and delivered by the Trustee that: (i) the principal of, premium, interest (including Special Interest, if any) on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest and (including, Special Interest, if any), and premium, if any, on the Notes, if any, to the extent lawful, and all other Obligations of the Company to the Holders or the Trustee under this Indenture and the Notes will be promptly paid in full, all in accordance with the terms of this Indenture and the Notes; and; (ii) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that the Notes will be promptly paid in full when due in accordance with the terms of such extension or renewal, whether at stated maturity, by acceleration or otherwise; provided that notwithstanding anything to the contrary herein or in Article 11 of the Indenture, the aggregate amount of the Obligations guaranteed under the Indenture by any Guarantor shall be limited in amount to the lesser of (x) the maximum amount that would not render such Guarantor's obligations subject to avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of any applicable state law and (y) the maximum amount that would not render the Note Guarantee of such Guarantor an improper corporate distribution by such Guarantor under applicable state law. 13. ADDITIONAL NOTE GUARANTEES. If the Company or any of its Subsidiaries shall acquire or create another Subsidiary (other than (x) any Foreign Subsidiary or (y) a Subsidiary that has been designated as an Unrestricted Subsidiary or (z) an Immaterial Subsidiary), then within 10 days after acquiring or creating such Subsidiary, the Company will cause each such Subsidiary to execute and deliver to the Trustee a counterpart of this Indenture as a Subsidiary Guarantor. 14. SUBORDINATION. (a) All Obligations owed under and in respect of the Notes are subordinated in right of payment, to the extent and in the manner provided in Article 10 of the Indenture, to the prior payment in full in cash of all Obligations owed under and in respect of all Senior Indebtedness of the Company and the Guarantors, and the subordination of the Notes is for the benefit of all holders of all Senior Indebtedness, whether outstanding on the Closing Date or Incurred thereafter. The Company agrees, and each Holder by accepting a Note agrees, to the subordination. A-11 (b) Each Guarantor's Obligations under its Notes Guarantee shall be junior and subordinated in right of payment to any Senior Indebtedness of the Guarantor in the manner set forth in more detail in Section 11.03 of the Indenture. 15. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee. 16. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or direct or indirect stockholder of the Company or any Guarantor (other than the Company and any Subsidiary Guarantor), as such, shall have any liability for any obligation of the Company or such Subsidiary Guarantor under the Indenture or the Notes or for any claim based on, in respect of, or by reason of, any such obligation or the creation of any such obligation. Each Holder by accepting a Note waives and releases such Persons from all such liability, and such waiver and release is part of the consideration for the issuance of the Notes. 17. MERGERS AND CERTAIN OTHER TRANSACTIONS. The Company will not, in a single transaction or a series of related transactions, (i) consolidate or merge with or into (other than a merger with a Wholly-Owned Restricted Subsidiary solely for the purpose of changing the Company's jurisdiction of incorporation to another State of the United States), or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Company or the Company and its Subsidiaries (taken as a whole), or assign any of its obligations under the Notes and the Indenture, to any Person or (ii) adopt a Plan of Liquidation unless, in either case: (a) the Person formed by or surviving such consolidation or merger (if other than the Company) or to which such sale, lease, conveyance or other disposition or assignment shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the "SUCCESSOR"), is a corporation organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Notes and the Indenture; (b) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; and (c) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (a) above and the incurrrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (1) the Consolidated Net Worth of the Company or the Successor, as the case may be, would be at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction and (2) the Company or the Successor, as the case may be, could meet the Coverage Ratio Incurrence Condition; and (d) each Subsidiary Guarantor, unless it is the other party to the transactions described above, shall have by amendment to its guarantee confirmed that its guarantee of the Notes shall apply to the obligations of the A-12 Company or the Successor under the Notes and the Indenture. For purposes of this paragraph, any Indebtedness of the Successor which was not Indebtedness of the Company immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction. 18. GOVERNING LAW. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to the conflict of laws provisions thereof. 19. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 20. CUSIP/CINS NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Company has caused CUSIP and CINS numbers, as applicable, to be printed on the Notes and has directed the Trustee to use CUSIP and CINS numbers, as applicable, in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers printed on the Notes. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: Eagle-Picher Industries, Inc., 250 East Fifth Street, Cincinnati, Ohio, Attention: Secretary. A-13 SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES(3) The following exchanges of a part of this Global Note for Certificated Notes have been made:
Principal Amount of this Amount of decrease in Amount of increase in Global Note following Signature of authorized Principal Amount of this Principal Amount of this such decrease (or officer of Trustee or Date of Exchange Global Note Global Note increase) Notes Custodian - ------------------- ------------------------- ------------------------ ---------------------------- -----------------------
- -------- (3) This schedule should only be added if the Note is issued in global form. A-14 [FORM OF TRANSFER NOTICE] FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No.: ______________________________________ Please print or typewrite name and address including zip code of assignee: - ------------------------------------------------------------ - ------------------------------------------------------------ the within Note and all rights thereunder, hereby irrevocably constituting and appointing - --------------------------- attorney to transfer said Note on the books of the Company with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL NOTES OTHER THAN EXCHANGE NOTES, REGULATION S PERMANENT GLOBAL NOTES AND OFFSHORE CERTIFICATED NOTES:] In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of an effective Registration or (ii) the end of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms, without utilizing any general solicitation or general advertising, that: [CHECK ONE] [ ] (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. OR [ ] (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If neither of the foregoing boxes is checked, the Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer or registration set forth herein and in Section 2.08 of the Indenture shall have been satisfied. Date: _______________ Signature: ________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. A-15 TO BE COMPLETED BY PURCHASER IF (a), ABOVE, IS CHECKED: The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ___________ Signature: _________________________________ NOTICE: To be executed by an executive officer of the transferee Signature Guarantee: _______________________________ (Signature must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ("STAMP"), in accordance with the Securities Exchange Act of 1934, as amended.) A-16 OPTION OF HOLDER TO ELECT PURCHASE If you elect to have this Note purchased by the Company pursuant to Section 4.15 of the Indenture, check the box: [ ] If you elect to have this Note purchased by the Company pursuant to Section 4.16 of the Indenture, check the box: [ ] If you elect to have only part of the principal amount of this Note purchased by the Company pursuant to Section 4.15 or 4.16 of the Indenture, state the portion of such amount (multiples of $1,000 principal amount only): $_________________________. Dated: Your signature: - ---------------------- ----------------------------------- (Sign exactly as name appears on the other side of this Note) Signature Guarantee:__________________________________________ (Signature must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ("STAMP"), in accordance with the Securities Exchange Act of 1934, as amended.) A-17 EXHIBIT B Form of Certificate of Beneficial Ownership [Complete Form I or Form II as Applicable] [Form I] The Bank of New York 101 Barclay St., Floor 21 West New York, NY 10286 Attention: Corporate Trust Administration Re: E-P Acquisition, Inc. (the "Company") 9 3/8% Senior Subordinated Notes due 2008 (the "Notes") Issued under the Indenture (the "Indenture") dated as of February 24, 1998 relating to the Notes Dear Sirs: We are the beneficial owners of U.S.$________ principal amount of Notes issued under the Indenture and represented by Temporary Global Notes (as defined in the Indenture). We hereby certify as follows: [CHECK A OR B AS APPLICABLE.] [ ]A. We are a non-U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended). [ ]B. We are a U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended) who purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended. Accordingly, you are hereby requested to exchange our beneficial interest in the Regulation S Temporary Global Notes for an equivalent beneficial interest in a Regulation S Permanent Global Notes. B-1 You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [NAME OF BENEFICIAL OWNER] By: ------------------------------- Name: Title: Address: Date:________________ [Form II] The Bank of New York 101 Barclay St., Floor 21 West New York, NY 10286 Attention: Corporate Trust Administration Re: E-P Acquisition, Inc. (the "Company") 9 3/8% Senior Subordinated Notes due 2008 (the "Notes") Issued under the Indenture (the "Indenture") dated as of February 24, 1998 relating to the Notes This is to certify that based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organizations ("Member Organizations") appearing in our records as persons being entitled to a portion of the principal amount of Notes represented by Regulation S Temporary Global Notes issued under the above-referenced Indenture, that as of the date hereof, $____ principal amount of Notes represented by the Regulation S Temporary Global Notes being submitted herewith for exchange is beneficially owned by persons who are either (i) non-U.S. persons (within the meaning of Regulation S under the Securities Act of 1933, as amended) or (ii) U.S. persons who purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended. We further certify that (i) we are not submitting herewith for exchange any portion of such Regulation S Temporary Global Notes excepted in such Member Organization certifications and (ii) as of the date hereof we have not received any notification from any Member Organization to the effect that the statements made by such Member Organization with respect to any portion of B-2 such Regulation S Temporary Global Notes submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof. Accordingly, you are hereby requested to exchange such beneficial interest in the Regulation S Temporary Global Notes for an equivalent beneficial interest in a Regulation S Permanent Global Notes. You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Yours faithfully, [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels office, as operator of the Euroclear System] OR [CEDEL BANK, societe anonyme] By: ----------------------------------------- Name: Title: Date:________________ B-3 EXHIBIT C Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S ---------, ---- The Bank of New York 101 Barclay St., Floor 21 West New York, NY 10286 Attention: Corporate Trust Administration Re: E-P Acquisition, Inc. (the "Company") 9 3/8% Senior Subordinated Notes due 2008 (the "Notes") Dear Sirs: In connection with our proposed sale of U.S.$________ aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States; (3) no directed selling efforts have been made by us in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act of 1933. C-1 You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By: --------------------------------- Authorized Signatory C-2 THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY (1) BY ITS ACQUISITION HEREOF REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND (2) IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (X) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (ii) TO THE COMPANY OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (Y) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (X) ABOVE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 2.06, 2.07 AND 2.08 OF THE INDENTURE. 2 E-P ACQUISITION, INC. TO BE MERGED INTO EAGLE-PICHER INDUSTRIES, INC. 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 No. 1 $200,000,000 CUSIP NO. 269803AC6 E-P Acquisition, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of Two Hundred Million Dollars on March 1, 2008. Interest Payment Dates: March 1 and September 1, commencing March 1, 1998 Record Dates: February 15 and August 15 Pursuant to the Indenture, the payment of principal of and premium, if any, and interest and, if applicable, Special Interest on this Note is unconditionally guaranteed by Eagle-Picher Holdings, Inc., and its successors ("PARENT") and by the Subsidiary Guarantors (as defined in the Indenture) (together with Parent, the "GUARANTORS"), and such other Persons as may from time to time execute and deliver to the Trustee a counterpart of the Indenture as a Subsidiary Guarantor. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof and as more fully specified in the Indenture, which further provisions shall for all purposes have the same effect as if set forth at this place. 3 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. E-P ACQUISITION, INC. By: /s/ Joel P. Wyler ---------------------------- Name: Title: By: /s/ Peter J. Ph. Kortenhorst ---------------------------- Name: Title: Dated: 2/24/98 This is one of the Notes referred to in the within-mentioned Indenture. THE BANK OF NEW YORK as Trustee By: /s/ Mary Jane Morrissey --------------------------------- Authorized Signatory 4 REVERSE OF NOTE 1. INTEREST. E-P Acquisition, Inc. (the "Company") promises to pay interest on the principal amount of this Note at the rate and in the manner specified below. Cash interest will accrue at 9.375% per annum until maturity and will be payable semi-annually in arrears in cash on March 1 and September 1 of each year commencing March 1, 1998, or if any such day is not a Business Day on the next succeeding Business Day (each an "Interest Payment Date"). Interest on this Note will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from the original date of issue. To the extent lawful, the Company shall pay interest on overdue principal, premium, if any, interest and Special Interest, if any, from time to time on demand at the rate of 11.375% per annum, compounded semi-annually. Interest will be computed on the basis of a 360-day year of twelve 30-day months. In the event that one or more Registration Defaults shall have occurred and be continuing under the Registration Rights Agreement, then Special Interest (as defined therein) (in addition to the interest otherwise due hereon) will accrue on the principal amount of the Notes and the New Notes (in addition to the stated interest on the Notes and the New Notes) from and including the date on which the first such Registration Default shall have occurred to but excluding the date on which all such Registration Defaults have been cured. Special Interest will accrue at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of the first such Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such rate exceed 1.5% per annum in the aggregate as a result of any Registration Default or Defaults. All accrued Special Interest, if any, will be paid by the Company or the Guarantors, in arrears, on each Interest Payment Date, commencing September 1, 1998. Upon the cure of all Registration Defaults, the accrual of Special Interest will cease. 2. METHOD OF PAYMENT. The Company will pay interest on this Note to the Person who is the registered Holder of this Note at the close of business on the record date for the next Interest Payment Date, which record date shall be February 15 and August 15 of each year (each a "Record Date"); notwithstanding the foregoing, the first record date shall be February 24, 1998. Holders must surrender Notes to a Paying Agent, as defined below, to collect principal payments on such Notes. Principal of, premium, if any, interest and Special Interest, if any, on, the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company by wire transfer of immediately available 5 funds or, in the case of certificated securities only, by mailing a check to the registered address of the Holder. Until otherwise designated by the Company, the Company's office or agency will be the office of the Trustee maintained for such purpose. 3. PAYING AGENT AND REGISTRAR. (a) The Bank of New York (the "Trustee") will initially act as the Paying Agent and Registrar. The Company may appoint additional paying agents or co-registrars, and change the Paying Agent, any additional paying agent, the Registrar or any co-registrar without prior notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. (b) Pursuant to the Indenture, the Company has appointed the Trustee as transfer and exchange agent for the purpose of any transfer or exchange of the Notes. (c) Holders shall present Notes to the Trustee, as transfer and exchange agent. 4. INDENTURE. The Company has issued the Notes under an Indenture, dated as of February 24, 1998 (the "Indenture"), among the Company, as issuer of the Notes, the Guarantors party thereto and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code 'SS''SS' 77aaa-77bbbb) as in effect on the date of the original issuance of the Notes (the "Trust Indenture Act"). The Notes are subject to, and qualified by, all such terms, certain of which are summarized herein, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms (all capitalized terms not defined herein shall have the meanings assigned to them in the Indenture). The Notes are unsecured general obligations of the Company limited to $220,000,000 in aggregate principal amount. 5. REDEMPTION PROVISIONS. (a) The Notes are not subject to any mandatory sinking fund redemption prior to maturity. (b) Except as set forth below in this Section 5, the Notes may not be redeemed at the option of the Company prior to March 1, 2003. On March 1, 2003 and thereafter, the Notes will be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of the principal amount of the Notes) set forth below, together with accrued and unpaid interest if any thereon to the 6 applicable redemption date, if redeemed during the twelve-month period beginning on March 1 of the years indicated below: YEAR PERCENTAGE ------------------------------------------- ---------- 2003....................................... 104.688% 2004....................................... 103.125% 2005....................................... 101.563% 2006 and thereafter........................ 100.000% (c) In addition to the Company's right to redeem the Notes as set forth in Section 5(b), at any time prior to March 1, 2001, the Company may redeem up to 35% of the aggregate principal amount of the Notes outstanding on the Issue Date with the net cash proceeds of one or more Equity Offerings at a redemption price equal to 109.375% of the principal amount thereof, plus accrued and unpaid interest (including Special Interest, if any) to the redemption date; provided that (x) at least $100 million aggregate principal amount of the Notes remains outstanding immediately after the occurrence of such redemption and (y) such redemption occurs within 60 days of the date of the closing of any such Equity Offering. (d) If less than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder whose Notes are to be redeemed at the registered address of such holder. On and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. 6. MANDATORY OFFERS. (a) Within 30 days after any Change of Control Trigger Date or Asset Sale Trigger Date, the Company shall mail to the Trustee (who shall mail to each Holder) a notice stating certain details as set forth in Section 3.08 of the Indenture in connection with the Offer that the Company is obligated under the Indenture to make to Holders in such circumstances. (b) Holders may tender all or, subject to Section 8 below, any portion of their Notes by completing the attachment hereto entitled "OPTION OF HOLDER TO ELECT PURCHASE" in an Offer. 7 (c) Upon a Change of Control, any Holder of Notes will have the right to cause the Company to purchase the Notes of such Holder, in whole or in part in integral multiples of aggregate principal amount of $1,000, at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest (including Special Interest, if any), if any, to the date of repurchase, as provided in, and subject to the terms of the Indenture. (d) Upon there being at least $5,000,000 in Excess Proceeds relating to one or more Asset Sales, any Holder of Notes will have the right to cause the Company to purchase the Notes of such Holder, in whole or in part in integral multiples of aggregate principal amount of $1,000, at a purchase price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, and Special Interest, if any, to the date such Net Proceeds Offer is consummated, as provided in, and subject to the terms of the Indenture. (e) Promptly after consummation of an Offer, (i) the Paying Agent shall mail or wire transfer, if permitted under the Indenture, to each Holder of Notes or portions thereof accepted for payment an amount equal to Change of Control Price or Offered Price, as the case may be, (ii) with respect to any tendered Note not accepted for payment in whole or in part, the Trustee shall return such Note to the Holder thereof, and (iii) with respect to any Note accepted for payment in part, the Company shall issue and the Trustee shall authenticate and mail to each such Holder a new Note equal in principal amount to the unpurchased portion of the tendered Note. (f) The Company will (i) announce the results of the Offer to Holders on or as soon as practicable after the Purchase Date, and (ii) comply with Rule 14e-1 under the Securities Exchange Act of 1934, as amended, and any other securities laws and regulations to the extent applicable to any Offer. 7. NOTES TO BE REDEEMED OR PURCHASED. The Notes may be redeemed or purchased in part, but only in multiples of $1,000 principal amount unless all Notes held by a Holder are to be redeemed or purchased. On or after any date on which Notes are redeemed or purchased, interest ceases to accrete or accrue, as the case may be, on the Notes or portions thereof called for redemption or accepted for purchase on such date. 8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form, without coupons, in denominations of $1,000 principal amount of 8 maturity and integral multiples thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. Holders seeking to transfer or exchange their Notes may be required, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Note or portion of a Note selected for redemption or tendered pursuant to an Offer. Neither the Trustee or the Registrar shall be required to issue, register the transfer of or exchange any Note (i) to register the transfer of or exchange any Note selected for redemption, (ii) to register the transfer of or exchange any Note for a period of 15 days before the mailing of a notice of redemption ending on the date of such mailing, (iii) to register the transfer or exchange of a Note between a record date and the next succeeding interest payment date. 9. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be treated as the owner of the Note for all purposes. 10. AMENDMENTS AND WAIVERS. (a) Subject to certain exceptions, the Indenture and the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes), and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes); provided that: (i) no such modification or amendment may, without the consent of the holders of 75% in aggregate principal amount of such series of Notes then outstanding, amend or modify the obligations of the Company under Section 4.15 of the Indenture (or the definitions related thereto) that could adversely affect the rights of any holder of the Notes; and (ii) without the consent of each holder affected, the Company and the Trustee may not: (w) extend the maturity of any Note; (x) affect the terms of any scheduled payment of interest on or principal of the Notes (including without limitation any redemption provisions); (y) take any action that would subordinate the Notes or the Note Guarantees to any other Indebtedness of the Company or any of Guarantors, respectively (except as provided in Article 10), or otherwise affect the ranking of the Notes or the Note Guarantees; or (z) reduce the percentage of holders necessary to consent to an amendment, supplement or waiver to this Indenture. (b) Notwithstanding section 10(a) above, the Company, the Guarantors and the Trustee may amend or supplement the Indenture or 9 the Notes, without the consent of any Holder, to: cure any ambiguity, defect or inconsistency; provide for uncertificated Notes in addition to or in place of certificated Notes; provide for the assumption of the obligations to the Holders of the Company, or the Guarantors, as the case may be, in the event of any merger or reorganization involving the Company, or a Guarantor, as the case may be, that is permitted under Article 5 of the Indenture; make any change that would provide any additional rights or benefits to Holders or does not adversely affect the legal rights under the Indenture of any Holder; comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 11. DEFAULTS AND REMEDIES. Events of Default include: (i) failure by the Company to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days; (ii) failure by the Company to pay the principal or premium, if any, on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise; (iii) failure by the Company to comply with any of its agreements or covenants described under Article 5 of the Indenture, or in respect of its obligations to make a Change of Control Offer or a Net Proceeds Offer described in Section 4.15 and 4.16 of the Indenture, respectively; (iv) failure by the Company to comply with any other covenant in the Indenture and continuance of such failure for 60 days after notice of such failure has been given to the Company by the Trustee or by the holders of at least 25% of the aggregate principal amount of the Notes then outstanding; (v) failure by either the Company or any of its Restricted Subsidiaries to make any payment when due after the expiration of any applicable grace period, in respect of any Indebtedness of the Company or any of such Restricted Subsidiaries, or the acceleration of the maturity of such Indebtedness by the holders thereof because of a default, with an aggregate outstanding principal amount for all such Indebtedness under this clause (v) of $10.0 million or more (but excluding in any event any such Indebtedness that is paid when so due after expiration of any applicable grace period, or upon acceleration of the maturity thereof, pursuant to any letter of credit); (vi) one or more final, non-appealable judgments or orders that exceed $10.0 million in the aggregate for the payment of money have been entered by a court or courts of competent jurisdiction against the Company or any Subsidiary of the Company and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered; (vii) certain events of bankruptcy, insolvency or reorganization involving the Parent, the Company or any Significant Subsidiary; and (viii) except as permitted by the Indenture, any Note Guarantee ceases to be in full force and effect or any Guarantor repudiates its obligations under any Note Guarantee. 10 If an Event of Default (other than an Event of Default specified in clause (vii) above with respect to the Company), shall have occurred and be continuing under the Indenture, the Trustee, by written notice to the Company, or the holders of at least 25% in aggregate principal amount of the Notes then outstanding by written notice to the Company and the Trustee may declare all amounts owing under the Notes to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal of, premium, if any, and interest on the outstanding Notes shall immediately become due and payable. If an Event of Default results from bankruptcy, insolvency or reorganization with respect to the Company, all outstanding Notes shall become due and payable without any further action or notice. In certain cases, the holders of a majority in aggregate principal amount of the Notes then outstanding may waive an existing Default or Event of Default and its consequences, except a default in the payment of principal of, premium, if any, and interest on the Notes. In the case of an Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes under the provisions of Article 3 of the Indenture and under the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, upon the acceleration of the Notes. If an Event of Default occurs prior to March 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to March 1, 2003, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable, to the extent permitted by law, in an amount equal to 10.0%. The holders may not enforce the provisions of the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power; provided however, that such direction does not conflict with the terms of the Indenture. The Trustee may withhold from the holders notice of any continuing Default or Event of Default (except any Default or Event of Default in payment of principal of, premium, if any, or interest on the Notes) if the Trustee determines that withholding such notice is in the holders' interest. 12. GUARANTEE. Each Guarantor unconditionally, jointly and severally, guarantees (each a "NOTE GUARANTEE") to each Holder of a Note authenticated and delivered by the Trustee that: (i) the principal of, premium, interest (including Special Interest, if any) on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and 11 interest on the overdue principal of and interest and (including, Special Interest, if any), and premium, if any, on the Notes, if any, to the extent lawful, and all other Obligations of the Company to the Holders or the Trustee under this Indenture and the Notes will be promptly paid in full, all in accordance with the terms of this Indenture and the Notes; and; (ii) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that the Notes will be promptly paid in full when due in accordance with the terms of such extension or renewal, whether at stated maturity, by acceleration or otherwise; provided that notwithstanding anything to the contrary herein or in Article 11 of the Indenture, the aggregate amount of the Obligations guaranteed under the Indenture by any Guarantor shall be limited in amount to the lesser of (x) the maximum amount that would not render such Guarantor's obligations subject to avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of any applicable state law and (y) the maximum amount that would not render the Note Guarantee of such Guarantor an improper corporate distribution by such Guarantor under applicable state law. 13. ADDITIONAL NOTE GUARANTEES. If the Company or any of its Subsidiaries shall acquire or create another Subsidiary (other than (x) any Foreign Subsidiary or (y) a Subsidiary that has been designated as an Unrestricted Subsidiary or (z) an Immaterial Subsidiary), then within 10 days after acquiring or creating such Subsidiary, the Company will cause each such Subsidiary to execute and deliver to the Trustee a counterpart of this Indenture as a Subsidiary Guarantor. 14. SUBORDINATION. (a) All Obligations owed under and in respect of the Notes are subordinated in right of payment, to the extent and in the manner provided in Article 10 of the Indenture, to the prior payment in full in cash of all Obligations owed under and in respect of all Senior Indebtedness of the Company and the Guarantors, and the subordination of the Notes is for the benefit of all holders of all Senior Indebtedness, whether outstanding on the Closing Date or Incurred thereafter. The Company agrees, and each Holder by accepting a Note agrees, to the subordination. (b) Each Guarantor's Obligations under its Notes Guarantee shall be junior and subordinated in right of payment to any Senior Indebtedness of the Guarantor in the manner set forth in more detail in Section 11.03 of the Indenture. 15. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may 12 otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee. 16. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or direct or indirect stockholder of the Company or any Guarantor (other than the Company and any Subsidiary Guarantor), as such, shall have any liability for any obligation of the Company or such Subsidiary Guarantor under the Indenture or the Notes or for any claim based on, in respect of, or by reason of, any such obligation or the creation of any such obligation. Each Holder by accepting a Note waives and releases such Persons from all such liability, and such waiver and release is part of the consideration for the issuance of the Notes. 17. MERGERS AND CERTAIN OTHER TRANSACTIONS. The Company will not, in a single transaction or a series of related transactions, (i) consolidate or merge with or into (other than a merger with a Wholly-Owned Restricted Subsidiary solely for the purpose of changing the Company's jurisdiction of incorporation to another State of the United States), or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Company or the Company and its Subsidiaries (taken as a whole), or assign any of its obligations under the Notes and the Indenture, to any Person or (ii) adopt a Plan of Liquidation unless, in either case: (a) the Person formed by or surviving such consolidation or merger (if other than the Company) or to which such sale, lease, conveyance or other disposition or assignment shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the "SUCCESSOR"), is a corporation organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Notes and the Indenture; (b) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; and (c) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (a) above and the incurrrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (1) the Consolidated Net Worth of the Company or the Successor, as the case may be, would be at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction and (2) the Company or the Successor, as the case may be, could meet the Coverage Ratio Incurrence Condition; and (d) each Subsidiary Guarantor, unless it is the other party to the transactions described above, shall have by amendment to its guarantee confirmed that its guarantee of the Notes 13 shall apply to the obligations of the Company or the Successor under the Notes and the Indenture. For purposes of this paragraph, any Indebtedness of the Successor which was not Indebtedness of the Company immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction. 18. GOVERNING LAW. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to the conflict of laws provisions thereof. 19. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 20. CUSIP/CINS NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Company has caused CUSIP and CINS numbers, as applicable, to be printed on the Notes and has directed the Trustee to use CUSIP and CINS numbers, as applicable, in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers printed on the Notes. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: Eagle-Picher Industries, Inc., 250 East Fifth Street, Cincinnati, Ohio, Attention: Secretary. 14 SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES The following exchanges of a part of this Global Note for Certificated Notes have been made:
Principal Amount of this Amount of decrease in Amount of increase in Global Note following Signature of authorized Principal Amount of this Principal Amount of this such decrease (or officer of Trustee or Date of Exchange Global Note Global Note increase) Notes Custodian - ------------------- ------------------------- ------------------------ ---------------------------- -----------------------
15 TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No.: ______________________________________ Please print or typewrite name and address including zip code of assignee: - ------------------------------------------------------------ - ------------------------------------------------------------ the within Note and all rights thereunder, hereby irrevocably constituting and appointing - --------------------------- attorney to transfer said Note on the books of the Company with full power of substitution in the premises. In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of an effective Registration or (ii) the end of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms, without utilizing any general solicitation or general advertising, that: [CHECK ONE] [ ] (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. OR [ ] (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If neither of the foregoing boxes is checked, the Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer or registration set forth herein and in Section 2.08 of the Indenture shall have been satisfied. Date: _______________ Signature: ________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. 16 TO BE COMPLETED BY PURCHASER IF (a), ABOVE, IS CHECKED: The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ___________ Signature: _________________________________ NOTICE: To be executed by an executive officer of the transferee Signature Guarantee: _______________________________ (Signature must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ("STAMP"), in accordance with the Securities Exchange Act of 1934, as amended.) 17 OPTION OF HOLDER TO ELECT PURCHASE If you elect to have this Note purchased by the Company pursuant to Section 4.15 of the Indenture, check the box: [ ] If you elect to have this Note purchased by the Company pursuant to Section 4.16 of the Indenture, check the box: [ ] If you elect to have only part of the principal amount of this Note purchased by the Company pursuant to Section 4.15 or 4.16 of the Indenture, state the portion of such amount (multiples of $1,000 principal amount only): $_________________________. Dated: Your signature: - ---------------------- ----------------------------------- (Sign exactly as name appears on the other side of this Note) Signature Guarantee:__________________________________________ (Signature must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ("STAMP"), in accordance with the Securities Exchange Act of 1934, as amended.) 18 EX-4.2 9 EXHIBIT 4.2 CROSS-REFERENCE TABLE Reconciliation and tie between Trust Indenture Act of 1939, as amended, and Indenture, dated as of February 24, 1998, among E-P Acquisition, Inc., the Guarantors named therein and The Bank of New York, as Trustee.
Trust Indenture Indenture Act Section Section ----------- ------- 'SS'310 (a)(1).................... 7.10 (a)(2).................... 7.10 (a)(5).................... 7.10 (b)....................... 7.08; 7.10 'SS'311 (a)....................... 7.11 (b)....................... 7.11 'SS'312 (a)....................... 2.05 (b)....................... 12.03 (c)....................... 12.03 'SS'313 (a)....................... 7.06 (b)(2).................... 7.06 (c)....................... 7.06; 12.02 (d)....................... 7.06 'SS'314 (a)....................... 4.02; 4.03; 12.02 (a)(4).................... 12.05 (c)(1).................... 12.04 (c)(2).................... 12.04 (e)....................... 12.05 'SS'315 (a)....................... 7.01 (b)....................... 7.05; 12.02 (c)....................... 7.01 (d)....................... 7.01 (e)....................... 6.11 'SS'316 (a)(last sentence)........ 2.11 (a)(1)(A)................. 6.05 (a)(1)(B)................. 6.04 (b)....................... 6.07 (c)....................... 2.15 'SS'317 (a)(1).................... 6.03; 6.08 (a)(2).................... 6.09 (b)....................... 2.04 'SS'318 (a)....................... 12.01
EX-4.3 10 EXHIBIT 4.3 FIRST SUPPLEMENTAL INDENTURE FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of February 24, 1998 among Eagle-Picher Industries, Inc., an Ohio corporation, ("Eagle-Picher"), as survivor to the merger between E-P Acquisition, Inc. ("E-P Acquisition") and Eagle-Picher, and The Bank of New York, a New York banking corporation, as Trustee (the "Trustee"). WITNESSETH: WHEREAS, E-P Acquisition, the Guarantors named therein and the Trustee executed and delivered an Indenture relating to the 9 3/8% Senior Subordinated Notes due 2008 (the "Notes") of E-P Acquisition, dated as of February 24, 1998; WHEREAS, Section 9.01 of the Indenture provides that the Indenture may be amended without the consent of the holders of the Notes in order to provide for the assumption of the obligations to the holders of the Notes in the event of merger or consolidation; WHEREAS, in accordance with and as contemplated by Article 5 of the Indenture, E-P Acquisition has been merged with Eagle-Picher, on the Issue Date, and the parties to the Indenture have agreed that Eagle-Picher, as survivor of such merger, be the "Issuer" under the Indenture. WHEREAS, all things necessary to make this Supplemental Indenture a valid supplement to the Indenture according to its terms and the terms of the Indenture have been done; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Certain Terms Defined in the Indenture. All capitalized terms used herein without definition herein shall have the meanings ascribed thereto in the Indenture. SECTION 2. Assumption of Obligations Under the Indenture. Eagle-Picher assumes all the obligations of E-P Acquisition under the Notes and the Indenture. SECTION 3. Governing Law. The laws of the State of New York shall govern this Supplemental Indenture. SECTION 4. Counterparts. This Supplemental Indenture may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. SECTION 5. Ratification. Except as expressly amended hereby, each provision of the Indenture shall remain in full force and effect and, as amended hereby, the Indenture is in all respects agreed to, ratified and confirmed by each of Eagle-Picher and the Trustee. 2 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. EAGLE-PICHER INDUSTRIES, INC. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: President DAISY PARTS, INC. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER DEVELOPMENT COMPANY, INC. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: President EAGLE-PICHER HOLDINGS, INC. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: President 3 EAGLE-PICHER FAR EAST, INC. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER FLUID SYSTEMS, INC. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER MINERALS, INC. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER TECHNOLOGIES, LLC By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: Director-Manager HILLSDALE TOOL & MANUFACTURING CO. By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: Authorized Person 4 MICHIGAN AUTOMOTIVE RESEARCH CORPORATION By: /s/ ANDRIES RUIJSSENAARS ______________________________________ Name: Andries Ruijssenaars Title: Authorized Person THE BANK OF NEW YORK as Trustee By: /s/ MARY JANE MORRISSEY ______________________________________ Name: Mary Jane Morrissey Title: Vice President 5 EX-10.1 11 EXHIBIT 10.1 MERGER AGREEMENT dated as of December 23, 1997 among EAGLE-PICHER INDUSTRIES, INC. PERSONAL INJURY SETTLEMENT TRUST, EAGLE-PICHER INDUSTRIES, INC., E-P HOLDINGS, INC. and E-P ACQUISITION, INC. TABLE OF CONTENTS
PAGE ---- ARTICLE I - THE MERGER 1.1 The Merger................................................................ 1 1.2 Effective Time............................................................ 1 1.3 Closing Date.............................................................. 2 1.4 Effects of the Merger..................................................... 2 1.5 Certificate of Incorporation and By-Laws.................................. 2 1.6 Directors and Officers of the Surviving Corporation....................... 2 1.7 Conversion of Capital Stock............................................... 2 ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE COMPANY 2.1 The Trust................................................................. 3 2.2 The Company............................................................... 3 2.3 Subsidiaries and Joint Venture Interests.................................. 3 2.4 Capitalization; Outstanding Debt.......................................... 4 2.5 Authority; No Conflict; Approvals......................................... 5 2.6 Ownership of Shares; Title................................................ 6 2.7 Financial Statements...................................................... 6 2.8 No Changes................................................................ 6 2.9 Real and Personal Property................................................ 6 2.10 Contracts................................................................. 7 2.11 Intellectual Property..................................................... 9 2.12 Litigation, Claims and Proceedings........................................ 10 2.13 Environmental Conditions.................................................. 10 2.14 Compliance with Law; Permits.............................................. 11 2.15 Taxes..................................................................... 12 2.16 Labor and Employee Benefits............................................... 12 2.17 Insurance................................................................. 14 2.18 Finder's Fee.............................................................. 14 2.19 Exclusivity of Representations............................................ 14 2.20 Transactions with Affiliates.............................................. 15
(i) TABLE OF CONTENTS (CONTINUED)
PAGE ---- ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND ACQUISITION 3.1 Due Organization.......................................................... 15 3.2 Authority................................................................. 15 3.3 No Conflict............................................................... 15 3.4 Approvals................................................................. 15 3.5 Litigation................................................................ 16 3.6. Finder's Fee.............................................................. 16 3.7 Financing................................................................. 16 ARTICLE 4 - COVENANTS 4.1 Conduct of Business....................................................... 16 4.2 Access to Records and Properties.......................................... 18 4.3 Approvals................................................................. 19 4.4 Public Announcements...................................................... 20 4.5 Confidentiality........................................................... 20 4.6 Reports; Access to Books and Records...................................... 20 4.7 Tax Matters............................................................... 21 4.8 Repurchase of Shares Payment; Payment of Outstanding Indebtedness.............................................................. 24 4.9 Director and Officer Liability............................................ 24 4.10 Notices of Certain Events................................................. 25 4.11 Further Assurances........................................................ 25 4.12 Financial Statements...................................................... 25 4.13 Negotiations.............................................................. 26 4.14 No Phase II Reviews....................................................... 27 4.15 ISRA...................................................................... 27 ARTICLE 5 - CONDITIONS TO OBLIGATIONS OF HOLDINGS AND ACQUISITION 5.1 Absence of Injunction..................................................... 27 5.2 Hart-Scott-Rodino......................................................... 27
(ii) TABLE OF CONTENTS (CONTINUED)
PAGE ---- 5.3 No Breach................................................................. 27 5.4 Bankruptcy Court Approval................................................. 27 5.5 Merger Approvals.......................................................... 27 5.6 Government Approvals...................................................... 28 5.7 Financing................................................................. 28 5.8 Material Adverse Change................................................... 28 5.9 Existing Indebtedness..................................................... 28 5.10 Environmental Conditions.................................................. 28 5.11 Legal Opinions............................................................ 28 5.12 Consents.................................................................. 28 5.13 Other Documents........................................................... 28 ARTICLE 6 - CONDITIONS TO OBLIGATIONS OF THE TRUST 6.1 Absence of Injunction..................................................... 28 6.2 Hart-Scott-Rodino......................................................... 29 6.3 No Breach................................................................. 29 6.4 Bankruptcy Court Approval................................................. 29 6.5 Merger Approvals.......................................................... 29 6.6 Government Approvals...................................................... 29 6.7 Legal Opinion............................................................. 29 6.8 Holdings Financing........................................................ 29 6.9. Other Documents........................................................... 29 ARTICLE 7 - CLOSING 7.1 The Trust Deliveries...................................................... 29 7.2 Holdings Deliveries....................................................... 30 7.3 Payment of Debentures..................................................... 30 ARTICLE 8 - INDEMNIFICATION 8.1 Indemnification by the Trust.............................................. 30 8.2 Indemnification by Acquisition and Holdings............................... 32 8.3 Survival.................................................................. 32
(iii) TABLE OF CONTENTS (CONTINUED)
PAGE ---- 8.4 Limitations on Indemnity.................................................. 33 8.5 Indemnification Procedure................................................. 33 8.6 Exclusive Remedy.......................................................... 34 ARTICLE 9 - TERMINATION; SURVIVAL 9.1 Termination............................................................... 35 9.2 Effect of Termination..................................................... 36 ARTICLE 10 - MISCELLANEOUS 10.1 Expenses.................................................................. 36 10.2 Entire Agreement.......................................................... 36 10.3 Waivers................................................................... 36 10.4 Binding Effect; Assignability............................................. 36 10.5 Notices................................................................... 37 10.6 Counterparts.............................................................. 38 10.7 Attachments, Exhibits and Schedules....................................... 38 10.8 Governing Law............................................................. 38 10.9 No Presumption............................................................ 38 10.10 Headings.................................................................. 39 10.11 Amendment................................................................. 39 10.12 Third Party Rights........................................................ 39 10.13 Severability.............................................................. 39 10.14 Consent to Jurisdiction................................................... 39 10.15 Nonrecourse Provisions.................................................... 39 10.16 Terms Generally........................................................... 40
(iv) TABLE OF CONTENTS (CONTINUED)
ATTACHMENTS Attachment A Definitions EXHIBITS Exhibit A Form of Opinion of Hughes Hubbard & Reed LLP, counsel to the Company and the Trust SCHEDULES Schedule 2.3(a) Subsidiaries Schedule 2.3(b) Joint Venture Entities and Interests Schedule 2.5 No Conflicts Schedule 2.7 Financial Statements Schedule 2.8 Material Changes Schedule 2.9 Real Property Schedule 2.10(a) Contracts Schedule 2.10(b) Contract Defaults Schedule 2.10(c) Material Government Contracts Schedule 2.11 Intellectual Property Rights and Claims Schedule 2.12 Litigation, Claims and Proceedings Schedule 2.13 Environmental Matters Schedule 2.14 Permits Schedule 2.16(a) Employment & Collective Bargaining Agreements and Labor Disputes Schedule 2.16(b) US Benefit Plans Schedule 2.16(f) Retiree Medical and Life Insurance Plans Schedule 2.16(h) Foreign Benefit Plans Schedule 2.17 Liability and Casualty Insurance Policies Schedule 2.18 Finder's Fee Schedule 2.20 Transactions with Affiliates Schedule 3.7 Financing Letters Schedule 4.1 Permitted Changes Schedule 5.10 Real Property Investigated for Environmental Conditions Schedule 5.12 Consents
(v) MERGER AGREEMENT MERGER AGREEMENT (together with the Attachments, Exhibits and Schedules hereto, and as amended from time to time in accordance with the terms hereof, this "Agreement") made as of December 23, 1997 among Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, an Ohio trust (the "Trust"), Eagle-Picher Industries, Inc., an Ohio corporation (the "Company"), E-P Holdings, Inc., a Delaware corporation ("Holdings"), and E-P Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Holdings ("Acquisition"). WHEREAS, the Trust is the sole stockholder of the Company: WHEREAS, the Board of Directors of each of Holdings, Acquisition, and the Company and the sole stockholders of Acquisition and the Company have approved the merger (the "Merger") of Acquisition with and into the Company, upon the terms and conditions of this Agreement. As a result of the Merger, each issued and outstanding share of common stock, without par value (the "Common Stock"), of the Company, will be converted into the right to receive the consideration provided in this Agreement and the separate corporate existence of Acquisition shall cease; and WHEREAS, the defined terms used in this Agreement, which are capitalized, shall have the meanings set forth in Attachment A. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in this Agreement, the Trust, the Company, Acquisition and Holdings agree as follows: ARTICLE I THE MERGER 1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Ohio General Corporation Law ("OGCL") and the Delaware General Corporation Law ("DGCL"), at the Effective Time (as defined below), Acquisition shall be merged with and into the Company. Following the Merger, the separate corporate existence of Acquisition shall cease and the Company shall continue as the surviving corporation (the "Surviving Corporation") and shall succeed to and assume all the rights and obligations of the Company in accordance with the OGCL and the DGCL. 1.2 Effective Time. At the Closing, upon the satisfaction of all conditions set forth in Articles 5 and 6 and the taking of all actions referred to in Sections 7.1 and 7.2 (other than 7.1(b) and 7.2(i)), the Trust, Holdings and Acquisition shall cause a copy of the certificate of merger (executed in accordance with the relevant provisions of the OGCL and the DGCL) or other appropriate documents to be filed in the office of the Ohio Secretary of State and the office of the Delaware Secretary of State (the "Certificate of Merger"), and the parties shall make all other 2 filings or recordings required under the OGCL and the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Ohio Secretary of State or at such time as is agreed upon by the parties and specified in the Certificate of Merger. Such time is referred to in this Agreement as the "Effective Time." 1.3 Closing Date. The closing of the Merger (the "Closing") shall take place at 10:00 a.m. Eastern Time at the offices of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New York on the fifth Business Day after all conditions to the obligations of Holdings and Acquisition, on the one hand, and the Trust, on the other hand, under Articles 5 and 6 of this Agreement shall have been satisfied or waived (other than the conditions referred to in Sections 5.3, 5.8 and 6.3), or at such other place and on such other date as the parties may mutually agree in writing (such date on which the Closing occurs hereinafter is referred to as the "Closing Date"). 1.4 Effects of the Merger. The Merger shall have the effects set forth in the OGCL and the DGCL. 1.5 Certificate of Incorporation and By-Laws. The Articles of Incorporation of the Company as in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation until amended. The Regulations of the Company as in effect immediately prior to the Effective Time shall be the Regulations of the Surviving Corporation until amended. 1.6 Directors and Officers of the Surviving Corporation. The directors and officers of Acquisition at the Effective Time shall be the directors and officers, respectively, of the Surviving Corporation, until the earlier of their resignation or removal or until their successors are duly elected and qualified. 1.7 Conversion of Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of Common Stock or any shares of common stock, par value $.01 per share (the "Acquisition Common Stock"), of Acquisition: (a) Acquisition Common Stock. Each issued and outstanding share of Acquisition Common Stock shall be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation. (b) Cancellation of Treasury Stock and Company-Owned Stock. Each share of Common Stock that is held by the Company as treasury stock or owned by the Company or any Company Subsidiary, in each case immediately prior to the Effective Time, shall be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor. (c) Exchange of Shares. All of the issued and outstanding shares (the "Shares") of Common Stock (all of which are and, immediately prior to the Effective Time, will be owned by the Trust) shall be converted into and become the right to receive an amount in cash equal to (A) $410,000,000 plus the Interest Amount less (B) the Transaction Expense 3 Amount (the "Merger Consideration"). Upon receipt by the Trust of the Merger Consideration, the Trust shall deliver to Holdings the certificates formerly representing the Shares and shall have no further rights with respect thereto. From and after the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of the shares of Common Stock. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE COMPANY The Trust and the Company represent and warrant to Acquisition and Holdings that, (x) as of the date of this Agreement and as of the Closing with respect to the Closing Representations and (y) as of December 1, 1997 with respect to the December 1 Representations (except as to requirements for matters to be disclosed on Schedules which requirements shall be as of the date of this Agreement): 2.1 The Trust. The Trust has been duly formed and is validly existing as a trust under the Laws of the State of Ohio pursuant to the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust Agreement dated November 29, 1996 (the "Trust Agreement") among the Company and certain of its Affiliates, as settlors, and James J. McMonagle, Ruth McMullin and Daniel M. Phillips (together with W. Thomas Stephens, the "Trustees") pursuant to the Third Amended Consolidated Plan of Reorganization of the Company and its affiliated debtors, as confirmed by the order of the United States District Court and the United States Bankruptcy Court for the Southern District of Ohio dated November 18, 1996 (the "Plan"). The Trust Agreement remains in full force and effect. The Trust has delivered to Holdings true and complete copies of the Trust Agreement. The Trust complies in all respects with the requirements of a trust set forth in Section 524(g)(2)(B)(i) of the Bankruptcy Reform Act of 1978, as amended. The Trust has the power and authority to enter into this Agreement and consummate the transactions contemplated hereby. 2.2 The Company. The Company is an Ohio corporation, duly incorporated and validly existing as a corporation in good standing under the Laws of the State of Ohio and has the corporate power to own, operate or lease the properties and assets owned, operated or leased by it and to carry on its business as now being conducted. The Company is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where qualification as a foreign corporation is required, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect. The Trust has delivered to Holdings prior to the date of this Agreement true and complete copies of the Articles of Incorporation and Regulations of the Company. There are no voting trusts, stockholders agreements, proxies or other similar agreements in effect with respect to the voting or transfer of the Shares. 2.3 Subsidiaries and Joint Venture Interests. (a) Set forth in Schedule 2.3(a) is a true and complete list of all Company Subsidiaries stating, with respect to each, its jurisdiction of incorporation, type of entity and equity ownership. Each of the Company Subsidiaries is duly incorporated, validly existing and 4 (with respect to Domestic Subsidiaries) in good standing under the laws of the jurisdiction of its incorporation and has the corporate power to own, operate or lease the properties and assets owned, operated or leased by it and to carry on its business as now being conducted. Each of the Company Subsidiaries which is a Domestic Subsidiary is duly qualified to do business (with regard to jurisdictions within the United States) and is in good standing in each jurisdiction where qualification as a foreign corporation is required, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect. All of the outstanding shares of capital stock of the Company Subsidiaries have been validly authorized and issued, are fully paid and nonassessable and have not been issued in violation of any preemptive rights or of any federal or state securities law and are owned by the Company of record and beneficially free and clear of any Lien other than Permitted Liens. The Trust has heretofore made available to Holdings true and correct copies of the certificates or articles of incorporation and bylaws or other organizational documents of the Company Subsidiaries. There are no voting trusts, stockholders agreements, proxies or other similar agreements in effect with respect to the voting or transfer of the capital stock or other equity interests of the Company Subsidiaries. (b) Set forth in Schedule 2.3(b) is a true and complete description of (i) the nature of interests (the "Joint Venture Interests") held by the Company and Company Subsidiaries in certain joint venture entities (the "Joint Venture Entities"), (ii) the holders of the Joint Venture Interests and (iii) the percentage of Joint Venture Interests held by the Company or Company Subsidiaries. (c) As of the date of this Agreement, except as set forth in Schedule 2.3(a) and Schedule 2.3(b), the Company does not have, directly or indirectly, any material ownership, equity, profit or voting interest in any corporation, partnership, joint venture, association, trust or any other unincorporated organization or entity and has no agreement or commitment to purchase any such interest. 2.4 Capitalization; Outstanding Debt. (a) The authorized stock of the Company consists of twenty million (20,000,000) shares of Common Stock, of which ten million (10,000,000) shares are issued and outstanding as of the date hereof, and no shares are held in the treasury of the Company. At the Effective Time, 9,340,000 shares of Common Stock will be issued and outstanding. The Trust owns all of the issued and outstanding shares of Common Stock. The Shares have been validly authorized and issued, are fully paid and nonassessable and have not been issued in violation of any preemptive rights or of any federal or state securities law. Other than as contemplated hereby, there is no security, option, warrant, right, call, subscription, agreement, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly: (i) calls for the issuance, sale, pledge or other disposition of any shares of the Company or any Company Subsidiary or any securities convertible into, or exchangeable or exercisable for, or other rights to acquire, any shares of the Company or any Company Subsidiary, (ii) affects to the voting or control of such stock, securities or rights or (iii) obligates the Company or any Company Subsidiary to grant, offer or enter into any of the foregoing. 5 (b) The sum of the outstanding principal amounts under the IRBs, other long-term indebtedness (including current portions) and any revolving credit or line of credit (collectively, "Company Debt") at November 30, 1997 was no greater than $23,400,000. 2.5 Authority; No Conflict; Approvals. (a) The execution, delivery and, subject to Section 2.5(c)(ii), the consummation of the transactions contemplated by this Agreement has been duly and validly authorized by all necessary action on the part of the Trust. This Agreement has been duly and validly executed and delivered by the Trust, constitutes a valid and binding obligation of the Trust and is enforceable against the Trust in accordance with its terms except to the extent that (i) such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws relating to creditors' rights generally and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (ii) specific performance may not be available in certain jurisdictions outside the US (the foregoing clauses (i) and (ii), collectively, the "Enforceability Exceptions"). (b) Except as set forth in Schedule 2.5 and assuming compliance with the matters referred to in Section 2.5(c), the execution and delivery by the Trust of this Agreement and the consummation of the transactions contemplated by this Agreement do not and will not (A) contravene, conflict with or result in the breach of any term or provision of (i) the Trust Agreement, or (ii) the charter, articles or certificate of incorporation or any other organizational document or bylaws of the Company or any Company Subsidiary, (B) (i) constitute a default under (or an event which, with notice or lapse of time or both, would constitute a default), or give rise to a right of termination, cancellation or acceleration under, or to a loss of any benefit to which the Trust, the Company or any Company Subsidiary is entitled under, any material agreement, contract or other instrument binding upon the Company or any Company Subsidiary or any material license, franchise, permit or other similar authorization held by the Company or any Company Subsidiary or (ii) result in the creation or imposition of any Lien on any material asset of the Company or any Company Subsidiary, or (C) contravene, conflict with or constitute a violation by the Trust, the Company or any Company Subsidiary of any Law applicable to such entity. (c) No Approval is necessary for the execution, delivery and performance of this Agreement by the Trust or to make this Agreement an enforceable obligation of the Trust or to permit the Trust to consummate the transactions contemplated hereunder without violating any Laws, except (i) compliance with applicable requirements under the H-S-R Act and the expiration or termination of all applicable waiting periods thereunder, (ii) the approval of the amendment of the Amended and Restated Articles of Incorporation of the Company contemplated by Section 6.4 by the United States Bankruptcy Court for the Southern District of Ohio, Western Division (the "Bankruptcy Court"), (iii) in connection with compliance with any applicable non-US competition laws or national merger regulations ("Merger Approvals"), (iv) in connection with compliance with any applicable non-US laws on exchange control or foreign investments, (v) in connection with any necessary Approvals of the US Government, including, without limitation, the Office of Defense Trade Controls and the Company's Cognizant Security 6 Agencies ("Government Approvals"), (vi) any Approvals that may be required to be made as a result of (x) the specific regulatory status of Holdings or any of its Affiliates or (y) any other facts that relate to the business or activities in which Holdings or any of its Affiliates is engaged, and (vii) any Pension Benefit Guaranty Corporation ("PBGC") "Notice of Reportable Event" required under Section 4043(c) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 2.6 Ownership of Shares; Title. The Trust is the sole record and beneficial owner of the Shares. The Trust has good title to the Shares, free and clear of Liens. 2.7 Financial Statements. Attached hereto as Schedule 2.7 are the unaudited consolidated balance sheet of the Company and the Company Subsidiaries as of August 31, 1997 (the "Balance Sheet") and the audited balance sheet of the Company and the Company Subsidiaries as of November 30, 1996 and the unaudited and audited consolidated statements of income and cash flows of the Company and Company Subsidiaries for the nine (9) month and the twelve (12) month periods then ended, respectively, (collectively, the "Financial Statements"). Except as set forth on Schedule 2.7 and as noted therein, the Financial Statements have been prepared in accordance with GAAP and present fairly, in all material respects, the consolidated financial position of the Company and the Company Subsidiaries as of August 31, 1997 and November 30, 1996 and the consolidated results of operations and cash flows of the Company and its consolidated Company Subsidiaries for the nine (9) month and the twelve (12) month periods then ended, respectively, subject in the case of the unaudited financial statements to normal year-end adjustments. Except as reflected, reserved against or otherwise disclosed in the Balance Sheet or as set forth on Schedule 2.7, during the period from November 30, 1996 to the date hereof, neither the Company nor any Company Subsidiary has incurred any liabilities (absolute, accrued, contingent or otherwise) required by GAAP to be reflected on a consolidated balance sheet of the Company or set forth in the notes thereto, except for liabilities incurred in the ordinary course of business and consistent with past practice. 2.8 No Changes. Except as disclosed on Schedule 2.8 or for Permitted Changes, during the period from August 31, 1997 to December 1, 1997, the businesses of the Company and the Company Subsidiaries taken as a whole have been conducted in all material respects in the ordinary course of business and consistent with past practice and there has been no change in the business, financial condition or results of operations of the Company and Company Subsidiaries that would reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2.8, during the period from August 31, 1997 to the date hereof, neither the Company nor any of the Company's Subsidiaries has taken any of the actions specified in Section 4.1(d)-(o) hereto. 2.9 Real and Personal Property. (a) Schedule 2.9 lists all real property owned or leased by the Company or Company Subsidiaries (together with any structures or improvements thereon and all easements and other rights with respect thereto, the "Real Property"). Schedule 2.9 sets forth the address by which each parcel of Real Property is commonly known, identifies which Real Property is owned 7 ("Owned Real Property") and which is leased ("Leased Real Property"), and identifies the respective Company or Company Subsidiary and the applicable division that owns or leases such Real Property. Except as disclosed on such Schedule, neither the Company nor any Company Subsidiary owns or leases any interest or estate in any Real Property. Except as set forth on Schedule 2.9, all Real Property conforms with all applicable building, zoning and other land use laws, ordinances, rules and regulations, with such exceptions as would not reasonably be expected to have a Material Adverse Effect. Each lease of Real Property (together with all amendments, supplements, and any other writing which affects the terms thereof, a "Real Property Lease") is in full force and effect and is enforceable against the landlord which is a party thereto in accordance with its terms, except as enforceability may be limited by the Enforceability Exceptions and with such exceptions that would not reasonably be expected to have a Material Adverse Effect, and neither any Company nor, to the knowledge of the Trust, any other party to any Real Property Lease, is in breach of or default under any Real Property Lease, with such exceptions as would not reasonably be expected to have a Material Adverse Effect. As identified on Schedule 2.9, the Company or such Company Subsidiary is the sole owner and holder of, and has good and valid fee title to, each Owned Real Property, and is the sole owner and holder of the lessee's interest and estate under each Real Property Lease and has a good and valid leasehold estate in each Leased Real Property, in each case with such exceptions as would not reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule 2.9, the Company and Company Subsidiaries have good and valid title to all of their owned Real Property, free and clear of all Liens (other than Permitted Liens). The Trust has delivered to Holdings a true and complete copy of each Real Property Lease described on Schedule 2.9. Except as disclosed on Schedule 2.9, no Consent is required from any landlord under any Real Property Lease for the transactions contemplated by this Agreement. All tangible personal property material to the operations of the Company and Company Subsidiaries is in good working condition, reasonable wear and tear and loss due to normal operations excepted. (b) None of the Trust, the Company or any Company Subsidiary has received any written notice of any, and to the Trust's Knowledge there is no existing, pending or contemplated condemnation, eminent domain or similar proceeding with respect to any material Real Property or any portion thereof. With such exceptions as would not reasonably be expected to have a Material Adverse Effect, no part of any Real Property is subject to any building or use restrictions that would restrict or prevent the present use and operation of such Real Property, and each Real Property is properly and duly zoned for its current use, and such current use is in all respects a conforming use or is a permitted nonconforming use. No Governmental Authority having jurisdiction over any Real Property has issued or, to the Knowledge of the Trust, has threatened to issue any notice or order that materially and adversely affects the current use or operation of any material Real Property. 2.10 Contracts. (a) Schedule 2.10(a) lists as of the date of this Agreement the following: (i) each Contract which meets any of the following criteria, except purchase orders made in the ordinary course of business (each such Contract, each Contract with a 8 supplier described in clause (ii) and each Material Government Contract, a "Material Contract"): (A) involves the sale by the Company or a Company Subsidiary of goods in excess of $1,000,000 annually following the Closing and is not terminable by the Company or Company Subsidiary without material penalty on less than sixty-one (61) days notice (other than purchase orders relating to the sale of goods and/or services of the Company or a Company Subsidiary in the ordinary course of business); (B) contains commitments of suretyship, guaranty or indemnification in excess of $1,000,000 annually by the Company or Company Subsidiary following the Closing, or is a Material Government Contract; (C) relating to indebtedness for money borrowed or capital leases by or from the Company or a Company Subsidiary from or to any person (other than credit terms offered to customers in connection with the sale of goods and/or services of the Company or a Company Subsidiary in the ordinary course of business) in excess of $1,000,000 annually following the Closing; (D) relating to any joint venture, partnership, limited liability company, or other similar agreement or arrangement which has involved or is expected to involve (i) a capital contribution by the Company or any Company Subsidiary or (ii) a sharing of annual revenues with other Persons, in each case, in excess of $500,000 or more; (E) relating to the employment or compensation of any director, officer or shareholder of the Company or any Company Subsidiary; (F) relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise) material to the Company and the Company Subsidiaries in the aggregate, which contract has been executed since November 30, 1996; (G) that limits the freedom of the Company or any Company Subsidiary to compete in any material respect in any line of business or with any Person or in any area or which would so limit the freedom of the Company or any Company Subsidiary after the Closing Date; (H) involving payments of in excess of $1,000,000 or involving employment arrangements and, in each case, containing a change of control provision; or (I) not made in the ordinary course of business and involving payments of in excess of $1,000,000 annually; and 9 (ii) each supplier with whom the Company or a Company Subsidiary has a written arrangement (or group of related written arrangements) for the purchase of raw materials, commodities, supplies, products or other personal property or for the receipt of services, in each case from whom more than $1,000,000 in the aggregate was purchased by the Company during the twelve months ending August 31, 1997. (b) Except as otherwise indicated in Schedule 2.10(b), as of the date of this Agreement: (i) neither the Trust nor, to the Trust's Knowledge, any other party to any of the Material Contracts (A) is in default thereunder, where such default would reasonably be expected to have a Material Adverse Effect, or (B) has since January 1, 1996 given notice of default to any other party thereunder, except where such default would not reasonably be expected to have a Material Adverse Effect; (ii) to the Knowledge of the Trust, no condition exists which, with notice or lapse of time or both, would constitute a default by the Company under any Material Contract; and (iii) no Consent is required under any Material Contract in order to consummate the transactions contemplated hereby. (c) Except as set forth on Schedule 2.10(c) with respect to each Government Contract with a backlog value in excess of $1,000,000 ("Material Government Contract"), (i) the Company and the Company Subsidiaries have complied, in all material respects, with all terms and conditions thereof and all provisions of Law applicable thereto; (ii) neither the Company nor any Company Subsidiary has received any written notice from the US Government that such entity has breached or violated any material term thereof or material provision of Law applicable thereto where there is a substantial probability that the matter will be resolved in a manner adverse to the Company or any Company Subsidiary; (iii) no termination for convenience, termination for default or cure notice is currently in effect with respect thereto; and (iv) to the Trust's Knowledge, no cost incurred by the Company or any Company Subsidiary with respect thereto, has been the subject of investigation or has been disallowed by the US Government where there is a substantial likelihood of a determination of such matter in a manner adverse to the Company or any Company Subsidiary. 2.11 Intellectual Property. Except as set forth on Schedule 2.11, the Company and the Company Subsidiaries either own or by license or otherwise have the right to use all trade secrets, patents, copyrights, trademarks, trade names and other protectible intellectual property rights which are used by the Company and the Company Subsidiaries in connection with the conduct of their business ("Intellectual Property"), with such exceptions as would not reasonably be expected to have a Material Adverse Effect. Schedule 2.11 sets forth a list of all such Intellectual Property registered or patented on the date of this Agreement in the name of the Company or any Company Subsidiary with the United States Patent and Trademark Office or comparable offices in foreign jurisdictions. Except as set forth on Schedule 2.11, to the Knowledge of the Trust, the Company and the Company Subsidiaries have conducted and are conducting their businesses in a manner which has not and does not violate any intellectual property right of another Person which violation would reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2.11, between January 1, 1996 and the date hereof, there has been no Intellectual Property Claim received by the Company and the 10 Company Subsidiaries, which Intellectual Property Claim would reasonably be expected to have a Material Adverse Effect. 2.12 Litigation, Claims and Proceedings. Except as set forth on Schedule 2.12, there is no suit, action, arbitration, administrative or other proceeding, or governmental investigation pending or, to the Trust's Knowledge, threatened against the Company or the Company Subsidiaries which would reasonably be expected to have a Material Adverse Effect. All of the matters disclosed on Schedule 2.12 are covered by the insurance policies set forth on Schedule 2.17 except as otherwise indicated. With respect to such matters, (i) the Company has timely provided all notices it is required to give to its insurance carriers to preserve coverage of such claims under such policies, (ii) the Company has not received written notice that any of the insurance carriers identified in such insurance policies have denied coverage in respect of any such claims (not including any deductibles not covered pursuant to the terms of such policies) and (iii) to the Trust's Knowledge, such insurance policies provide adequate coverage in respect of such claims subject to the terms and conditions of such insurance policies, except to the extent the Company self-insures the risks to which such claims relate. Except as set forth in Schedule 2.12, neither the Company nor any Company Subsidiary has received notice that it is subject to any material injunction, writ, judgment, order or decree from a Governmental Authority. Except as set forth in Schedule 2.12, neither the Company nor any Company Subsidiary has received written notice of any claim or threatened claim against the Company or any Company Subsidiary for product liability, nor, to the Knowledge of the Trust, has the Company or any Company Subsidiary received oral notice of any claim or threatened claim against the Company or any Company Subsidiary for product liability, in each case, which claim would reasonably be expected to have a Material Adverse Effect. 2.13 Environmental Conditions. (a) Except as set forth on Schedule 2.13: (i) to the Trust's Knowledge, the Company and the Company Subsidiaries are in compliance with all Environmental Requirements, with such exceptions as would not reasonably be expected to have a Material Adverse Effect; (ii) the Company and the Company Subsidiaries have not received any written notice prior to the date of this Agreement from a governmental, administrative or judicial agency or authority or third party regarding any liability of the Company or the Company Subsidiaries under Environmental Requirements that would reasonably be expected to have a Material Adverse Effect; (iii) the Company and the Company Subsidiaries are not subject to any judicial or administrative proceeding alleging any violation of or liability under any Environmental Requirements; (iv) the Company and the Company Subsidiaries have not filed with any Governmental Authority any notice under or relating to any Environmental Requirements indicating or reporting any past or present spillage, disposal or release into the 11 environment of any Hazardous Material that, individually, would reasonably be expected to require an expenditure of in excess of $50,000; (v) there are no events or conditions with respect to any facilities or properties currently or previously owned, leased or occupied by the Company or any Company Subsidiary that require the Company or any Company Subsidiary under any Environmental Requirement to expend in excess of $50,000 per site in the aggregate with respect to any such sites in environmental remediation costs (including, without limitation, for investigator costs, cleanup costs, governmental response costs, natural resources damages, property damages, fines or penalties); and (vi) No claim has been asserted, or to the Trust's Knowledge, threatened to be asserted against the Company or any Company Subsidiary for liabilities under CERCLA relating to the disposal of Hazardous Materials since January 7, 1991. Neither the Company nor any Company Subsidiary has expressly assumed by contract or operation of law any liability or obligation of a third party (including, without limitation, any former owner, lienholder or former or present tenant or other user of any of the facilities or properties) arising out of, or relating to, any violation of or liability under any Environmental Requirement. To the Trust's Knowledge, since January 7, 1991, no third party has Released or disposed of any Hazardous Materials on, in, under, above or about any of the facilities or properties owned, leased or occupied by the Company or a Company Subsidiary on or after January 7, 1991, except for such Releases as would not reasonably be expected to have a Material Adverse Effect. (b) All payments and distributions on account of claims relating to Liquidated Sites (as defined in the Environmental Settlement Agreement) have been paid in full to the Environmental Claimants and all pre-petition claims of the Environmental Claimants relating to Liquidated Sites have been discharged. (c) The Trust has provided Holdings with a copy of certain environmental profiles for the facilities and property currently owned, leased or occupied by the Company and the Company Subsidiaries (collectively, "Environmental Reports"). (d) Except as disclosed on Schedule 2.13, neither the Company nor any Company Subsidiary is involved in any pending suit, nor has any notice been received of any claims, relating to personal injuries from exposure to Hazardous Materials resulting from the operation of any facilities or properties currently or previously owned, leased or occupied by the Company or a Company Subsidiary and there have been no such claims in the preceding five years, other than any of the foregoing that would not be reasonably likely to have a Material Adverse Effect. 2.14 Compliance with Law; Permits. The Company and the Company Subsidiaries, with regard to their assets and businesses, are operating their businesses in compliance in all material respects, and are not in default under or in violation of any statutes, laws, ordinances or regulations of any Governmental Authority (collectively, "Laws") applicable to any of their assets or to the conduct of their businesses. Except as set forth in Schedule 2.14, the Company and the Company Subsidiaries have all Permits which are necessary to own and operate their 12 assets and to conduct their businesses as they are presently being conducted and are in compliance in all material respects with all such material Permits, and the Company and the Company Subsidiaries have made all filings and registrations with all Governmental Authorities which are necessary to own and operate their assets and to conduct their businesses as they are presently being conducted with all such Permits, except where the absence of any of the foregoing or the noncompliance therewith would not reasonably be expected to have a Material Adverse Effect. 2.15 Taxes. (a) Each of the Company and the Company Subsidiaries has filed all material Tax Returns and reports required to be filed by it, or requests for extensions to file such Tax Returns or reports have been timely filed and granted and have not expired, and all Tax Returns and reports are complete and accurate in all respects. The Company and each of the Company Subsidiaries has paid (or the Company has paid on their behalf) all Taxes due and payable by the Company and each of the Company Subsidiaries for all taxable periods and portions thereof through the date hereof. The Balance Sheet reflects an adequate reserve for all Taxes payable by the Company and the Company Subsidiaries for all taxable periods and portions thereof accrued through the date of such Balance Sheet, and no deficiencies for any Taxes have been proposed, asserted or assessed against the Company or any Company Subsidiary that are not adequately reserved for. No requests for waivers of the time to assess any taxes against the Company or any Company Subsidiary have been granted or are pending, except for requests with respect to such taxes that have been adequately reserved for in the Balance Sheet. (b) Neither the Company nor any of the Company Subsidiaries has been a United States real property holding company within the meaning of Section 897(c)(2) of the Code during the period specified in Section 897(c)(1)(A)(ii) of the Code. Neither the Company nor any of the Company Subsidiaries is a party to a tax sharing or tax indemnity agreement with any third party or any other agreement of a similar nature that remains in effect. Each of the Company and the Company 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) The Trust is a "qualified settlement fund" within the meaning of Treasury Regulation Section 1.468B-1 for United States federal income tax purposes. As of December 1, 1997, (i) the amount of the Company's alternative minimum tax ("AMT") net operating loss carryforward is not less than $123 million. Payment of principal on the Debentures will entitle the Company to a deduction for United States federal income tax purposes in the year payment is made equal to the amount of such payment. 2.16 Labor and Employee Benefits. (a) Except as set forth in Schedule 2.16(a) hereto, neither the Company nor any Company Subsidiary is a party to (i) any material written employment agreement or (ii) any collective bargaining agreement with any union or other labor organization. Copies of any such agreements have been provided or made available to Holdings. Except as set forth in Schedule 13 2.16(a), neither the Company nor any Domestic Subsidiary has, at any time during the preceding three years, had a strike, work stoppage, work slowdown or other labor dispute, nor, to the Trust's Knowledge, is any such action or labor dispute threatened that, in any such case, would reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule 2.12 or 2.16(a), or as would not reasonably be expected to have a Material Adverse Effect, there is no unfair labor practice complaint or other proceeding against the Company or any Domestic Subsidiary pending before the National Labor Relations Board or any other Governmental Authority and, to the Trust's Knowledge, there are no charges relating to the business and operations of the Company or any Domestic Subsidiary before the Equal Employment Opportunity Commission or any other agency responsible for the prevention of unlawful employment practices, including, without limitation, discrimination based on age, sex or race. (b) Schedule 2.16(b) hereto contains a true and correct list of (i) each "employee benefit plan" within the meaning of Section 3(3) of ERISA, and (ii) each other stock option, stock purchase, stock award, stock appreciation, deferred compensation, pension, retirement, savings, profit sharing, incentive, bonus, health, life insurance, cafeteria, flexible spending, dependent care, vacation pay, holiday pay, disability, sick pay, severance, employee loan or educational assistance plan, arrangement or policy, other than any such plan, arrangement or policy which is required by applicable law ("Benefit Plan"), which is sponsored or maintained by the Company or a Domestic Subsidiary or to which the Company, a Domestic Subsidiary or any of their Affiliates contributes or is required to contribute, on behalf of current or former employees of the Company or a Domestic Subsidiary ("US Benefit Plans"). (c) With respect to any US Benefit Plan, other than a "multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA ("Multiemployer Plan"), the Trust or the Company has delivered or made available to Holdings complete and correct copies of the plan document, any trust agreement, any summary plan description, the most recent IRS determination letter, the most recent annual report on IRS Form 5500, and the most recent actuarial report. (d) With respect to each US Benefit Plan other than a Multiemployer Plan: (i) each such plan is and has been operated and administered, in all material respects, in accordance with its terms and all applicable laws; (ii) each such plan intended to be tax-qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS as to its tax-qualified status under the Code and, to the Trust's Knowledge nothing has occurred since the date of such favorable determination letter which would adversely affect the qualified status of such plan; (iii) there are no actions, suits, or claims (other than routine claims for benefits in the ordinary course) with respect to any such plan pending or, to the Trust's Knowledge threatened which would reasonably be expected to give rise to a material liability to any such plan, the Company or any Company Subsidiary, and the Trust and the Company have no knowledge of any facts which could give rise to any such actions, suits or claims (other than routine claims for benefits in the ordinary course of business); and (iv) to the Trust's Knowledge, no such plan is currently under governmental investigation or audit and, to the Trust's Knowledge no such investigation or audit is contemplated or under consideration. 14 (e) With respect to each US Benefit Plan which is a Multiemployer Plan, to the Trust's Knowledge: (i) no termination (within the meaning of Section 4041A(a) of ERISA) has occurred; and (ii) such plan is not insolvent or in reorganization within the meaning of Sections 4245 and 4241 of ERISA, respectively. Neither the Company nor any Company Subsidiary has incurred liability under Title IV of ERISA as a result of any termination of, or withdrawal from, a plan by the Company, a Domestic Subsidiary or any of their Affiliates. (f) Except as set forth in Schedule 2.16(f), no US Benefit Plan provides medical or life insurance benefits to retirees of the Company or a Domestic Subsidiary. (g) All contributions to US Benefit Plans that will have been required to have been made by the Company or a Company Subsidiary will have been made or accrued as of the Closing. (h) Schedule 2.16(h) hereto contains a true and correct list of each material Benefit Plan, which is sponsored by or maintained by the Company, a Foreign Subsidiary or any of their Affiliates, or to which the Company, a Foreign Subsidiary or any of their Affiliates contributes or is required to contribute, on behalf of current or former employees of a Foreign Subsidiary other than any such plan, arrangement or policy which is required by applicable law ("Foreign Benefit Plan"). Each Foreign Benefit Plan is and has been operated and administered, in all material respects, in accordance with its terms and all applicable laws. All contributions to Foreign Benefit Plans that will have been required to have been made by the Company or a Company Subsidiary prior to the Closing will have been made or accrued as of the Closing. 2.17 Insurance. Schedule 2.17 lists all material liability and casualty insurance policies with coverage limits in excess of $1,000,000 in force as of the date of this Agreement for the benefit of the Company or the Company Subsidiaries with respect to their businesses or their assets. All such policies are in full force and effect and shall not be affected by the Merger. All premiums due thereon have been paid by the Company or the Company Subsidiaries and the Company and the Company Subsidiaries have complied in all material respects with the provisions of such policies and have not received any written notice from any of their insurance brokers or carriers that such broker or carrier will not be willing or able to renew their existing coverage. There are no material pending claims against such policies by the Company or any Company Subsidiary. 2.18 Finder's Fee. Except as set forth on Schedule 2.18, which amounts will be borne solely by the Trust, the Trust and the Company have done nothing to cause Holdings to incur any liability to any party for any brokerage or finder's fee or agent's commission, or the like, in connection with this Agreement or any transaction provided for herein. 2.19 EXCLUSIVITY OF REPRESENTATIONS. THE REPRESENTATIONS AND WARRANTIES MADE BY THE TRUST IN THIS AGREEMENT, IN THE DISCLOSURE SCHEDULES OR IN ANY CERTIFICATES OR OTHER DOCUMENTS DELIVERED BY THE TRUST PURSUANT TO SECTIONS 4.12 AND 7.1 OF THIS AGREEMENT ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES. THE TRUST HEREBY 15 DISCLAIMS ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO HOLDINGS OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING, WITHOUT LIMITATION, ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA). 2.20 Transactions with Affiliates. Schedule 2.20 sets forth each Contract by and between the Trust and its Affiliates (other than the Company and the Company Subsidiaries), on one hand, and the Company and any Company Subsidiary, on the other hand. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND ACQUISITION Holdings and Acquisition represent and warrant to the Trust as follows: 3.1 Due Organization. Each of Acquisition and Holdings is a corporation duly organized and validly existing and in good standing under the Laws of the State of Delaware and each has all requisite corporate power and authority to enter into and perform its obligations under this Agreement. 3.2 Authority. The execution, delivery and performance of this Agreement have been duly and validly authorized by all necessary corporate action on the part of Acquisition and Holdings. This Agreement has been duly and validly executed and delivered by Acquisition and Holdings, constitutes a valid and binding obligation of Acquisition and Holdings and is enforceable against Acquisition and Holdings in accordance with its terms, except to the extent of the Enforceability Exceptions. 3.3 No Conflict. The consummation of the transactions contemplated by this Agreement will not result in (a) the breach of any term or provision of (i) the charter, articles or certificate of incorporation or any other organizational document or by-laws of Acquisition or Holdings, or (ii) any contract or agreement of Acquisition or Holdings or (b) the violation by Acquisition or Holdings of any Law applicable to Acquisition or Holdings, except, in the cases of clauses (a)(ii) and (b) above, for such breaches or violations, if any, which would not reasonably be expected to preclude Acquisition or Holdings in any material respect from consummating the transactions contemplated by this Agreement or delay such consummation. 3.4 Approvals. No Approval is necessary for the execution, delivery and performance of this Agreement by Acquisition or Holdings or for the consummation of the transactions contemplated hereunder without violating any Law, except for (i) compliance with applicable requirements under the H-S-R Act and the expiration or termination of all applicable waiting periods thereunder, (ii) approval of the amendment of the Amended and Restated Articles of Incorporation of the Company contemplated by Section 6.4 by the Bankruptcy Court, (iii) compliance with the Merger Approvals, (iv) compliance with any applicable non-US laws on exchange control or foreign investments and (v) with any necessary Government Approvals. 16 3.5 Litigation. There is no suit, action, arbitration, administrative or other proceeding, or governmental investigation pending or, to Holdings' knowledge, threatened against Holdings which would materially and adversely affect or delay Holdings' ability to perform its obligations hereunder. 3.6. Finder's Fee. Holdings has done nothing to cause the Trust to incur any liability to any party for any brokerage or finder's fee or agent's commission, or the like, in connection with this Agreement or any transaction provided for herein. 3.7 Financing. Attached as Schedule 3.7 is (i) a Commitment Letter from ABN AMRO Bank NV and (ii) a highly confident letter from SBC Warburg Dillon Read Inc. (collectively, the "Financing Letters"), in each case for the benefit of Holdings, which contemplate the financing described therein subject in each case to definitive documentation and the satisfaction of the conditions contained therein. As of the date of this Agreement, the Financing Letters have not been amended and are in full force and effect, and Holdings has no reason to believe such financing will not be available. The financing outlined in the Financing Letters, together with the additional $100 million equity investment from Holdings, or its Affiliates, will be sufficient to pay the Merger Consideration, the Debt Repayment Amount and the Transaction Expense Amount, and to consummate the other transactions contemplated by this Agreement to be consummated by Holdings. None of the Financing Letters require Phase II Environmental Site Assessments as a condition to providing the financing contemplated hereby. Holdings has been advised by ABN AMRO Bank NV and SBC Warburg Dillon Read, Inc. that they will make their environmental assessment solely on Phase I Environmental Site Assessments and reviews of internal Company environmental profiles. ARTICLE 4 COVENANTS 4.1 Conduct of Business. During the period from the date hereof until the Closing, except for any change contemplated by this Agreement or consented to in writing by Holdings or described on Schedule 4.1 (collectively, "Permitted Changes"), the Trust shall cause the Company and the Company Subsidiaries to: (a) conduct their businesses and utilize their assets in all material respects in the ordinary course of business and consistent with past practice; (b) refrain from transferring, pledging, mortgaging, encumbering or otherwise granting any rights in any assets, except in the ordinary course of their businesses or pursuant to Contracts in effect as of the date hereof; (c) use their reasonable efforts consistent with past practices to maintain the businesses intact, to retain their employees, and to preserve the good relations of their suppliers, customers and others with whom they have businesses relations (it being agreed that nothing herein shall prohibit the Company or the Company Subsidiaries from 17 terminating the employment of any employee if the Company or a Company Subsidiary deems it appropriate under the circumstances to do so); (d) refrain from (i) making or granting any general wage or salary increase or making any material increase in the payments of benefits under any bonus, insurance, pension or other employee benefit plan or program, in each case other than in the ordinary course of their businesses (including, without limitation, customary year-end wage and salary increases), pursuant to existing agreements or commitments or benefit plans or as required by Law, (ii) granting any increase in the compensation payable or to become payable by the Company or any of the Company Subsidiaries to any of its executive officers or key employees, or (iii) entering into any employment or severance agreement with or, except in accordance with the existing agreements, granting any severance or termination pay to any officer, director or employee of the Company or any Company Subsidiaries; (e) refrain from changing the certificates of incorporation and by-laws (or equivalent organizational documents) of the Company and the Company Subsidiaries, except that the Amended and Restated Articles of Incorporation of the Company shall be amended as contemplated by Section 6.4 of this Agreement; (f) refrain from splitting, combining or reclassifying any of their equity securities, declaring, setting aside or paying any dividends, or making any distributions, in respect of their equity securities, or purchasing, redeeming or otherwise acquiring any such equity securities; (g) refrain from issuing or selling any additional shares of the capital stock of, or other equity interests in, the Company or securities convertible into or exchangeable for such shares or equity interests, or issue or grant any options, warrants or other rights of any kind to acquire additional shares of such capital stock, such other equity interests, or such securities; (h) refrain from making any loans, advances, or capital contributions to, or investments in, any other person or entity (other than the Company or a Company Subsidiary) other than in the ordinary course of business and consistent with past practice; (i) refrain from transferring, leasing, licensing, selling, mortgaging, pledging, disposing of, or encumbering any material assets other than in the ordinary course of business and consistent with past practice, or incurring or modifying any material indebtedness or other liability, other than in the ordinary course of business and consistent with past practice; (j) except in the ordinary course of business and consistent with past practice, refrain from entering into any Contract involving consideration in excess of $250,000 individually or $1,000,000 in the aggregate or which is otherwise material to the Company and the Company Subsidiaries taken as a whole, and refrain from modifying, amending or 18 terminating any of its Material Contracts or waiving, releasing or assigning any material rights or claims; (k) refrain from permitting any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without notice to Holdings, except in the ordinary course of business and consistent with past practice; (l) refrain from incurring, assuming or guaranteeing any indebtedness for borrowed money or purchase money indebtedness; (m) refrain from changing any of the accounting principles used by it unless required by GAAP; (n) refrain from paying, discharging or satisfying any claims, liabilities or obligations, other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, (x) in the ordinary course of business and consistent with past practice, of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the Audited Financial Statements (or the notes thereto) or (y) incurred in the ordinary course of business and consistent with past practice; and (o) refrain from entering into any Contract to do any of the foregoing, or from authorizing, recommending proposing or announcing an intention to do any of the foregoing. Notwithstanding any other provision hereof, (A) the Company may purchase from the Trust 660,000 Shares for an aggregate purchase price of Twenty Nine Million Dollars ($29,000,000), (B) the Company Subsidiaries may distribute or dividend cash and intercompany accounts and notes receivable to the Company or other Company Subsidiaries and (C) the Company and the Company Subsidiaries may repay intercompany borrowings. 4.2 Access to Records and Properties. From the date hereof until the Closing Date, the Trust shall cause the Company and the Company Subsidiaries to: (a) provide Holdings and its officers and other representatives and employees with such access to the facilities and Real Property of their respective businesses and their principal personnel and such books and records pertaining to their businesses, as Holdings may reasonably request in order to effectuate the transactions contemplated hereby, without charge by the Trust to Holdings (but otherwise at Holdings' expense), provided that Holdings agree that such access will be requested and exercised during normal business hours and without causing unreasonable interference with the operations of the businesses; (b) promptly furnish to Holdings or their representatives, upon reasonable request, such additional financial and operating data and other information relating to the businesses; 19 (c) make available to Holdings, and its representatives upon reasonable request, for inspection and review all documents, or copies thereof, listed in the Schedules hereto, and all files, records and papers pertaining to any proceedings and matters listed in the Schedules hereto; and (d) provided Holdings has entered into a Site Access and Investigation Agreement on customary terms reasonably satisfactory to the Company, permit Holdings or its agents access to each facility and property owned, leased or occupied by the Company or a Company Subsidiary solely (with respect to environmental due diligence) for the purpose of conducting a Phase I Environmental Site Assessment of such facility and real property, and for general business site visits for financing parties, and which contains appropriate confidentiality provisions. 4.3 Approvals. (a) From the date hereof until the Closing Date, the Trust and Holdings shall (and shall cause their respective Affiliates to) use all reasonable efforts to obtain or make, as the case may be, as soon as possible, all Approvals as may be required to be obtained or made, as the case may be, by it (and/or any of its Affiliates) in order to enable it (and/or any of its Affiliates) to perform its obligations under this Agreement, including, obtaining all necessary Government Approvals. (b) As promptly as practicable, after the date of this Agreement, the Trust and Holdings shall each make their initial filing (and shall thereafter timely make any required filings (including responses to requests for additional information)) with the FTC and the DOJ pursuant to the H-S-R Act and any other Governmental Authority whose acquiescence or consent is necessary in order for the transactions contemplated by this Agreement to be consummated as promptly as practicable. The parties shall use reasonable efforts to demonstrate that such transactions should not be opposed by the FTC, the DOJ, or such other Governmental Authority, and Holdings and the Trust shall jointly use all reasonable efforts to eliminate and/or satisfy as promptly as practicable any objection that any such Governmental Authority may have to the transactions contemplated hereby. Without limiting the generality of the foregoing, Holdings and the Trust shall jointly: (i) use all reasonable efforts to prevent the entry in a judicial or administrative proceeding brought under any antitrust law by any Governmental Authority or any other party of any permanent or preliminary injunction or other order that would make consummation of the Merger in accordance with the terms of this Agreement unlawful or would prevent or delay it; (ii) take promptly, in the event that such an injunction or order has been issued in such a proceeding, any and all reasonable steps, including, without limitation, appeal thereof, the posting of a bond necessary to vacate, modify or suspend such injunction or order so as to permit the consummation of such transaction as nearly as possible on the schedule contemplated by this Agreement; and 20 (iii) take promptly all other reasonable action and do all other things necessary and proper to avoid or eliminate each and every impediment under any antitrust law which may be asserted by any Governmental Authority or any other party, US or foreign, to the consummation of the Merger in accordance with the terms of this Agreement. 4.4 Public Announcements. On and after the date hereof and through the Closing Date, the Trust and Holdings shall consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement and the transactions contemplated hereby. Neither the Trust nor Holdings shall issue any press release or make any public statement prior to obtaining the other party's approval, which approval shall not be unreasonably withheld, except that no such approval shall be necessary to the extent disclosure may be required by Law (including, without limitation, any required disclosures to employee representatives) or any listing agreement of either party hereto; provided, however, that if disclosure shall be required pursuant to applicable Law or a listing agreement, the parties shall seek to make such disclosure in a form mutually acceptable to them. The Trust acknowledges that Holdings and its financing parties will be required to make certain disclosures in connection with completing the financing described in Section 3.7. 4.5 Confidentiality. (a) Except as provided in Section 4.5(b), the terms of the letter agreement dated as of September 4, 1997 (the "Confidentiality Agreement") between the Trust and Holdings are hereby incorporated herein by reference and shall continue in full force and effect until the Closing, at which time the Confidentiality Agreement and the obligations of Holdings under this Section 4.5 shall terminate. If this Agreement is for any reason terminated prior to the Closing, the Confidentiality Agreement shall nonetheless continue in full force and effect. (b) Except as required by applicable Law, the Trust agrees to keep confidential all material non-public information with respect to the Company and the Company Subsidiaries and all material non-public information obtained by it with respect to Holdings in connection with this Agreement and the negotiations preceding this Agreement. Notwithstanding the foregoing, the Trust shall not be required to keep confidential or return any information which (i) is known by it through other lawful sources not, to the Knowledge of the Trust, subject to a confidentiality agreement with the disclosing party, (ii) is or becomes publicly known through no breach of a confidentiality obligation owed by the Trust or its agents or (iii) is developed by the Trust independently of any disclosure by Holdings. 4.6 Reports; Access to Books and Records. After the Closing, Holdings shall permit the Trust to have reasonable access to and the right to make copies of such of the Company's or the Company Subsidiaries' or their Affiliates' books, records and files for any reasonable purpose of the Trust, such as for use in litigation, financial reporting, tax return preparation, or tax compliance matters. In addition, Holdings shall make available to the Trust, upon the Trust's reasonable request, personnel of the Company or the Company Subsidiaries or their Affiliates who are familiar with any such matter requested. Holdings agrees to preserve and keep all of the books, records and files of the Company's and the Company Subsidiaries' businesses and assets 21 in accordance with their existing document retention policies, except that books and records maintained for financial and tax purposes shall be preserved and kept for a period of not less than five (5) years after the Closing Date. 4.7 Tax Matters. (a) Holdings shall make an election (the "Election") pursuant to Section 338(g) of the Code and shall report the transaction consistent with such Election. The Trust agrees that it shall pay and indemnify Holdings, the Company and the Company Subsidiaries for any Federal income taxes (including interest and penalties thereon) resulting from the Election (net of the present value of any incremental future tax benefits to Holdings, the Company or any of the Company Subsidiaries resulting therefrom, as determined using an assumed discount rate equal to the "Federal mid-term rate" (as defined in Section 1274(d) of the Code) in effect on the date hereof) ; provided, however, that with respect to Federal income taxes imposed under Section 55 of the Code, the Trust shall pay and indemnify Holdings, the Company and the Company Subsidiaries only to the extent such Federal income taxes (including interest and penalties thereon) directly result from a breach of the representation and warranty made by the Trust under Section 2.15(c). For purposes of this subparagraph (a), Federal income taxes resulting from the Election shall mean taxable gain associated with the deemed asset sale calculated in accordance with Section 338 of the Code and the regulations promulgated thereunder less (i) the sum of (A) net operating losses, (B) foreign tax credits, (C) general business credits, (D) AMT credit carryforwards, (E) AMT net operating losses and (F) alternative minimum foreign tax credit carryforwards, each of the Company as of November 30, 1997 and (ii) the full amount of the deduction to the Company resulting from payment of the Debentures. Except as provided in this Section 4.7(a), the Trust shall not have any liability for Taxes of the Company or the Company Subsidiaries attributable to the Election. (b) All Tax Returns with respect to the Company and the Company Subsidiaries not required to be filed on or before the date hereof (i) shall, to the extent required to be filed on or before the Closing Date (taking into account any valid extensions), be caused by the Trust to be filed by the Company and the Company Subsidiaries when due in accordance with all applicable laws and (ii) shall, as of the time of filing, correctly reflect in all material respects the facts regarding the income, business, assets, operations, activities and status of the Company and each of the Company Subsidiaries and any other information required to be shown therein. (c) All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred solely as a result of the Merger hereunder (including any real property transfer tax and any similar Tax, but excluding any Taxes referred to in the last sentence of Section 4.7(a)) shall be paid by the Trust when due but only to the extent the amount of such Taxes does not exceed the amount of Taxes that would have been incurred if the Seller had sold the Common Stock to Holdings, and the Trust will file all necessary Tax Returns and other documentation with respect to all such Taxes and fees. (d) From the date hereof until the Closing, without the prior written consent of Holdings, neither the Company nor any of the Company Subsidiaries shall make or change any 22 Tax election, change any annual Tax accounting period, adopt or change any method of Tax accounting, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment, surrender any right to claim a Tax refund, consent to any extension or waiver of the limitations period applicable to any Tax claim or assessment or take or omit to take any other action, if any such other action or omission would have the effect of materially increasing the Tax liability of the Company or any of the Company Subsidiaries. (e) (i) Notwithstanding any other provision of this Agreement (including, without limitation, Section 8.1), in the event that the Closing occurs, the Trust shall be liable for and indemnify Holdings, the Company and the Company Subsidiaries for Taxes of the Company and the Company Subsidiaries for any taxable year or period that ends on or before November 30, 1997 and, with respect to any taxable year or period beginning before and ending after November 30, 1997, the portion of such taxable year ending on and including November 30, 1997 but only to the extent such Taxes exceed the aggregate amount accrued (to the extent such accruals are consistent with past practice) for Taxes on the Audited Balance Sheet. (ii) In the event that the Closing occurs, Holdings, the Company and the Company Subsidiaries shall be liable for and indemnify the Trust for the Taxes of the Company and the Company Subsidiaries for any taxable year or period that begins after November 30, 1997 and, with respect to any taxable year or period beginning before and ending after November 30, 1997, the portion of the taxable year beginning on the day after November 30, 1997. (iii) For purposes of subparagraphs (e)(i) and (e)(ii), whenever it is necessary to determine the liability for Taxes of the Company and the Company Subsidiaries for a portion of a taxable year or period that begins before and ends after November 30, 1997, the determination of such Taxes for the portion of the year or period ending on, and the portion of the year or period beginning after November 30, 1997 shall be determined by assuming that the Company and the Company Subsidiaries had a taxable year or period which ended at the close of November 30, 1997, except that exemptions, allowances or deductions that are calculated on an annual basis, such as the deduction for depreciation, shall be apportioned based on the number of days in the year elapsed to and including November 30, 1997. (iv) Any payment by the Trust or Holdings under this Section 4.7 will be treated for Tax purposes as, in the case of a payment by the Trust, a contribution to the capital of the Company and, in the case of a payment by Holdings, as a distribution by the Company to the Trust, in either case, immediately prior to the Effective Time. (f) After the date hereof, each of the Trust and Holdings shall: (i) assist in all reasonable respects (and cause their respective Affiliates to assist) the other party in preparing any Tax Returns or reports which such other party is responsible for preparing and filing in accordance with this Section 4.7; 23 (ii) cooperate in all reasonable respects in preparing for any audits of, or disputes with Governmental Authorities regarding, any Tax Returns of the Company and each of the Company Subsidiaries; (iii) make available to the other and to any Governmental Authority as reasonably requested all information, records, and documents relating to Taxes of the Company and each of the Company Subsidiaries; (iv) provide timely notice to the other in writing of any pending or threatened Tax audits or assessments of the Company or any of the Company Subsidiaries for taxable period for which the other may have a liability under this Section 4.7; and (v) furnish the other with copies of all correspondence received from any Government Authority in connection with any Tax audit or information request with respect to any taxable period of the Company and each of the Company Subsidiaries. (g) Holdings shall notify the Trust in writing upon receipt by Holdings, the Company or any of the Company Subsidiaries of notice of any pending or threatened federal, state, local or foreign Tax audits or assessments which may materially affect the Tax liabilities of the Company for which the Trust would be required to indemnify Holdings, the Company or any of the Company Subsidiaries. The Trust shall notify Holdings in writing upon receipt by the Trust of written notice of any pending or threatened federal, state, local or foreign Tax audits or assessments which may materially affect the Tax liabilities of the Trust, the Company or any of the Company Subsidiaries for which Holdings would be required to indemnify the Trust. (h) All Taxes that are not due and payable on or prior to November 30, 1997 but which relate to a tax period ending on or prior to November 30, 1997 will be paid by the Trust when due, but only to the extent such taxes exceed the amount accrued (to the extent such accruals are consistent with past practice) on the balance sheet for the year in which such Taxes arose. Notwithstanding any other provision of this Agreement (including, without limitation, Section 8.1), the Company and the Company Subsidiaries shall be liable for the Taxes described in this subsection (h). (i) To the extent that an indemnification obligation pursuant to Section 4.7 duplicates or is inconsistent with an indemnification obligation pursuant to Article 8, the provisions of Section 4.7 shall govern. (j) Except as provided in Section 4.7(k), Holdings shall have the right to control the conduct of any audit or administrative or court proceeding relating to a taxable year or period of the Company or any of the Company Subsidiaries ending on or prior to November 30, 1997. Holdings shall keep the Trust informed on a current basis of the progress of any such audit or proceeding (including, without limitation, providing upon request copies of correspondence received from the IRS and giving the Trust full access to all relevant information and to the advisors handling such audit or proceeding), and shall permit the Trust to participate at its own expense in the preparation of any briefs, memoranda or other similar materials to be submitted in connection with such audit or proceeding. Holdings shall ensure that due consideration is given 24 to any points raised by the Trust with respect to such an audit or proceeding. Holdings shall not agree to compromise or settle any audit or proceeding without the prior written consent of the Trust, which consent shall not be unreasonably withheld. (k) The Trust shall have the right to control the conduct of an audit concerning the valuation of the Common Stock held by the Trust and any administrative or court proceeding relating to such audit. The Trust shall keep Holdings informed on a current basis of the progress of such audit or proceeding (including, without limitation, providing upon request copies of correspondence received from the IRS and giving Holdings full access to all relevant information and to the advisors handling any such audit or proceeding), and shall permit Holdings to participate at its own expense in the preparation of any briefs, memoranda or other similar materials to be submitted in connection with any such audit or proceeding. The Trust shall ensure that due consideration is given to any points raised by Holdings with respect to any such audit or proceeding. The Trust shall not agree to compromise or settle any audit or proceeding without the prior written consent of Holdings, which consent shall not be unreasonably withheld. 4.8 Repurchase of Shares Payment; Payment of Outstanding Indebtedness. Immediately prior to the Effective Time, the Trust shall cause the Company to: (a) repurchase 660,000 Shares from the Trust for an aggregate purchase price of Twenty-Nine Million Dollars ($29,000,000); and (b) pay, by wire transfer of immediately available funds, to PNC, Ohio, National Association, as agent ("PNC Bank"), an amount in cash equal to the principal amount of all indebtedness of the Company and the Company Subsidiaries owed to the bank syndicate for which PNC Bank acts as agent as of the Closing Date, all accrued and unpaid interest thereon through the Closing Date and all other obligations of the Company and the Company Subsidiaries payable to PNC Bank. The "Debt Repayment Amount" shall mean an amount equal to the sum of (i) the amount of the payments made or to be made pursuant to Sections 4.8(b) and 7.3, and (ii) the principal amount of the IRBs and any other long-term indebtedness (including current portions) or revolving credit or similar balance outstanding on the Closing Date. 4.9 Director and Officer Liability. (a) For six years after the Closing Date, Holdings and the Company shall indemnify and hold harmless each person who is, or has been at any time prior to the date hereof or who becomes prior to the Closing an officer or director of the Company (the "Management Persons"), in respect of acts or omissions occurring prior to the Closing (including but not limited to the transactions contemplated by this Agreement); provided that such indemnification shall be subject to any limitation imposed from time to time under applicable law. For six years after the Closing Date, Holdings shall cause the Company to provide, if available, officers' and directors' liability insurance in respect of acts or omissions occurring prior to the Closing, including but not limited to the transactions contemplated by this Agreement, covering each such Person currently covered by the Company's officers' and directors' liability insurance policy, or who becomes 25 covered by such policy prior to the Closing, on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof; provided that in satisfying its obligation under this Section 4.9, the Company shall not be obligated to pay premiums in excess of two-hundred percent (200%) of the amount per annum the Company paid the fiscal year ended November 30, 1997; but provided further that Holdings shall nevertheless be obligated to cause the Company to provide such coverage as may be obtained for such amount. (b) Any determination to be made as to whether any Management Person has met any standard of conduct imposed by law shall be made by legal counsel reasonably acceptable to such Management Person and Holdings, retained at the Company's expense. This Section 4.9 is intended to benefit the Management Persons, their heirs, executors and personal representatives and shall be binding on successors and assigns of Holdings. 4.10 Notices of Certain Events. The Trust shall promptly notify Holdings of (i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; (ii) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (iii) any actions, suits, claims, investigations or proceedings commenced or, to the Trust's Knowledge threatened, against the Trust, the Company or any Company Subsidiary that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 2.12; (iv) the occurrence, or the failure to occur, of any event which would be likely to cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect (except for any representation and warranty qualified as to materiality, which need only be untrue or inaccurate as a result of such event occurring or failing to occur); and (v) any failure by the Trust to comply with or satisfy any material covenant, condition or agreement to be complied with or satisfied by it hereunder prior to the Closing Date. For the purposes of this Section 4.10 only, the December 1 Representations shall be read to speak as of the Closing Date. 4.11 Further Assurances. Each party shall use all commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, to consummate and make effective the transactions contemplated by this Agreement as expeditiously as practicable within the control of any of them. 4.12 Financial Statements. At least 20 business days prior to the Closing, the Trust shall deliver to Holdings (i) the audited consolidated balance sheet of the Company and the Company Subsidiaries as of November 30, 1997 and the related audited consolidated statement of income and cash flows of the Company and Company Subsidiaries for the fiscal year then ended (including any notes thereto) certified by Deloitte & Touche and accompanied by their reports thereon (collectively, the "Audited Financial Statements"), and (ii) a certificate of the Trust stating that the Audited Financial Statements are prepared in accordance with GAAP and present fairly, in all material respects, the consolidated financial position of the Company and the Company's Subsidiaries as of November 30, 1997 and the consolidated results of operations and 26 cash flows of the Company and the consolidated Company Subsidiaries for the fiscal year ended November 30, 1997. 4.13 Negotiations. From the date hereof until the termination of this Agreement in accordance with its terms, the Trust agrees that neither the Trust, the Company nor any of their respective Trustees, directors, officers, employees, investment banking firms, advisors or other agents, nor any Person acting on their behalf (the "Trust Group"), will initiate, solicit or encourage or take any action intended to facilitate the making of any inquiries or proposals by, or engage in any discussions or negotiations with, or furnish any information to or enter into any agreement with, any Person concerning the sale of an equity interest in the Company or a sale of substantially all of the assets of the Company or the merger, consolidation, or other business combination involving the Company, and will promptly notify Holdings orally and in writing of the substance of any inquiry or proposal concerning any such transaction that may be received by the Trust or any other member of the Trust Group; provided, however, that notwithstanding any other provision of this Agreement, the Trust may (i) engage in discussions or negotiations with a third party who (without any solicitation, initiation, encouragement, discussion or negotiation, directly or indirectly, by or with the Trust after December 19, 1997) seeks to initiate such discussions or negotiations and may furnish such third party information concerning the Company if, and only to the extent that, (A)(x) the third party has first made an Acquisition Proposal that is financially superior (taking into account all relevant factors) to the transactions contemplated by this Agreement and has demonstrated that the funds necessary for the Acquisition Proposal are reasonably likely to be available (as determined in good faith in each case by the Trust after consultation with its financial advisors) and (y) the Trustees shall conclude in good faith after consulting with their financial and legal advisors that such action is in the best interests of the Trust and its beneficiaries and (B) prior to furnishing such information to or entering into discussions or negotiations with such Person, the Trust (x) provides prompt notice to Holdings to the effect that it is furnishing information to or entering into discussions or negotiations with such Person and (y) receives from such Person an executed confidentiality agreement in reasonably customary form and (ii) provided the Trust terminates this Agreement pursuant to Section 9.1(d), accept an Acquisition Proposal from a third party. The Trust shall notify Holdings orally and in writing of any such inquiries, offers or proposals (including, without limitation, the terms and conditions of any such proposal and the identity of the Person making it), within 24 hours of the receipt thereof, shall keep Holdings informed of the status and details of any such inquiry, offer or proposal (including any material change to the offer or proposal), and shall give Holdings five days' advance notice of any agreement to be entered into with, or any information to be supplied to, any Person making such inquiry, offer or proposal. The Trust shall, and shall cause the Company, the Company Subsidiaries and Affiliates and their respective officers, directors, employees, investment bankers, attorneys, accountants and other agents to immediately cease and cause to be terminated all discussions and negotiations that have taken place prior to the date of this Agreement, if any, with any parties conducted heretofore with respect to any Acquisition Proposal. As used herein, "Acquisition Proposal" shall mean a bona fide proposal or offer (other than by Holdings) for a merger or other business combination involving the Company, or any bona fide proposal or offer to acquire in any manner all or substantially all of the assets or equity of the Company. 27 4.14 No Phase II Reviews. Holdings and Acquisition agree that neither Holdings, Acquisition nor any of their affiliates, agents, or financing parties shall have any right to engage in any Phase II Environmental Site Assessments prior to Closing, at any facility or property owned, leased or occupied by the Company or a Company Subsidiary. 4.15 ISRA. Prior to the Closing, the Trust shall prepare, and deliver to the New Jersey Department of Environmental Protection, all written submissions required by the New Jersey Industrial Site Recovery Act ("ISRA"), with respect to the facilities owned or operated by the Company or any Company Subsidiaries, including the facilities located at 10 Industrial Road in Carlstadt, New Jersey. ARTICLE 5 CONDITIONS TO OBLIGATIONS OF HOLDINGS AND ACQUISITION The obligations of Holdings and Acquisition to be performed by Holdings and Acquisition at the Closing are subject to the satisfaction at or prior to the Closing of each of the following conditions, unless waived by Holdings in its sole discretion: 5.1 Absence of Injunction. No Governmental Order shall have been issued and be in effect that prohibits or enjoins in any material respect the consummation of the transactions contemplated by this Agreement. 5.2 Hart-Scott-Rodino. The waiting period (and any extensions thereof) under the H-S-R Act applicable to the Merger shall have expired or otherwise been terminated. 5.3 No Breach. Each representation and warranty of the Trust contained in this Agreement (a) that is qualified by a reference to Material Adverse Effect shall be true and correct and (b) that is not qualified by a reference to Material Adverse Effect, shall be true and correct with such exceptions as would not reasonably be expected to have a Material Adverse Effect, in each case under clauses (a) and (b), as of (x) the Closing in the case of the Closing Representations and (y) as of December 1, 1997 in the case of the December 1 Representations, except to the extent a different date is specified therein, in which case such representation and warranty shall be true and correct, or true and correct with such exceptions as would not reasonably be expected to have a Material Adverse Effect, as the case may be, as of such date. Each covenant and agreement of the Trust contained in this Agreement required to be performed or complied with at or prior to the Closing will have been duly performed and complied with in all material respects as of the Closing. 5.4 Bankruptcy Court Approval. The Bankruptcy Court shall have approved an amendment of the Amended and Restated Articles of Incorporation of the Company that deletes Article Sixth thereof. 5.5 Merger Approvals. All Merger Approvals required to consummate the transactions as contemplated hereby shall have been obtained. 28 5.6 Government Approvals. All Governmental Approvals required to consummate the transactions contemplated hereby shall have been obtained. 5.7 Financing. Holdings shall have received or otherwise have available financing outlined in the Financing Letters, on terms and conditions no less favorable to Holdings than the terms and conditions set forth in the Financing Letters. 5.8 Material Adverse Change. Since August 31, 1997, there shall not have occurred any event, change or effect having, or which would be reasonably likely to have, individually or in the aggregate, a material adverse change on the business, assets, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole. 5.9 Existing Indebtedness. The holder of any outstanding indebtedness for borrowed money referred to in Section 4.8(b) shall have released and discharged the same and its lien securing the same against payment pursuant to Section 4.8 of this Agreement of the outstanding balance of such indebtedness and any related obligation, and Holdings shall have received reasonably satisfactory evidence of the foregoing. 5.10 Environmental Conditions. The Phase I Environmental Site Assessments that Holdings has commissioned and received with respect to those of the properties identified on Schedule 5.10 do not identify any Updated Environmental Conditions except for Updated Environmental Conditions that are not material and adverse to the Company and the Company Subsidiaries taken as a whole. "Updated Environmental Conditions" shall mean environmental conditions that are significantly different from those disclosed pursuant to Table 2.13(a)(v) of Schedule 2.13. 5.11 Legal Opinions. Holdings shall have received an opinion, dated as of the Closing Date and addressed to it, of Hughes Hubbard & Reed LLP, counsel to the Company and the Trust, substantially in the form attached hereto as Exhibit A. 5.12 Consents. All Consents identified in Schedule 5.12 shall have been obtained. 5.13 Other Documents. The Trust shall have delivered or caused to be delivered to Holdings all other documents reasonably requested by Holdings. ARTICLE 6 CONDITIONS TO OBLIGATIONS OF THE TRUST The obligations of the Trust to be performed by the Trust at the Closing are subject to the satisfaction at or prior to the Closing of each of the following conditions, unless waived by the Trust in its sole discretion: 6.1 Absence of Injunction. No Governmental Order shall have been issued and be in effect that prohibits or enjoins in any material respect the consummation of the transactions contemplated by this Agreement. 29 6.2 Hart-Scott-Rodino. The waiting period (and any extensions thereof) under the H-S-R Act applicable to the Merger shall have expired or otherwise been terminated. 6.3 No Breach. Each representation and warranty of Acquisition and Holdings contained in this Agreement shall be true and correct as of the Closing, except to the extent a different date is specified therein, in which case such representation and warranty shall be true and correct as of such date. Each covenant and agreement of Acquisition and Holdings contained in this Agreement required to be performed or complied with at or prior to the Closing will have been duly performed and complied with in all material respects as of the Closing. 6.4 Bankruptcy Court Approval. The Bankruptcy Court shall have approved an amendment of the Amended and Restated Articles of Incorporation of the Company that deletes Article Sixth thereof. 6.5 Merger Approvals. All Merger Approvals required to consummate the transactions contemplated hereby shall have been obtained. 6.6 Government Approvals. All Government Approvals required to consummate the transactions contemplated hereby shall have been obtained. 6.7 Legal Opinion. The Trust shall have received an opinion, dated as of the Closing Date and addressed to it, of Howard, Darby & Levin, counsel to Holdings and Acquisition, in form and substance reasonably satisfactory to the Trust. 6.8 Holdings Financing. Holdings and Acquisition shall have received or otherwise have available funds in an amount sufficient to satisfy all of its obligations hereunder. Holdings shall have demonstrated to the reasonable satisfaction of the Trust that Holdings will comply with the terms of Section 7.3. 6.9. Other Documents. Holdings shall have delivered or caused to be delivered to the Trust all other documents reasonably requested by the Trust. ARTICLE 7 CLOSING 7.1 The Trust Deliveries. Subject to the conditions set forth in this Agreement, at the Closing, the Trust shall deliver to Holdings: (a) certificates representing all of the Shares accompanied by stock powers duly executed in blank with all necessary stock transfer and other documentary stamps attached; (b) a receipt for the Merger Consideration; (c) a certificate, dated the Closing Date and duly executed by a Trustee and a senior executive officer of the Company, to the effect that the conditions set forth in Section 5.3 have been satisfied; 30 (d) a Secretary's certificate certifying the (i) resolutions adopted by the Trust evidencing the authorizations described in Section 2.5, (ii) constituent documents of the Trust, and (iii) incumbency of the Trustees executing this Agreement and the other documents required hereunder; and (e) a FIRPTA affidavit from the Trust, and any other Person required under the Code to deliver the same in connection with the transactions contemplated by this Agreement under and in accordance with Section 897 and Section 1445 of the Code. 7.2 Holdings Deliveries. At the Closing, (i) Holdings shall make the wire transfer of funds in the amount of the Merger Consideration and (ii) shall execute where applicable and deliver to the Trust: (a) a certificate, dated the Closing Date and duly executed by a senior executive officer of Acquisition and Holdings, to the effect that the conditions set forth in Section 6.3 have been satisfied; and (b) a Secretary's certificate certifying the (x) resolutions adopted by Acquisition and Holdings evidencing the authorizations described in Section 3.2, (y) the constituent documents of Acquisition and Holdings, and (z) incumbency of officers of Acquisition and Holdings executing this Agreement and the other documents required hereunder. 7.3 Payment of Debentures. At the Closing, simultaneously with the Effective Time, Holdings shall cause the Company to pay, by wire transfer of immediately available funds, to the Trust, an amount in cash equal to Two Hundred Fifty Million Dollars ($250,000,000), representing the principal amount of all indebtedness of the Company owed to the Trust as of the Closing Date under the Company's 10% Senior Unsecured Sinking Fund Debentures Due November 29, 2006 (the "Debentures"), plus all accrued and unpaid interest thereon through the Closing Date and all other obligations of the Company and the Company Subsidiaries payable to the Trust thereon. ARTICLE 8 INDEMNIFICATION 8.1 Indemnification by the Trust. Subject to Section 8.4, if the Closing occurs, the Trust shall, jointly and severally, defend and indemnify and hold harmless Acquisition and Holdings and its directors, officers, employees, Affiliates, agents, successors by operation of law and permitted assigns ("Holdings Indemnified Parties") from and against and in respect of any and all Losses which any of them may incur as a result of any one or more of the following: (a) any breach by the Trust of any covenant or agreement of the Trust in this Agreement; or (b) any breach of or inaccuracy in any representation or warranty made by the Trust in this Agreement or any certificate or document delivered by the Closing Date 31 pursuant to or in connection with this Agreement (or any facts or circumstances constituting such breach) (it being agreed and acknowledged by the parties that for purposes of Acquisition's and Holdings' rights to indemnification pursuant to this Section 8.1, the representations and warranties contained herein shall be made without qualification by any references therein to materiality generally or whether any breach or inaccuracy would have, or be reasonably expected to have, a Material Adverse Effect); provided, however, that notwithstanding any other provision contained herein, the Trust shall have no liability for any breach of or inaccuracy in any December 1 Representation which arises out of or is based upon any event, change or effect which occurs after December 1, 1997; or (c) (i) any investigation, assessment, sampling, monitoring, treatment, remediation, removal or cleanup ("Remedial Activities") after the Closing relating to any release of Hazardous Materials into the environment of, on or about the Real Property prior to the Closing to the extent such Remedial Activities are required under any Environmental Laws (including any authoritative interpretation thereof by any Governmental Authority) or are necessary to prevent any imminent danger to health or human safety; or (ii) any claims, suits, demands or notices of liability or potential liability arising at any time under Environmental Laws (including any authoritative interpretation thereof by any Governmental Authority) relating to the business or operation of the Company or the Company Subsidiaries prior to the Closing, provided, however, that (x) with respect to environmental matters disclosed on Table 2.13(a)(v) of Schedule 2.13, Holdings Indemnified Parties shall be entitled to indemnification pursuant to this Section 8.1 for such matters only to the extent that the Losses with respect to such matters or properties exceed the amount of the liability with respect to such matters or properties set forth on Table 2.13(a)(v) of Schedule 2.13; and (y) that Holdings Indemnified Parties shall not be entitled to indemnification pursuant to this Section 8.1 with respect to any property that is identified on Schedule 5.10; provided, however, that, if and to the extent any Phase I Environmental Site Assessment commissioned and received by Holdings prior to the Closing with respect to such property identifies adverse Updated Environmental Conditions, the Holdings Indemnified Parties shall be entitled to indemnification with respect to such Updated Environmental Conditions pursuant to this Section 8.1, subject to the limitations set forth in Section 8.4, subject to the following: (x) notwithstanding Section 8.1(c) the Holdings Indemnified Parties shall not be entitled to any indemnification for Losses arising out of any Phase II Environmental Site Assessment other than any such action taken (x) in connection with a settlement, resolution of any pending or threatened administrative enforcement action or as otherwise required to comply with any Environmental Law, or action rendered necessary by an imminent danger to health or human safety; or (y) as part of any monitoring or remediation consistent with the past practices; and (y) with respect to any remediation on any Real Property in respect of which indemnity is provided under Section 8.1(c), Holdings shall use remedial alternatives which shall be among the most cost-effective alternatives permitted 32 under applicable Environmental Laws that does not cause or result in a material interference with operations on the Real Property and may include, without limitation, the use of risk assessments, deed restrictions, institutional controls and industrial remediation standards. Holdings shall promptly provide copies to the Trust of any notices, correspondence, drafts and final reports relating to any covered matter; or (d) any matter on Schedule 2.11 or 2.12 that is designated as covered by this Section 8.1(d); provided, however, that the Trust's obligations under this Section 8.1(d) shall be limited to 50% of any Losses resulting from any such matter; or (e) any matter on Schedule 2.12 that is designated as covered by this Section 8.1(e). 8.2 Indemnification by Acquisition and Holdings. Subject to Section 8.4, if the Closing occurs, Holdings shall, jointly and severally, defend, indemnify and hold harmless the Trust and its Trustees, officers, employees, Affiliates, successors and permitted assigns ("Trust Indemnified Parties") from and against and in respect of any and all Losses which any of them may incur as a result of any one or more of the following: (a) any breach by Acquisition or Holdings of any covenant or agreement of Acquisition or Holdings in this Agreement; or (b) any breach of or inaccuracy in any representation or warranty on the part of Acquisition or Holdings in this Agreement or any certificate or document delivered at the Closing in connection with this Agreement (or any facts or circumstances constituting such breach) (it being agreed and acknowledged by the parties that for purposes of the Trust's right to indemnification pursuant to this Section 8.2, the representations and warranties contained herein shall not be deemed qualified by any references herein to materiality generally). 8.3 Survival. The parties agree that, regardless of any investigation made at any time by the parties, the representations and warranties made by the Trust, the Company, Acquisition and Holdings in this Agreement or in any Schedule (and any related indemnity obligations) shall survive the Closing but shall terminate and be of no further force and effect on, and no claims of any kind with respect thereto may be made by the Trust, the Company, Holdings or Acquisition after, March 31, 1999; provided, however, that representations and warranties set forth in Section 2.4, paragraph (a) of Section 2.5, Section 2.6 and Section 2.18 will survive the Closing Date and remain in full force and effect indefinitely, and, provided, further, that the representations and warranties set forth in Section 2.15 and the agreements contained in Section 4.7 shall survive until six months after the expiration of the applicable statute of limitations and provided, further, that the representatives and warranties in Section 2.13 shall survive until the third anniversary of the Closing. The indemnification obligations set forth in Section 8.1(c) shall survive until the third anniversary of the Closing at which time they shall terminate and be of no further force or effect. In addition, if written notice of a claim has been given prior to the expiration of the applicable representations and warranties or indemnification obligations under Section 8.1(c) by 33 either Acquisition or Holdings or the Trust, as applicable, then the relevant representations and warranties (and related indemnity obligations) or indemnification obligations under Section 8.1(c) shall survive as to such claim, until such claim has been finally resolved. The covenants and agreements contained in this Agreement shall survive the closing. 8.4 Limitations on Indemnity. (a) The following limitations shall apply in respect of the indemnification obligations pursuant to Sections 8.1 and 8.2: (i) no claim for indemnification may be made by a Holdings Indemnified Party pursuant to Section 8.1 or by a Trust Indemnified Party pursuant to Section 8.2 unless notice of such claim (describing the basic facts or events, the existence or occurrence of which constitute or have resulted in the alleged breach of a representation or warranty made in this Agreement or which otherwise form the basis of the claim) has been given to the party from whom indemnification is sought (the "Indemnifying Party") during the relevant survival period set forth in Section 8.3; (ii) The Trust shall have no liability pursuant to Section 8.1 until the cumulative aggregate amount of all Losses which are otherwise recoverable thereunder by Holdings Indemnified Parties exceed Ten Million Dollars ($10,000,000) (the "Deductible"), and then only for the amount (the "Excess Amount") by which such Losses exceed the Deductible up to a maximum Excess Amount of, and the cumulative aggregate amount of Losses for which the Trust shall be liable pursuant to Section 8.1 shall in no event exceed, Fifty Million Dollars ($50,000,000); provided, however, that this Section 8.4(a)(ii) shall not apply to any recovery for claims based upon a breach of Section 2.4, paragraph (a) of Section 2.5, and Sections 2.6 and 2.18; and (iii) The cumulative aggregate indemnity obligation of Holdings under Section 8.2 shall in no event exceed Fifty Million Dollars ($50,000,000). This Section 8.4 shall not apply to Tax matters, which shall be governed by Section 4.7. The parties hereto acknowledge and agree that there shall not be any duplication of indemnification with respect to any matter, notwithstanding the fact that such matter may give rise to a right or rights of reimbursement or indemnification under one or more Sections of this Article 8 or Section 4.7 of this Agreement. 8.5 Indemnification Procedure. (a) Any party making a claim for indemnification hereunder (an "Indemnitee") shall notify the indemnifying party (an "Indemnitor") of the claim in writing promptly (a "Notice of Claim"), provided that the failure to so notify an Indemnitor shall not relieve the Indemnitor of its obligations hereunder except to the extent such failure shall have actually prejudiced the Indemnitor. 34 (b) With respect to any third party action, lawsuit, proceeding, investigation or other claim which is the subject of a Notice of Claim (a "Third Party Claim"), if (i) such claim does not seek an order, injunction or other equitable relief against the Indemnitee which, if successful, would materially interfere with the business or operations of the Indemnitee and (ii) the Indemnitor admits in writing that this indemnity fully covers the Indemnitee against such Third Party Claim, an Indemnitor shall be entitled to assume and control (with counsel of its choice reasonably acceptable to the Indemnitee) the defense of such Third Party Claim at the Indemnitor's expense and at its option by sending written notice of its election to do so within fifteen (15) days after receiving the Notice of Claim from the Indemnitee as aforesaid; provided, however, that: (i) The Indemnitee shall be entitled to participate in the defense of such Third Party Claim and to employ counsel of its choice for such purpose (the fees and expenses of such separate counsel shall be borne by Indemnitee); and to assert against any third party (other than the Indemnitor) any and all crossclaims and counterclaims the Indemnitee may have, subject to the Indemnitor's consent, which consent shall not be unreasonably withheld; (ii) If the Indemnitor elects to assume the defense of any such Third Party Claim, the Indemnitor shall be entitled to compromise or settle such Third Party Claim in its sole discretion so long as either (x) such is solely a monetary settlement which provides an unconditional release of the Indemnitee with respect to such claim or (y) the Indemnitor shall obtain the prior written consent of the Indemnitee (which shall not be unreasonably withheld); and (iii) If the Indemnitor shall not have assumed the defense of such Third Party Claim within the fifteen (15) day period set forth above, the Indemnitee may assume the defense of such Third Party Claim with counsel selected by it and may make any compromise or settlement thereof or otherwise protect against the same and be entitled to all amounts paid as a result of Third Party Claim or any compromise or settlement thereof. The Indemnitee shall give the Indemnitor notice of the name of counsel selected by it prior to the time of assuming the defense and the Indemnitor shall have five (5) Business Days in which to object to such counsel. In the event of such objection, the Indemnitor shall have the obligation to defend on the terms specified in Section 8.5(b)(ii). (c) The Indemnitee shall at all times cooperate, at no expense, in all reasonable ways with, make its relevant files and records available for inspection and copying by, and make its employees available or otherwise render reasonable assistance to, the Indemnitor. (d) Upon payment of any amount pursuant to any claim for indemnification hereunder, the Indemnitor shall be subrogated, to the extent of such payment, to all of the Indemnitee's rights of recovery against any third party with respect to the matters to which such claims relates. 8.6 Exclusive Remedy. If the Closing occurs, the sole and exclusive remedies of Acquisition and Holdings for (a) any breach of any representation or warranty made by the Trust 35 or the Company, (b) any breach, nonfulfillment or nonperformance of any covenant or agreement to be performed, complied with or fulfilled by the Trust under this Agreement or (c) any Losses referred to in Section 8.1 hereof shall be the remedies therefor expressly provided in this Article 8 and the Trust shall have no other obligations with respect thereto; provided, however, that this Section 8.6 shall not apply to matters governed by Section 4.7. If the Closing occurs, the sole and exclusive remedies of the Trust for (a) any breach of any representation or warranty made by Acquisition and Holdings, (b) any breach, non-fulfillment or non-performance of any covenant or agreement to be performed, complied with or fulfilled by Acquisition and Holdings under this Agreement or (c) any Losses referred to in Section 8.2 hereof shall be the remedies therefor expressly provided in this Article 8 and Acquisition and Holdings shall have no other obligations with respect thereto; provided, however that this Section 8.6 shall not apply to matters governed by Section 4.7. ARTICLE 9 TERMINATION 9.1 Termination. Notwithstanding anything to the contrary set forth herein, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing: (a) by mutual consent of Holdings and the Trust; (b) by either Holdings or the Trust, if the Closing shall not have been consummated on or before June 30, 1998 (the "Deadline"); provided, however, that the right to terminate this Agreement pursuant to this Section 9.1(b) shall be suspended as to any party whose failure to fulfill any material obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur prior to the Deadline until the fifth Business Day after such failure has been cured; (c) by either Holdings or the Trust in the event of the issuance of a final, nonappealable Governmental Order restraining or prohibiting the consummation of the transactions contemplated hereby; or (d) by the Trust, upon five days' prior notice to Holdings, if the Trust has complied with the provisions of the proviso in the first sentence of Section 4.13; provided, however, that prior to any such termination, the Trust shall, and shall cause its respective financial and legal advisors to, negotiate with Holdings to make such adjustments in the terms and conditions of this Agreement as would enable Holdings to proceed with the transactions contemplated hereby; provided further, however, that no termination shall be effective pursuant to this clause (d) unless concurrently with such termination a termination fee equal to the sum of (i) Seventeen Million Five Hundred Thousand Dollars ($17,500,000) and (ii) Holdings' (and its Affiliates') out-of-pocket expenses relating to the transaction (including, without limitation, professional and other fees and disbursements and commitment and other financing fees) up to a maximum of Two Million Five Hundred Thousand Dollars ($2,500,000), is paid in cash by the Trust to Holdings. 36 9.2 Effect of Termination. If this Agreement is terminated pursuant to Section 9.1, this Agreement shall be of no further force and effect, and none of the parties hereto nor their respective Affiliates, directors, shareholders, officers, employees, agents, consultants, attorneys-in-fact or other representatives shall have any liability in respect of such termination, except that (a) the agreements in Section 10.1 and 10.16 shall survive the termination hereof and (b) nothing herein shall relieve either party from liability for any breach hereof or failure to perform hereunder. Notwithstanding the foregoing, if this Agreement shall be terminated by either party pursuant to Section 9.1(b) as a result of the other party's failure to fulfill any material obligation of this Agreement, then the non-terminating party shall pay the other party an amount equal to the terminating party's reasonable fees and expenses incurred by such party in connection with the transactions contemplated by this Agreement, including, but not limited to, fees of counsel, filing fees, agency fees, commitment fees, accountant fees, appraisal fees and all out-of-pocket expenses related thereto. ARTICLE 10 MISCELLANEOUS 10.1 Expenses. Except as otherwise expressly provided herein, whether or not the transactions contemplated hereby are consummated, all costs, expenses and disbursements incurred by the Trust and Holdings in connection with this Agreement and the transactions contemplated hereby shall be borne by them, respectively. 10.2 Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersede all previous agreements, understandings or discussions with respect to the subject matter hereof, except for the Confidentiality Agreement. Except as set forth in the preceding sentence, any and all prior arrangements, representations, promises, understandings and conditions in connection with said subject matter and any representations, promises or conditions not expressly incorporated herein or expressly made a part hereof shall not be binding upon any party hereto. 10.3 Waivers. Any waiver of rights hereunder must be set forth in writing signed by the party against whom the waiver is to be effective. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive any party's rights at any time to enforce strict compliance thereafter with every term or condition of this Agreement for any other breach or failure to comply with the terms and conditions of this Agreement. 10.4 Binding Effect; Assignability. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties and their respective successors and permitted assigns. This Agreement shall not be assignable by any party without the express written consent of the other parties; provided, however, that Holdings may assign its rights and obligations under this Agreement to any Affiliate of Holdings and any of its financing parties without the express written consent of the Trust provided that Holdings shall not be relieved of any of its obligations hereunder. 37 10.5 Notices. All notices or other communications required or permitted to be given hereunder shall be (as elected by the party giving such notice) (a) personally delivered against receipt to the party to whom it is to be given with copies to all others listed, (b) transmitted by telecopy, (c) transmitted by postage prepaid certified mail, return receipt requested, or (d) delivered from a point in the United States by a recognized overnight courier service as follows: (i) If to the Trust: Eagle-Picher Industries, Inc. Personal Injury Settlement Trust One East Fourth Street Suite 1219 Cincinnati, Ohio 45202 Telecopy: (513) 721-3404 with a copy to: Hughes Hubbard & Reed LLP One Battery Park Plaza New York, New York 10004 Attention: Ed Kaufmann Telecopy: (212) 422-4726 (ii) If to the Company: Eagle-Picher Industries, Inc. 580 Walnut Street Floor 13 Cincinnati, Ohio 45202 Telecopy: (513) 721-2341 with a copy to: Hughes Hubbard & Reed LLP One Battery Park Plaza New York, New York 10004 Attention: Ed Kaufmann Telecopy: (212) 422-4726 (iii) If to Holdings or Acquisition: Granaria Holdings B.V. Lange Voorhout 16 P.O. Box 233 2501 CE The Hague 38 The Netherlands Attention: Joel P. Wyler Chairman Telecopy: 011 31 70 312 1150 with a copy to: Howard, Darby & Levin 1330 Avenue of the Americas New York, NY 10019 Attention: Scott F. Smith Telecopy: (212) 841-1010 All notices and other communications shall be deemed to have been duly given on (x) the date of receipt if delivered personally or by telecopy (with issuance by the transmitting machine of confirmation of successful transmission), (y) the day of delivery as indicated on the return receipt if delivered by mail, or (z) one (1) Business Day after the date of delivery in the US to the overnight courier if sent by overnight courier. Any party hereto may change its address for purposes hereof by notice to the other parties. 10.6 Counterparts. This Agreement may be executed simultaneously in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute and be the same instrument. 10.7 Attachments, Exhibits and Schedules. All Attachments, Exhibits and Schedules attached hereto are incorporated herein and expressly made a part of this Agreement as though completely set forth herein. All references to this Agreement herein or in any of the Attachments, Exhibits or Schedules shall be deemed to refer to this entire Agreement, including all Attachments, Exhibits and Schedules. Neither the specification of any dollar amount in the representations and warranties set forth in Article 2 or elsewhere herein nor the indemnification provisions of Article 8 nor the inclusion of any Schedule shall be deemed to constitute an admission by the Trust, or otherwise imply, that any such amounts or the items so included are material for purposes of this Agreement or are required to be listed on the relevant schedule. 10.8 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE INTERPRETED, CONSTRUED, AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, DISREGARDING ANY CONFLICT OF LAWS PROVISIONS WHICH MIGHT OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION. 10.9 No Presumption. Holdings, Acquisition, the Trust and the Company have participated jointly in the negotiation and drafting of this Agreement. In the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by Holdings and the Trust, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. 39 10.10 Headings. The headings and subheadings of this Agreement are inserted for convenience of reference only and shall not affect the interpretation of this Agreement. 10.11 Amendment. This Agreement may be amended only in a writing signed by all parties hereto. 10.12 Third Party Rights. Except as otherwise provided (a) in Section 4.9 with respect to the rights of Management Persons, (b) in Article 8 with respect to the indemnification obligations for the benefit of Holdings Indemnified Parties and the Trust Indemnified Parties (other than Holdings and the Trust) and (c) in Section 10.16 with respect to the rights of Trust Persons, the provisions of this Agreement are for the sole benefit of Holdings, Acquisition, the Company and the Trust and shall not inure to the benefit of any other Person (other than permitted assigns of the parties hereto) either as a third party beneficiary or otherwise, including, without limitation, with respect to rights of subrogation in favor of title insurance companies. 10.13 Severability. If and to the extent that any court of competent jurisdiction holds any provisions (or any part thereof) of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement. 10.14 Consent to Jurisdiction. Holdings, Acquisition, the Trust and the Company hereby submit to the non-exclusive jurisdiction of the courts of general jurisdiction of the State of New York and the federal courts of the US, located in the City of New York, solely in respect of the interpretation and enforcement of the provisions of this Agreement and any other agreement, instrument or other document entered into in connection herewith and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement of this Agreement or any such other agreement, instrument or other document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that this Agreement or any such other agreement, instrument or other document may not be enforced in or by such courts or that its property is exempt or immune from execution, that the suit, action or proceeding is brought in an inconvenient forum, or that the venue of the suit, action or proceeding is improper. Service of process with respect thereto may be made upon Holdings or the Trust by mailing a copy thereof by registered or certified mail, postage prepaid, to such party at its address as provided in Section 10.5 hereof with copies to the indicated parties, provided that service of process may be accomplished in any other manner permitted by applicable Law. 10.15 Nonrecourse Provisions. (a) Holdings agrees that, notwithstanding to the contrary in this Agreement (including, without limitation, Article 8) or any agreement, instrument or certificate of the Trust delivered pursuant to this Agreement (each a "Transaction Document") or under any applicable rule of law or equity, (i) the sole recourse of Holdings under the Transaction Documents or otherwise with respect to the matters contemplated hereby or thereby shall be limited to the Trust and its assets and (ii) the Trust's obligations and liabilities under all Transaction Documents and otherwise in connection with the transactions contemplated therein shall be Nonrecourse to the 40 Trustees and the beneficiaries, employees, advisors and agents of the Trust (collectively, "Trust Persons"). (b) "Nonrecourse" shall mean that the obligations and liabilities are limited in recourse solely to the Trust and the assets of the Trust (which shall not include any receivables due from or other rights against Trust Persons), and no Trust Person shall be directly or indirectly personally liable in any respect for any obligation or liability of the Trust under any Transaction Document or any transaction contemplated herein or therein. (c) Holdings hereby covenants for itself and its successors and assigns that it and its successors and assigns will not make any claim, or bring, commence, prosecute or maintain any action, either at law or equity, in any federal, state or local court of the United States or in any foreign court, against any Trust Person in respect of (i) the payment of any amount or the performance of any obligation under any Transaction Document, (ii) the satisfaction of any liability arising in connection with any such payment or obligation or otherwise, including without limitation, liability arising in law for tort (including, without limitation, for active and passive negligence, negligent misrepresentation and fraud), equity (including, without limitation, for indemnification and contribution) or contract (including, without limitation, monetary damages for the breach of representation or warranty or performance of any of the covenants or obligations contained in any Transaction Document or with the transactions contemplated herein or therein) or (iii) otherwise in respect of the transactions contemplated hereby provided that this Section 10.15(c) shall not limit Holdings from naming a Trust Person in any action against the Trust, solely for the purposes of enforcing the Trust's obligations under the Agreement or satisfying any liability referred to in clauses (i) and (ii) of this Section 10.15(c). 10.16 Terms Generally. (a) Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (b) the terms "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Attachments and Schedules hereto) and not to any particular provision of this Agreement, (c) Article, Section, paragraph, clause, Attachment and Schedule references are to the Articles, Sections, paragraphs, clauses, Attachments and Schedules to this Agreement unless otherwise specified, (d) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless otherwise specified, (e) the word "or" shall not be exclusive, and (f) references to a Person are also references to its permitted successors and assigns. 41 IN WITNESS WHEREOF, the duly authorized officers or representatives of the parties hereto have duly executed this Agreement on the date first written above. E-P HOLDINGS, INC. EAGLE-PICHER INDUSTRIES, INC. PERSONAL INJURY SETTLEMENT TRUST By: /s/ Joel P. Wyler By: /s/ Ruth R. McMullin ----------------------------- --------------------------------- Name: Joel P. Wyler Name: Ruth R. McMullin Title: Chairman and President Title: Chairperson E-P ACQUISITION, INC. EAGLE-PICHER INDUSTRIES, INC. By: /s/ Joel P. Wyler By: /s/ Thomas E. Petry ----------------------------- ---------------------------------- Name: Joel P. Wyler Name: Thomas E. Petry Title: Chairman and President Title: Chairman and CEO ATTACHMENT A Definitions For purposes of this Agreement: "Acquisition" shall have the meaning specified in the Preamble. "Acquisition Common Stock" shall have the meaning specified in Section 1.7. "Acquisition Proposal" shall have the meaning specified in Section 4.13. "Affiliate" shall mean, as to any specified Person, any other Person, which, directly or indirectly, controls, is controlled by or is under common control with, such specified Person. For purposes of this definition, "control" means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" shall have the meaning specified in the Preamble. "AMT" shall have the meaning specified in Section 2.15(c). "Approval" shall mean any Consent of, or notice to or filing, registration or qualification with, any Governmental Authority. "Audited Balance Sheet" shall mean the audited consolidated balance sheet of the Company and the Company Subsidiaries as of November 30, 1997. "Audited Financial Statements" shall have the meaning set forth in Section 4.12(i). "Balance Sheet" shall have the meaning specified in Section 2.7. "Bankruptcy Court" shall have the meaning specified in Section 2.5(c)(ii). "Benefit Plan" shall have the meaning specified in Section 2.16(b). "Business Day" shall mean a day other than a Saturday, Sunday or other day on which banks in New York, New York are required to or may be closed. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. 'SS''SS' 9601, et seq.). "Certificate of Merger" shall have the meaning specified in Section 1.2. "Closing" shall have the meaning specified in Section 1.3. "Closing Date" shall have the meaning specified in Section 1.3. 2 "Closing Representations" shall mean the representations and warranties contained in Section 2.1 through 2.6, Sections 2.15(b) and (c) and Section 2.18. "Code" shall mean the US Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder. "Common Stock" shall have the meaning specified in the second recital of this Agreement. "Company" shall have the meaning specified in the Preamble. "Company Debt" shall have the meaning specified in Section 2.4(b). "Company Property" shall have the meaning specified in Section 8.1(e). "Company Subsidiary" shall mean a Subsidiary of the Company. "Confidentiality Agreement" shall have the meaning specified in Section 4.5(a). "Consent" shall mean any action, approval, waiver, consent, authorization, notification or permit. "Contract" shall mean a written or oral contract or agreement, plan, lease, arrangement or commitment to which the Company or a Company Subsidiary is a party. "Deadline" shall have the meaning specified in Section 9.1(b). "Debentures" shall have the meaning specified in Section 7.3. "Debt Repayment Amount" shall have the meaning specified in Section 4.8. "December 1 Representations" shall mean the representations and warranties contained in Section 2.7 through 2.17 (except Sections 2.15(b) and (c)) and in Section 2.20. "Deductible" shall have the meaning specified in Section 8.4(a)(ii). "DGCL" shall mean the Delaware General Corporation Law. "DOJ" shall mean the US Department of Justice. "Domestic Subsidiary" shall mean a Company Subsidiary incorporated in the United States. "Effective Time" shall have the meaning specified in Section 1.2. "Election" shall have the meaning specified in Section 4.7(a). "Enforceability Exceptions" shall have the meaning specified in Section 2.5(a). 3 "Environmental Claimants" shall mean the US Environmental Protection Agency, the US Department of the Interior and the states of Arizona, Oklahoma and Michigan. "Environmental Laws" shall mean Laws in effect as of the close of business on November 30, 1997 relating to the protection of the environment from pollution or regulating or relating to the emission, discharge, disposal, treatment, transportation, storage, release or threatened release of Hazardous Materials into the environment, including ambient air, surface water, ground water, land surface or subsurface strata. "Environmental Reports" shall have the meaning specified in Section 2.13(c). "Environmental Requirements" shall mean any Environmental Laws and all Permits issued under Environmental Laws. "Environmental Settlement Agreement" shall mean a certain Settlement Agreement by and among the Company, certain Company Subsidiaries and the Environmental Claimants, approved by an order issued on or about June 6, 1996 by the United States Bankruptcy Court for the Southern District of Ohio, Western Division. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Evaluation Material" shall have the meaning set forth in the Confidentiality Agreement. "Excess Amount" shall have the meaning specified in Section 8.4(a)(ii). "Financial Statements" shall have the meaning specified in Section 2.7. "Financing Letters" shall have the meaning specified in Section 3.7. "FIRPTA" shall mean the Foreign Investment in Real Property Act of 1980. "Foreign Benefit Plan" shall have the meaning specified in Section 2.16(h). "Foreign Subsidiary" shall mean any Company Subsidiary not qualified to do business in the United States. "FTC" shall mean the Federal Trade Commission. "GAAP" shall mean United States generally accepted accounting principles as in effect at the relevant time, or during the relevant period, specified herein, applied on a consistent basis over the period indicated. "Government Approval" shall have the meaning specified in Section 2.5(c)(v). "Government Contract" shall mean any written prime contract, subcontract, grant or cooperative agreement between the Company or any Company Subsidiary and (i) the US 4 Government, (ii) any prime contractor of the US Government or (iii) any subcontractor with respect to any contract described in clauses (i) or (ii) above. "Governmental Authority" shall mean any United States Federal, State or local, or any foreign, (i) government, governmental, regulatory or administrative authority, agency or commission or (ii) court, tribunal, or judicial body. "Governmental Order" shall mean any order, writ, stay, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. "Hazardous Material" shall mean (i) any substance designated pursuant to Section 311(b)(2)(A) of the Clean Water Act, as amended (33 U.S.C. 'SS''SS' 1251, et seq.), (ii) any "hazardous substance" designated pursuant to CERCLA, (iii) any waste having the characteristics identified under or listed pursuant to the Resource Conservation Recovery Act of 1976, as amended (42 U.S.C. 'SS''SS' 6901, et seq.), (iv) any pollutant listed under Section 307(a) of the Clean Water Act, as amended (33 U.S.C. 'SS''SS' 1251, et seq.), (v) any hazardous air pollutant listed under Section 112 of the Clean Air Act, as amended (42 U.S.C. 'SS''SS' 7401, et seq.), (vi) any petroleum, crude oil or any fraction or by-product thereof which is not otherwise specifically listed or designated under paragraphs (i) to (v) above, (vii) any other substance, pollutant, waste or petroleum fraction which is designated as hazardous under the above statutes or under any Environmental Law, (viii) any other substance which is regulated by or forms the basis of liability under any Environmental Law, including, without limitation, friable asbestos and polychlorinated biphenyls ("PCBs") and (ix) any material or substance which is defined as a "hazardous waste," "hazardous substance," "hazardous material," "restricted hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant," "toxic waste" or "toxic substance" under any provision of Environmental Law. "Holdings" shall have the meaning specified in the Preamble. "Holdings Indemnified Parties" shall have the meaning specified in Section 8.1. "H-S-R Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. "Indemnifying Party" shall have the meaning specified in Section 8.4(a)(i). "Indemnitee" shall have the meaning specified in Section 8.5(a). "Indemnitor" shall have the meaning specified in Section 8.5(a). "Intellectual Property" shall have the meaning specified in Section 2.11. "Intellectual Property Claim" shall mean any written claim (i) challenging the scope, validity or enforceability of any of the Intellectual Property, (ii) that any of the products designed, manufactured or sold by the Company or any Company Subsidiary infringes upon the intellectual property rights of any third party or (iii) made by the Company or the Company Subsidiaries that any 5 activity of a third party infringes upon any of the Intellectual Property of the Company or the Company Subsidiaries. "Interest Amount" shall mean an amount equal to the amount of interest on $410,000,000 for the period beginning on (and including) December 1, 1997 to (but excluding) the Closing Date, at a rate per annum of 8% (calculated on the basis of the actual number of days elapsed over a year of 365 days). "IRB" shall mean Industrial Revenue Bond. "IRS" shall mean the US Internal Revenue Service. "ISRA" shall have the meaning specified in Section 4.15. "Joint Venture Entities" shall have the meaning specified in Section 2.3(b). "Joint Venture Interests" shall have the meaning specified in Section 2.3(b). "Knowledge of the Trust," "the Trust's Knowledge" or variants thereof shall mean the actual knowledge, as of the date of this Agreement, of the Trustees and the chief executive officer, the chief operating officer, the senior vice president-finance, controller, the general counsel, chief information officer, senior human resources officer and the head of the Hillsdale Tool Division, the Wolverine Gasket Division, the Technologies Division, the Construction Equipment Division and the Minerals Division, in each case without specific investigation. "Laws" shall have the meaning specified in Section 2.14. "Leased Real Property" shall have the meaning specified in Section 2.9(a). "Lien" shall mean any mortgage, pledge, security interest or similar encumbrance of property, whether voluntarily incurred or arising by operation of law or otherwise. "Liquidated Sites" shall have the meaning specified in the Environmental Settlement Agreement. "Losses" shall mean claims, liabilities, obligations, losses, damages, costs, and out of pocket expenses (including without limitation, reasonable legal, accounting and similar expenses); provided, however, that (i) Losses shall be calculated on a net after tax basis assuming that the person incurring the Loss has an effective tax rate of 40% and taking into account any Tax benefits realized by such Person from the Losses (net of insurance recovery); (ii) Losses shall not include consequential damages other than Losses payable to a third party that consist of consequential damages suffered by such third party; (iii) Losses shall not include punitive damages, except to the extent such Losses represent the amount necessary to satisfy a specific award of punitive damages to a third party; and (iv) Losses shall be reduced by the amount of any insurance recovery or other payment from a non-affiliated third party received by the person incurring the Loss in connection with the Loss, subject to the offsetting effect of Taxes. 6 "Management Persons" shall have the meaning specified in Section 4.9(a). "Material Adverse Effect" shall mean a material adverse effect, individually or in the aggregate, on the business, financial condition or results of operations of the Company and the Company Subsidiaries considered as a single enterprise. "Material Contract" shall have the meaning specified in Section 2.10(a)(i). "Material Government Contract" shall have the meaning specified in Section 2.10(c). "Merger" shall have the meaning specified in the second recital of this Agreement. "Merger Approvals" shall have the meaning specified in Section 2.5(c)(iii). "Merger Consideration" shall have the meaning specified in Section 1.7(c). "Multiemployer Plan" shall have the meaning specified in Section 2.16(c). "Notice of Claim" shall have the meaning specified in Section 8.5(a). "Nonrecourse" shall have the meaning specified in Section 10.15(b). "OGCL" shall mean the Ohio General Corporation Law. "Owned Real Property" shall have the meaning specified in Section 2.9(a). "PBGC" shall mean the Pension Benefit Guaranty Corporation. "PCBs" shall mean polychlorinated biphenyls. "Permit" shall mean any permit, certificate, license or authorization issued by any Governmental Authority. "Permitted Changes" shall have the meaning specified in Section 4.1. "Permitted Liens" shall mean (i) Liens for current property taxes and assessments or other government charges or levies not yet due or the validity of which is being contested in good faith by appropriate proceedings, (ii) Liens of mechanics, materialmen, laborers, warehousemen, carriers and other similar common law or statutory Liens in each case, arising in the ordinary course of business and not in excess of $500,000, (iii) Liens and encumbrances existing on the date hereof which are set forth on Schedule 2.9, (iv) zoning, and other land use and environmental regulations by governmental agencies, (v) any other Liens or encumbrances which do not materially detract from the value or materially interfere with the present use of the relevant asset or property, (vi) Liens reflecting capitalized leases from the Person financing a purchase of equipment so long as the Lien is limited to the specific equipment so acquired, and (vii) with respect to Real Property and Real Property Leases, leases, subleases and occupancy agreements to Persons occupying less than 25,000 square feet pursuant 7 to arrangements on market terms when made that can be terminated on ninety (90) or fewer days notice or that expire within one (1) year of the Closing Date. "Person" shall mean any individual, corporation, partnership (general, limited or limited liability), limited liability company, joint venture, association, trust, or other entity or organization. "Phase I Environmental Site Assessment" shall have the meaning used and understood by and among environmental consultants and shall exclude any boring, sampling, installation of wells, analysis of soil and groundwater, and all other intrusive work. "Phase II Environmental Site Assessment" shall mean an environmental site assessment that includes any boring, sampling, installation of wells, analysis of soil and groundwater, or other intrusive work. "Plan" shall have the meaning specified in Section 2.1. "PNC Bank" shall have the meaning specified in Section 4.8(b). "Real Property" shall have the meaning specified in Section 2.9(a). "Real Property Lease" shall have the meaning specified in Section 2.9(a). "Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment. "Remedial Activities" shall have the meaning set forth in Section 8.1(c). "Securities Act" shall mean the Securities Act of 1933, as amended. "Seller Group" shall have the meaning specified in Section 4.13. "Shares" shall have the meaning set forth in Section 1.7(c). "Subsidiary" shall mean, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such Person. "Surviving Corporation" shall have the meaning specified in Section 1.1. "Tax" or "Taxes" shall mean all taxes, assessments or other governmental charges (including, without limitation, excise taxes, sales taxes, taxes withheld from employees' salaries and other withholding taxes and obligations and all deposits required to be made with respect thereto), levies, assessments, deficiencies, imports, duties, licenses and registration fees and charges of any nature whatsoever, including any interest and penalties thereon or additions thereto, imposed by any government or taxing authority which are levied upon the property, assets, income or franchises of Company or the Company Subsidiaries by virtue of the operations of their businesses. 8 "Tax Return" shall mean 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. "Third Party Claim" shall have the meaning specified in Section 8.5(b). "Transaction Document" shall have the meaning specified in Section 10.15(a). "Transaction Expense Amount" shall mean the aggregate amount of fees and expenses of all accounting, financial and legal advisors to the Company and the Trust incurred in connection with the transactions contemplated by this Agreement to the extent such fees and expenses are paid by the Company. "Trust" shall have the meaning specified in the preamble. "Trust Agreement" shall have the meaning specified in Section 2.1. "Trust Indemnified Parties" shall have the meaning specified in Section 8.2. "Trust Persons" shall have the meaning specified in Section 10.15(a). "Trustees" shall have the meaning specified in Section 2.1. "Updated Environmental Conditions" shall have the meaning specified in Section 5.10. "US" shall mean the United States of America. "US Benefit Plans" shall have the meaning specified in Section 2.16(b). "US Government" shall mean the United States Government and any agencies, instrumentalities and departments thereof. EX-10.2 12 EXHIBIT 10.2 AMENDMENT NO. 1 TO MERGER AGREEMENT dated as of February 23, 1998 among EAGLE-PICHER INDUSTRIES, INC. PERSONAL INJURY SETTLEMENT TRUST, EAGLE-PICHER INDUSTRIES, INC., EAGLE-PICHER HOLDINGS, INC. and E-P ACQUISITION, INC. AMENDMENT NO. 1 TO MERGER AGREEMENT AMENDMENT NO. 1 TO MERGER AGREEMENT (this "Amendment"), dated as of February 23, 1998, among Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, an Ohio trust (the "Trust"), Eagle-Picher Industries, Inc., an Ohio corporation (the "Company"), Eagle-Picher Holdings, Inc., a Delaware corporation ("Holdings"), and E-P Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Holdings ("Acquisition"), amending the Merger Agreement, made as of December 23, 1997, among the Trust, the Company, Holdings and Acquisition (the "Merger Agreement"). The parties to the Merger Agreement desire to amend the Merger Agreement on the terms set forth herein. Accordingly, this Amendment shall be deemed to be part of the Merger Agreement and all references in the Merger Agreement to "this Agreement" (or similar terminology) shall be deemed to refer to the Merger Agreement after giving effect to the amendments set forth in this Amendment. All capitalized terms used herein, unless otherwise defined herein, are used as defined in the Merger Agreement. In consideration of the mutual covenants and agreements contained in the Merger Agreement and in this Amendment, and notwithstanding anything in the Merger Agreement to the contrary, the parties hereto agree as follows: 1. Amendment to Section 1.7(c) of the Merger Agreement. Section 1.7(c) of the Merger Agreement is hereby amended by adding the language "from Acquisition (and Holdings shall cause Acquisition to pay to the Trust)" after the language "shall be converted into and become the right to receive" in the third line of Section 1.7(c). 2. Amendment to Article 4 of the Merger Agreement. Article 4 of the Merger Agreement is hereby amended by adding the following Sections 4.16, 4.17, 4.18 and 4.19: 4.16 Assignment to the Trust of Certain Claims Against Third Parties. Except as set forth in Section 4.18, the Company and the Company Subsidiaries hereby (i) assign to the Trust all rights, claims, and causes of action of the Company and Company Subsidiaries against any third party arising out of (x) any payment made by the Company or Company Subsidiaries prior to the Closing Date to any claimant alleging bodily injury from exposure to asbestos-containing products and (y) any defense costs incurred by the Company or Company Subsidiaries prior to the Closing Date in the defense of claims alleging bodily injury from exposure to asbestos-containing products, (ii) agree to execute and deliver to the Trust such documents as shall, in the reasonable opinion of the Trust, be necessary to further evidence the assignment referred to in clause (i) of this Section 4.16, and (iii) shall transfer to the Trust upon its request originals or complete and correct copies of all files, records and other documents relating to the matters referred to in clause (i) of this Section 4.16. 4.17 Claims by the Trust of Rights Under Certain Insurance Policies. (a) Except as set forth in Section 4.18, the Company and the Company 3 Subsidiaries acknowledge that the Trust is an insured party under all general liability, umbrella, and excess liability policies issued to the Company, a Company Subsidiary or any current or former Affiliate of the Company prior to December 23, 1997 to the extent such policies cover claims alleging bodily injury arising out of exposure to lead-containing products (the "Lead Policies"). (b) Except as set forth in Section 4.18, Holdings, the Company, the Company Subsidiaries and their respective Affiliates (i) shall refrain from opposing, contesting or impeding, in any manner whatsoever, any claim the Trust may make for coverage under the Lead Policies for claims alleging bodily injury as a result of exposure to lead-containing products and (ii) shall provide reasonable cooperation to the Trust in pursuing any such claims under the Lead Policies, provided that the Company shall not be required to incur any unreasonable expense in providing such cooperation. 4.18 Certain Insurance Claims. (a) Section 4.16 shall not apply to (i) any claims against Liberty Mutual Insurance Company, or any of its Affiliates, of any rights, claims, payments or causes of action in connection with the matter of Eagle-Picher Industries, Inc. v. Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, Number 97-1032, pending before the United States Bankruptcy Court for the Southern District of Ohio, Western Division, relating to Eagle-Picher Industries, Inc., Debtors (Consolidated Case Number 1-91-00100) (the "Liberty Mutual Settlement"), (ii) any claims against General Accident Insurance Company of America or American Employers' Insurance Company, of any rights, claims, payments or causes of action in connection with the matter of Eagle-Picher Industries, Inc. v. General Accident Insurance Company of America, et al., Number C-1-96-1082, pending before the United States District Court for the Southern District of Ohio, Western Division (the "Insurance Coverage Litigation") or (iii) any other pending claims against insurance companies under policies issued to Eagle-Picher Industries, Inc. or any affiliated company other than for claims alleging bodily injury arising out of exposure to asbestos-related and lead-related products. (b) The Trust and its Affiliates shall refrain from opposing, contesting or impeding, in any manner whatsoever, any claim Holdings, the Company, the Company Subsidiaries and their respective subsidiaries may make for coverage under the claims identified in Section 4.18(a) (including the Liberty Mutual Settlement and the Insurance Coverage Litigation). 4.19 Payments to Trust. Holdings and the Trust shall enter into arrangements, reasonably satisfactory to the Trust, which shall result in the Trust receiving the payments contemplated by Sections 7.2(i) and 7.3 simultaneously with the Effective Time. 3. Amendment to Section 8.1 of the Merger Agreement. Section 8.1 of the Merger Agreement is hereby amended by (i) inserting "or" at the end of Section 8.1(e) and (ii) adding the following Section 8.1(f): 4 (f) the matter of the Unofficial Committee of Co-Defendants v. Eagle-Picher Industries, Inc., et al., Case Nos. 96-4309 and 97-149, pending before the United States Court of Appeals for the Sixth Circuit, relating to In re Eagle-Picher Industries, Inc., Debtor. 4. Amendment to Section 8.3 of the Merger Agreement. Section 8.3 of the Merger Agreement is hereby amended by deleting "Section 8.1(c)" in the fifteenth and eighteenth lines of Section 8.3 and replacing such language with "Section 8.1". 5. Amendment to Section 8.4 of the Merger Agreement. Section 8.4 of the Merger Agreement is hereby amended by: (a) (i) deleting "Section 8.1" in the first line of Section 8.4(a)(ii) and replacing such language with "Sections 8.1(a), (b), (c), (d), or (e)", (ii) deleting "Section 8.1" in the sixth line of Section 8.4(a)(ii) and replacing such language with "Sections 8.1(a), (b), (c), (d) and (e)", and (iii) deleting "and" at the end of Section 8.4(a)(ii); (b) adding the following Section 8.4(a)(iii): (iii) The cumulative aggregate amount of all Losses for which the Trust shall be liable pursuant to Section 8.1(f) shall in no event exceed an amount equal to (x) the sum of the Merger Consideration plus Two Hundred Fifty Million Dollars ($250,000,000) less (y) the cumulative aggregate amount of all Losses for which the Trust shall be liable pursuant to Sections 8.1 (a), (b), (c), (d) and (e); and (c) replacing "(iii)" at the beginning of Section 8.4(a)(iii) with "(iv)". 6. Amendment to Article 10 of the Merger Agreement . Article 10 of the Merger Agreement is hereby amended by adding the following Section 10.17: 10.17 Specific Performance. The parties recognize that any breach of any covenant or agreement contained in this Agreement may give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly agree that, in addition to other remedies, any non-breaching party will be entitled to enforce the covenants and agreements of a breaching party contained herein by a decree of specific performance without the necessity of proving the inadequacy as a remedy of money damages. 7. Ratification. Except as amended hereby, the Merger Agreement continues and shall remain in full force and effect in all respects. In the event of any conflict or inconsistency between the terms of this Amendment and the Merger Agreement, the terms of this Amendment shall govern. 8. Miscellaneous. This Amendment may be executed simultaneously in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together shall together constitute and be the same instrument. This Amendment shall in all respects be interpreted, construed and governed by and in accordance with the laws of the State of New 5 York, disregarding any conflict of laws provisions which might otherwise require the application of the law of another jurisdiction. 6 IN WITNESS WHEREOF, the duly authorized officers or representatives of the parties hereto have duly executed this Amendment on the date first written above. EAGLE-PICHER HOLDINGS, INC. EAGLE-PICHER INDUSTRIES, INC. PERSONAL INJURY SETTLEMENT TRUST By: /s/ JOEL P. WYLER By: /s/ RUTH R. McMULLIN ---------------------------- --------------------------- Name: Joel P. Wyler Name: Ruth R. McMullin Title: Chairman and President Title: Chairperson of the Trustees E-P ACQUISITION, INC. EAGLE-PICHER INDUSTRIES, INC. By: /s/ JOEL P. WYLER By: /s/ ANDRIES RUIJSSENAARS ----------------------------- ---------------------------- Name: Joel P. Wyler Name: Andries Ruijssenaars Title: Chairman and President Title: President and Chief Operating Officer
EX-10.4 13 EXHIBIT 10.4 E-P ACQUISITION, INC. to be merged into Eagle-Picher Industries, Inc. $220,000,000 9 3/8% Senior Subordinated Notes due 2008 NOTES PURCHASE AGREEMENT February 19, 1998 New York, New York SBC Warburg Dillon Read Inc. 535 Madison Avenue New York, New York 10022 ABN AMRO Incorporated 1325 Avenue of the Americas New York, New York 10019 Ladies and Gentlemen: E-P Acquisition, Inc., a Delaware corporation (the "ISSUER"), to be merged on or prior to the Closing Date (as defined herein) into Eagle-Picher Industries, Inc., an Ohio corporation (the "COMPANY"), and Eagle-Picher Holdings, Inc. ("PARENT") jointly and severally agree with you as follows: 1. ISSUANCE OF NOTES. The Issuer proposes to issue and sell to SBC Warburg Dillon Read Inc. and ABN AMRO Incorporated (together, the "INITIAL PURCHASERS") an aggregate of $220,000,000 principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "ORIGINAL NOTES"). The Original Notes will be issued pursuant to an indenture (the "NOTES INDENTURE"), to be dated the Closing Date (as defined below), by and among the Issuer, the Guarantors and The Bank of New York, as trustee (the "TRUSTEE"). The Issuer's obligations under the Original Notes will be succeeded to, upon the merger, by the Company and will be unconditionally guaranteed (the "GUARANTEES") on an unsecured senior subordinated basis by Parent and the Subsidiary Guarantors (collectively, the "Guarantors"). All references herein to the Original Notes include the related Guarantees, unless the context otherwise requires. Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Notes Indenture or the Offering Memorandum (as defined below). The Original Notes will be offered and sold to the Initial Purchasers pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended (the "ACT"). The Issuer has prepared a preliminary offering memorandum dated February 4, 1998 (the "PRELIMINARY OFFERING MEMORANDUM") and a final offering memorandum dated February 20, 1998 (the "OFFERING MEMORANDUM") relating to the Issuer, the Company, the Guarantors and the Original Notes. The Initial Purchasers have advised the Issuer that the Initial Purchasers intend, as soon as they deem practicable after this Notes Purchase Agreement has been executed and delivered, to resell (the "EXEMPT RESALES") the Original Notes purchased by the Initial Purchasers under this Notes Purchase Agreement (this "AGREEMENT") in private sales exempt from registration under the Act on the terms set forth in the Offering Memorandum, as amended or supplemented, solely to (i) persons whom the Initial Purchasers reasonably believe to be "qualified institutional buyers," as defined in Rule 144A under the Act ("QIBS"), and (ii) other eligible purchasers pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Act; the persons specified in clauses (i) and (ii) are sometimes collectively referred to herein as the "ELIGIBLE PURCHASERS." Holders (including subsequent transferees) of the Original Notes will have the registration rights set forth in the registration rights agreement (the "REGISTRATION RIGHTS AGREEMENT") to be dated the Closing Date in form and substance satisfactory to the Initial Purchasers and conforming to the description thereof in the Offering Memorandum, for so long as such Original Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Issuer will agree to (i) file with the Securities and Exchange Commission (the "COMMISSION") under the circumstances set forth in the Registration Rights Agreement, (a) a registration statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to a new issue of debt securities (the "NEW NOTES" and, together with the Original Notes, the "NOTES," which term includes the Guarantees related thereto) to be offered in exchange for the Original Notes (the "EXCHANGE OFFER") and issued under the Notes Indenture or an indenture substantially identical to the Notes Indenture and/or (b) under certain circumstances set forth in the Registration Rights Agreement, a shelf registration statement pursuant to Rule 415 under the Act (the "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer Registration Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain holders of the Original Notes, and (ii) to cause such Registration Statements to be declared effective. This Agreement, the Notes, the 2 Notes Indenture and the Registration Rights Agreement are hereinafter sometimes referred to collectively as the "OPERATIVE DOCUMENTS." Upon original issuance of the Original Notes and until such time as the same is no longer required under the applicable requirements of the Act, the Original Notes shall bear the legend relating thereto set forth under "Transfer Restrictions" in the Offering Memorandum. Concurrently with the offering of Notes hereby, Parent is offering (the "PREFERRED STOCK OFFERING") approximately $80.0 million of gross proceeds of 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock (the "PREFERRED STOCK"). In connection with the Acquisition (as defined below) and the offering of the Original Notes hereby, the Issuer, the Company and the Guarantors will enter into a Credit Agreement (the "CREDIT AGREEMENT") with ABN AMRO Bank N.V., as Agent, and the other agents and lenders party thereto. The net proceeds from the sale of the Original Notes and from the Preferred Stock Offering and borrowings under the New Credit Agreement will be used as described under "The Acquisition and Use of Proceeds" in the Offering Memorandum, including, but not exclusively, (i) to pay the Merger Consideration in connection with the merger of the Issuer into the Company (the "ACQUISITION") pursuant to a Merger Agreement (the "MERGER AGREEMENT") dated as of December 23, 1997 by and among the Issuer, Parent, the Company and the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust (the "TRUST") and (ii) to repay the total amount outstanding under the 10% Debentures and (iii) to redeem 660,000 shares of Common Stock from the Trust. 2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations, warranties and covenants contained in this Agreement, and subject to the terms and conditions contained in this Agreement, the Issuer agrees to issue and sell to the Initial Purchasers, and the Initial Purchasers agree to purchase from the Issuer, severally and not jointly, the aggregate principal amount of Original Notes set forth opposite its name in Schedule I hereto. The purchase price for the Original Notes shall be 99.836% of their principal amount. The Guarantors shall unconditionally guarantee on an unsecured senior subordinated basis the Issuer's obligations under the Notes. 3. DELIVERY AND PAYMENT. Delivery of, and payment of the purchase price for, the Original Notes shall be made at 10:00 a.m., New York City time, on February 24, 1998 (such date and time, the "CLOSING DATE") at the offices of Howard, Darby & Levin, 1330 Avenue of the Americas, New York, New York 10019. The Closing Date and the location of delivery of and the form of payment for the Original Notes may be varied by mutual agreement between the Initial Purchasers and the Issuer. 3 One or more of the Original Notes in global form registered in such names as the Initial Purchasers may request upon at least one business day's notice prior to the Closing Date, having an aggregate principal amount corresponding to the aggregate principal amount of the Original Notes, shall be delivered by the Issuer to the Initial Purchasers (or as the Initial Purchasers direct), against payment by the Initial Purchasers of the purchase price therefor by means of transfer of immediately available funds to such account or accounts as the Issuer shall specify prior to the Closing Date, or by such means as the parties hereto shall agree prior to the Closing Date. The Original Notes in global form shall be made available to the Initial Purchasers for inspection not later than 1:00 p.m. on the business day immediately preceding the Closing Date. 4. AGREEMENTS OF THE ISSUER. The Issuer covenants and agrees with the Initial Purchasers as follows: (a) To furnish the Initial Purchasers and those persons identified by the Initial Purchasers, without charge, with as many copies of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments or supplements thereto, as the Initial Purchasers may reasonably request. The Issuer consents to the use of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments and supplements thereto required pursuant to this Agreement, by the Initial Purchasers in connection with Exempt Resales that are in compliance with this Agreement. (b) Not to amend or supplement the Offering Memorandum prior to the Closing Date unless the Initial Purchasers shall previously have been advised of, and shall not have objected to, such amendment or supplement within a reasonable time, but in any event not longer than two business days after being furnished with a copy of such amendment or supplement. The Issuer shall promptly prepare, upon the Initial Purchasers' reasonable request, any amendment or supplement to the Offering Memorandum that may be necessary or advisable in connection with Exempt Resales. (c) If, during the time that an Offering Memorandum is required to be delivered in connection with any Exempt Resales or market-making transactions after the date of this Agreement and prior to the consummation of the Exchange Offer, any event shall occur that, in the judgment of the Issuer or in the judgment of counsel to the Initial Purchasers, makes any statement of a material fact in the Offering Memorandum as then amended or supplemented untrue or that requires the 4 making of any additions to or changes in the Offering Memorandum in order to make the statements in the Offering Memorandum as then amended or supplemented, in the light of the circumstances under which they are made, not misleading, or if it is necessary to amend or supplement the Offering Memorandum to comply with all applicable laws, the Issuer shall promptly notify the Initial Purchasers of such event and prepare an appropriate amendment or supplement to the Offering Memorandum so that (i) the statements in the Offering Memorandum as amended or supplemented will, in the light of the circumstances at the time that the Offering Memorandum is delivered to prospective Eligible Purchasers, not be misleading and (ii) the Offering Memorandum will comply with applicable law. (d) To cooperate with the Initial Purchasers and counsel to the Initial Purchasers in connection with the qualification or registration of the Original Notes under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may request and to continue such qualification in effect so long as required for the Exempt Resales. Notwithstanding the foregoing, neither the Issuer nor the Company nor the Guarantors shall be required to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or to file a general consent to service of process in any such jurisdiction or subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction where it is not then so subject. (e) To advise the Initial Purchasers promptly and, if requested by the Initial Purchasers, to confirm such advice in writing, of the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of any of the Original Notes for offering or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any state securities commission or other regulatory authority. The Issuer shall use its reasonable best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of any of the Original Notes under any state securities or Blue Sky laws, and if at any time any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption of any of the Original Notes under any state securities or Blue Sky laws, the Issuer shall use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. (f) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement becomes effective or is terminated, to pay all costs, expenses, fees, disbursements (including fees, expenses and disbursements of counsel to the Issuer, the Guarantors and 5 the Company, but not of counsel to the Initial Purchasers (except pursuant to clause (iv) herein) or expenses of the Initial Purchases if the transactions contemplated hereby are consummated) and stamp, documentary or similar taxes incident to and in connection with: (i) the preparation, printing and distribution of the Preliminary Offering Memorandum and the Offering Memorandum (including, without limitation, financial statements) and all amendments and supplements thereto, (ii) the preparation and delivery of the Operative Documents and all other agreements, memoranda, correspondence and documents prepared and delivered in connection with this Agreement and with the Exempt Resales, (iii) the issuance, transfer and delivery by the Issuer and the Guarantors of the Original Notes and the Guarantees, respectively, to the Initial Purchasers, (iv) the qualification or registration of the Notes for offer and sale under the securities or Blue Sky laws of the several states of the United States or provinces of Canada (including, without limitation, the cost of printing and mailing a preliminary and final Blue Sky memorandum and the fees and disbursements of counsel to the Initial Purchasers relating thereto), (v) the furnishing of such copies of the Preliminary Offering Memorandum and the Offering Memorandum, and all amendments and supplements thereto, as may be reasonably requested for use in connection with Exempt Resales, (vi) the preparation of certificates for the Notes, (vii) the application for quotation of the Notes in the National Association of Securities Dealers, Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"), including, but not limited to, all listing fees and expenses, (viii) the approval of the Notes by The Depository Trust Company ("DTC") for "book-entry" transfer, (ix) the rating of the Notes by rating agencies, (x) the fees and expenses of the Trustee and its counsel and (xi) the performance by the Issuer, the Company and the Guarantors of their other obligations under the Operative Documents, including, but not limited to, the fees, disbursements and expenses of the Issuer's counsel and accountants. (g) To use the proceeds from the sale of the Original Notes in the manner described in the Offering Memorandum under the caption "The Acquisition and Use of Proceeds." (h) To do and perform all things required to be done and performed under this Agreement by it prior to or after the Closing Date and to satisfy all conditions precedent on its part to the delivery of the Original Notes. (i) Not to, and not to permit any Subsidiary of the Company to, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect 6 of any security (as defined in the Act) that would be integrated with the sale of the Original Notes in a manner that would require the registration under the Act of the sale of the Original Notes to the Initial Purchasers or any Eligible Purchasers. (j) During the period of two years after the Closing Date or, if earlier, until such time as the Original Notes are no longer restricted securities (as defined in Rule 144 under the Act), not to, not to permit any Subsidiary to, and to use its reasonable best efforts to cause its other affiliates (as defined in Rule 144 under the Act) not to, resell any of the Original Notes that have been reacquired by any of them. (k) Not to engage, not to allow any Subsidiary to engage, and to use its reasonable best efforts to cause its other affiliates and any person acting on its behalf (other than in any case any Initial Purchaser, as to whom the Issuer and Parent make no covenant) not to engage, in any form of general solicitation or general advertising (within the meaning of Regulation D under the Act) in connection with any offer or sale of the Original Notes in the United States. (l) Not to engage, not to allow any Subsidiary to engage, and to use its reasonable best efforts to cause its other affiliates and any person acting on its behalf (other than in any case any Initial Purchaser, as to whom the Issuer and Parent make no covenant) not to engage in any directed selling effort with respect to the Original Notes, and agrees to comply with the offering restrictions requirement of Regulation S under the Act. Terms used in this paragraph have the meanings given to them by Regulation S. (m) In connection with the offering, until 90 days after the Closing Date, not to, not to permit any Subsidiary to, and to use its reasonable best efforts to cause its other affiliates not to, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Original Notes; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Original Notes. (n) During the period of two years after the Closing Date or, if earlier, until such time as the Original Notes are no longer restricted securities (as defined in Rule 144 under the Act), not to be or become a closed-end investment company required to be registered, but not 7 registered, under the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"). (o) From and after the Closing Date, for so long as any of the Notes remain outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Act and during any period in which the Issuer is not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to make available upon request the information required by Rule 144(d)(4) under the Act to (i) any Holder or beneficial owner or Notes in connection with any sale of such Notes and (ii) any prospective purchase of such Notes from any such Holder or beneficial owner designated by the Holder or beneficial owner. The Issuer will pay the expenses of printing and distributing such documents. (p) To comply with all its agreements set forth in the Registration Rights Agreement and all agreements set forth in the representations letter of the Issuer to DTC relating to the approval of the Notes by DTC for "book-entry" transfer and to obtain approval of the Notes by DTC for "book-entry" transfer. (q) To use its reasonable best efforts to effect the inclusion of the Original Notes in PORTAL. (r) Prior to the Closing Date, to furnish to the Initial Purchasers, as soon as they have been prepared by the Company and its Subsidiaries, a copy of any regularly prepared final internal financial statements of the Company and its Subsidiaries for any period subsequent to the period covered by the financial statements appearing in the Offering Memorandum and prior to the Closing Date. (s) Not to distribute prior to the Closing Date any offering material in connection with the offer and sale of the Original Notes other than the Preliminary Offering Memorandum and the Offering Memorandum. (t) To cause each Original Note to bear the legend set forth in the form of Original Note set forth in the Notes Indenture until such legend shall no longer be necessary or advisable because the Notes are no longer subject to the restrictions on transfer described therein. 5. REPRESENTATIONS AND WARRANTIES. (a) Each of the Issuer and Parent represents and warrants to the Initial Purchasers that: 8 (i) Each of the Preliminary Offering Memorandum and the Offering Memorandum has been prepared in connection with the Exempt Resales. Neither the Preliminary Offering Memorandum nor the Offering Memorandum, nor any supplement or amendment thereto, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Issuer and Parent make no representation or warranty with respect to information contained in or omitted from the Preliminary Offering Memorandum or the Offering Memorandum, as supplemented or amended, in reliance upon and in conformity with the information set forth in Section 9 hereto and furnished to the Issuer and Parent in writing by or on behalf of the Initial Purchasers expressly for inclusion in the Preliminary Offering Memorandum or the Offering Memorandum or any supplement or amendment thereto. No order preventing the use of either the Preliminary Offering Memorandum or the Offering Memorandum, or any order asserting that any of the transactions contemplated by this Agreement are subject to the registration requirements of the Act, has been issued or to the knowledge of Issuer or Parent threatened. (ii) There are no securities of either the Company or the Guarantors that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated interdealer quotation system. (iii) As of the date of this Agreement, the Trust beneficially owns 100% of the outstanding common stock equity ownership of the Company and, as of the Closing Date, the Company shall have an authorized capitalization as set forth under the heading entitled "Company Pro Forma" in the section of the Offering Memorandum entitled "Capitalization". Attached as Schedule A is a true and complete list of all Subsidiaries, their jurisdictions of incorporation, type of entity and equity ownership. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable. All shares of capital stock of the Subsidiaries that are owned of record directly by the Company or indirectly by a wholly-owned Subsidiary of the Company are owned free and clear of any lien, security interest, pledge, charge, encumbrance, equity or claim; none of the outstanding shares of capital stock of each such Subsidiary was issued in violation of, or subject to, any preemptive or similar rights or the charter or by-laws of the Issuer, the Company or such Subsidiary or any agreement to which the Issuer, the Company or such Subsidiary is a party. 9 Upon the closing of the Acquisition, there will not be any outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interest of the Company's Subsidiaries, which shares of capital stock or other equity interests are held by the Company. (iv) The Issuer, the Company, Parent and each Subsidiary has been duly incorporated, is validly existing as a corporation in good standing (or its equivalent in the case of non-U.S. Subsidiaries) under the laws of its respective jurisdiction of incorporation and has all requisite corporate power and authority, and all necessary authorizations, approvals, orders, licenses, certificates and permits of and from regulatory or governmental officials, bodies and tribunals, except where the failure to obtain such authorizations, approvals, orders, licenses, certificates and permits would not reasonably be expected to have a Material Adverse Effect, to (A) carry on its business as it is currently being conducted and as described in the Offering Memorandum and (B) own, lease, license and operate its respective properties in accordance with its business as currently conducted. The Company and each Restricted Subsidiary is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not, either individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. A "MATERIAL ADVERSE EFFECT" means any material adverse effect on the business, condition (financial or other), properties, results of operations or prospects of the Company and its Subsidiaries, taken as a whole. (v) Each of the Issuer, the Company and each Guarantor has all requisite corporate power and authority to execute, deliver and perform all of its obligations under the Operative Documents to which it is a party and to consummate the transactions contemplated by the Operative Documents to be consummated on its part and, without limitation, the Issuer has all requisite corporate power and authority to issue, sell and deliver the Notes and each Guarantor has all requisite corporate power and authority to execute, deliver and perform all its obligations under its Guarantee. (vi) This Agreement has been duly and validly authorized, executed and delivered by the Issuer and Parent. (vii) The Notes Indenture, including the Guarantees set forth therein, has been, or upon the Closing Date will be, duly and validly authorized by the Issuer and each Guarantor and, when duly executed and 10 delivered by the Issuer, each Guarantor and the Trustee (assuming the due authorization, execution and delivery thereof by the Trustee), will be a legal, valid and binding obligation of each of the Issuer and each Guarantor, enforceable against each of them in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity and the discretion of the court before which any proceedings therefor may be brought. The Notes Indenture, when executed and delivered, will conform in all material respects to the description thereof in the Preliminary Offering Memorandum and the Offering Memorandum. (viii) The Original Notes have been, or upon the Closing Date will be, duly and validly authorized for issuance and sale to the Initial Purchasers by the Issuer and, when issued, authenticated and delivered by the Issuer against payment by the Initial Purchasers in accordance with the terms of this Agreement and the Notes Indenture, the Original Notes will be legal, valid and binding obligations of the Issuer, entitled to the benefits of the Notes Indenture and enforceable against the Issuer in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity and the discretion of the court before which any proceedings therefor may be brought. The Original Notes, when issued, authenticated and delivered, will conform in all material respects to the description thereof in the Preliminary Offering Memorandum and the Offering Memorandum. (ix) The New Notes have been, or upon the Closing Date will be, duly and validly authorized for issuance by the Issuer and, when issued, authenticated and delivered by the Issuer in accordance with the terms of the Registration Rights Agreement, the Exchange Offer and the Notes Indenture, the New Notes will be legal, valid and binding obligations of the Issuer, entitled to the benefits of the Notes Indenture and enforceable against the Issuer in accordance with their terms, except that enforceability of the New Notes may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity and the discretion of the court before which any proceedings therefor may be brought. The New Notes, when issued, authenticated and delivered, will conform in all material respects to the 11 description thereof in the Preliminary Offering Memorandum and the Offering Memorandum. (x) The Registration Rights Agreement has been, or upon the Closing Date will be, duly and validly authorized, executed and delivered by the Issuer and, when duly executed and delivered by the Issuer and the Initial Purchasers, will constitute a legal, valid and binding obligation of the Issuer, enforceable against it in accordance with its terms, except that (A) enforceability of the Registration Rights Agreement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity and the discretion of the court before which any proceedings therefor may be brought and (B) any rights to indemnity or contribution thereunder may be limited by federal and state securities laws and public policy considerations. The Registration Rights Agreement will conform in all material respects to the description thereof in the Preliminary Offering Memorandum and the Offering Memorandum. (xi) All taxes, fees and other governmental charges that are due and payable on or prior to the Closing Date in connection with the execution, delivery and performance of the Operative Documents, the Credit Agreement and the Merger Agreement and the execution, delivery and sale of the Original Notes shall have been paid by or on behalf of the Issuer at or prior to the Closing Date. (xii) None of the Issuer, the Company, Parent or any Subsidiary is (A) in violation of its charter, constitutive documents or bylaws or (B) in default (or, with notice or lapse of time or both, would be in default) in the performance or observance of any obligation, agreement, covenant or condition contained in any bond, debenture, note, indenture, mortgage, deed of trust, loan or credit agreement, lease, license, franchise agreement, authorization, permit, certificate or other agreement or instrument to which any of them is a party or by which any of them is bound or to which any of their assets or properties is subject (collectively, "AGREEMENTS AND INSTRUMENTS"), or (C) in violation of any law, statute, rule, regulation, judgment, order or decree of any domestic or foreign court with jurisdiction over any of them or any of their assets or properties or other governmental or regulatory authority, agency or other body, that, in the case of clauses (B) and (C) herein, would reasonably be expected to have a Material Adverse Effect. There exists no condition that, with notice, the passage of time or otherwise, would constitute a default by the Issuer, the Company, Parent or any Subsidiary under any such document or 12 instrument or result in the imposition of any penalty or the acceleration of any indebtedness, other than penalties, defaults or conditions that would not have a Material Adverse Effect. (xiii) The Credit Agreement has been, or upon the Closing Date will be, authorized, executed and delivered by the Issuer, the Guarantors, ABN AMRO Bank N.V., as Agent, and the other agents and lenders party thereto will constitute the legal, valid and binding obligations of the Issuer and the Guarantors, enforceable against the Issuer and the Guarantors, in accordance with their terms, except that enforceability of the Credit Agreement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforceability of creditors' rights generally and by general principles of equity and the discretion of the court before which any proceedings therefor may be brought. The Credit Agreement conforms in all material respects to the description thereof in the Preliminary Offering Memorandum and the Offering Memorandum. (xiv) The Merger Agreement has been duly and validly authorized, executed and delivered by the Issuer and Parent, and constitutes a legal, valid and binding obligation of the Issuer and Parent enforceable against the Issuer and Parent in accordance with its terms except that enforceability of the Merger Agreement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforceability of creditors' rights generally and by general principles of equity and the discretion of the court before which any proceedings therefor may be brought. (xv) None of (A) the execution and delivery by the Issuer and Parent of this Agreement and the Registration Rights Agreement, (B) the execution, delivery and performance by the Issuer or each of the Guarantors of (x) the other Operative Documents, (y) the Credit Agreement or (z) the Merger Agreement to the extent each is a party or (C) the consummation of the offer and sale of the Original Notes, the Preferred Stock Offering or the Acquisition does or will violate, conflict with or constitute a breach of any of the terms or provisions of, or a default under (or an event that with notice or the lapse of time, or both, would constitute a default), or require consent under, or result in the creation or imposition of a lien (other than, as of the Closing Date, the liens imposed under the Credit Agreement), charge or encumbrance on any property or assets of the Issuer, the Company, Parent or any Subsidiary or an acceleration of any indebtedness of the Issuer, the Company, Parent or any Subsidiary pursuant to, (i) the charter, constitutive documents or bylaws of 13 the Issuer, the Company, Parent or any Subsidiary, (ii) assuming the consummation of the Acquisition and the transactions contemplated thereby, any Agreement or Instrument, (iii) any law, statute, rule or regulation applicable to the Issuer, the Company, Parent or any Subsidiary or their respective assets or properties or (iv) any judgment, order or decree of any domestic or foreign court or governmental agency or authority having jurisdiction over the Issuer, the Company, Parent or any Subsidiary or their respective assets or properties. Assuming the accuracy of the representations and warranties of the Initial Purchasers in Section 5(b) of this Agreement, no consent, approval, authorization or order of, or filing, registration, qualification, license or permit of or with, any court or governmental agency, body or administrative agency, domestic or foreign, is required to be obtained or made by the Issuer, the Company or any Guarantor for (1) the execution and delivery by the Issuer or Parent of this Agreement or the Registration Rights Agreement, (2) the execution, delivery and performance by the Issuer and each Guarantor of (x) the other Operative Documents, (y) the Credit Agreement or (z) the Merger Agreement to the extent each is a party or (3) the consummation of the Acquisition or any of the transactions contemplated thereby, except (x) such as have been or will be obtained or made on or prior to the Closing Date, (y) registration of the Exchange Offer or resale of the Notes under the Act pursuant to the Registration Rights Agreement or (z) such as may be required by the NASD. No consents or waivers from any other person or entity are required for the execution, delivery and performance of this Agreement or any of the other Operative Documents, the execution, delivery and performance of the Merger Agreement or the Credit Agreement or the consummation of the Preferred Stock Offering or the Acquisition or any of the transactions contemplated thereby, other than such consents and waivers as have been obtained or will be obtained prior to the Closing Date. (xvi) The Issuer has delivered or made available to the Initial Purchasers true and correct executed copies of the Merger Agreement and the Credit Agreement and there have been no amendments, alterations or modifications thereto or waivers of any of the provisions thereof. The representations and warranties of the Issuer and each Guarantor set forth in the Merger Agreement and the Credit Agreement will be true and correct in all material respects as of the Closing Date (except to the extent that any such representation or warranty was expressly made as of any other date, in which case such representation and warranty was true and correct as of such date). 14 (xvii) Except as set forth in the Offering Memorandum, there is (A) no action, suit or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending or, to the knowledge of the Issuer or Parent, threatened or contemplated, to which the Issuer, the Company, Parent or any Subsidiary is or may be a party or to which the business, assets or property of such person is or may be subject, (B) no statute, rule, regulation or order that has been enacted, adopted or issued or, to the knowledge of the Issuer or Parent, that has been proposed by any governmental body or agency, domestic or foreign, (C) no injunction, restraining order or order of any nature by a federal or state court or foreign court of competent jurisdiction to which the Issuer, the Company, Parent or any Subsidiary is or may be subject that (x) in the case of clause (A) above, if determined adversely to the Issuer, the Company, Parent or any Subsidiary, would reasonably be expected, either individually or in the aggregate, (1) to have a Material Adverse Effect or (2) to interfere with or adversely affect the issuance of the Notes or the Guarantees in any jurisdiction or adversely affect the consummation of the transactions contemplated by any of the Operative Documents, the Merger Agreement or the Credit Agreement and (y) in the case of clauses (B) and (C) above, would reasonably be expected, either individually or in the aggregate, (1) to have a Material Adverse Effect or (2) to interfere with or adversely affect the issuance of the Notes or the Guarantees in any jurisdiction or adversely affect the consummation of the transactions contemplated by any of the Operative Documents, the Merger Agreement or the Credit Agreement. Every request of any securities authority or agency of any jurisdiction for additional information with respect to the Notes that has been received by the Issuer, Parent or their counsel prior to the date hereof has been, or will prior to the Closing Date be, complied with in all material respects. (xviii) Except as would not reasonably be expected to have a Material Adverse Effect, (a) no labor disturbance by the employees of the Company or any Subsidiary exists or, to the actual knowledge of the Issuer or Parent, is imminent; (b) the Issuer, the Company, Parent and each Subsidiary are in compliance in all respects with, as applicable, all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); (c) no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Issuer, the Guarantors, the Company or any Subsidiary would have any liability; (d) none of the Issuer, the Company, Parent or any Subsidiary has incurred or expects to incur liability under (A) Title IV of ERISA with respect to termination of, or 15 withdrawal from, any "pension plan" or (B) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and (e) each "pension plan" that is maintained or contributed to by the Company or its Subsidiaries that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by failure to act, that would cause the loss of such qualification. (xix) Except as set forth in the Offering Memorandum, each of the Company and each Subsidiary (A) is in compliance with, or not subject to costs or liabilities under, all local, state, provincial, federal and foreign laws, regulations, rules of common law, orders and decrees, as in effect as of the date hereof, and any present judgments and injunctions issued or promulgated thereunder relating to pollution or protection of public and employee health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants applicable to it or its business or operations or ownership or use of its property ("ENVIRONMENTAL LAWS"), other than noncompliance or such costs or liabilities that would not reasonably be expected to have a Material Adverse Effect, and (B) possesses all permits, licenses or other approvals required under applicable Environmental Laws, except where the failure to possess any such permit, license or other approval would not reasonably be expected to have a Material Adverse Effect. All currently pending and, to the knowledge of the Issuer or Parent, threatened proceedings, notices of violation, demands, notices of potential responsibility or liability, suits and existing environmental conditions by any governmental authority which the Company or its Subsidiaries could reasonably expect to result in a Material Adverse Effect are fully and accurately described in all material respects in the Offering Memorandum. (xx) Each of the Company and each Subsidiary has (A) good and marketable title to all of the properties and assets described in the Offering Memorandum as owned by it and good and marketable title to the leasehold estates in the real and personal property described in the Offering Memorandum as leased by them, free and clear of all Liens (as defined in the Notes Indenture), except for Liens described in the Offering Memorandum and Liens permitted under the Notes Indenture, and such Liens as would not reasonably be expected to have a Material Adverse Effect on the rights of the holders of the Notes, (B) all licenses, certificates, permits, authorizations, approvals, franchises and other rights from, and has made all declarations and filings with, all federal, state, local and foreign authorities, all self-regulatory authorities and all courts and other tribunals (each, an "AUTHORIZATION") necessary to engage in the 16 business conducted by it in the manner described in the Offering Memorandum, except where failure to hold such Authorizations would not be reasonably expected to have a Material Adverse Effect, and (C) no reason to believe that any governmental body or agency, domestic or foreign, is considering limiting, suspending or revoking any such Authorization, except where such limitation, suspension or revocation would not reasonably be expected to have a Material Adverse Effect. All such Authorizations are valid and in full force and effect and the Company and each Subsidiary is in compliance in all material respects with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities having jurisdiction with respect to such Authorizations, except for any invalidity, failure to be in full force and effect or noncompliance with any Authorization that would not reasonably be expected to have a Material Adverse Effect. (xxi) The Company and each Subsidiary owns, possesses or has the right to employ all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, the "INTELLECTUAL PROPERTY") necessary to conduct the businesses operated by it as described in the Offering Memorandum, except where the failure to own, possess or have the right to employ such Intellectual Property would not reasonably be expected to have a Material Adverse Effect. None of the Company or any Subsidiary has received any notice of infringement of or conflict with (and neither knows of any such infringement or a conflict with) asserted rights of others with respect to any of the foregoing that, if such assertion of infringement or conflict were sustained, would reasonably be expected to have a Material Adverse Effect. The use of the Intellectual Property in connection with the business and operations of the Company and its Subsidiaries does not infringe on the rights of any person, except for such infringement as would not reasonably be expected to have a Material Adverse Effect. (xxii) All tax returns required to be filed by the Company and each Subsidiary have been filed in all jurisdictions where such returns are required to be filed; and all taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due or claimed to be due from such entities or that are due and payable have been paid, other than those being contested in good faith and for which reserves have been provided in accordance with generally accepted accounting principles or those currently payable without penalty or interest and except where the failure to make such required filings or payment would not reasonably be 17 expected to have a Material Adverse Effect. To the knowledge of the Issuer and Parent, there are no material proposed additional tax assessments against any of the Company and its Subsidiaries or their assets or property. (xxiii) None of the Issuer, the Company, Parent or any Subsidiary is an "investment company" or a company "controlled" by an "investment company" incorporated in the United States within the meaning of the Investment Company Act. (xxiv) Except as set forth in the Registration Rights Agreement or as described in the Offering Memorandum, there are no holders of securities of the Issuer, the Company, Parent or any Subsidiary who have the right to request or demand that the the Issuer, the Company, Parent or any of the Company's Subsidiaries register under the Act or analogous foreign laws and regulations any of such securities held by any such holders. (xxv) Each of the Company and its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of its financial statements in conformity with United States generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for its assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (xxvi) Each of the Company and its Subsidiaries maintains insurance covering its properties, assets, operations, personnel and businesses, and such insurance is of such type and in such amounts in accordance with customary industry practice to protect the Company and its Subsidiaries and their businesses. None of the Company or any Subsidiary has received notice from any insurer or agent of such insurer that any material capital improvements or other material expenditures will have to be made in order to continue any insurance maintained by any of them other than capital improvements and other expenditures that have been budgeted by the Company or its Subsidiaries, as the case may be. (xxvii) None of the Issuer, the Company, any Restricted Subsidiary or their Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has (A) taken, directly or indirectly, any action designed to, or that 18 might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Issuer to facilitate the sale or resale of the Original Notes or (B) since the date of the Preliminary Offering Memorandum (x) sold, bid for, purchased or paid any person any compensation for soliciting purchases of the Original Notes in a manner that would require registration of the Original Notes under the Act or (y) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Issuer, the Company or any Restricted Subsidiary in a manner that would require registration of the Original Notes under the Act. (xxviii) None of the Issuer, the Company, any Restricted Subsidiary or any of their Affiliates (as defined in Regulation D under the Act) has, directly or through any agent, sold, offered for sale, contracted to sell, pledged, solicited offers to buy or otherwise disposed of or negotiated in respect of, any security (as defined in the Act) that is currently or will be integrated with the sale of the Original Notes in a manner that would require the registration of the Original Notes under the Act. (xxix) None of the Issuer, the Company, any Restricted Subsidiary or any of their Affiliates, or any person acting on its or their behalf (other than any Initial Purchasers, as to whom the Issuer and Parent make no representation), is engaged in any directed selling effort with respect to the Original Notes, and each of them has complied with the offering restrictions requirement of Regulation S under the Act. Terms used in this paragraph have the meaning given to them by Regulation S. (xxx) No registration under the Act of the Original Notes or qualification of the Notes Indenture under the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), is required for the sale of the Original Notes to the Initial Purchasers as contemplated by this Agreement or for the Exempt Resales, assuming in each case that (A) the purchasers who buy the Original Notes in the Exempt Resales are Eligible Purchasers and (B) the accuracy of and compliance with the Initial Purchasers' representations, warranties and covenants contained in Section 5(b) of this Agreement. No form of general solicitation or general advertising (prohibited by the Act in connection with offers or sales such as the Exempt Resales) was used by the Issuer, the Company, any Restricted Subsidiary or any of their representatives (other than any Initial Purchaser, as to whom the Issuer and Parent make no representation) in connection with the offer and sale of any of the Original Notes or in connection with Exempt Resales, including, but not limited to, articles, notices or other communications published in any newspaper, magazine or similar medium 19 or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. None of the Issuer, the Company, any Restricted Subsidiary or any of their affiliates has entered into, and none of the Issuer, the Company, any Restricted Subsidiary or their affiliates will enter into any contractual arrangement with respect to the distribution of the Original Notes except for this Agreement. (xxxi) The execution and delivery of this Agreement, the other Operative Documents, and the sale of the Notes to be purchased by the QIBs will not involve any prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A)-(D) of the Code. The representation made by the Issuer and Parent in the preceding sentence is made in reliance upon and subject to the accuracy of, and compliance with, the representations and covenants made or deemed made by the Initial Purchasers in Section 5(b) and by the persons who purchase the Notes as set forth in the Offering Memorandum under the caption "Transfer Restrictions." (xxxii) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, and each amendment or supplement thereto, as of its date, contains the information specified in, and meets the requirements of, Rule 144A(d)(4) under the Act. (xxxiii) As of November 30, 1997, neither, the Company, nor any Subsidiary had any material liabilities or obligations, direct or contingent, that were not set forth in the Company's consolidated balance sheet as of November 30, 1997 or in the notes thereto set forth in the Offering Memorandum. Since November 30, 1997, except as set forth or contemplated in the Offering Memorandum, (a) none of the Issuer, the Company, Parent or any Subsidiary has (1) incurred any liabilities or obligations, direct or contingent, that would reasonably be expected to have a Material Adverse Effect, or (2) entered into any material transaction not in the ordinary course of business, (b) there has not been any event or development in respect of the business or condition (financial or other) of the Company and its Subsidiaries that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect and (c) there has been no dividend or distribution of any kind declared, paid or made by the Company or any Subsidiary on any class of their capital stock. (xxxiv) None of the Issuer, the Company, Parent or any Subsidiary (or any agent thereof acting on their behalf) has taken, and none of them 20 will take, any action that might cause this Agreement or the issuance or sale of the Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal Reserve System or analogous foreign laws and regulations, in each case as in effect, or as the same may hereafter be in effect, on the Closing Date. (xxxv) Each firm of accountants that has certified or shall certify the financial statements included or to be included as part of the Offering Memorandum is an independent accountant within the meaning of the Act. The historical financial statements and the notes thereto included in the Preliminary Offering Memorandum and the Offering Memorandum comply as to form in all material respects with the requirements applicable to registration statements on Form S-1 under the Act and present fairly in all material respects the consolidated financial position and results of operations of Parent, the Company and its Subsidiaries at the respective dates and for the respective periods indicated. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis throughout the periods presented (except as disclosed in the Offering Memorandum). The pro forma financial statements included in the Preliminary Offering Memorandum and the Offering Memorandum have been prepared on a basis consistent with such historical statements, except for the pro forma adjustments specified therein, and give effect to assumptions made on a reasonable basis and present fairly in all material respects the historical and proposed transactions contemplated by the Preliminary Offering Memorandum and the Offering Memorandum, this Agreement and the other Operative Documents. The other financial and statistical information and data included in the Preliminary Offering Memorandum and the Offering Memorandum, historical and pro forma, are accurately presented in all material respects and prepared on a basis consistent with the financial statements and the books and records of Parent, the Company and its Subsidiaries. (xxxvi) None of the Issuer, the Company, Parent or any Subsidiary (A) is "insolvent" as that term is defined in Section 101(32) of the United States Bankruptcy Code (the "Bankruptcy Code") (11 U.S.C. ' 101(32)), Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent Conveyance Act ("UFCA"), (B) has "unreasonably small capital" as that term is used in Section 548(a)(2)(ii) of the Bankruptcy Code or Section 5 of the UFCA, (C) is engaged or about to engage in a business or transaction for which its remaining property is 21 "unreasonably small" in relation to the business or transaction as that term is used in Section 4 of the UFTA or (D) is unable to pay its debts as they mature or become due, within the meaning of Section 548(a)(2)(B)(iii) of the Bankruptcy Code, Section 4 of the UFTA and Section 6 of the UFCA. The Issuer, Parent, the Company and each Subsidiary now own assets having a value both at "fair valuation" and at "present fair saleable value" greater than the amount required to pay its "debts" as such terms are used in Section 2 of the UFTA and Section 2 of the UFCA. None of the Issuer, the Company, Parent or any Subsidiary of the Company will be rendered insolvent by the execution and delivery of any of the Operative Documents or the Credit Agreement or by the transactions contemplated hereunder or thereunder. (xxxvii) Except as described in the Offering Memorandum, the Consolidated Plan of Reorganization of the Eagle-Picher Group, the Order of the Bankruptcy Court and the Ohio District Court and the Injunction (together, the "Bankruptcy Plans and Orders") are in full force and effect, and none of them has been stayed, voided, vacated or reversed or modified in any material respect; the Eagle-Picher Group, the Issuer and Parent have not taken any actions or omitted to take actions in violation of the Bankruptcy Plans and Orders. (xxxviii) Except as described in the section entitled "Certain Relationships and Related Transactions" in the Offering Memorandum, there are no contracts, agreements or understandings between the Issuer, the Company, Parent or any Subsidiary and any other person other than the Initial Purchasers that would give rise to a valid claim against the Issuer, the Company, Parent, any Subsidiary or the Initial Purchasers for a brokerage commission, finder's fee or like payment in connection with the issuance, purchase and sale of the Notes. (xxxix) The Company has the authorized, issued and outstanding capitalization set forth in the Preliminary Offering Memorandum and the Offering Memorandum under the caption "Capitalization"; all of the outstanding capital stock of the Company has been duly authorized and validly issued, is or will be on the Closing Date fully paid and nonassessable and was not issued in violation of any preemptive or similar rights. (xl) The statistical and market-related data and forward-looking statements (within the meaning of Section 27A of the Act and Section 21E of the Exchange Act) included in the Preliminary Offering Memorandum and the Offering Memorandum are based on or derived from sources that 22 the Issuer and Parent believe to be reliable and accurate in all material respects and represent their good faith estimates that are made on the basis of data derived from such sources, and the Company and its Subsidiaries have informed the Issuer and Parent that they believe such sources to be reliable and accurate in all material respects and have notified the Issuer and Parent as to their good faith estimates made on the basis of data derived from such sources. (xli) Each certificate signed by any officer of the Issuer or Parent and delivered to the Initial Purchasers or counsel for the Initial Purchasers pursuant to, or in connection with, this Agreement shall be deemed to be a representation and warranty by the Issuer or Parent to the Initial Purchasers as to the matters covered by such certificate. (xlii) All of the representations and warranties made by the Issuer and Parent in each of the Operative Documents will be true and correct as of the Closing Date in all material respects, in each case after giving effect to the Merger and the transactions contemplated thereby. The Issuer and Parent acknowledge that the Initial Purchasers and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 of this Agreement, counsel to the Issuer and counsel to the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations and the Issuer and Parent hereby consent to such reliance. (b) Each Initial Purchaser represents, warrants and covenants (as to itself only) to the Issuer that: (i) It is a QIB with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Notes. (ii) (A) It has not and will not solicit offers for, or offer or sell, the Original Notes by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Act and (B) it has and will solicit offers for the Original Notes only from, and will offer and sell the Original Notes only to (1) persons whom the Initial Purchaser reasonably believes to be QIBs or, if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to the Initial Purchaser that each such account is a QIB to whom notice has been 23 given that such sale or delivery is being made in reliance on Rule 144A, and, in each case, in reliance on the exemption from the registration requirements of the Act pursuant to Rule 144A, or (2) persons other than U.S. persons outside the United States in reliance on the exemption from the registration requirements of the Act provided by Regulation S. (iii) With respect to offers and sales outside the United States, (A) such Initial Purchaser will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Notes or has in its possession or distributes either any Preliminary Offering Memorandum or Offering Memorandum or any such other material, in all cases at its own expense; (B) the Original Notes have not been and will not be registered under the Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Act or pursuant to an exemption from the registration requirements of the Act; (C) such Initial Purchaser has offered the Original Notes and will offer and sell the Original Notes (1) as part of its distribution at any time and (2) otherwise until 40 days after the later of the commencement of the offering of the Original Notes and the Closing Date, only in accordance with Rule 903 of Regulation S or another exemption from the registration requirements of the Act. Accordingly, neither such Initial Purchaser nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Original Notes, and any such persons have complied and will comply with the offering restrictions requirements of Regulation S; Terms used in this Section 5(b)(iii) have the meanings given to them by Regulation S. (iv) The source of funds being used by it to acquire the Original Notes does not include the assets of any "employee benefit plan" (within the meaning of Section 3 of ERISA) or any "plan" (within the meaning of Section 4975 of the Code). 24 Each of the Initial Purchasers understands that the Issuer and, for purposes of the opinions to be delivered to them pursuant to Sections 8(g) and 8(h) hereof, counsel to the Issuer and counsel to the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations, and each of the Initial Purchasers hereby consents to such reliance. 6. INDEMNIFICATION. (a) Each of the Issuer and Parent, on a joint and several basis, agrees to indemnify and hold harmless each Initial Purchaser, each person, if any, who controls an Initial Purchaser within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, the agents, employees, officers and directors of the Initial Purchasers and the agents, employees, officers and directors of any such controlling person from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including, but not limited, to reasonable attorneys' fees and any and all reasonable expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all reasonable amounts paid in settlement of any claim or litigation) (collectively, "LOSSES") to which they or any of them may become subject under the Act, the Exchange Act or otherwise insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Issuer and Parent will not be liable in any such case to the extent, but only to the extent, that any such Loss arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to the Initial Purchasers furnished to the Issuer or Parent by or on behalf of the Initial Purchasers expressly for use therein; and, provided further, however, that the indemnity agreement contained in this subsection (a) with respect to any Preliminary Offering Memorandum shall not inure to the benefit of the Initial Purchasers or their agents, employees, officers and directors for any Loss if the Offering Memorandum corrected any such alleged untrue statement or omission and if such Initial Purchasers failed to send or give a copy of the Offering Memorandum at or prior to the written confirmation of a sale of the Notes to the person alleging such Loss. This indemnity agreement will be in addition to any liability that each of the Issuer and 25 Parent may otherwise have, including, but not limited to, liability under this Agreement. (b) The Initial Purchasers agree, severally and not jointly, to indemnify and hold harmless the Issuer and Parent, each person, if any, who controls the Issuer and Parent within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and each of its agents, employees, officers and directors and the agents, employees, officers and directors of any such controlling person from and against any Losses to which they or either of them may become subject under the Act, the Exchange Act or otherwise insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that any such Loss arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to the Initial Purchasers furnished in writing to the Issuer and Parent by the Initial Purchasers expressly for use therein. The Issuer, Parent and the Initial Purchasers acknowledge that the information set forth in Section 9 is the only information furnished in writing by the Initial Purchasers to the Issuer and Parent expressly for use in the Preliminary Offering Memorandum or the Offering Memorandum. (c) Promptly after receipt by an indemnified party under subsection 6(a) or 6(b) above of notice of the commencement of any action, suit or proceeding (collectively, an "ACTION"), such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement of such action (but the failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability that it may have under this Section 6 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement of such action, the indemnifying party will be entitled to participate in such action, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, 26 to assume the defense of such action with counsel satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such action, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) the named parties to such action (including any impleaded parties) include such indemnified party and the indemnifying parties (or such indemnifying parties have assumed the defense of such action), and such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them that are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such reasonable fees and expenses of counsel shall be borne by the indemnifying parties. In no event shall the indemnifying party be liable for the fees and expenses of more than one counsel (together with appropriate local counsel) at any time for all indemnified parties in connection with any one action or separate but substantially similar or related actions arising in the same jurisdiction out of the same general allegations or circumstances. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent; provided, however, that such consent was not unreasonably withheld. 7. CONTRIBUTION. In order to provide for contribution in circumstances in which the indemnification provided for in Section 6 of this Agreement is for any reason held to be unavailable from the indemnifying party, or is insufficient to hold harmless a party indemnified under Section 6 of this Agreement, the Issuer, Parent and the Initial Purchasers shall contribute to the amount paid or payable by such indemnified party as a result of such aggregate Losses of the nature contemplated by such indemnification provision (but after deducting in the case of Losses suffered by the indemnifying party, any contribution received by the indemnifying party from persons other than the indemnified party who may also be liable for contribution, including persons who control the indemnified party within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Issuer, Parent and the Initial Purchasers may be subject in such proportion as is appropriate to reflect the relative benefits received by the Issuer and Parent, on the one hand, and the Initial Purchasers, on the other hand, from the offering of the Original Notes or, if such 27 allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in paragraph (c) of this Section 8 and having been prejudiced in any material respect by the absence of such notice, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Issuer and Parent, on the one hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. The relative benefits received by the Issuer and Parent, on the one hand, and the Initial Purchasers, on the other hand, shall be deemed to be in the same proportion as (x) the total proceeds from the offering of Original Notes (net of discounts and commissions but before deducting expenses) received by the Issuer and Parent, and (y) the total discounts and commissions received by the Initial Purchasers as set forth in the table on the cover page of the Offering Memorandum. The relative fault of the Issuer and Parent, on the one hand, and the Initial Purchasers, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer, Parent or the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or alleged statement or omission. The Issuer, Parent and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 7, (i) in no case shall the Initial Purchasers be required to contribute any amount in excess of the amount by which the total discount and commissions applicable to the Original Notes pursuant to this Agreement exceeds the amount of any damages that the Initial Purchasers have otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Initial Purchasers, and each person, if any, who controls the Issuer and Parent within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Issuer and Parent, subject in each case to clauses (i) and (ii) of this Section 7. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made against another party or parties under this Section 7, 28 notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 7 or otherwise, except to the extent that it has been prejudiced in any material respect by such failure; provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 6 for purposes of indemnification. Anything in this section to the contrary notwithstanding, no party shall be liable for contribution with respect to any action or claim settled without its written consent, provided, however, that such written consent was not unreasonably withheld. 8. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of the Initial Purchasers to purchase and pay for the Original Notes, as provided for in this Agreement, shall be subject to satisfaction of the following conditions prior to or concurrently with such purchase: (a) All of the representations and warranties of the Issuer and Parent contained in this Agreement shall be true and correct, or true and correct in all material respects where such representations and warranties are not qualified by materiality or Material Adverse Effect, on the date of this Agreement and, in each case after giving effect to the Merger and the transactions contemplated thereby, on the Closing Date, except that if a representation and warranty is made as of a specific date, and such date is expressly referred to therein, such representation and warranty shall be true and correct (or true and correct in all material respects, as applicable) as of such date. The Issuer and Parent shall have performed or complied with all of the agreements contained in this Agreement and required to be performed or complied with by them at or prior to the Closing Date. (b) The Offering Memorandum shall have been printed and copies distributed to the Initial Purchasers not later than 5:00 p.m., New York City time, on the day following the date of this Agreement or at such later date and time as the Initial Purchasers may agree. No stop order suspending the qualification or exemption from qualification of the Original Notes in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. (c) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency that would, as of the Closing Date, prevent the issuance of the Original Notes or consummation of the Exchange Offer; except as disclosed in the Offering Memorandum, no action, suit or 29 proceeding shall have been commenced and be pending against or affecting or, to the best knowledge of the Issuer and Parent, threatened against the Issuer, the Company, Parent and/or any Subsidiary before any court or arbitrator or any governmental body, agency or official that, if adversely determined, would reasonably be expected to have a Material Adverse Effect; and no stop order preventing the use of the Offering Memorandum, or any amendment or supplement thereto, or any order asserting that any of the transactions contemplated by this Agreement are subject to the registration requirements of the Act shall have been issued. (d) As of November 30, 1997, neither, the Company, nor any Subsidiary had any material liabilities or obligations, direct or contingent, that were not set forth in the Company's consolidated balance sheet as of November 30, 1997 or in the notes thereto set forth in the Offering Memorandum. Since November 30, 1997, except as set forth or contemplated in the Offering Memorandum, (a) none of the Issuer, the Company, Parent or any Subsidiary has (1) incurred any liabilities or obligations, direct or contingent, that would reasonably be expected to have a Material Adverse Effect, or (2) entered into any material transaction not in the ordinary course of business, (b) there has not been any event or development in respect of the business or condition (financial or other) of the Company and its Subsidiaries that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect and (c) there has been no dividend or distribution of any kind declared, paid or made by the Company or any Subsidiary on any class of their capital stock. (e) The Initial Purchasers shall have received certificates, dated the Closing Date, signed by two authorized officers of each of the Issuer and Parent confirming, as of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d) of this Section 8. (f) The Initial Purchasers shall have received on the Closing Date an opinion dated the Closing Date, addressed to the Initial Purchasers, of Howard, Darby & Levin, counsel to the Issuer, the Guarantors and the Company, in form and substance reasonably satisfactory to the Initial Purchasers and counsel to the Initial Purchasers. (g) The Initial Purchasers shall have received on the Closing Date an opinion (satisfactory in form and substance to the Initial Purchasers) dated the Closing Date of Davis Polk & Wardwell, special counsel to the Initial Purchasers, covering such matters as are customarily covered in such opinions. 30 In addition, such counsel shall state that they have participated in discussions with your representatives, representatives of the Issuer and the Guarantors and their counsel and independent public accountants concerning the preparation of the Offering Memorandum. Such counsel shall state that, although they are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements in the Offering Memorandum, on the basis of the foregoing (relying as to materiality to a large extent upon officers or other representatives of the Issuer and the Company and upon your representations), no facts have come to their attention that lead such counsel to believe that the Offering Memorandum (other than the financial statements and other financial and statistical data contained therein as to which such counsel need express no belief), on the date of such Offering Memorandum and as of the date of the time of purchase, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (h) Prior to the execution of this Agreement, the Initial Purchasers shall have received a "comfort letter" from each of KPMG Peat Marwick LLP and Deloitte & Touche LLP, independent public accountants for the Company, dated as of the date of this Agreement, addressed to the Initial Purchasers and in form and substance satisfactory to the Initial Purchasers and counsel to the Initial Purchasers. In addition, as of the Closing Date, the Initial Purchasers shall have received a "bring-down comfort letter" from Deloitte & Touche LLP in form and substance satisfactory to the Initial Purchasers and counsel to the Initial Purchasers covering the same items and matters as covered in their "comfort letter" but as of a date that is not more than three days prior to the date thereof and any changes and additions to the Preliminary Offering Memorandum that were made producing the Offering Memorandum. (i) The Issuer and each of the Guarantors shall have entered into the Notes Indenture and the Initial Purchasers shall have received copies, conformed as executed, thereof. (j) The Issuer shall have entered into the Registration Rights Agreement and the Initial Purchasers shall have received counterparts, conformed as executed, thereof. 31 (k) The Issuer and each of the Guarantors shall have entered into the Credit Agreement, and the Initial Purchasers shall have received counterparts, conformed as executed, thereof. (l) The Initial Purchasers shall have received on the Closing Date a certificate from the Company dated the Closing Date as to the solvency of the Company and its Subsidiaries, addressed to the Initial Purchasers and to the lenders in connection with the Issuer and Guarantors entering into the Credit Agreement. (m) Simultaneously with the purchase by the Initial Purchasers of the Original Notes under this Agreement, the Initial Purchasers shall have consummated the Preferred Stock Offering. (n) Prior to or simultaneously with the closing of the transactions contemplated by this Agreement, the Acquisition shall have been consummated or will be consummated and the Issuer shall have been merged into, or on the Closing Date will be merged into, the Company. (o) The Initial Purchasers shall have been furnished with copies of such documents as they may reasonably request and all closing documents from the closings of the transactions contemplated hereby. (p) Davis Polk & Wardwell, counsel to the Initial Purchasers, shall have been furnished with such documents as they may reasonably request to enable them to review or pass upon the matters referred to in this Section 8 and in order to evidence the accuracy, completeness or satisfaction in all material respects of any of the representations, warranties or conditions contained in this Agreement. (q) The Original Notes shall be eligible for trading in the PORTAL market upon issuance. (r) The Notes shall have initially been assigned ratings of "B-" and "B3" by Standard & Poor's Rating Services and Moody's Investors Service, Inc., respectively, and no such rating shall have been downgraded or placed on any "watch list" for possible downgrading as of or prior to the Closing Date. (s) All agreements set forth in the representation letter of the Issuer to DTC relating to the approval of the Notes by DTC for "book-entry" transfer shall have been complied with. 32 If any of the conditions specified in this Section 8 shall not have been fulfilled when and as required by this Agreement to be fulfilled, this Agreement may be terminated by the Initial Purchasers on notice to the Issuer at any time at or prior to the Closing Date, and such termination shall be without liability of any party to any other party. Notwithstanding any such termination, the provisions of Sections 4(f), 6, 7, 10, 11(d) and 14 shall remain in effect. The Issuer's obligation under this Agreement to sell the Original Notes to the Initial Purchasers on the Closing Date is subject to the Initial Purchasers purchasing and paying for all of the Original Notes and the accuracy of, and compliance with, the representations and warranties and agreements in Section 5(b). 9. INITIAL PURCHASERS' INFORMATION. The Issuer, Parent and the Initial Purchasers severally acknowledge that the statements with respect to the offer and sale of the Original Notes set forth in (i) the last paragraph of the cover page, (ii) the first paragraph of page 3 and (iii) in the second, fourth, and fifth paragraph under the caption "Plan of Distribution", all in the Offering Memorandum constitute the only information furnished in writing by the Initial Purchasers expressly for use in the Preliminary Offering Memorandum or the Offering Memorandum. 10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and warranties, covenants and agreements contained in this Agreement, including the agreements contained in Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and the contribution agreements contained in Section 7 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Initial Purchasers or any controlling person thereof or by or on behalf of the Issuer, Parent or any controlling person of any thereof, and shall survive delivery of and payment for the Original Notes to and by the Initial Purchasers. The agreements contained in Sections 4(f), 6, 7, 11(d) and 14 shall survive the termination of this Agreement, including pursuant to Section 11. 11. EFFECTIVE DATE OF AGREEMENT; TERMINATION. (a) This Agreement shall become effective upon execution and delivery of a counterpart hereof by each of the parties hereto. (b) The Initial Purchasers shall have the right to terminate this Agreement at any time prior to the Closing Date by notice to the Issuer from the Initial Purchasers, without liability (other than with respect to Sections 6 and 7) on the Initial Purchasers' part to the Issuer if, on or prior to such date, (i) the Issuer and Parent shall have failed, refused or been 33 unable to perform in any material respect any agreement on its part to be performed under this Agreement when and as required, (ii) any other condition to the obligations of the Initial Purchasers under this Agreement to be fulfilled by the Issuer or any of the Guarantors pursuant to Section 8 is not fulfilled when and as required in any material respect, (iii) trading in securities generally on the New York Stock Exchange or the American Stock Exchange shall have been suspended or materially limited, or minimum prices shall have been established on such exchange by the Commission, or by such exchange or other regulatory body or governmental authority having jurisdiction, (iv) a general banking moratorium shall have been declared by federal, New York or Ohio authorities or (v) there is an outbreak or escalation of armed hostilities involving the United States on or after the date of this Agreement, or if there has been a declaration by the United States of a national emergency or war or other national or international calamity or crisis (economic, political, financial or otherwise) which affects the U.S. and international markets, making it, in the Initial Purchasers' judgment, impracticable to proceed with the offering or delivery of the Original Notes on the terms and in the manner contemplated in the Offering Memorandum. (c) Any notice of termination pursuant to this Section 11 shall be given at the address specified in Section 12 below by telephone, telex, telephonic facsimile or telegraph, confirmed in writing by letter. (d) If this Agreement shall be terminated pursuant to clause (i) or (ii) of Section 11(b), or if the sale of the Notes provided for in this Agreement is not consummated because the Issuer or Parent to satisfy any condition to the obligations of the Initial Purchasers set forth in this Agreement to be satisfied on their part or because of any refusal, inability or failure on the part of either of the Issuer or Parent to perform any agreement in this Agreement or comply with any provision of this Agreement, the Issuer will, subject to demand by the Initial Purchasers, reimburse the Initial Purchasers for all of their reasonable out-of-pocket expenses (including the fees and expenses of the Initial Purchasers' counsel) incurred in connection with this Agreement. 12. NOTICE. All communications with respect to or under this Agreement, except as may be otherwise specifically provided in this Agreement, shall be in writing and, if sent to the Initial Purchasers, shall be mailed, delivered, or telexed, telegraphed or telecopied and confirmed in writing to SBC Warburg Dillon Read Inc., 535 Madison Avenue, New York, New York 10022 (telephone: (212) 906-7000), Attention: Syndicate Department, telecopy number: 203-719-1075; and if sent to the Issuer or Parent, shall be mailed, delivered or telexed, 34 telegraphed or telecopied and confirmed in writing to Eagle-Picher Industries, Inc., 250 East Fifth Street, Cincinnati, Ohio 45202 (telephone: (513) 721-7010, Telecopy (513) 721-2341, Attention: President). All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged by telecopier machine, if telecopied; and one business day after being timely delivered to a next-day air courier. 13. PARTIES. This Agreement shall inure solely to the benefit of, and shall be binding upon, the Initial Purchasers, the Issuer and Parent and the controlling persons and agents referred to in Sections 6 and 7, and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of Notes from the Initial Purchasers. 14. CONSTRUCTION. This Agreement shall be construed in accordance with the internal laws of the State of New York (without giving effect to any provisions thereof relating to conflicts of law) and each of the parties hereto consent to the jurisdiction of the courts of the State of New York. Each of the parties hereto agrees to submit to the jurisdiction of the courts of the State of New York and the U.S. federal courts sitting in the City of New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of the Initial Purchasers to bring proceedings against the Company in the courts of any other jurisdiction. 15. CAPTIONS. The captions included in this Agreement are included solely for convenience of reference and are not to be considered a part of this Agreement. 16. COUNTERPARTS. This Agreement may be executed in various counterparts that together shall constitute one and the same instrument. 35 If the foregoing Notes Purchase Agreement correctly sets forth the understanding among the Issuer, Parent and the Initial Purchasers, please so indicate in the space provided below for the purpose, whereupon this letter and your acceptance shall constitute a binding agreement among the Issuer, Parent and the Initial Purchasers. E-P ACQUISITION, INC. By: /s/ Joel P. Wyler ------------------------------- Name: Joel P. Wyler Title: Chairman and President EAGLE-PICHER HOLDINGS, INC. By: /s/ Joel P. Wyler ------------------------------- Name: Joel P. Wyler Title: Chairman and President Confirmed and accepted as of the date first above written: SBC WARBURG DILLON READ INC. By: /s/ John G. Brim --------------------------------------- Name: John G. Brim Title: Managing Director ABN AMRO INCORPORATED By: /s/ Linda A. Dawson --------------------------------------- Name: Linda A. Dawson Title: Managing Director SCHEDULE I
Principal Amount of Initial Purchaser Original Notes - ------------------ ------------------------ SBC Warburg Dillon Read Inc..................................... $200,903,282 ABN AMRO Incorporated........................................... 19,096,718 ------------- Total $220,000,000 =============
SCHEDULE A SUBSIDIARIES Jurisdiction Name Type of Entity Of Incorporation Equity Ownership and Direct Owner - ------------------------------------------------------------------------------------------------------------------------- 1. DOMESTIC OPERATING SUBSIDIARIES Daisy Parts, Inc. corporation Michigan Eagle-Picher Industries, Inc. - 100% Eagle-Picher Development Company, Inc. corporation Dealware Eagle-Picher Industries, Inc. - 100% Eagle-Picher Far East, Inc. corporation Dealware Eagle-Picher Industries, Inc. - 100% Eagle-Picher Fluid Systems, Inc. corporation Michigan Eagle-Picher Industries, Inc. - 100% Eagle-Picher Minerals, Inc. corporation Nevada Eagle-Picher Industries, Inc. - 100% Hillsdale Tool & Manufacturing Co. corporation Michigan Eagle-Picher Industries, Inc. - 100% Michigan Automotive Research Corporation corporation Michigan Eagle-Picher Development Company, Inc. - 100% 2. FOREIGN SUBSIDIARIES Eagle-Picher Automotive GmbH Gesellschaft mit Germany Eagle-Picher Industries, Europe B.V. - 100% Beschraeckter Haftung (company with limited liability) Eagle-Picher Espana, S.A. Sociedad Anonima Spain Eagle-Picher Industries, Europe B.V. - 100% (joint stock company) Eagle-Picher Fluid Systems, Ltd. private limited England & Wales Eagle-Picher UK Limited - 100% company Eagle-Picher Hillsdale Limited private limited England & Wales Eagle-Picher UK Limited - 100% company Eagle-Picher Industries Europe B.V. Besloten Netherlands Eagle-Picher Industries Inc - 100% Venwootschap (private company with limited liability)
Jurisdiction Name Type Of Entity Of Incorporation Equity Ownership and Direct Owner - ------------------------------- -------------------- ---------------- ---------------------------------- Eagle-Pitcher Technologies GmbH Gesellschaft mit Germany Eagle-Picher Wolverine GmbH - 100% beschraenkter Haftung (company with limited liability) Eagle-Picher Industries of Canada corporation Ontario, Canada Eagle-Picher Industries, Inc. - 100% Limited Eagle-Picher Minerals International Societe a Responsabilite France Eagle-Picher Minerals, Inc. - 100% S.A.R.L. Limite (limited liability company) Eagle-Picher UK Limited private limited company England & Wales Eagle-Picher Industries Europe B.V. - 100% Eagle-Picher Wolverine GmbH private limited company Germany Eagle-Picher Industries Europe B.V. - 99.95% (DM 3,798,000); A Ruijssenaars in trust for Eagle-Picher Industries, Inc. - .05% (DM 2,000) Eagle-Picher, Inc. foreign sales corporation Virgin Islands Eagle-Picher Industries, Inc. - 100% EPTEC, S.A. de C.V. Sociedad Anonima de Mexico Eagle-Picher Industries, Inc. (28,582,138 Capital Variable shares) & Hillsdale Tool & Manufacturing (corporation with Co. (1 share) variable capital) Equipos de Acuna, S.A. de C.V. Sociedad Anonima de Mexico Eagle-Picher Industries, Inc. (999 shares Capital Variable of Series A, 19,794,801 shares of Series (corporation with B, 1,508,248 shares of Series C; James A. variable capital) Ralston - 1 share of Series A United Minerals GmbH & Co. KG Kommandit Gesellschaft Germany Eagle-Picher Minerals International (limited partnership) S.A.R.L. - 100% United Minerals Verwaltungs-und Gesellschaft mit Germany Eagle-Picher Minerals International Beteiligungs GmbH beschraenkter Haftung S.A.R.L - 100% (company with limited liability) 3. IMMATERIAL SUBSIDIARIES Fabricon Corporation corporation Michigan Eagle-Picher Industries, Inc. - 100% Fabricon Products Corporation of corporation Pennsylvania Fabricon Corporation - 100% Pennsylvania
Jurisdiction Name Type Of Entity Of Incorporation Equity Ownership and Direct Owner - ---------------------------------- -------------------- ---------------- ---------------------------------- Ross Aluminum Foundries, Inc. corporation Ohio Eagle-Picher Industries, Inc. - 100% Wolverine Gasket and Manufacturing corporation Michigan Eagle-Picher Industries, Inc. - 100% Company Cincinnati Industrial Machinery corporation Ohio Eagle-Picher Industries, Inc. - 100% Sales Company
EX-10.5 14 EXHIBIT 10.5 ASSUMPTION AGREEMENT FOR THE NOTES PURCHASE AGREEMENT AGREEMENT dated as of February 24, 1998 of Eagle-Picher Industries, Inc., an Ohio corporation (the "COMPANY"), and the Subsidiary Guarantors listed on the signature pages hereof (the "SUBSIDIARY GUARANTORS"). WHEREAS, E-P Acquisition, Inc. (the "ISSUER"), Eagle-Picher Holdings, Inc., a Delaware corporation ("PARENT"), and SBC Warburg Dillon Read Inc. and ABN AMRO Incorporated (together, the "INITIAL PURCHASERS") have entered into the Notes Purchase Agreement dated as of the date hereof (the "NOTES PURCHASE AGREEMENT"); and WHEREAS, pursuant to the Merger Agreement dated as of December 23, 1997 (the "MERGER AGREEMENT") among the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, the Company, Assignor and Parent, Assignor has merged into the Company with the Company as the surviving corporation; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the Company and the Subsidiary Guarantors hereto agree as follows: SECTION 1. Definitions. All capitalized terms not otherwise defined herein have the respective meanings set forth in the Notes Purchase Agreement. SECTION 2. Assignment. The Company and the Subsidiary Guarantors hereby assume all of the obligations of the Issuer under the Notes Purchase Agreement. Upon the execution and delivery hereof by the the Company and the Subsidiary Guarantors, the Company shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of the "Issuer," and the Subsidiary Guarantors shall, as of the date hereof, be obligated to perform the obligations of Guarantors along with "Parent" under the Notes Purchase Agreement. SECTION 3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 4. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the Company and the Subsidiary Guarantors have caused this Agreement to be executed and delivered as of the date first above written. EAGLE-PICHER INDUSTRIES, INC. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: President DAISY PARTS, INC. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER DEVELOPMENT COMPANY, INC. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: President EAGLE-PICHER FAR EAST, INC. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER FLUID SYSTEMS, INC. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER MINERALS, INC. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: Authorized Person EAGLE-PICHER TECHNOLOGIES, LLC By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: Director-Manager HILLSDALE TOOL & MANUFACTURING CO. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: Authorized Person MICHIGAN AUTOMOTIVE RESEARCH CORPORATION By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: Authorized Person EX-10.6 15 EXHIBIT 10.6 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and entered into as of February 24, 1998 by and among E-P ACQUISITION, INC., a Delaware corporation (the "COMPANY"), and SBC WARBURG DILLON READ INC. and ABN AMRO INCORPORATED (the "INITIAL PURCHASERS"). The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers to purchase $220,000,000 aggregate principal amount of the Company's 93/8% Senior Subordinated Notes due 2008 (the "NOTES") under the Notes Purchase Agreement, dated February 19, 1998 (the "PURCHASE AGREEMENT"), by and among the Company, Parent and the Initial Purchasers. The Notes will be guaranteed on an unsecured senior subordinated basis by the Guarantors and will be issued pursuant to the Notes Indenture (as defined herein). The Company and the Initial Purchasers hereby agree as follows: SECTION 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: "ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission pursuant thereto. "ACTION" has the meaning set forth in Section 8(c) of this Agreement. "BROKER-DEALER" means any broker or dealer registered under the Exchange Act. "COMMISSION" means the Securities and Exchange Commission. "CONSUMMATION" of an Offer means the occurrence of (i) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the New Notes to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) of this Agreement and (iii) the delivery by the Company to the Registrar under the Notes Indenture of New Notes in the same aggregate principal amount as the aggregate principal amount of Old Notes tendered by the Holders thereof pursuant to the Exchange Offer and not withdrawn. "CONSUMMATE," when used as a verb, has a correlative meaning. "EFFECTIVENESS TARGET DATE" has the meaning set forth in Section 5 of this Agreement. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission pursuant thereto. "EXCHANGE OFFER" means the registration under the Act by the Company of the New Notes pursuant to a Registration Statement pursuant to which the Company offers the Holders of outstanding Transfer Restricted Securities the opportunity to exchange such outstanding Old Notes that are Transfer Restricted Securities held by such Holders for New Notes in an aggregate principal amount equal to the aggregate principal amount of the Old Notes that are Transfer Restricted Securities tendered in such exchange offer by such Holders. "EXCHANGE OFFER REGISTRATION STATEMENT" means the Registration Statement relating to the Exchange Offer, including the related Prospectus. "GUARANTORS" means Parent and the Subsidiary Guarantors (as defined in the Purchase Agreement). "HOLDERS" has the meaning set forth in Section 2(b) of this Agreement. "INDEMNIFIED PERSON" has meaning set forth in Section 8(a) of this Agreement. "INITIAL PURCHASERS" means SBC Warburg Dillon Read Inc. and ABN AMRO Incorporated. "INTEREST PAYMENT DATE" has the meaning set forth in the Notes Indenture and the Notes. "ISSUE DATE" means the date that the Notes are purchased by the Initial Purchasers pursuant to the Purchase Agreement. "LOSSES" has the meaning set forth in Section 8(a) of this Agreement. "NASD" means the National Association of Securities Dealers, Inc. "NEW NOTES" means the Company's 9 3/8% Senior Subordinated Notes due 2008 to be issued pursuant to the Notes Indenture or an indenture substantially identical to the Notes Indenture (i) in connection with the Exchange Offer or (ii) upon the request of any Holder of Old Notes covered by the Shelf Registration Statement, in exchange for such Old Notes and evidencing the same debt as the Old Notes, including the guarantees by the Guarantors. "NOTES" means the Old Notes and the New Notes. 2 "NOTES INDENTURE" means the Notes Indenture, dated as of February 24, 1998, by and among the Company and The Bank of New York, as trustee (the "TRUSTEE"), pursuant to which the Notes are to be issued, as such Notes Indenture is amended or supplemented from time to time in accordance with its terms. "OLD NOTES" means the Company's 9 3/8% Senior Subordinated Notes due 2008 to be issued pursuant to the Notes Indenture on the Issue Date, including the Guarantees by the Guarantors. "PARENT" means Eagle-Picher Holdings, Inc., a Delaware corporation, and its successors. "PARTICIPATING BROKER-DEALER" has the meaning set forth in Section 6(a) of this Agreement. "PERSON" means an individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or a government or other agency or political subdivision thereof or other entity of any kind. "PROSPECTUS" means the prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments and supplements thereto, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such Prospectus. "REGISTRATION DEFAULT" has the meaning set forth in Section 5 of this Agreement. "REGISTRATION STATEMENT" means any registration statement of the Company relating to (a) an offering of New Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement that is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including pre- and post-effective amendments) and all exhibits and material incorporated by reference or deemed to be incorporated by reference, if any, therein. "SHELF FILING DEADLINE" has the meaning set forth in Section 4(a) of this Agreement. 3 "SHELF REGISTRATION STATEMENT" has the meaning set forth in Section 4(a) of this Agreement. "SUBSIDIARY" means, with respect to any Person, any other Person of which a majority of the equity ownership or the voting securities is at the time owned, directly or indirectly, by such Person or by one or more other subsidiaries of such Person or a combination thereof. "TIA" means the Trust Indenture Act of 1939, as amended, and the rules and regulations promulgated pursuant thereto, all as in effect on the date of the Notes Indenture. "TRANSFER RESTRICTED SECURITIES" means each Note until the earliest to occur of (i) the date on which each such Old Note has been exchanged by a person other than a Broker-Dealer for a New Note in the Exchange Offer, (ii) following the exchange by a Broker-Dealer in the Exchange Offer of an Old Note for a New Note, the date on which such New Note is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the Prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Note has been effectively registered under the Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Note could be resold pursuant to Rule 144 under the Act. "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" means a registration in which securities of the Company are sold to an underwriter for reoffering to the public pursuant to an effective Registration Statement. SECTION 2. Securities Subject to this Agreement. (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such Person beneficially owns Transfer Restricted Securities. SECTION 3. Registered Exchange Offer. (a) Unless the Exchange Offer shall not be permitted by applicable federal law or Commission policy, the Company shall (i) cause to be filed with the Commission on or prior to 45 days after the Issue Date, an Exchange Offer Registration Statement under the Act relating to the New Notes and the Exchange Offer and (ii) use its best efforts to cause such Exchange Offer Registration Statement to be declared effective by the Commission on or prior to 90 days after the Issue Date. In connection with the foregoing, the Company shall (A) file all pre-effective amendments to such 4 Exchange Offer Registration Statement as may be necessary to cause such Exchange Offer Registration Statement to become effective, (B) if applicable, file a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act, (C) cause all necessary filings in connection with the registration and qualification of the New Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer; provided, however, that the Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or to take any action which would subject it to general service of process or taxation in any jurisdiction where it is not so subject and (D) upon the effectiveness of such Registration Statement, commence the Exchange Offer and use its best efforts to issue on or prior to 45 days after the date on which such Exchange Offer Registration Statement is declared effective by the Commission, New Notes in exchange for all Old Notes tendered prior thereto in the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the New Notes to be offered in exchange for the Old Notes that are Transfer Restricted Securities and permitting resales of New Notes held by Broker-Dealers as contemplated by Section 3(c) below. If, after such Exchange Offer Registration Statement initially is declared effective by the Commission, the Exchange Offer or the issuance of New Notes under the Exchange Offer or the resale of New Notes received by Broker-Dealers in the Exchange Offer as contemplated by Section 3(c) below is interfered with by any stop order, injunction or other order or requirement of the Commission or any other governmental agency or court, such Exchange Offer Registration Statement shall be deemed not to have become effective for purposes of this Agreement during the period that such stop order, injunction or other similar order or requirement shall remain in effect. (b) The Company shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. The Company shall only offer to exchange New Notes for Old Notes in the Exchange Offer. The Company shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but not less than 20 business days after such effective date and in no event later than 45 days after such effective date. (c) The Company shall indicate in a "Plan of Distribution" section contained in the Prospectus included in the Exchange Offer Registration 5 Statement that any Broker-Dealer that holds Old Notes that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company or any affiliate of the Company), may exchange such Old Notes pursuant to the Exchange Offer; provided, however, that such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with any resales of the New Notes received by such Broker-Dealer in the Exchange Offer. Such "Plan of Distribution" section shall allow the use of such Prospectus by all Persons subject to the prospectus delivery requirements of the Act, including Participating Broker-Dealers, and shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement. The Company shall use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Notes acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the date on which the Exchange Offer Registration Statement is declared effective. The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day period in order to facilitate such resales. SECTION 4. Shelf Registration. (a) Shelf Registration. If (i) the Company is not required to file an Exchange Offer Registration Statement or to Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (ii) any Holder of Transfer Restricted Securities shall notify the Company within 20 days after the commencement of the Exchange Offer that such Holder (A) is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus, and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) is a Broker-Dealer and holds Old Notes (including the Initial Purchasers that hold Old Notes as part of an unsold allotment from the original offering of the Notes) acquired directly from the Company or one of its affiliates, 6 then the Company shall (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "SHELF REGISTRATION STATEMENT"), on or prior to the earliest to occur of (1) the 45th day after the date on which the Company determines that it is not required to file the Exchange Offer Registration Statement or (2) the 45th day after the date on which the Company receives notice from a Holder of Transfer Restricted Securities as contemplated by clause (ii) above (such earliest date being the "SHELF FILING DEADLINE"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(c) of this Agreement, and (y) use its best efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 45th day after the Shelf Filing Deadline. The Company shall use its best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and 6(c) of this Agreement to the extent necessary to ensure that it is available for resales of Notes by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a) and to ensure that it conforms to the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a continuous period of two years following the date on which such Shelf Registration becomes effective under the Act or such shorter period that will terminate when all the Notes covered by the Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement. (b) Postponement or Suspension of Shelf Registration Statement under Certain Circumstances. If, notwithstanding its best efforts to cause an Exchange Offer Registration Statement to be declared effective and to consummate the Exchange Offer pursuant to Section 3(a) of this Agreement, the Company is required to file a Shelf Registration Statement pursuant to Section 4(a) hereof, the Company may postpone or suspend the filing or effectiveness of such Shelf Registration Statement (or any amendment or supplements thereto) (i) if such action is required by applicable law or (ii) for up to an aggregate of 30 days during any consecutive 365-day period, if such action is approved by the Board of Directors of the Company and is taken by the Company in good faith and for valid business reasons (not including the avoidance of the Company's obligations hereunder), including the premature disclosure of material nonpublic information which, if disclosed at such time, would be materially harmful to the interests of the Company and its shareholders, so long as the Company promptly thereafter complies with the requirements of Section 4(a) hereof. This Section 4(b) shall not affect the Company's obligations to pay Special Interest pursuant to Section 5 of this Agreement. 7 (c) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 15 days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary prospectus included in such Shelf Registration Statement. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed to make the information previously furnished to the Company by such Holder not materially misleading. SECTION 5. Special Interest. If (i) the Exchange Offer Registration Statement or the Shelf Registration Statement is not filed with the Commission on or prior to the date specified for such filing in Section 3(a) or Section 4(a), respectively, of this Agreement, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement has not been declared effective by the Commission on or prior to the date specified for such effectiveness in Section 3(a) or Section 4(a), respectively, of this Agreement (the "EFFECTIVENESS TARGET DATE"), (iii) the Exchange Offer has not been Consummated within 45 days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or usable in connection with resales of Transfer Restricted Securities during the periods required by this Agreement (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company hereby agrees to pay to each Holder of Transfer Restricted Securities additional interest ("SPECIAL INTEREST") on the principal amount of the Notes (in addition to the stated interest on the Notes) from and including the date on which any such Registration Defaults have occurred to but excluding the date on which all such Registration Defaults have been cured. Special Interest will accrue at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such rate exceed 1.5% per annum. The Company shall have no obligation to pay additional Special Interest in respect of any subsequent Registration Default so long as the Company continues to accrue Special Interest with respect to an earlier Registration Default. All accrued Special Interest shall be paid by the Company on each Interest Payment Date in accordance with the provisions applicable to the payment of interest set forth in the Notes Indenture. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of Special Interest with respect to such Transfer Restricted Securities will cease. 8 All obligations of the Company set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Transfer Restricted Security shall have been satisfied in full. SECTION 6. Registration Procedures. (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company shall comply with all of the provisions of Section 6(c) below, shall use its best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If, in the reasonable opinion of counsel to the Company, there is a question as to whether the Exchange Offer is permitted by applicable federal law or Commission policy, the Company hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company to Consummate an Exchange Offer for such Old Notes. The Company hereby agrees to pursue the issuance of such a no-action letter or favorable decision to the Commission staff level. In connection with the foregoing, the Company hereby agrees to take all such other reasonable actions as are requested by the Commission or otherwise required in connection with the issuance of such no-action letter or decision, including without limitation (A) participating in telephonic conferences with the Commission staff, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff of such submission. The Initial Purchasers shall be given prior notice of any action taken by the Company under this clause (i). (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company within the meaning of the Act, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution of the New Notes to be issued in the Exchange Offer and (C) it is acquiring the New Notes in its ordinary course of business. Holders 9 of Transfer Restricted Securities shall use their best efforts to cooperate in the Company's preparations for the Exchange Offer. (iii) The Company and the Initial Purchasers acknowledge that the staff of the Commission has taken the position that any Broker-Dealer that owns New Notes that were received by such Broker-Dealer for its own account in the Exchange Offer (a "PARTICIPATING BROKER-DEALER") may be deemed to be an "underwriter" within the meaning of the Act and must deliver a prospectus meeting the requirements of the Act in connection with any resale of such New Notes. Further, the Company and the Initial Purchasers acknowledge that the Initial Purchasers may not exchange in the Exchange Offer Old Notes representing unsold allotments resulting from the original offering of the Old Notes. The Company and the Initial Purchasers also acknowledge that it is the Commission staff's current position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the New Notes, without naming the Participating Broker-Dealers or specifying the amount of New Notes owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligations under the Act in connection with resales of New Notes for their own accounts (other than a resale of an unsold allotment resulting from the original offering of the Notes), so long as the Prospectus otherwise meets the requirements of the Act. (b) Shelf Registration Statement. In the event that a Shelf Registration Statement is required by this Agreement, the Company shall comply with all the provisions of Section 6(c) of this Agreement and shall use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution of such Transfer Restricted Securities and, in connection therewith, the Company shall, as expeditiously as possible, prepare and file with the Commission a Shelf Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution of such Transfer Restricted Securities within the time periods and otherwise in accordance with the provisions of this Agreement. (c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration 10 Statement and the related Prospectus, to the extent that the same are required to be available to permit resales of Notes by Broker-Dealers), the Company shall: (i) use its best efforts to keep such Registration Statement continuously effective for the applicable time period required hereunder and provide all requisite financial statements (including, if required by the Act or any regulation thereunder, financial statements of the Guarantors) for the period specified in Section 3 or 4 of this Agreement, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall promptly notify the Holders to suspend use of the Prospectus, and the Holders shall suspend use of the Prospectus and the Holders shall not communicate non-public information to any third party in violation of the securities laws until the Company has made an appropriate amendment to such Registration Statement (or caused the Prospectus to be supplemented by a Prospectus Supplement), in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), the Company shall use its best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such pre-effective and post-effective amendments to such Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 of this Agreement, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act during the applicable time period required hereunder and to comply fully with the applicable provisions of Rules 424 and 430A under the Act in a timely manner; and comply with the provisions of the Act and the Exchange Act applicable to the Company with respect to the disposition of all Transfer Restricted Securities covered by such Registration Statement during such period in accordance with the intended method or methods of distribution by the sellers of such securities set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; (iii) advise the underwriter(s), if any, the Initial Purchasers, and, in the case of a Shelf Registration Statement, each of the selling Holders 11 promptly and, if requested by such Persons, confirm such advice in writing, (A) when the Prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating to such Registration Statement or Prospectus, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement to such Registration Statement or Prospectus, as the case may be, or any document incorporated by reference in such Registration Statement or Prospectus untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements in such Registration Statement or Prospectus not misleading and that, in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) furnish to each of the underwriter(s), if any, the Initial Purchasers and, in the case of a Shelf Registration Statement, each of the selling Holders, before filing with the Commission, copies of any Registration Statement or any Prospectus included in such Registration Statement or Prospectus or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such underwriter(s), if any, the Initial Purchasers, and such Holders for a period of at least five business days, and the Company will not file any such Registration Statement or Prospectus or any amendment or 12 supplement to any such Registration Statement or Prospectus, as the case may be (including all such documents incorporated by reference), to which any underwriter, Initial Purchaser or selling Holder shall reasonably object within five business days after the receipt of such Registration Statement or Prospectus; (v) in connection with any Shelf Registration Statement and, in the case of Participating Broker-Dealers, any Exchange Offer Registration Statement, promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, (A) provide copies of such document to the selling Holders (including Participating Broker-Dealers, if any) and to the underwriter(s), if any, (B) make the Company's representatives reasonably available for discussion of such document and other customary due diligence matters; provided that such discussion and due diligence shall be coordinated on behalf of the selling Holders by one counsel designated by and on behalf of such selling Holders and (C) include such information in such document prior to the filing of such document as such selling Holders or underwriter(s), if any, may reasonably request; (vi) make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such selling Holders or any of the underwriter(s), if any, at the offices where normally kept, during reasonable business hours, all relevant financial and other records, pertinent corporate documents and properties of the Company and the Guarantors and cause the Company's and the Guarantors' officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness; provided, however, that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such selling Holders, underwriters, attorney or accountant, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying, obligation of confidentiality. Each selling Holder, underwriter, attorney or accountant requesting disclosure will agree that it will, upon learning that disclosure of such information is sought in connection with a court proceeding, give notice to the Company and allow it at its own expense to undertake appropriate action to prevent disclosure of the information deemed confidential; 13 (vii) if requested by any selling Holders or the underwriter(s), if any, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment, if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid for Transfer Restricted Securities and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; provided, however, that the Company shall not be required to take any action pursuant to this Section 6(c)(vii) that would, in the opinion of counsel for the Company, violate applicable law; (viii) furnish to each underwriter, if any, the Initial Purchasers and selling Holders, without charge, at least one conformed copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference that are expressly requested by such persons); (ix) deliver to each selling Holder, each of the underwriter(s), if any, and the Initial Purchasers, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons may reasonably request; the Company hereby consents to the use of the Prospectus and any amendment or supplement to the Prospectus by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities in accordance with the terms thereof and with U.S. federal securities laws and Blue Sky laws covered by the Prospectus or any amendment or supplement thereto; (x) enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings of securities of this type) and take all such other reasonable actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all as may be reasonably requested by any Holder of Transfer Restricted Securities or 14 the underwriter(s), if any, in connection with any sale or resale of Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Company shall (A) make such representations and warranties to the Holders of such Transfer Restricted Securities and the underwriters, if any, with respect to the business of the Company and its Subsidiaries (including with respect to businesses or assets acquired or to be acquired by any of them), and the Shelf Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when customarily requested; (B) use its reasonable best efforts to obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the underwriters, if any, and special counsel to the Holders of the Transfer Restricted Securities being sold), addressed to each selling Holder of Transfer Restricted Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such underwriters, if any, and special counsel to Holders of Transfer Restricted Securities; (C) use its reasonable best efforts to obtain customary "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company or any such subsidiary for which financial statements and financial data is, or is required to be, included in the Registration Statement), addressed to each selling Holder of Transfer Restricted Securities and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings; (D) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less 15 favorable to the selling Holders and the underwriters, if any, than those set forth in Section 8 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Transfer Restricted Securities covered by such Shelf Registration Statement and the underwriters, if any); and (E) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities being sold and the underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to clause (A) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. If at any time the representations and warranties of the Company contemplated in clause (x)(A) above cease to be true and correct, the Company shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by any of them, shall confirm such advice in writing; (xi) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification (or exemption from such registration or qualification) of the Transfer Restricted Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the selling Holders and underwriter(s), if any, may reasonably request and do any and all other reasonable acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Registration Statement; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xii) if a Shelf Registration is filed pursuant to Section 4, cooperate with the selling Holders of Registrable Securities and the managing Underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company; and enable such Transfer Restricted Securities to be in such denominations and 16 registered in such names as the managing Underwriters, if any, or Holders may reasonably request; (xiii) in connection with any sale or transfer of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities made by such underwriter(s); (xiv) use its best efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers of such Transfer Restricted Securities or the underwriter(s), if any, to Consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xi) above; (xv) if any fact or event contemplated by Section 6(c)(iii)(D) of this Agreement shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated in such Registration Statement or Prospectus by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Registration Statement will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading and the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; (xvi) provide a CUSIP or CINS number for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the Trustee under the Notes Indenture with certificates for the Transfer Restricted Securities that are in a form eligible for deposit with The Depository Trust Company; (xvii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by 17 any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD; (xviii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission in regards to any Registration Statement, and make generally available to its securityholders, as soon as practicable, a consolidated earnings statement of the Company and its subsidiaries meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or reasonable best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement; and (xix) cause the Notes Indenture or such other indenture for the New Notes to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, if applicable, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Notes Indenture, if any, as may be required for such Notes Indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its best efforts to cause the Trustee to execute, all customary documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Notes Indenture to be so qualified in a timely manner. In the case of a Shelf Registration Statement, the Company may require each Holder to furnish to the Company such information as the Company may reasonably request, and the Company may exclude from such registration the New Notes of any Holder who fails to furnish such information within a reasonable period of time after receiving such request. Each Holder as to which any Shelf Registration is being effected shall furnish promptly to the Company, upon its request, all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) of this Agreement, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) of this Agreement, or until it is advised in writing (the "ADVICE") by the Company that the use of the Prospectus may be resumed, and has received copies of any 18 additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event that the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 of this Agreement, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) of this Agreement to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) of this Agreement or, if no such supplemented or amended Prospectus is required, when it shall have received the Advice. SECTION 7. Registration Expenses. (a) All fees and expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including required filings made by any Initial Purchaser or Holder with the NASD (and, if applicable, the reasonable fees and expenses of any "qualified independent underwriter" and its counsel that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the New Notes to be issued in the Exchange Offer and printing of Prospectuses); (iv) all fees and disbursements of counsel for the Company and, subject to Section 7(b) below, all reasonable fees and disbursements of counsel for the Holders of Transfer Restricted Securities; (v) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any comfort letters required by or incident to such performance); and (vi) all fees and expenses of the Trustee and any exchange agent and the fees and disbursements of its counsel. The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. Notwithstanding the foregoing or anything in this Agreement to the contrary, each Holder of Transfer Restricted Securities shall pay all underwriting discounts and commissions of any underwriters with respect to any Notes sold by or on behalf of it. 19 (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Davis Polk & Wardwell or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8. Indemnification. (a) The Company agrees to indemnify and hold harmless (i) the Initial Purchasers (in their capacity as such), each Holder of Transfer Restricted Securities and each Participating Broker-Dealer, (ii) each person, if any, who controls any of the foregoing within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act (any of the persons referred to in this clause (ii) being hereinafter referred to as a "controlling person") and (iii) the respective agents, employees, officers and directors of the Initial Purchasers (in their capacity as such) and the agents, employees, officers and directors of any Holder or any controlling person (any person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an "INDEMNIFIED PERSON") from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including, but not limited to, reasonable attorneys' fees and any and all reasonable expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all reasonable amounts paid in settlement of any claim or litigation) (collectively, "LOSSES") to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, preliminary prospectus or Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent, but only to the extent, that any such Loss arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Indemnified Person relating to such Indemnified Person expressly for use therein; and, provided further, however, that the indemnity agreement contained in this subsection (a) with respect to any preliminary prospectus shall not inure to the benefit of the 20 Indemnified Persons or their agents, employees, officers and directors for any Loss if the Prospectus corrected any such alleged untrue statement or omission and if such Indemnified Persons failed to send or give a copy of the Prospectus at or prior to the written confirmation of a sale of the Notes to the person alleging such Loss. This indemnity agreement will be in addition to any liability that the Company may otherwise have, including, but not limited to, liability under this Agreement. (b) In connection with any Registration Statement pursuant to which a Holder of Transfer Restricted Securities offers or sells Transfer Restricted Securities, such Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, its respective agents, employees, officers and directors and any person controlling the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and the agents, employees, officers and directors of such controlling person to the same extent as the foregoing indemnity from the Company to each Indemnified Person but only with respect to, and to the extent that, information relating to such Holder furnished in writing by or on behalf of such Holder expressly for use in such Registration Statement. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, suit or proceeding (collectively, an "ACTION"), such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement of such Action (but the failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability that it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such Action is brought against any indemnified party, and it notifies an indemnifying party of the commencement of such Action, the indemnifying party will be entitled to participate in such Action, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense of such Action with counsel satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such Action, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such Action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such Action within a reasonable time after notice of commencement of the Action, or (iii) the named parties to such Action (including any impleaded parties) include such indemnified party and the indemnifying parties (or such indemnifying parties shall have 21 assumed the defense of such action), and such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them that are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such Action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties. In no event shall the indemnifying party be liable for the fees and expenses of more than one counsel (together with appropriate local counsel) at any time for all indemnified parties in connection with any one Action or separate but substantially similar or related Actions arising out of the same general allegations or circumstances. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or Action effected without its written consent; provided, however, that such consent was not unreasonably withheld. (d) In order to provide for contribution in circumstances in which the indemnification provided for in paragraphs (a) and (b) of this Section 8 is for any reason held to be unavailable from the indemnifying party, or is insufficient to hold harmless a party indemnified under this Section 8, the Company and the Indemnified Persons shall contribute to the aggregate Losses of the nature contemplated by such indemnification provision (but after deducting in the case of Losses suffered by the indemnifying party, any contribution received by the indemnifying party from persons other than the Indemnified Person who may also be liable for contribution, including persons who control the Indemnified Person within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company and the Indemnified Persons may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Indemnified Persons, on the other hand, from the offering of the Notes or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in paragraph (c) of this Section 8 and having been prejudiced in any material respect by the absence of such notice, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company, on the one hand, and the Indemnified Persons, on the other hand, in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. The relative benefits received by the Company shall be deemed to be in the same proportion as the total proceeds from the offering of Old Notes (net of discounts but before deducting expenses) received by the Company as set forth in the table on the cover page of the Prospectus. The relative fault of the Company, on the one hand, and the Indemnified Persons, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a 22 material fact relates to information supplied by the Company or the Indemnified Persons and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or alleged statement or omission. (e) The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to paragraph (d) of this Section 8 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to above. Notwithstanding the provisions of paragraph (d) of this Section 8, (i) in no case shall an Indemnified Persons be required to contribute any amount in excess of the amount by which the total received by such Indemnified Person with respect to its sale of its Transfer Restricted Securities or New Notes, as the case may be, exceeds the amount of any damages that such Indemnified Person has otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of paragraphs (d) and (e) of this Section 8, each person, if any, who controls an Indemnified Person within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Indemnified Person, and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Company, subject in each case to clauses (i) and (ii) of this Section 8(e). Any party entitled to contribution will, promptly after receipt of notice of commencement of any Action against such party in respect of which a claim for contribution may be made against another party or parties under paragraph 8(d) or (e) of this Section 8, notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under paragraph (d) or (e) of this Section 8 or otherwise; except to the extent that it has been prejudiced in any material respect by such failure; provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 6 for purposes of indemnification. Anything in this section to the contrary notwithstanding, no party shall be liable for contribution with respect to any Action or claim settled without its written consent; provided, however, that such written consent shall not be unreasonably withheld. SECTION 9. Rule 144A. The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities and any 23 prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner and to Broker-Dealers, upon their request, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. SECTION 10. Participation in Underwritten Registrations. No Holder may participate in any Underwritten Registration under this Agreement unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in customary underwriting arrangements approved by the Persons entitled under this Agreement to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorneys, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. SECTION 11. Selection of Underwriters. The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided that such investment bankers and managers must be reasonably satisfactory to the Company. SECTION 12. Miscellaneous. (a) Remedies. Each Holder, in addition to being entitled to exercise all rights provided in this Agreement, in the Notes Indenture, the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by them of the provisions of this Agreement and hereby agree to waive the defense in any Action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions of this Agreement. The Company has not previously entered into any agreement granting any registration rights with respect to its respective securities to any Person, except as disclosed in the Offering Memorandum dated February 20, 1998 relating to the Old Notes and in the Offering Memorandum dated February 20, 1998 relating to the offering of preferred stock by Parent. The rights granted to the Holders under this Agreement do not in any way conflict with and are not inconsistent with the rights granted to 24 the holders of the Company's securities under any agreement in effect on the date of this Agreement. (c) Adjustments Affecting the Notes. Without the written consent of the Holders of a majority in aggregate principal amount of outstanding Transfer Restricted Securities, the Company will not take any action, or permit any change to occur, with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer. (d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions of this Agreement may not be given unless (i) in the case of Section 5 hereof and this Section 12(d)(i), the Company has obtained the written consent of each affected Holder of outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions of this Agreement that relates exclusively to the rights of Holders whose securities are being sold or tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being sold or tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivering, first-class mail (registered or certified, return receipt requested), telex, telecopier or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Notes Indenture, with a copy to the Registrar under the Notes Indenture; and (ii) if to the Company, at: E-P Acquisition, Inc. c/o Eagle-Picher Industries, Inc. The Chiquita Center 250 East Fifth Street Cincinnati, Ohio 45202 Facsimile: (513) 721-2341 Attention: President 25 with a copy to: Howard, Darby & Levin 1330 Avenue of the Americas New York, New York 10019 Facsimile: (212) 841-1010 Attention: Scott F. Smith. Esq. All such notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) five business days after being deposited in the mail, postage prepaid, if mailed; (iii) when answered back, if telexed; (iv) when receipt acknowledged by telecopier machine, if telecopied; and (v) on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Notes Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties to this Agreement in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of this Agreement. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF. (j) Severability. In the event that any one or more of the provisions contained in this Agreement, or the application of any such provision in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained in this Agreement shall not be affected or impaired thereby. 26 (k) Entire Agreement. This Agreement together with the other Operative Documents (as defined in the Purchase Agreement) is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties to this Agreement in respect of the subject matter contained in this Agreement. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to in this Agreement with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 27 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. E-P ACQUISITION, INC. By: /s/ JOEL P. WYLER --------------------------------- Name: Joel P. Wyler Title: Chairman and President Accepted and agreed as of the date first above written: SBC WARBURG DILLON READ INC. By: /s/ JOHN G. BRIM ------------------------------- Name: John G. Brim Title: Managing Director ABN AMRO INCORPORATED By: /s/ LINDA A. DAWSON ------------------------------- Name: Linda A. Dawson Title: Managing Director EX-10.7 16 EXHIBIT 10.7 ASSUMPTION AGREEMENT FOR THE REGISTRATION RIGHTS AGREEMENT AGREEMENT dated as of February 24, 1998 of Eagle-Picher Industries, Inc., an Ohio corporation (the "COMPANY"). WHEREAS, the E-P Acquisition, Inc. (the "ISSUER") and SBC Warburg Dillon Read Inc. and ABN AMRO Incorporated (together, the "INITIAL PURCHASERS") have entered into the Registration Rights Agreement dated as of the date hereof (the "REGISTRATION RIGHTS AGREEMENT"); and WHEREAS, pursuant to the Merger Agreement dated as of December 23, 1997 (the "MERGER AGREEMENT") among the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, the Assignee, Assignor and Eagle-Picher Holdings, Inc., Assignor has merged into the Assignee with the Assignee as the surviving corporation; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the Company hereto agrees as follows: SECTION 1. Definitions. All capitalized terms not otherwise defined herein have the respective meanings set forth in the Registration Rights Agreement. SECTION 2. Assumption. The Assignee hereby assumes all of the obligations of the Assignor under the Registration Rights Agreement. Upon the execution and delivery hereof by the Assignee, the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of the "Issuer" under the Registration Rights Agreement. SECTION 3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 4. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and delivered as of the date first above written. EAGLE-PICHER INDUSTRIES, INC. By: /s/ ANDRIES RUIJSSENAARS ------------------------------- Name: Andries Ruijssenaars Title: President 2 EX-10.8 17 EXHIBIT 10.8 ================================================================================ CREDIT AGREEMENT Among E-P ACQUISITION, INC. (to be merged with and into EAGLE-PICHER INDUSTRIES, INC.) VARIOUS LENDERS FROM TIME TO TIME PARTY HERETO ABN AMRO BANK N.V., as Agent PNC BANK, NATIONAL ASSOCIATION, as Documentation Agent And DLJ CAPITAL FUNDING, INC., as Syndication Agent -------------------------- Dated as of February 19, 1998 -------------------------- ================================================================================ TABLE OF CONTENTS
SECTION HEADING PAGE Parties...........................................................................................1 SECTION 1. AMOUNT AND TERMS OF CREDIT..........................................................1 Section 1.01. The Commitments.................................................................1 Section 1.01.01. Term Loans and Revolving Credit........................................1 Section 1.01.02. Swingline Loans........................................................3 Section 1.01.03. Mandatory Borrowing....................................................3 Section 1.02. Minimum Borrowing Amount, Etc...................................................4 Section 1.03. Notice of Borrowing.............................................................4 Section 1.04. Disbursement of Funds...........................................................5 Section 1.05. Notes...........................................................................6 Section 1.06. Conversions.....................................................................7 Section 1.07. Pro Rata Borrowings.............................................................8 Section 1.08. Interest........................................................................8 Section 1.09. Interest Periods................................................................9 Section 1.10. Increased Costs, Illegality, Etc...............................................10 Section 1.11. Compensation...................................................................12 Section 1.12. Change of Lending Office.......................................................13 Section 1.13. Replacement of Lenders.........................................................13 SECTION 2. LETTERS OF CREDIT..................................................................14 Section 2.01. Letters of Credit..............................................................14 Section 2.02. Minimum Stated Amount..........................................................16 Section 2.03. Letter of Credit Requests......................................................16 Section 2.04. Letter of Credit Participations................................................16 Section 2.05. Agreement to Repay Letter of Credit Drawings...................................18 Section 2.06. Increased Costs................................................................19 SECTION 3. FEES; COMMITMENTS..................................................................20 Section 3.01. Fees...........................................................................20 Section 3.02. Voluntary Reduction of Commitments.............................................21 Section 3.03. Mandatory Adjustments of Commitments, Etc......................................21 SECTION 4. PREPAYMENTS; PAYMENTS..............................................................22
i Section 4.01. Voluntary Prepayments..........................................................22 Section 4.02. Mandatory Prepayments and Repayments...........................................23 Section 4.02.01. Mandatory Prepayments and Repayments..................................23 Section 4.02.02. Application...........................................................26 Section 4.02.03. Waiver of Certain Mandatory Repayments by B Lenders and C Lenders...............................................27 Section 4.03. Method and Place of Payment....................................................28 Section 4.04. Net Payments...................................................................28 Section 4.05. Application After Event of Default.............................................30 SECTION 5. CONDITIONS PRECEDENT...............................................................31 Section 5.01. Conditions to Closing Date and Credit Events on the Closing Date...................................................................31 Section 5.02. Conditions to Each Credit Event................................................37 Section 5.03. Determinations under Section 5.01..............................................38 SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.........................................38 Section 6.01. Corporate Status...............................................................39 Section 6.02. Corporate Power and Authority..................................................39 Section 6.03. No Violation...................................................................39 Section 6.04. Governmental Approvals.........................................................39 Section 6.05. Financial Statements; Financial Condition; Undisclosed Liabilities, etc...............................................................40 Section 6.06. Litigation.....................................................................41 Section 6.07. True and Complete Disclosure...................................................41 Section 6.08. Use of Proceeds; Margin Regulations............................................42 Section 6.09. Tax Returns and Payments.......................................................42 Section 6.10. Compliance with ERISA..........................................................43 Section 6.11. Subsidiaries...................................................................43 Section 6.12. Compliance with Statutes, etc..................................................43 Section 6.13. Environmental Matters..........................................................44 Section 6.14. Investment Company Act.........................................................44 Section 6.15. Public Utility Holding Company Act.............................................44 Section 6.16. Patents, Licenses, Franchises and Formulas.....................................45 Section 6.17. Properties.....................................................................45 Section 6.18. Labor Relations................................................................45 Section 6.19. Indebtedness...................................................................45 Section 6.20. Security Interests.............................................................45 Section 6.21. Representations and Warranties in Other Documents..............................46
ii Section 6.22. Transaction....................................................................46 Section 6.23. Capitalization.................................................................46 Section 6.24. Senior Subordinated Notes......................................................47 SECTION 7. AFFIRMATIVE COVENANTS..............................................................47 Section 7.01. Information Covenants..........................................................47 Section 7.02. Books, Records and Inspections.................................................50 Section 7.03. Maintenance of Property, Insurance, Environmental Matters, etc...................................................................51 Section 7.04. Corporate Franchises...........................................................51 Section 7.05. Compliance with Statutes, etc..................................................52 Section 7.06. ERISA..........................................................................52 Section 7.07. Performance of Obligations.....................................................53 Section 7.08. Payment of Taxes...............................................................53 Section 7.09. Collateral, Additional Security; Further Assurances............................53 Section 7.10. Interest Rate Protection.......................................................57 Section 7.11. Foreign Subsidiaries Security..................................................57 SECTION 8. NEGATIVE COVENANTS.................................................................58 Section 8.01. Liens..........................................................................58 Section 8.02. Consolidation, Merger, Sale of Assets, etc.....................................60 Section 8.03. Dividends and Payment under Related Party Agreement............................61 Section 8.04. Indebtedness...................................................................61 Section 8.05. Advances, Investments and Loans................................................62 Section 8.06. Transactions with Affiliates...................................................63 Section 8.07. Capital Expenditures...........................................................64 Section 8.08. Interest Coverage Ratio........................................................65 Section 8.09. Leverage Ratio.................................................................65 Section 8.10. Fixed Charge Coverage Ratio....................................................66 Section 8.11. Limitation on Voluntary Payments and Modifications of Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; Issuances of Capital Stock; etc................................................66 Section 8.12. Limitation on Restrictions on Subsidiary Dividends and Other Distributions............................................................67 Section 8.13. Limitation on Issuances of Capital Stock by Subsidiaries.......................67 Section 8.14. Limitation on the Creation of Subsidiaries.....................................67 Section 8.15. Maintenance of Corporate Separateness; etc..................................... Section 8.16. Business.......................................................................68
iii SECTION 9. EVENTS OF DEFAULT..................................................................68 Section 9.01. Payments.......................................................................68 Section 9.02. Representations, etc...........................................................68 Section 9.03. Covenants......................................................................68 Section 9.04. Default under Other Agreements.................................................69 Section 9.05. Bankruptcy, etc................................................................69 Section 9.06. ERISA..........................................................................69 Section 9.07. Security Documents.............................................................70 Section 9.08. Guaranties.....................................................................70 Section 9.09. Judgments......................................................................70 Section 9.10. Change in Control..............................................................70 Section 9.11. Matters Regarding the Permanent Injunction.....................................70 SECTION 10. DEFINITIONS AND ACCOUNTING TERMS...................................................71 Section 10.01. Defined Terms..................................................................71 Section 10.02. Principles of Construction.....................................................99 SECTION 11. THE AGENT..........................................................................99 Section 11.01. Appointment....................................................................99 Section 11.02. Nature of Duties..............................................................100 Section 11.03. Lack of Reliance on the Agent.................................................100 Section 11.04. Certain Rights of the Agent...................................................100 Section 11.05. Reliance......................................................................101 Section 11.06. Indemnification...............................................................101 Section 11.07. The Agents in Their Individual Capacity.......................................101 Section 11.08. Holders.......................................................................101 Section 11.09. Resignation or Removal of the Agent...........................................102 Section 11.10. Release of Collateral.........................................................102 SECTION 12. MISCELLANEOUS.....................................................................102 Section 12.01. Payment of Expenses, Etc......................................................102 Section 12.02. Right of Setoff...............................................................104 Section 12.03. Notices.......................................................................104 Section 12.04. Benefit of Agreement, Etc.....................................................105 Section 12.05. No Waiver; Remedies Cumulative................................................107 Section 12.06. Payments Pro Rata.............................................................107 Section 12.07. Calculations; Computations....................................................108
iv Section 12.08. Governing Law; Submission to Jurisdiction; Venture; Waiver of Jury Trial..........................................................108 Section 12.09. Counterparts..................................................................110 Section 12.10. Effectiveness.................................................................110 Section 12.11. Headings Descriptive..........................................................110 Section 12.12. Amendment or Waiver; etc......................................................110 Section 12.13. Survival......................................................................112 Section 12.14. Domicile of Loans.............................................................112 Section 12.15. Confidentiality...............................................................112 Section 12.16. Register......................................................................113 Section 12.17. Judgment Currency.............................................................113 Section 12.18. Integration...................................................................114 Signature Page..................................................................................115
v Annex I Commitment Annex II Pricing Grid Annex III Credit Party Address Exhibit A Notice of Borrowing Exhibit B-1 A Term Note Exhibit B-2 B Term Note Exhibit B-3 C Term Note Exhibit B-4 Revolving Note Exhibit B-5 Swingline Note Exhibit C Notice of Conversion/Continuation Exhibit D Letter of Credit Request Exhibit E Section 4.04(b)(ii) Certificate Exhibit F Opinion Exhibit G Certificate Exhibit H Holdings Guaranty Exhibit I Subsidiary Guaranty Exhibit J Holdings Pledge Agreement Exhibit K Borrower and Subsidiary Pledge Agreement Exhibit L Security Agreement Exhibit M Subordination Agreement Exhibit N Assignment and Assumption Agreement Exhibit O Surveyor's Certificate Schedule 2.01 Existing Letters of Credit Schedule 6.03 Consents Not Obtained Schedule 6.05 Material Changes Schedule 6.06 Litigation Schedule 6.09 Taxes Schedule 6.10 ERISA Schedule 6.11 Subsidiary Schedule 6.13 Environmental Matters Schedule 6.17 Properties Schedule 6.19 Existing Indebtedness Schedule 6.23 Capitalization Schedule 8.01 Existing Liens Schedule 8.05 Joint Venture vi CREDIT AGREEMENT, dated as of February 19, 1998, among E-P ACQUISITION, INC., a Delaware corporation (as further defined herein, the "Borrower"), the lenders from time to time party hereto (each a "Lender" and, collectively, the "Lenders"), ABN AMRO BANK N.V., as Agent (in such capacity, the "Agent"), PNC BANK, NATIONAL ASSOCIATION, as Documentation Agent (in such capacity, the "Documentation Agent") and DLJ CAPITAL FUNDING, INC., as Syndication Agent (in such capacity, the "Syndication Agent"). All capitalized terms used herein shall have the meanings provided in Section 10. WITNESSETH: WHEREAS, the Borrower has requested the Lenders to provide certain term loan facilities and a revolving credit facility (including a sublimit for letters of credit and a sublimit for swingline loans); and WHEREAS, the credit facilities shall be used (i) to effectuate the merger of the Borrower with and into Eagle-Picher Industries, Inc., an Ohio corporation ("EPII"), including the repayment of certain existing debt of EPII, (ii) to pay the transaction costs of such merger and (iii) for general corporate purposes, all as hereinafter more fully set forth; and WHEREAS, the Lenders are willing to provide such credit upon the terms and conditions hereinafter set forth; NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound thereby, covenant and agree as follows: SECTION 1. AMOUNT AND TERMS OF CREDIT. Section 1.01. The Commitments. Section 1.01.01. Term Loans and Revolving Credit. Subject to and upon the terms and conditions herein set forth, each Lender severally agrees to make a loan or loans to the Borrower which loans shall be drawn, to the extent such Lender has a commitment under such Facility, under the A Term Loan Facility, the B Term Loan Facility, the C Term Loan Facility and the Revolving Credit Facility, as set forth below: (a) Each loan under the A Term Loan Facility (each an "A Term Loan" and, collectively, the "A Term Loans") (i) shall be made pursuant to a drawing on the Closing Date, (ii) shall be denominated in U.S. Dollars, (iii) except as hereinafter provided, shall be made as Base Rate Loans or Eurodollar Rate Loans and may, at the option of the Borrower, be maintained as and/or converted into Base Rate Loans or Eurodollar Rate Loans, provided that all A Term Loans made by all Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of A Term Loans of the same Type and (iv) shall not exceed for any Lender at the time of incurrence thereof that aggregate principal amount which equals the A Term Loan Commitment, if any, of such Lender at such time. Once repaid, A Term Loans may not be reborrowed. The aggregate amount of the A Term Loans shall not exceed $100,000,000. (b) Each loan under the B Term Loan Facility (each a "B Term Loan" and, collectively, the "B Term Loans") (i) shall be made pursuant to a drawing on the Closing Date, (ii) shall be denominated in U.S. Dollars, (iii) except as hereinafter provided, shall be made as Base Rate Loans or Eurodollar Rate Loans and may, at the option of the Borrower, be maintained as and/or converted into Base Rate Loans or Eurodollar Rate Loans, provided that all B Term Loans made by all Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of B Term Loans of the same Type and (iv) shall not exceed for any Lender at the time of incurrence thereof that aggregate principal amount which equals the B Term Loan Commitment, if any, of such Lender at such time. Once repaid, B Term Loans may not be reborrowed. The aggregate amount of the B Term Loans shall not exceed $50,000,000. (c) Each loan under the C Term Loan Facility (each a "C Term Loan" and, collectively, the "C Term Loans") (i) shall be made pursuant to a drawing on the Closing Date, (ii) shall be denominated in U.S. Dollars, (iii) except as hereinafter provided, shall be made as Base Rate Loans or Eurodollar Rate Loans and may, at the option of the Borrower, be maintained as and/or converted into Base Rate Loans or Eurodollar Rate Loans, provided that all C Term Loans made by all Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of C Term Loans of the same Type and (iv) shall not exceed for any Lender at the time of incurrence thereof that aggregate principal amount which equals the C Term Loan Commitment, if any, of such Lender at such time. Once repaid, C Term Loans may not be reborrowed. The aggregate amount of the C Term Loans shall not exceed $75,000,000. (d) Each loan under the Revolving Credit Facility (each a "Revolving Loan" and, collectively, the "Revolving Loans") (i) shall be made at any time and from time to time on or after the Closing Date and prior to the Revolving Loan Maturity Date, (ii) shall be denominated in U.S. Dollars, (iii) except as hereinafter provided, may, at the option of the Borrower, be incurred and maintained as and/or converted into Base Rate Loans or Eurodollar Rate Loans, provided that all Revolving Loans made as part of the same Borrowing shall, unless otherwise specifically provided herein, consist of Revolving Loans of the same Type, (iv) may be repaid and reborrowed in accordance with the provisions hereof and (v) shall not exceed for any Revolving Lender at any time outstanding that aggregate principal amount which equals such Revolving Lender's Revolving Percentage, if any, of the Total Unutilized Revolving Credit Commitment at such time. The Total Revolving Credit Commitment on the Closing Date shall be $160,000,000. 2 Section 1.01.02. Swingline Loans. Subject to and upon the terms and conditions set forth herein, the Swingline Lender agrees to make, at any time and from time to time on or after the Closing Date and prior to the Swingline Expiry Date, a loan or loans (each, a "Swingline Loan" and, collectively, the "Swingline Loans") to the Borrower, which Swingline Loans (i) shall be made and maintained as Base Rate Loans, (ii) shall be denominated in U.S. Dollars, (iii) may be repaid and reborrowed in accordance with the provisions hereof, (iv) shall not exceed in aggregate principal amount at any time outstanding that aggregate principal amount which, when added to the sum of (I) the aggregate principal amount of all Revolving Loans then outstanding and (II) the aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid Drawings relating to Letters of Credit which are repaid with the proceeds of, and simultaneously with the incurrence of, the respective incurrence of such Swingline Loans) at such time, equals the Total Revolving Credit Commitment at such time and (v) shall not exceed the Maximum Swingline Amount. The Swingline Lender will not make a Swingline Loan after it has received written notice from the Required Lenders stating that a Default or an Event of Default exists and specifically requesting that the Swingline Lender not make any Swingline Loans, provided that the Swingline Lender may continue making Swingline Loans at such time thereafter as the respective Default or Event of Default has been cured or waived in accordance with the requirements of this Agreement or the Required Lenders have withdrawn the written notice described above in this sentence. In addition, the Swingline Lender shall not be obligated to make any Swingline Loan at a time when a Lender Default exists unless the Swingline Lender shall have entered into arrangements satisfactory to it and the Borrower to eliminate the Swingline Lender's risk with respect to the Defaulting Lender's participation in such Swingline Loan, including by cash collateralizing such Defaulting Lender's Revolving Percentage of the outstanding Swingline Loans. Section 1.01.03. Mandatory Borrowing. On any Business Day, the Swingline Lender may, in its sole discretion, give notice to the Revolving Lenders that its outstanding Swingline Loans shall be funded with a Borrowing of Revolving Loans (provided that such notice shall be deemed to have been automatically given upon the occurrence of a Default or an Event of Default under Section 9.05 or upon the exercise of any of the remedies provided in the last paragraph of Section 9), in which case a Borrowing of Revolving Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory Borrowing") shall be made on the immediately succeeding Business Day by all Revolving Lenders (without giving effect to any reductions thereto pursuant to the last paragraph of Section 9) pro rata based on each Revolving Lender's Revolving Percentage (determined before giving effect to any termination of the Commitments pursuant to the last paragraph of Section 9), and the proceeds thereof shall be applied directly to the Swingline Lender to repay the Swingline Lender for such outstanding Swingline Loans. Each Revolving Lender hereby irrevocably agrees to make Base Rate Loans upon one Business Day's notice pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified in writing by the Swingline Lender notwithstanding (i) the amount of the Mandatory Borrowing may not comply with the Minimum Borrowing Amount otherwise required hereunder, (ii) any condition specified in Section 5 may not then be satisfied, (iii) the existence of any Default or Event of Default, (iv) the date of such Mandatory Borrowing and (v) the amount of the Total Revolving Credit Commitment at such time. In 3 the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code with respect to the Borrower), then each Revolving Lender (other than the Swingline Lender) hereby agrees that it shall forthwith purchase (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase from the Swingline Lender) (without recourse or warranty) such participations in the outstanding Swingline Loans as shall be necessary to cause the Revolving Lenders to share in such Swingline Loans ratably based upon their respective Revolving Percentages (determined before giving effect to any termination of the Commitments pursuant to the last paragraph of Section 9), provided that (x) all interest payable on the Swingline Loans shall be for the account of the Swingline Lender until the date the respective participation is required to be purchased and, to the extent attributable to the purchased participation, shall be payable to the participant from and after such date and (y) at the time any purchase of participations pursuant to this sentence is actually made, the purchasing Lender shall be required to pay the Swingline Lender interest on the principal amount of participation purchased for each day from and including the day upon which the Mandatory Borrowing would otherwise have occurred to but excluding the date of payment for such participation, at the overnight Federal Funds Rate for the first three days and at the rate otherwise applicable to Revolving Loans maintained as Base Rate Loans for each day thereafter. Section 1.02. Minimum Borrowing Amount, Etc. The aggregate principal amount of each Borrowing under a Facility shall not be less than the Minimum Borrowing Amount for such Facility, provided that Mandatory Borrowings shall be made in the amounts required by Section 1.01.03. More than one Borrowing may occur on the same date, but at no time shall there be an outstanding more than fifteen Borrowings of Eurodollar Rate Loans. Section 1.03. Notice of Borrowing. (a) Whenever the Borrower desires to incur Loans under any Facility (excluding Revolving Loans incurred pursuant to a Mandatory Borrowing and Swingline Loans), it shall give the Agent at its Notice Office at least (x) three Business Day's prior written notice (or telephonic notice promptly confirmed in writing) of each Eurodollar Rate Loan to be made hereunder and (y) one Business Day's prior written notice (or telephonic notice promptly confirmed in writing) of each Base Rate Loan to be made hereunder, provided that any such notice shall be deemed to have been given on a certain day only if actually received by the Agent before 11:00 A.M. (New York time) on such day. Each such notice (each a "Notice of Borrowing"), except as otherwise expressly provided in Section 1.10, shall be irrevocable, and, in the case of each written notice and each confirmation of telephonic notice, shall be in the form of Exhibit A, appropriately completed, to specify (i) the Facility pursuant to which such Borrowing is to be made, (ii) the date of such Borrowing (which shall be a Business Day), (iii) the aggregate principal amount of the Loans to be made pursuant to such Borrowing, (iv) whether the Loans to be made pursuant to such Borrowing are to be initially maintained as Base Rate Loans or, to the extent permitted hereunder, Eurodollar Rate Loans and (v) in the case of Eurodollar Rate Loans, the initial Interest Period to be applicable thereto. The Agent shall promptly give each Lender notice of (i) such proposed Borrowing, (ii) such 4 Lender's proportionate share thereof, if any, and (iii) the other matters required by the immediately preceding sentence to be specified in the Notice of Borrowing. (b) (i) Whenever the Borrower desires to incur Swingline Loans hereunder, it shall give the Swingline Lender no later than 11:00 A.M. (New York time) on the day such Swingline Loan is to be made, written notice or telephonic notice promptly confirmed in writing of each Swingline Loan to be made hereunder. Each such notice shall be irrevocable and specify in each case (i) the date of Borrowing (which shall be a Business Day) and (ii) the aggregate principal amount of the Swingline Loans to be made pursuant to such Borrowing. (ii) Mandatory Borrowings shall be made upon the notice specified in Section 1.01.03, with the Borrower irrevocably agreeing, by its incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set forth in Section 1.01.03. (c) Without, in any way, limiting the obligation of the Borrower to confirm in writing any telephonic notice permitted to be given hereunder, the Agent or the Swingline Lender (in the case of a Borrowing of Swingline Loans) or the Letter of Credit Issuer (in the case of the issuance of Letters of Credit), as the case may be, may act without liability upon the basis of such telephonic notice, believed by the Agent, the Swingline Lender or the Letter of Credit Issuer, as the case may be, in good faith to be from an Authorized Officer of the Borrower (or from any other officer of the Borrower designated in writing from time to time by an Authorized Officer of the Borrower as a person entitled to give telephonic notices hereunder), prior to receipt of written confirmation. In each such case, the Borrower hereby waives the right to dispute the Agent's, the Swingline Lender's or the Letter of Credit Issuer's record of the terms of any such telephonic notice to the extent such record is made without gross negligence or willful misconduct of the Agent, the Swingline Lender or the Letter of Credit Issuer, as the case may be. Section 1.04. Disbursement of Funds. No later than 1:00 P.M. (New York time) on the date specified in each Notice of Borrowing (or (x) in the case of Swingline Loans, no later than 2:00 P.M. (New York time) on the date specified in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, no later than 12:00 Noon (New York time) on the date specified in Section 1.01.03), each Lender with a Commitment under the respective Facility will make available through such Lender's applicable lending office its pro rata portion, if any, of each Borrowing requested to be made on such date to the Agent (or, in the case of Swingline Loans, the Swingline Lender shall make available the full amount thereof), in U.S. Dollars and in immediately available funds at the Agent's Payment Office. The Agent will make available to the Borrower at the Agent's Payment Office the aggregate of the amounts so made available prior to 1:00 P.M. (New York time) on such day, to the extent of funds actually received by the Agent prior to 12:00 Noon (New York time). Unless the Agent shall have been notified by any Lender prior to the date of any Borrowing that such Lender does not intend to make available to the Agent such Lender's portion of any Borrowing to be made on such date, the Agent may assume that such Lender has made such amount available to the Agent on such date of Borrowing and the Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such corresponding 5 amount is not in fact made available to the Agent by such Lender, the Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent shall promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Agent. The Agent shall also be entitled to recover on demand from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Borrower until the date such corresponding amount is recovered by the Agent, at a rate per annum equal to (i) if recovered from such Lender, the overnight Federal Funds Rate and (ii) if recovered from the Borrower, the rate of interest applicable to the respective Borrowing as determined in accordance with the appropriate clause of Section 1.08. Nothing in this Section 1.04 shall be deemed to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder. Section 1.05. Notes. (a) The Borrower's obligation to pay the principal of, and interest on, all Loans made by each Lender to the Borrower shall be evidenced (i) if A Term Loans, by a promissory note duly executed and delivered to such Lender by the Borrower in the form of Exhibit B-1 with blanks appropriately completed in conformity herewith (each, an "A-Term Note" and, collectively, the "A-Term Notes"), (ii) if B Term Loans, by a promissory note duly executed and delivered to such Lender by the Borrower in the form of Exhibit B-2 with blanks appropriately completed in conformity herewith (each, a "B-Term Note" and collectively, the "B-Term Notes"), (iii) if C Term Loans, by a promissory note duly executed and delivered to such Lender by the Borrower in the form of Exhibit B-3 with blanks appropriately completed in conformity herewith (each, a "C-Term Note" and, collectively, the "C-Term Notes"), (iv) if Revolving Loans, by a promissory note duly executed and delivered to such Lender by the Borrower in the form of Exhibit B-4 with blanks appropriately completed in conformity herewith (each, a "Revolving Note" and, collectively, the "Revolving Notes") and (v) if Swingline Loans, by a promissory note duly executed and delivered to the Swingline Lender by the Borrower in the form of Exhibit B-5 with blanks appropriately completed in conformity herewith (the "Swingline Note"). (b) The A-Term Note issued to each Lender shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Closing Date, (iii) be in a stated principal amount equal to the A Term Loan Commitment of such Lender and be payable in the principal amount of the outstanding A Term Loans evidenced thereby, (iv) mature on the A Term Loan Maturity Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Rate Loans, as the case may be, evidenced thereby and (vi) be entitled to the benefits of this Agreement and the other Credit Documents. (c) The B-Term Note issued to each Lender shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Closing Date, (iii) be in a stated principal amount equal to the B Term Loan Commitment of such Lender and be payable in the principal amount of the outstanding B Term Loans evidenced thereby, (iv) mature on the B Term Loan Maturity Date, (v) bear interest as provided in the 6 appropriate clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Rate Loans, as the case may be, evidenced thereby and (vi) be entitled to the benefits of this Agreement and the other Credit Documents. (d) The C-Term Note issued to each Lender shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Closing Date, (iii) be in a stated principal amount equal to the C Term Loan Commitment of such Lender and be payable in the principal amount of the outstanding C Term Loans evidenced thereby, (iv) mature on the C Term Loan Maturity Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Rate Loans, as the case may be, evidenced thereby and (vi) be entitled to the benefits of this Agreement and the other Credit Documents. (e) The Revolving Note issued to each Lender shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Closing Date, (iii) be in a stated principal amount equal to the Revolving Credit Commitment of such Lender and be payable in the principal amount of the outstanding Revolving Loans evidenced thereby, (iv) mature on the Revolving Loan Maturity Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Rate Loans, as the case may be, evidenced thereby and (vi) be entitled to the benefits of this Agreement and the other Credit Documents. (f) The Swingline Note issued to the Swingline Lender shall (i) be executed by the Borrower, (ii) be payable to the Swingline Lender or its registered assigns and be dated the Closing Date, (iii) be in a stated principal amount equal to the Maximum Swingline Amount and be payable in the principal amount of the outstanding Swingline Loans evidenced thereby, (iv) mature on the Swingline Expiry Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in respect of the Base Rate Loans evidenced thereby, and (vi) be entitled to the benefits of this Agreement and the other Credit Documents. (g) Each Lender will note on its internal records the amount of each Loan made by it and each payment and conversion in respect thereof and will prior to any transfer of any of its Notes endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation shall not affect the Borrower's obligations in respect of such Loans. Section 1.06. Conversions. The Borrower shall have the option to convert on any Business Day occurring after the Closing Date all or a portion equal to at least the applicable Minimum Borrowing Amount, of the outstanding principal amount of the Loans (other than Swingline Loans) made to the Borrower pursuant to one or more Borrowings of one or more Types of Loans under a single Facility into a Borrowing or Borrowings of another Type of Loans under such Facility, provided that (i) except as otherwise provided in Section 1.10(b), Eurodollar Rate Loans may be converted into Base Rate Loans only on the last day of an Interest Period applicable thereto and no such partial conversion of Eurodollar Rate Loans shall reduce the outstanding principal amount of Eurodollar Rate Loans made pursuant to any single Borrowing to less than the Minimum Borrowing Amount applicable 7 thereto, (ii) Base Rate Loans may only be converted into Eurodollar Rate Loans if no Default or Event of Default is in existence on the date of the conversion and (iii) no conversion pursuant to this Section 1.06 shall result in a greater number of Borrowings than is permitted under Section 1.02. Swingline Loans may not be converted pursuant to this Section 1.06. Each such conversion shall be effected by the Borrower giving the Agent at its Notice Office prior to 11:00 A.M. (New York time) at least three Business Days' (two Business Days' in the case of conversions into Base Rate Loans) prior written notice in the form of Exhibit C (or telephone notice promptly confirmed in writing) (each a "Notice of Conversion") specifying the Loans to be so converted, the Borrowing(s) pursuant to which such Loans were made, the date of such conversion (which shall be a Business Day) and, if to be converted into Eurodollar Rate Loans, the Interest Period to be initially applicable thereto. Each Notice of Conversion, except as otherwise expressly provided in Section 1.10, shall be irrevocable. The Agent shall give each Lender prompt notice of any such proposed conversion affecting any of its Loans. Section 1.07. Pro Rata Borrowings. All Borrowings of Loans (other than Swingline Loans) under this Agreement with respect to a Facility shall be incurred from the Lenders pro rata on the basis of their then respective Commitments. It is understood that no Lender shall be responsible for any default by any other Lender of its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans to be made by it hereunder regardless of the failure of any other Lender to fulfill its commitments. Section 1.08. Interest. (a) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Base Rate Loan made to the Borrower from the date the proceeds thereof are made available to the Borrower until the earlier of (i) the maturity (whether by acceleration or otherwise) of such Base Rate Loan and (ii) the conversion of such Base Rate Loan into a Eurodollar Rate Loan pursuant to Section 1.06 at a rate per annum which shall be equal to the sum of the Applicable Base Rate Margin plus the Base Rate in effect from time to time. (b) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Eurodollar Rate Loan made to the Borrower from the date the proceeds thereof are made available to the Borrower until the earlier of (i) the maturity (whether by acceleration or otherwise) of such Eurodollar Rate Loan and (ii) the conversion of such Eurodollar Rate Loan into a Base Rate Loan pursuant to Section 1.06 at a rate per annum which shall, during each Interest Period applicable thereto, be equal to the sum of the Applicable Eurodollar Rate Margin plus the Eurodollar Rate for such Interest Period. (c) Overdue principal and, to the extent permitted by law, overdue interest in respect of each Loan and any other overdue amount payable hereunder (including, to the extent legally permitted, overdue interest) shall bear interest at a rate per annum equal to (i) in the case of overdue principal of any Loan, the rate which is 2% in excess of the rate then borne by such Loan and, after the expiration of the Interest Period, if any, for such Loan, 2% plus 8 the Applicable Base Rate Margin plus the Base Rate from time to time in effect and (ii) in the case of overdue interest or any other overdue amount, the rate equal to 2% plus the Applicable Base Rate Margin plus the Base Rate from time to time in effect. Interest which accrues under this Section 1.08(c) shall be payable on demand. (d) Accrued (and theretofore unpaid) interest shall be payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last Business Day of each February, May, August and November, (ii) in respect of each Eurodollar Rate Loan, (x) on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on each date occurring at three month intervals after the first day of such Interest Period and (y) the date of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10(b), as applicable (on the amount converted), and (iii) in respect of each Loan, on any repayment or prepayment (on the amount repaid or prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. (e) On each Interest Determination Date, the Agent shall determine the interest rate for the Eurodollar Rate Loans for the Interest Period to be applicable to such Eurodollar Rate Loans and shall promptly notify the Borrower and the Lenders thereof. Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto. Section 1.09. Interest Periods. At the time the Borrower gives any Notice of Borrowing or Notice of Conversion in respect of the making of, or conversion into, any Eurodollar Rate Loan (in the case of the initial Interest Period applicable thereto) or by giving the Agent written irrevocable notice (or telephonic notice promptly confirmed in writing) thereof by 11:00 A.M. (New York time), on the third Business Day prior to the expiration of an Interest Period applicable to such Eurodollar Rate Loan (in the case of subsequent Interest Periods), it shall have the right to elect the interest period (each an "Interest Period") applicable to a Borrowing of such Eurodollar Rate Loans, which Interest Period shall, at the option of the Borrower, be a one, two, three or six-month or, if available (as determined by the Agent), twelve-month period provided that: (i) all Eurodollar Rate Loans comprising a Borrowing shall at all times have the same Interest Period; (ii) the initial Interest Period for any Borrowing of Eurodollar Rate Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of Base Rate Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires; (iii) if any Interest Period begins on a day for which there is not numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month; (iv) if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, however, that if any Interest Period would otherwise expire on a day which 9 is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (v) no Interest Period may be selected at any time when a Default or an Event of Default is then in existence; (vi) no Interest Period for a Borrowing under a Facility may be selected if it would extend beyond the respective Maturity Date for such Facility; and (vii) no Interest Period with respect to any Borrowing of Term Loans shall extend beyond any date upon which a scheduled repayment of such Term Loans is required to be made under Section 4.02.01(b)(i), (ii) or (iii), as the case may be, if, after giving effect to the selection of such Interest Period, the aggregate principal amount of such Term Loans maintained as Eurodollar Loans with Interest Periods ending after such date of mandatory repayment would exceed the aggregate principal amount of such Term Loans permitted to be outstanding after such mandatory prepayment. If upon the expiration of any Interest Period, the Borrower has failed to select (or is not permitted to select) a new Interest Period to be applicable to such Borrowing as provided above, the Borrower shall be deemed to have selected to convert such Borrowing into a Borrowing of Base Rate Loans effective as of the expiration date of such current Interest Period. Section 1.10. Increased Costs, Illegality, Etc. (a) In the event that any Lender shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto but, with respect to clause (i) below, may be made only by the Agent): (i) on any Interest Determination Date that, by reason of any changes arising after the date of this Agreement affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate; or (ii) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Eurodollar Rate Loan because of (x) any change since the date of this Agreement in any applicable law or governmental rule, regulation, guideline, order or request (whether or not having the force of law) or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, guideline, order or request such as, for example, but not limited to, (A) a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Eurodollar Rate or (B) a change in the basis of taxation of payments to any Lender of the principal of or interest on such Eurodollar Rate Loan or any other amounts payable hereunder (except for changes in 10 the rate of tax on, or determined by reference to, the net income or profits of such Lender pursuant to the laws of the jurisdiction in which such Lender is organized or the jurisdiction in which such Lender's principal office or applicable lending office is located or any subdivision thereof or therein) and/or (y) any other circumstances affecting such Lender or the interbank Eurodollar market or the position of such Lender in such market; or (iii) at any time that the making or continuance of any Eurodollar Rate Loan has become (x) unlawful by compliance by such Lender with any law, governmental rule, regulation, guideline or order, (y) impossible by compliance by such Lender with any governmental request (whether or not having the force of law) or (z) has become impracticable as a result of a contingency occurring after the date of this Agreement which materially and adversely affects the interbank Eurodollar market; then, and in any such event, such Lender (or the Agent, in the case of clause (i) above) shall promptly give notice (by telephone confirmed in writing) to the Borrower and, except in the case of clause (i) above, to the Agent of such determination (which notice the Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, Eurodollar Rate Loans shall no longer be available until such time as the Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower with respect to such affected Eurodollar Rate Loans which have not yet been incurred (including by way of conversion) shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, within 15 days of receipt of the notice referred to below, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as shall be required to compensate such Lender for such increased costs or reductions in amounts received or receivable hereunder (a written notice as to the additional amounts owed to such Lender, setting forth in reasonable detail the basis for the calculation thereof, submitted to the Borrower by such Lender shall, absent manifest error, be final and conclusive and binding upon all parties hereto) and (z) in the case of the clause (iii) above, the Borrower shall take one of the actions specified in Section 1.10(b) as promptly as possible and, in any event, within the time period required by law. (b) At any time that any Eurodollar Rate Loan is affected by the circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and in the case of a Eurodollar Rate Loan affected pursuant to Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Rate Loan is then being made initially or pursuant to a conversion, cancel the respective Borrowing by giving the Agent irrevocable telephonic notice (confirmed in writing) thereof on the same date that the Borrower was notified by the affected Lender or the Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar Rate Loan is then outstanding, upon at least three Business Days' written notice to the Agent, require the affected Lender to convert such Eurodollar Rate Loan into a Base Rate Loan (which conversion, in the case of the circumstances described in Section 1.10(a)(iii), shall occur no later than the last day of the Interest Period then applicable to such Eurodollar Rate Loan (or 11 such earlier date as shall be required by applicable law)), provided that, if more than one Lender is similarly affected at any time, then all similarly affected Lenders must be treated the same pursuant to this Section 1.10(b). (c) If any Lender shall have determined that after the date hereof, the adoption or effectiveness of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy issued after the date hereof (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's or such other corporation's capital or assets as a consequence of such Lender's Commitments or obligations hereunder to a level below that which such Lender or such other corporation could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's or such other corporation's policies with respect to capital adequacy), then from time to time, upon written demand by such Lender (with a copy to the Agent), accompanied by the notice referred to in the last sentence of this clause (c), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such other corporation for such reduction. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this Section 1.10(c), will give prompt written notice thereof to the Borrower, which notice shall set forth the basis of the calculation of such additional amounts, although the failure to give any such notice shall not release or diminish the Borrower's obligations to pay additional amounts pursuant to this Section 1.10(c) upon the subsequent receipt of such notice. Section 1.11. Compensation. The Borrower shall compensate each Lender, upon its written request (which request shall set forth the basis for requesting such compensation), for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Eurodollar Rate Loans but excluding any loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender or the Agent) a Borrowing of, or conversion from or into, Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10); (ii) if any repayment (including any repayment made pursuant to Section 4.01 or 4.02 or as a result of an acceleration of the Loans pursuant to Section 9) or conversion of any of its Eurodollar Rate Loans occurs on a date which is not the last day of an Interest Period with respect thereto; (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any other default by the Borrower to repay its Loans when required by the terms of this Agreement or the Notes held by such Lender or (y) any election made pursuant to Section 1.10(b). Calculation of all amounts payable to a Lender under this Section 1.11 shall be made as though that Lender had actually funded its relevant Eurodollar Rate Loan through the purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of that Loan, having a maturity 12 comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumption shall be utilized only for the calculation of amounts payable under this Section 1.11. It is further understood and agreed that if any repayment of Eurodollar Rate Loans pursuant to Section 4.01 or 4.02 or any conversion of Eurodollar Rate Loans pursuant to Section 1.06 in either case occurs on a date which is not the last day of any Interest Period applicable thereto, such repayment or conversion shall be accompanied by any amounts owing to any Lender pursuant to this Section 1.11. Section 1.12. Change of Lending Office. Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans or Letters of Credit affected by such event, provided that such designation is made on such terms that, in the sole judgment of such Lender, such Lender and its lending office suffer no economic, legal, regulatory or other disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 1.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Sections 1.10, 2.06 and 4.04. Section 1.13. Replacement of Lenders. (a)(i) If any Lender becomes a Defaulting Lender, (ii) upon the occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to any Lender which results in such Lender charging to the Borrower increased costs in excess of those being generally charged to the Borrower by the other Lenders or (iii) as and to the extent provided in Section 12.12(b), the Borrower shall have the right and in the case of clause (a)(i) above, the Agent shall have the right, in accordance with the requirements of Section 12.04(b), if, in the case of a replacement by the Borrower, no Default or Event of Default will exist after giving effect to such replacement, to replace such Lender (the "Replaced Lender") with one or more other Eligible Transferee or Transferees (collectively, the "Replacement Lender") acceptable to the Agent and the Letter of Credit Issuers (such acceptability to be communicated to the Borrower within 15 days), provided that (i) at the time of any replacement pursuant to this Section 1.13, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to said Section 12.04(b) to be paid by the Replacement Lender) pursuant to which the Replacement Lender shall acquire all of the Commitments and all outstanding Loans of, and the participations in Letters of Credit and Swingline Loans by, the Replaced Lender and, in connection therewith, shall pay to (x) the Replaced Lender in respect thereof an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender and an amount equal to all Unpaid Drawings that have been funded by (and not reimbursed to) such Replaced Lender, together with all then unpaid interest with respect thereto at such time, and (B) an amount equal to all accrued, but theretofore unpaid, Fees owing to the Replaced Lender 13 pursuant to Section 3.01, (y) the Letter of Credit Issuer an amount equal to such Replaced Lender's Revolving Percentage of any Unpaid Drawing (which at such time remains an Unpaid Drawing) to the extent such amount was not theretofore funded by such Replaced Lender and (z) the Swingline Lender an amount equal to such Replaced Lender's Revolving Percentage of any Mandatory Borrowing to the extent such amount was not theretofore funded by such Replaced Lender, and (ii) all obligations of the Borrower owing to the Replaced Lender (other than those specifically described in clause (i) above in respect of which the assignment purchase price has been, or is concurrently being, paid) shall be paid in full by the Borrower to such Replaced Lender concurrently with such replacement. (b) Upon the execution of the respective Assignment and Assumption Agreements, the payment of the amounts referred to in clauses (i) and (ii) of proviso of Section 1.13(a), recordation of the assignment on the Register by the Agent pursuant to Section 12.16 and the delivery to the Replacement Lender of the appropriate Note or Notes executed by the Borrower, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.01 and 12.06), which shall survive as to such Replaced Lender. SECTION 2. LETTERS OF CREDIT. Section 2.01. Letters of Credit. (a) Subject to and upon the terms and conditions set forth herein, the Borrower may request that the Letter of Credit Issuer issue, at any time and from time to time on and after the Closing Date and prior to the fifth Business Day (or the 30th day in the case of trade Letters of Credit) preceding the Revolving Loan Maturity Date, for the account of the Borrower and in support of (i) trade obligations of the Borrower or any of its Subsidiaries that arise in the ordinary course of business and are in respect of general corporate purposes of the Borrower or any of its Subsidiaries, as the case may be, and/or (ii) on a standby basis, L/C Supportable Indebtedness of the Borrower or any of its Subsidiaries to any other Person, irrevocable letters of credit in such form as may be approved by the Letter of Credit Issuer, and subject to and upon the terms and conditions herein set forth, the Letter of Credit Issuer in each case agrees to issue from time to time Letters of Credit (each such letter of credit issued or deemed issued pursuant to this paragraph (a), a "Letter of Credit" and, collectively, the "Letters of Credit"). For purposes of this Agreement and the other Credit Documents, each of the Existing Letters of Credit shall be deemed a Letter of Credit issued under this Agreement (in which each Revolving Lender shall be deemed to have purchased a participation on the Closing Date as provided in Section 2.04(a)). To the extent the terms and conditions of any agreement or document relating to the reimbursement of drawings under any Existing Letter of Credit are inconsistent with the terms and conditions of this Agreement, the terms and conditions of this Agreement shall control with respect to such Existing Letter of Credit. Notwithstanding the foregoing the Letter of Credit Issuer shall be under no obligation to issue any Letter of Credit if at the time of such issuance: (i) any order, judgment or decree of any governmental authority or arbitrator shall purport by its terms to enjoin or restrain the Letter of Credit Issuer 14 from issuing such Letter of Credit or any requirement of law applicable to the Letter of Credit Issuer or any request or directive (whether or not having the force of law) from any governmental authority with jurisdiction over the Letter of Credit Issuer shall prohibit, or request that the Letter of Credit Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Letter of Credit Issuer with respect to such Letter of Credit any restriction or reserve or capital requirement (for which the Letter of Credit Issuer is not otherwise compensated) not in effect on the date hereof, or any unreimbursed loss, cost or expense which was not applicable, in effect or known to the Letter of Credit Issuer as of the date hereof and which the Letter of Credit Issuer in good faith deems material to it; or (ii) the Letter of Credit Issuer shall have received notice from the Required Lenders prior to the issuance of such Letter of Credit of the type described in the penultimate sentence of Section 2.03(b). In addition, the Letter of Credit Issuer shall not be obligated to issue any Letter of Credit at a time when a Lender Default exists unless the Letter of Credit Issuer shall have entered into arrangements satisfactory to it and the Borrower to eliminate the Letter of Credit Issuer's risk with respect to the participation in Letters of Credit of the Defaulting Lender, including by cash collateralizing such Lender's Revolving Percentage of the Letter of Credit Outstandings. If the Letter of Credit Issuer shall not be able to issue a Letter of Credit because of the circumstances described in clause (i) above, then, the Borrower may, with the consent of the Agent and such Revolving Lender, designate any Revolving Lender as a substitute letter of credit issuer for such Letter of Credit. (b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and prior to the issuance of, the respective Letter of Credit) at such time would exceed either (x) $60,000,000 or (y) when added to the sum of the aggregate principal amount of all Swingline Loans and Revolving Loans then outstanding, an amount equal to the Total Revolving Credit Commitment at such time; (ii)(x) each standby Letter of Credit shall have an expiry date occurring not later than one year after such Letter of Credit's date of issuance (except for the Existing Letters of Credit, which shall each have an expiry date as set forth in Schedule 2.01 and any Letter of Credit replacing each Existing Letter of Credit identified on Schedule 2.01 as a letter of credit required to have an expiry date later than one year after the issuance), provided that any such Letter of Credit (other than Existing Letters of Credit) may be automatically extendable for periods of up to one year so long as such Letter of Credit provides that the Letter of Credit Issuer retains an option, satisfactory to the Letter of Credit Issuer, to terminate such Letter of Credit within a specified period of time prior to each scheduled extension date and (y) each trade Letter of Credit shall have an expiry date occurring not later than one year after such Letter of Credit's date of issuance; (iii)(x) no standby Letter of Credit shall have an expiry date occurring later than the fifth Business Day next preceding the Revolving Loan Maturity Date and (y) no trade Letter of Credit shall have an expiry date occurring later 15 than 30 days prior to the Revolving Loan Maturity Date; and (iv) each Letter of Credit shall be denominated in U.S. Dollars. Section 2.02. Minimum Stated Amount. The initial Stated Amount of each Letter of Credit shall not be less than $25,000 or such lesser amount as is acceptable to the Letter of Credit Issuer. Section 2.03. Letter of Credit Requests. (a) Whenever the Borrower desires that a Letter of Credit be issued for its account, it shall give the Agent and the Letter of Credit Issuer at least five Business Days' (or such shorter period as is acceptable to the Letter of Credit Issuer) written notice thereof. Each notice shall be in the form of Exhibit D (each a "Letter of Credit Request"). (b) The making of each Letter of Credit Request shall be deemed to be a representation and warranty by the Borrower that such Letter of Credit may be issued in accordance with, and will not violate the requirements of, Section 2.01(b). Unless the Letter of Credit Issuer has received notice from the Required Lenders before it issues a Letter of Credit that a Default or an Event of Default then exists or that the issuance of such Letter of Credit would violate Section 2.01(b), then the Letter of Credit Issuer shall issue the requested Letter of Credit for the account of the Borrower in accordance with the Letter of Credit Issuer's usual and customary practices. Upon its issuance of any Letter of Credit or any amendment thereto, the Letter of Credit Issuer shall promptly notify the Agent and each Lender of such issuance or amendment, which notice shall be accompanied by a copy of the Letter of Credit actually issued or the amendment actually made. Section 2.04. Letter of Credit Participations. (a) Immediately upon the issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of Credit Issuer shall be deemed to have sold and transferred to each other Revolving Lender (each such Lender, in its capacity under this Section 2.04, a "Participant"), and each such Participant shall be deemed irrevocably and unconditionally to have purchased and received from the Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation, to the extent of such Participant's Revolving Percentage in such Letter of Credit, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto. Upon any change in the Revolving Credit Commitment of the Revolving Lenders pursuant to Section 1.13 or 12.04, it is hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to the participations pursuant to this Section 2.04 to reflect the new Revolving Percentages of the assignor and assignee Lender or of all Lenders, as the case may be. (b) In determining whether to pay under any Letter of Credit, the Letter of Credit Issuer shall have no obligation relative to the respective Participants other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to substantially comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the Letter of Credit Issuer under or in connection with any Letter of Credit if taken or omitted in the absence of gross 16 negligence or willful misconduct, shall not create for the Letter of Credit Issuer any resulting liability to the Borrower or any Lender. (c) In the event that the Letter of Credit Issuer makes any payment under any Letter of Credit and the Borrower shall not have reimbursed such amount in full to the Letter of Credit Issuer pursuant to Section 2.05(a), the Letter of Credit Issuer shall promptly notify the Agent, which shall promptly notify each Participant of such failure, and each Participant shall promptly and unconditionally pay to the Agent for the account of the Letter of Credit Issuer the amount of such Participant's Revolving Percentage of such unreimbursed payment in U.S. Dollars and in same day funds. If the Agent so notifies, prior to 12:00 Noon (New York time) on any Business Day, any Participant required to fund a payment under a Letter of Credit, such Participant shall make available to the Agent for the account of the Letter of Credit Issuer in U.S. Dollars such Participant's Revolving Percentage of the amount of such payment on such Business Day in same day funds. If and to the extent such Participant shall not have so made its Revolving Percentage of the amount of such payment available to the Agent for the account of the Letter of Credit Issuer, such Participant agrees to pay to the Agent for the account of the Letter of Credit Issuer, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Agent for the account of the Letter of Credit Issuer at the overnight Federal Funds Rate. The failure of any Participant to make available to the Agent for the account of the Letter of Credit Issuer its Revolving Percentage of any payment under any Letter of Credit shall not relieve any other Participant of its obligation hereunder to make available to the Agent for the account of the Letter of Credit Issuer its Revolving Percentage of any payment under any Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other Participant to make available to the Agent for the account of the Letter of Credit Issuer such other Participant's Revolving Percentage of any such payment. (d) Whenever the Letter of Credit Issuer receives a payment of a reimbursement obligation as to which the Agent has received for the account of the Letter of Credit Issuer any payments from the Participants pursuant to clause (c) above, the Letter of Credit Issuer shall pay to the Agent for the account of each Participant which has paid its Revolving Percentage thereof, in U.S. Dollars and in same day funds, an amount equal to such Participant's Revolving Percentage (based upon the proportionate aggregate amount originally funded by such Participant to the aggregate amount funded by all Participants) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective participations. (e) The obligations of the Participants to make payments to the Agent for the account of the Letter of Credit Issuer with respect to Letters of Credit shall be unconditional and irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances: 17 (i) any lack of validity or enforceability of this Agreement or any of the other Credit Documents; (ii) the existence of any claim, setoff, defense or other right which the Borrower or any of its Subsidiaries may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Agent, the Agent for the account of the Letter of Credit Issuer, any Participant, any Lender or any other Person, whether in connection with this Agreement, any Letter of Credit, any other Credit Document, the transactions contemplated herein or therein or any unrelated transactions (including any underlying transaction between the Borrower or any of its Subsidiaries on the one hand and the beneficiary named in any such Letter of Credit on the other hand); (iii) any draft, certificate or any other document presented under any 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; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or (v) the occurrence of any Default or Event of Default unless the Letter of Credit Issuer shall have issued any such Letter of Credit in disregard of a notice received from the Required Lenders of the type described in the penultimate sentence of Section 2.03(b). Section 2.05. Agreement to Repay Letter of Credit Drawings. (a) The Borrower hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the Agent in immediately available funds at the Payment Office of the Agent, for any payment or disbursement made by the Letter of Credit Issuer under any Letter of Credit (each such amount, so paid until reimbursed, an "Unpaid Drawing"), immediately after, and in any event on the date of such payment or disbursement, with interest on the amount so paid or disbursed by the Letter of Credit Issuer, to the extent not reimbursed prior to 12:00 Noon (New York time) on the date of such payment or disbursement, from and including the date paid or disbursed to but excluding the date the Letter of Credit Issuer was reimbursed by the Borrower therefor at a rate per annum which shall be the Applicable Base Rate Margin plus the Base Rate as in effect from time to time for Revolving Loans; provided, however, to the extent such amounts are not reimbursed prior to 12:00 Noon (New York time) on the third Business Day following such payment or disbursement, interest shall thereafter accrue on the amounts so paid or disbursed by the Letter of Credit Issuer (and until reimbursed by the Borrower) at a rate per annum which shall be the Applicable Base Rate Margin plus the Base Rate as in effect from time to time for Revolving Loans plus 2% and with such interest to be payable on demand. The Letter of Credit Issuer shall give the Borrower prompt notice of each Drawing under any Letter of Credit, provided that the failure to give any such notice shall in no way affect, impair or diminish the Borrower's obligations hereunder. 18 (b) The obligations of the Borrower under this Section 2.05 to reimburse the Letter of Credit Issuer with respect to drawings on Letters of Credit (each, a "Drawing") (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower or any of its Subsidiaries may have or have had against any Lender (including in its capacity as issuer of the Letter of Credit or as Participant), or any non-application or misapplication by the beneficiary of the proceeds of such Drawing, the Letter of Credit Issuer's only obligation to the Borrower being to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to substantially comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the Letter of Credit Issuer under or in connection with any Letter of Credit if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for the Letter of Credit Issuer any resulting liability to the Borrower or any of its Subsidiaries. Section 2.06. Increased Costs. If at any time after the date hereof, the introduction of or any change in any applicable law or governmental rule, regulation, order, guideline, directive or request (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Letter of Credit Issuer or any Participant with any request or directive by any such authority (whether or not having the force of law), or any change in generally acceptable accounting principles, shall either (i) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against letters of credit issued by the Letter of Credit Issuer or participated in by any Participant, or (ii) impose on the Letter of Credit Issuer or any Participant any other conditions relating, directly or indirectly, to this Agreement or any Letter of Credit; and the result of any of the foregoing is to increase the cost to the Letter of Credit Issuer or any Participant of issuing, maintaining or participating in any Letter of Credit, or reduce the amount of any sum received or receivable by the Letter of Credit Issuer or any Participant hereunder or reduce the rate of return on its capital with respect to Letters of Credit (except for changes in the rate of tax on, or determined by reference to, the net income or profits of the Letter of Credit Issuer or such Participant, pursuant to the laws of the jurisdiction in which the Letter of Credit Issuer or such Participant is organized or the jurisdiction in which the Letter of Credit Issuer's or such Participant's principal office or applicable lending office is located or any subdivision thereof or therein), then, within 15 days after demand to the Borrower by the Letter of Credit Issuer or such Participant (a copy of which demand shall be sent by the Letter of Credit Issuer or such Participant to the Agent), the Borrower shall pay to the Letter of Credit Issuer or such Participant such additional amount or amounts as will compensate the Letter of Credit Issuer or such Participant for such increased cost or reduction in the amount receivable or reduction on the rate of return on its capital. The Letter of Credit Issuer or any Participant, upon determining that any additional amounts will be payable pursuant to this Section 2.06, will give prompt written notice thereof to the Borrower, which notice shall include a certificate submitted to the Borrower by the Letter of Credit Issuer or such Participant (a copy of which certificate shall be sent by the Letter of Credit Issuer or such Participant to the Agent), setting forth in reasonable detail the basis for the calculation of 19 such additional amount or amounts necessary to compensate the Letter of Credit Issuer or such Participant. The certificate required to be delivered pursuant to this Section 2.06 shall, if delivered in good faith and absent manifest error, be final and conclusive and binding on the Borrower. SECTION 3. FEES; COMMITMENTS Section 3.01. Fees. (a) The Borrower agrees to pay to the Agent for distribution to each Revolving Lender a commitment fee (the "Commitment Fee") for the period from the Closing Date to and including the Revolving Loan Maturity Date (or such earlier date as the Total Revolving Credit Commitment shall have been terminated) computed at a rate for each day equal to the Applicable Commitment Fee Rate for such day on the daily average Unutilized Revolving Credit Commitment of such Lender. Accrued Commitment Fees shall be due and payable quarterly in arrears on the last Business Day of each February, May, August and November of each year, and on the Revolving Loan Maturity Date (or upon such earlier date as the Total Revolving Credit Commitment is terminated). Notwithstanding anything to the contrary contained in the immediately preceding sentence, (i) the Commitment Fee shall be 1/2 of 1% per annum at any time when an Event of Default shall exist and (ii) the Commitment Fee shall be 1/2 of 1% per annum prior to the date which is six months after the Closing Date. (b) The Borrower agrees to pay to the Agent for pro rata distribution to each Revolving Lender (based upon such Lender's Revolving Percentage) a fee in respect of each Letter of Credit issued hereunder (the "Letter of Credit Fee") for the period from and including the date of issuance of such Letter of Credit to and including the termination of such Letter of Credit, computed at a rate per annum equal to the Applicable Eurodollar Rate Margin for Revolving Loans as in effect from time to time on the daily Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on the last Business Day of each February, May, August and November and upon the first day on or after the termination of the Total Revolving Credit Commitment upon which no Letters of Credit remain outstanding. (c) The Borrower agrees to pay to the Agent for the account of the Letter of Credit Issuer a fee in respect of each Letter of Credit (the "Facing Fee"), for the period from and including the date of issuance of such Letter of Credit to and including the termination of such Letter of Credit, computed at a rate per annum equal to 1/8 of 1% per annum on the daily Stated Amount of such Letter of Credit, provided, that in any event the minimum amount of the Facing Fee payable in any 12 month period for each Letter of Credit shall be $500; it being agreed that, on the date of issuance of any Letter of Credit and on each anniversary thereof prior to the termination of such Letter of Credit, if $500 will exceed the amount of Facing Fees that will accrue with respect to such Letter of Credit for the immediately succeeding 12 month period, the full $500 shall be payable on the date of issuance of such Letter of Credit and on each such anniversary thereof prior to the termination of such Letter of Credit. Except as otherwise provided in the proviso to the immediately preceding sentence, accrued Facing Fees shall be due and payable quarterly in arrears on the last Business Day of each February, May, August and November and upon the 20 first day on or after the termination of the Total Revolving Credit Commitment upon which no Letters of Credit remain outstanding. (d) The Borrower agrees to pay to the Letter of Credit Issuer, upon each drawing under, issuance of, or amendment to, any Letter of Credit, such amount as shall at the time of such event be the administrative charge which the Letter of Credit Issuer is customarily charging in connection with such occurrence with respect to letters of credit. (e) The Borrower agrees to pay to the Agent, for its own account, such other fees as shall have been agreed to by the Borrower and the Agent in that certain fee letter between them dated December 21, 1997, as amended. Section 3.02. Voluntary Reduction of Commitments. (a) Upon at least five Business Days' prior written notice to the Agent at its Notice Office (which notice the Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, at any time or from time to time, without premium or penalty, to terminate the Total Unutilized Revolving Credit Commitment in whole or in part, in integral multiples of $1,000,000 in the case of partial reductions to the Total Unutilized Revolving Credit Commitment, provided that each such reduction shall apply proportionately to permanently reduce the Revolving Credit Commitment of each Revolving Lender. (b) As and to the extent provided in Section 12.12(b), the Borrower may, upon five Business Days' prior written notice to the Agent at its Notice Office (which notice the Agent shall promptly transmit to each of the Lenders), require such Lender to assign its entire Revolving Credit Commitment and all Loans, Fees and other amounts owing to such Lender to another Lender or Lenders (which would agree to provide the consent refused by the assignor Lender) pursuant to subsection 12.04(b), if such other Lender or Lenders consent to such assignment, (at which time Annex I shall be deemed modified to reflect such changed amounts), and at such time, such Lender shall no longer constitute a "Lender" for purposes of this Agreement, except with respect to indemnifications under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.01 and 12.06), which shall survive as to such Lender. Section 3.03. Mandatory Adjustments of Commitments, Etc. (a) The Total Commitment shall terminate in its entirety on February 27, 1998 unless the Closing Date has occurred on or before such date. (b) Each of the Total A Term Loan Commitment, the Total B Term Loan Commitment and the Total C Term Loan Commitment shall terminate in its entirety on the Closing Date, after giving effect to the making of the respective Term Loans on such date. (c) The Total Revolving Credit Commitment (and the Revolving Credit Commitment of each Revolving Lender) shall terminate in their entirety on the earlier of (i) the date on which a Change of Control occurs and (ii) the Revolving Loan Maturity Date. 21 (d) From and after payment in full of the Term Loans, on each date upon which a mandatory repayment of Term Loans pursuant to Section 4.02.01.(c), (d), (e), (f) or (g) would otherwise be required, the Total Revolving Credit Commitment shall be permanently reduced by the amount, if any, required to be applied pursuant to said Sections. (e) Each reduction of the Total Revolving Credit Commitment pursuant to this Section 3.03 shall apply proportionately to the Revolving Credit Commitment of each Lender. SECTION 4. PREPAYMENTS; PAYMENTS Section 4.01. Voluntary Prepayments. The Borrower shall have the right to prepay the Loans, without premium or penalty, in whole or in part at any time and from time to time on the following terms and conditions: (i) the Borrower shall give the Agent prior to 12:00 Noon (New York time) at its Notice Office (x) at least one Business Day's prior irrevocable written notice (or telephonic notice promptly confirmed in writing) of the Borrower's intent to prepay Base Rate Loans (or same day notice in the case of Swingline Loans provided such notice is given prior to 11:00 A.M. (New York time)) and (y) at least three Business Days' prior irrevocable written notice (or telephonic notice promptly confirmed in writing) of the Borrower's intent to prepay Eurodollar Rate Loans, whether A Term Loans, B Term Loans, C Term Loans, Revolving Loans or Swingline Loans shall be prepaid, the amount of such prepayment and the Types of Loans to be prepaid and, in the case of Eurodollar Rate Loans, the specific Borrowing or Borrowings pursuant to which such Eurodollar Rate Loans were made, which notice the Agent shall promptly transmit to each of the Lenders; (ii) each prepayment shall be in an aggregate principal amount of at least $500,000 (or $50,000 in the case of Swingline Loans) and in increments of $100,000 (or $25,000 in the case of Swingline Loans) in excess thereof, provided that if any partial prepayment of Eurodollar Rate Loans made pursuant to any Borrowing shall reduce the outstanding Eurodollar Rate Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount, then such Borrowing may not be continued as a Borrowing of Eurodollar Rate Loans and any selection of an Interest Period with respect thereto given by the Borrower shall have no force or effect; (iii) each prepayment in respect of any Loans made pursuant to a specific Borrowing shall be applied pro rata among such Loans, provided that at the Borrower's election in connection with any prepayment of Revolving Loans pursuant to this Section 4.01, such prepayment shall not be applied to any Revolving Loans of a Defaulting Lender at any time when the aggregate amount of Revolving Loans of any Non-Defaulting Lender exceeds such Non-Defaulting Lender's Revolving Percentage of all Revolving Loans then outstanding; (iv) each prepayment of Term Loans pursuant to this Section 4.01 must consist of a prepayment of A Term Loans (in an amount equal to the A TL Percentage of such prepayment), B Term Loans (in an amount equal to the B TL Percentage of such prepayment) and C Term Loans (in an amount equal to the C TL Percentage of such prepayment); (v) each prepayment of A Term Loans pursuant to this Section 4.01 shall reduce the then remaining Scheduled A Repayments on a pro rata basis (based upon the then remaining principal amount of each such Scheduled A Repayment); (vi) each prepayment of B Term Loans pursuant to this Section 4.01 shall reduce the then remaining Scheduled B Repayments on a pro rata basis 22 (based upon the then remaining principal amount of each such Scheduled B Repayment); and (vii) each prepayment of C Term Loans pursuant to this Section 4.01 shall reduce the then remaining Scheduled C Repayments on a pro rata basis (based upon the then remaining principal amount of each such Scheduled C Repayment). Section 4.02. Mandatory Prepayments and Repayments. Section 4.02.01. Mandatory Prepayments and Repayments. (a) If on any date the sum of (I) the aggregate outstanding principal amount of Revolving Loans and Swingline Loans and (II) the aggregate amount of Letter of Credit Outstandings exceeds the Total Revolving Credit Commitment as then in effect, the Borrower shall repay on such date that principal amount of Swingline Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans, in an amount equal to such excess. If, after giving effect to the prepayment of all outstanding Swingline Loans and Revolving Loans, the aggregate amount of the Letter of Credit Outstandings exceeds the Total Revolving Credit Commitment as then in effect, the Borrower shall pay to the Agent at the Payment Office on such date an amount of cash or Cash Equivalents equal to the amount of such excess (up to a maximum amount equal to the Letter of Credit Outstandings at such time), such cash or Cash Equivalents to be held as security for the obligations of the Borrower hereunder in a cash collateral account established by the Agent. (b) (i) The Borrower shall be required to repay the principal amount of A Term Loans on each date set forth below in the amount set forth opposite such date below (each such repayment, as the same may be reduced as provided in Sections 4.01 and 4.02.02(b), a "Scheduled A Repayment"):
SCHEDULED A REPAYMENT DATE AMOUNT the last Business Day in August, 1998 $2,500,000.00 the last Business Day in November, 1998 2,500,000.00 the last Business Day in February, 1999 2,500,000.00 the last Business Day in May, 1999 2,500,000.00 the last Business Day in August, 1999 2,500,000.00 the last Business Day in November, 1999 2,500,000.00 the last Business Day in February, 2000 3,750,000.00 the last Business Day in May, 2000 3,750,000.00 the last Business Day in August, 2000 3,750,000.00 the last Business Day in November, 2000 3,750,000.00 the last Business Day in February, 2001 5,000,000.00 the last Business Day in May, 2001 5,000,000.00 the last Business Day in August, 2001 5,000,000.00 the last Business Day in November, 2001 5,000,000.00
23 the last Business Day in February, 2002 6,250,000.00 the last Business Day in May, 2002 6,250,000.00 the last Business Day in August, 2002 6,250,000.00 the last Business Day in November, 2002 6,250,000.00 the last Business Day in February, 2003 6,250,000.00 the last Business Day in May, 2003 6,250,000.00 the last Business Day in August, 2003 6,250,000.00 A Term Loan Maturity Date (the last Business Day in November, 2003) 6,250,000.00
(ii) The Borrower shall be required to repay the principal amount of B Term Loans on each date set forth below in the amount set forth opposite such date below (each such repayment, as the same may be reduced as provided in Sections 4.01 and 4.02.02(b), a "Scheduled B Repayment"):
SCHEDULED B REPAYMENT DATE AMOUNT the last Business Day in November, 1998 $100,000.00 the last Business Day in November, 1999 150,000.00 the last Business Day in November, 2000 150,000.00 the last Business Day in November, 2001 150,000.00 the last Business Day in November, 2002 150,000.00 the last Business Day in November, 2003 150,000.00 the last Business Day in November, 2004 150,000.00 B Term Loan Maturity Date (the last Business Day in August, 2005) 49,000,000.00
(iii) The Borrower shall be required to repay the principal amount of C Term Loans on each date set forth below in the amount set forth opposite such date below (each such repayment, as the same may be reduced as provided in Sections 4.01 and 4.02.02(b), a "Scheduled C Repayment"):
SCHEDULED C REPAYMENT DATE AMOUNT the last Business Day in November, 1998 $100,000.00 the last Business Day in November, 1999 150,000.00 the last Business Day in November, 2000 150,000.00 the last Business Day in November, 2001 150,000.00
24 the last Business Day in November, 2002 150,000.00 the last Business Day in November, 2003 150,000.00 the last Business Day in November, 2004 150,000.00 the last Business Day in November, 2005 150,000.00 C Term Loan Maturity Date (the last Business Day 73,850,000.00 in August, 2006)
(c) On the Business Day after the date of receipt thereof by the Borrower and/or any of its Subsidiaries of Cash Proceeds from any Asset Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset Sale shall be applied as a mandatory repayment of principal of the Term Loans (with the A TL Percentage of such amount to be applied as a repayment of the A Term Loans, the B TL Percentage of such amount to be applied as a repayment of the B Term Loans and the C TL Percentage of such amount to be applied as a repayment of the C Term Loans, in each case subject to modification of such application as set forth in Section 4.02.03), provided that with respect to no more than $25,000,000 in the aggregate of such Net Cash Proceeds in any fiscal year of the Borrower, such Net Cash Proceeds shall not be required to be so applied on such date to the extent that no Default or Event of Default then exists and the Borrower delivers a certificate to the Agent on or prior to such date stating that such Net Cash Proceeds shall be used to purchase assets used or to be used in the businesses referred to in Section 8.16, within 270 days following the date of such Asset Sale (which certificate shall set forth the estimates of the proceeds to be so expended), and provided further, that if all or any portion of such Net Cash Proceeds not so applied to the repayment of Term Loans are not so used within such 270 day period, such remaining portion shall be applied on the last day of such period as a mandatory repayment of principal of outstanding Term Loans as provided above in this Section 4.02.01(c). (d) On the Business Day after the date of the receipt thereof by the Borrower and/or any of its Subsidiaries, an amount equal to 100% of the cash proceeds (net of underwriting discounts and commissions and other reasonable costs associated therewith) of the incurrence of Indebtedness by the Borrower and/or any of its Subsidiaries (other than Indebtedness permitted to be incurred by Section 8.04 as such section is in effect on the date hereof) shall be applied as a mandatory repayment of principal of the Term Loans (with the A TL Percentage of such amount to be applied as a repayment of the A Term Loans, the B TL Percentage of such amount to be applied as a repayment of the B Term Loans and the C TL Percentage of such amount to be applied as a repayment of the C Term Loans, in each case subject to modification of such application as set forth in Section 4.02.03). (e) On the Business Day after the date of the receipt thereof by the Borrower and/or any of its Subsidiaries, an amount equal to 50% of the cash proceeds (net of underwriting discounts and commissions and other reasonable costs associated therewith) of the issuance or sale of equity securities by the Borrower and/or any of its Subsidiaries shall be applied as a mandatory repayment of principal of the Term Loans (with the A TL Percentage of such amount to be applied as a repayment of the A Term Loans, the 25 B TL Percentage of such amount to be applied as a repayment of the B Term Loans and the C TL Percentage of such amount to be applied as a repayment of the C Term Loans, in each case subject to modification of such application as set forth in Section 4.02.03). (f) On each Excess Cash Payment Date, an amount equal to 60% of Excess Cash Flow of the Borrower and its Subsidiaries for the most recent Excess Cash Flow Period ending prior to such Excess Cash Payment Date shall be applied as a mandatory repayment of principal of the Term Loans (with the A TL Percentage of such amount to be applied as a repayment of the A Term Loans, the B TL Percentage of such amount to be applied as a repayment of the B Term Loans and the C TL Percentage of such amount to be applied as a repayment of the C Term Loans, in each case subject to modification of such application as set forth in Section 4.02.03). (g) Within 10 days following each date on which the Borrower or any of its Subsidiaries receives any proceeds from any Recovery Event, an amount equal to 100% of the proceeds of such Recovery Event (net of reasonable costs and taxes incurred in connection with such Recovery Event) shall be applied as a mandatory repayment of principal of the Term Loans (with the A TL Percentage of such amount to be applied as a repayment of the A Term Loans, the B TL Percentage of such amount to be applied as a repayment of the B Term Loans and the C TL Percentage of such amount to be applied as a repayment of the C Term Loans, in each case subject to modification of such application as set forth in Section 4.02.03), provided that so long as no Default or Event of Default then exists and the requirements of the Security Documents have been satisfied, such proceeds shall not be required to be so applied on such date to the extent that the Borrower has delivered a certificate to the Agent on or prior to such date stating that such proceeds shall be used to replace or restore any properties or assets in respect of which such proceeds were paid within 360 days following the date of the receipt of such proceeds (which certificate shall set forth the estimates of the proceeds to be so expended), and provided further, that if all or any portion of such proceeds not required to be applied to the repayment of Term Loans pursuant to the preceding proviso are not so used within 360 days after the date of the receipt of such proceeds, such remaining portion shall be applied on the last day of such period as a mandatory repayment of principal of the Term Loans as provided above in this Section 4.02.01(g). (h) Notwithstanding anything to the contrary contained elsewhere in this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full on the Swingline Expiry Date and (ii) all other then outstanding Loans of the respective Facility shall be repaid in full on the Maturity Date for such Facility. Section 4.02.02. Application. (a) Any amount required to be applied to A Term Loans, B Term Loans or C Term Loans, as the case may be, shall apply to the repayment of the outstanding principal amount of A Term Loans, B Term Loans and C Term Loans, respectively, of the respective Facility. (b) All repayments of A Term Loans, B Term Loans and C Term Loans pursuant to Section 4.02.01(c), (d), (e), (f) or (g) shall be applied to reduce the then remaining 26 Scheduled Repayments of the respective Facility pro rata based on the sum of the then remaining Scheduled Repayments of the respective Facility. (c) With respect to each repayment of Loans required by this Section 4.02, the Borrower may designate the Types of Loans which are to be repaid and the specific Borrowing(s) under the affected Facility pursuant to which such Borrowing(s) was/were made; provided that (i) Eurodollar Rate Loans made pursuant to a specific Facility may be designated for repayment pursuant to this Section 4.02 only on the last day of an Interest Period applicable thereto unless all Eurodollar Rate Loans made pursuant to such Facility with Interest Periods ending on such date of required prepayment and all Base Rate Loans made pursuant to such Facility have been paid in full; (ii) if early repayment of Eurodollar Rate Loans made pursuant to a single Borrowing shall reduce the outstanding Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount, such Borrowing shall be immediately converted into Base Rate Loans; and (iii) each repayment of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans; provided that no repayment pursuant to Section 4.02.01(a) shall be applied to any Revolving Loans of a Defaulting Lender at any time when the aggregate amount of the Revolving Loans of any Non-Defaulting Lender exceeds such Non-Defaulting Lender's Revolving Percentage of Revolving Loans then outstanding. In the absence of a designation by the Borrower as described in the preceding sentence, the Agent shall, subject to the above, make such designation in its sole discretion. Section 4.02.03. Waiver of Certain Mandatory Repayments by B Lenders and C Lenders. Notwithstanding anything to the contrary contained in this Section 4.02 or elsewhere in this Agreement (including, without limitation, in Section 12.12), Lenders with outstanding B Term Loans (the "B Lenders") or outstanding C Term Loans (the "C Lenders") may waive a mandatory repayment of such Loans pursuant to Section 4.02.01(c), (d), (e), (f) and/or (g) (each such repayment, a "Waivable Mandatory Repayment") upon the terms and provisions set forth in this Section 4.02.03. The Borrower shall give to the Agent written irrevocable notice of its intention to make a Waivable Mandatory Repayment at least five Business Days prior to such repayment, which notice the Agent shall promptly forward to all B Lenders and C Lenders (indicating in such notice the amount of such repayment to be applied to each such Lender's outstanding Term Loans under such Facilities). Any B Lender and C Lender may waive all or any part of any such Waivable Mandatory Repayment. In the event any such B Lender or C Lender desires to waive such Lender's right to receive any such Waivable Mandatory Repayment in whole or in part, such Lender shall so advise the Agent no later than the close of business two Business Days after the date of such notice from the Agent, which notice shall also include the amount such Lender desires to receive in respect of such repayment. If any Lender does not reply to the Agent within the two Business Days, it will be deemed not to have waived any part of such repayment. If any Lender does not specify an amount it wishes to receive, it will be deemed to have accepted 100% of the total payment. In the event that any such Lender waives all or part of such right to receive any such Waivable Mandatory Repayment, the Agent shall apply 100% of the amount so waived by such Lender to the A Term Loans in accordance with Section 4.02.02. From and after payment in full of the A Term Loans and, if any B Lender or C Lender waives all or any part of a Waivable Mandatory 27 Repayment, 100% of the principal amount of the Waivable Mandatory Repayment so waived shall be applied to (i) permanently reduce the Total Revolving Credit Commitment until the Total Revolving Credit Commitment is reduced to $100,000,000 (the Borrower shall repay all the Revolving Loans in excess of such Commitment as so reduced) and (ii) thereafter, repay the outstanding Revolving Loans, if any, without reducing the Total Revolving Credit Commitment. Section 4.03. Method and Place of Payment. Except as otherwise specifically provided herein, all payments under this Agreement or any Note shall be made to the Agent for the account of the Lender or Lenders entitled thereto no later than 12:00 Noon (New York time) on the date when due and shall be made in U.S. Dollars in immediately available funds at the Agent's Payment Office. Any payments under this Agreement which are made later than 12:00 Noon (New York time) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension. Section 4.04. Net Payments. (a) All payments made by the Borrower hereunder or under any Note will be made without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Borrower and without setoff, counterclaim or other defense or deduction of any nature. Except as provided in Section 4.04(b), all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding, in the case of each Lender and the Agent, except as provided in the second succeeding sentence, any tax imposed on or measured by the net income or profits pursuant to the laws of the jurisdiction in which such Lender or the Agent (as the case may be) is organized or any subdivision thereof or therein and, in the case of each Lender, any tax imposed on or measured by the net income or profits pursuant to the laws of the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein) and all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. If any amounts are payable in respect of Taxes pursuant to the preceding sentence, the Borrower agrees to reimburse each Lender, upon the written request of such Lender, for taxes imposed on or measured by the net income or profits of such Lender pursuant to the laws of the jurisdiction in which such Lender is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or under the laws of any political subdivision or taxing authority of any such jurisdiction in which such Lender is organized or the jurisdiction in which such Lender is organized or the jurisdiction in which the principal office or applicable 28 lending office of such Lender is located and for any withholding of taxes as such Lender shall determine are payable by, or withheld from, such Lender in respect of such amounts so paid to or on behalf of such Lender pursuant to the preceding sentence and in respect of any amounts paid to or on behalf of such Lender pursuant to this sentence. The Borrower will furnish to the Agent within 30 days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by the Borrower. The Borrower agrees to indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender. (b) Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the Agent on or prior to the Closing Date, or in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 1.13 or 12.04 (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, (i) two accurate and complete original signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement to a complete exemption from United States withholding tax with respect to payments to be made under this Agreement and under any Note, or (ii) if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit E (any such certificate, a "Section 4.04(b)(ii) Certificate") and (y) two accurate and complete original signed copies of Internal Revenue Service Form W-8 (or successor form) certifying to such Lender's entitlement to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement and under any Note. In addition, each Lender agrees that from time to time after the Closing Date, when a lapse in time or change in circumstances renders the previous certification obsolete or inaccurate in any material respect, it will deliver to the Borrower and the Agent two new accurate and complete original signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement and any Note, or it shall immediately notify the Borrower and the Agent of its inability to deliver any such Form or Certificate, in which case such Lender shall not be required to deliver any such Form or Certificate. Notwithstanding anything to the contrary contained in Section 4.04(a), but subject to Section 12.04(b) and the immediately succeeding sentence, (x) the Borrower shall be entitled, to the extent it is required to do so by law, to deduct or withhold income or similar taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, fees or other amounts payable hereunder for the account of any Lender which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that such Lender has not provided to the Borrower U.S. Internal Revenue Service Forms that establish a complete exemption from such deduction or withholding and (y) the Borrower shall not be obligated pursuant to Section 4.04(a) to gross-up payments to be made to a Lender in respect of income or similar 29 taxes imposed by the United States if (I) such Lender has not provided to the Borrower the Internal Revenue Service Forms or other certificates and documents required to be provided to the Borrower pursuant to this Section 4.04(b) or (II) in the case of a payment, other than interest, to a Lender described in clause (ii) above, to the extent that such Forms do not establish a complete exemption from withholding of such taxes. Notwithstanding anything to the contrary contained in the preceding sentence or elsewhere in this Section 4.04 and except as set forth in Section 12.04(b), the Borrower agrees to pay additional amounts and to indemnify each Lender in the manner set forth in Section 4.04(a) (without regard to the identity of the jurisdiction requiring the deduction or withholding) in respect of any amounts deducted or withheld by it as described in the immediately preceding sentence as a result of any changes after the Closing Date in any applicable law, treaty, governmental rule, regulation, guideline or order, or in the interpretation thereof, relating to the deducting or withholding of income or similar Taxes. Section 4.05. Application After Event of Default. Notwithstanding any other provisions of this Credit Agreement, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent or any Lender on account of amounts outstanding under any of the Credit Documents or in respect of the Collateral shall be paid over or delivered as follows: FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable attorneys' fees) of the Agent in connection with enforcing the rights of the Lenders under the Credit Documents and any protective advances made by the Agent with respect to the Collateral under or pursuant to the terms of the Credit Documents; SECOND, to the payment of all reasonable costs and expenses (including without limitation reasonable attorneys' fees and allocated cost of in-house attorneys), of each of the Lenders in connection with enforcing its rights under the Credit Documents; THIRD, to the payment of all accrued fees and interest payable to the Lenders, the Agent or the Letter of Credit Issuer hereunder; FOURTH, to the payment of the outstanding principal amount of the Loans and Unpaid Drawings under Letters of Credit, to the payment or cash collateralization of the outstanding Letter of Credit Outstandings and to any amounts owing under Interest Rate Protection Agreements with any Lenders or any Affiliate thereof, pro rata as set forth below; FIFTH, to all other obligations which shall have become due and payable under the Credit Documents and not repaid pursuant to clauses "FIRST" through "FOURTH" above; and SIXTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus. 30 In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (b) each of the Lenders shall receive an amount equal to its pro rata share (based on the proportion that the then outstanding Loans, Letter of Credit Outstandings and obligations under Interest Rate Protection Agreements held by such Lender bears to the aggregate then outstanding Loans, Letter of Credit Outstandings and obligations under Interest Rate Protection Agreements) of amounts available to be applied pursuant to clauses "SECOND," "THIRD," "FOURTH," and "FIFTH" above; and (c) to the extent that any amounts available for distribution pursuant to clause "FOURTH" above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral account and applied (x) first, to reimburse the Letter of Credit Issuer from time to time for any drawings under such Letters of Credit and (y) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses "FIRST" and "FIFTH" above in the manner provided in this Section 4.05. SECTION 5. CONDITIONS PRECEDENT. Section 5.01. Conditions to Closing Date and Credit Events on the Closing Date. The obligation of each Lender to make each Loan to the Borrower hereunder, the obligation of the Letter of Credit Issuer to issue each Letter of Credit hereunder and of the Existing Letters of Credit becoming Letters of Credit hereunder, in each case on the Closing Date, is subject, at the time of each such Credit Event, to the satisfaction of the following conditions: (a) Execution of Agreement; Notes. On or prior to the Closing Date, (i) this Agreement shall have been executed and delivered to the Agent and (ii) there shall have been delivered to the Agent for the account of each Lender the appropriate A-Term Note, B-Term Note, C-Term Note and Revolving Note, if any, and to ABN AMRO, the Swingline Note, in each case executed by the Borrower and in the amount, maturity and as otherwise provided herein. (b) Officer's Certificate. On the Closing Date, the Agent shall have received a certificate dated such date signed by an appropriate officer of the Borrower stating that all of the applicable conditions set forth in Sections 5.01(e), (f), (g) and 5.02(a) exist as of such date. (c) Opinions of Counsel. On the Closing Date, the Agent shall have received opinions, addressed to the Agent and each of the Lenders and dated the Closing Date, from (i) Howard, Darby & Levin, counsel to the Credit Parties, which opinion shall cover the matters contained in Exhibit F and (ii) subject to Section 7.09(i), local and other counsel to the Credit Parties and/or the Agent reasonably satisfactory to the Agent, which opinions shall cover such matters incident to the transactions contemplated herein and in the other Credit Documents as the Agent may request and shall be in form and substance reasonably satisfactory to the Agent. In addition, on the Closing Date, the Agent shall have received copies of the opinions delivered pursuant to the Merger Agreement, which shall be in form and substance reasonably satisfactory to the Agent. 31 (d) Corporate Proceedings. (i) On the Closing Date, the Agent shall have received from each Credit Party a certificate, dated the Closing Date, signed by the chairman, a vice chairman, the president or any vice-president of such Credit Party, and attested to by the secretary or any assistant secretary of such Credit Party, in the form of Exhibit G with appropriate insertions or in another form approved by the Agent and executed and attested by such officers acceptable to the Agent, together with copies of the certificate of incorporation and by-laws of such Credit Party and the resolutions of such Credit Party referred to in such certificate and all of the foregoing (including each such certificate of incorporation and by-laws) shall be reasonably satisfactory to the Agent. (ii) On the Closing Date, all corporate and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the Merger Agreement and the other Documents to be consummated on and as of the Closing Date shall be satisfactory in form and substance to the Agent and the Required Lenders, and the Agent shall have received all information and copies of all certificates, documents and papers, including good standing certificates, bring-down certificates and any other records of corporate proceedings and governmental approvals, if any, which the Agent reasonably may have requested in connection therewith, such documents and papers, where appropriate, to be certified by proper corporate or governmental authorities. (e) Adverse Changes Etc. Since November 30, 1997, nothing shall have occurred that has had or could be expected to have a material adverse effect on the rights or remedies of the Agent or the Lenders, or on the ability of the Borrower to perform its respective obligations to the Agent, Letter of Credit Issuer and the Lenders or which has, or could be expected to have, a Material Adverse Effect. Since November 30, 1997, nothing shall have occurred that has had or could be expected to have a material adverse effect on the business, properties, assets, liabilities or financial condition of Holdings and its Subsidiaries taken as a whole, except as set forth in Schedule 6.05. (f) Litigation. On the Closing Date, there shall be no actions, suits proceedings or investigations pending or threatened (i) with respect to this Agreement or any other Document or (ii) which the Agent or the Agent and the Required Lenders shall determine could reasonably be expected to (x) have a Material Adverse Effect or (y) have a material adverse effect on the Transaction, the rights or remedies of the Lenders or the Agent hereunder or under any other Credit Document or on the ability of any Credit Party to perform its respective obligations to the Lenders or the Agent hereunder or under any other Credit Document or prospects of the Borrower or of the Borrower and its Subsidiaries taken as a whole. (g) Approvals. On or prior to the Closing Date, all necessary governmental (domestic and foreign) and third party approvals in connection with the Transaction, the transactions contemplated by the Documents and otherwise referred to herein or therein shall have been obtained and remain in effect, and all applicable waiting periods shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of the Transaction, the transactions contemplated by the Documents and otherwise referred to herein or therein. 32 Additionally, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the consummation of the Transaction or the making of Loans or the issuance of the Letters of Credit. (h) Security Documents. (i) On the Closing Date, Holdings shall have duly authorized, executed and delivered the Holdings Guaranty in the form of Exhibit H (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Holdings Guaranty") and each of the Borrower's Domestic Subsidiaries (except Immaterial Subsidiaries), shall have duly authorized, executed and delivered the Subsidiary Guaranty in the form of Exhibit I (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Subsidiary Guaranty"). (ii) On the Closing Date, Holdings shall have duly authorized, executed and delivered the Holdings Pledge Agreement in the form of Exhibit J (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Holdings Pledge Agreement") and shall have delivered to the Collateral Agent for the benefit of Secured Creditors, as pledgee thereunder, all of the Pledged Securities referred to therein, accompanied by executed and undated stock powers, and the Holdings Pledge Agreement shall be in full force and effect. On the Closing Date, the Borrower, Eagle-Picher Development Company, Inc. and Eagle-Picher Minerals, Inc. shall have duly authorized, executed and delivered the Borrower and Subsidiary Pledge Agreement in the form of Exhibit K (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Borrower and Subsidiary Pledge Agreement") and shall have delivered to the Collateral Agent for the benefit of Secured Creditors, as pledgee thereunder, all of the Pledged Securities referred to therein, accompanied by executed and undated stock powers, and the Borrower and Subsidiary Pledge Agreement shall be in full force and effect. (iii) On the Closing Date, the Borrower and each of its Domestic Subsidiaries (except Immaterial Subsidiaries), shall have duly authorized, executed and delivered the Security Agreement in the form of Exhibit L (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Security Agreement") covering all of the Security Agreement Collateral, together with: (A) executed copies of Financing Statements (Form UCC-1) or appropriate local equivalent in appropriate form for filing under the UCC or appropriate local equivalent of each jurisdiction as may be necessary to perfect the security interests purported to be created by the Security Agreement; (B) certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports, each of a recent date listing all effective financing statements that name the Borrower or any of its Domestic Subsidiaries as debtor and that are filed in the jurisdictions referred to in clause (A) above or as otherwise identified by the Agent, together with copies of such financing statements that name the Borrower or any of its Domestic Subsidiaries as debtor (none of which shall cover the Collateral 33 except (x) those with respect to which appropriate termination statements executed by the secured lender thereunder have been delivered to the Agent and (y) to the extent evidencing Permitted Liens); (C) evidence of the completion of all other recordings and filings of, or with respect to, the Security Agreement as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests in the Security Agreement Collateral purported to be created by the Security Agreement; and (D) evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests in the Security Agreement Collateral purported to be created by the Security Agreement have been taken; and the Security Agreement and such Financing Statements shall be in full force and effect. (i) Mortgages; Title Insurance; Surveys. (A) On the Closing Date, the Collateral Agent shall have received fully executed counterparts of deeds of trust, mortgages and similar documents in each case in form and substance reasonably satisfactory to the Agent (as amended, modified or supplemented from time to time in accordance with the terms thereof and hereof, each a "Mortgage" and, collectively, the "Mortgages") with respect to each of the Mortgaged Properties, subject to Section 7.09(j), and arrangements reasonably satisfactory to the Agent shall be in place to provide that counterparts of such Mortgages shall be recorded on or promptly after the Closing Date in all places to the extent necessary or desirable, in the judgment of the Collateral Agent, effectively to create a valid and enforceable first priority mortgage Lien, subject to Permitted Liens, (but subject to Section 7.09(k)) on each such Mortgaged Property in favor of the Collateral Agent (or such other trustee as may be required or desired under local law) for the benefit of the Secured Creditors. (B) On the Closing Date, the Collateral Agent shall have received mortgagee title insurance policies, which may be in the form of marked-up countersigned commitments (the "Mortgage Policies"), with respect to each of the Mortgaged Properties, subject to Section 7.09(i) issued by title insurers satisfactory to the Agent (the "Title Insurers") in amounts equal to fair market value thereof or otherwise reasonably satisfactory to the Agent and assuring the Collateral Agent that the Mortgages referred to in paragraph (A) above are valid and enforceable first priority mortgage Liens on the respective Mortgaged Properties, free and clear of all defects and encumbrances except Permitted Liens. Such Mortgage Policies shall be in form and substance satisfactory to the Agent and (i) shall include (to the extent available in the respective jurisdiction of each such Mortgaged Property) an endorsement for future advances under this Agreement, the Notes and the Mortgages, and endorsements for such other matters that the Agent in its discretion may request, (ii) shall not include an exception for mechanics' liens, and (iii) shall provide for affirmative insurance and such reinsurance (including direct access agreements) as the Agent in its discretion may reasonably request. 34 (j) Existing Indebtedness Agreements; Shareholders' Agreements; Management Agreements; and Leases. On or prior to the Closing Date, there shall have been delivered to the Agent copies, certified as true and correct by an appropriate officer of the Borrower, of: (i) all agreements evidencing or relating to the Existing Indebtedness that are to remain in effect after giving effect to the consummation of the Transaction (collectively, the "Existing Indebtedness Agreements"); (ii) all agreements entered into by the Borrower or any of its Subsidiaries governing the terms and relative rights of its capital stock, and any agreements entered into by shareholders relating to any such entity with respect to their capital stock, in each case that are to remain in effect after giving effect to the consummation of the Transaction (collectively, the "Shareholders' Agreements"); (iii) any material agreements (or the forms thereof) with members of, or with respect to, the management of the Borrower or any of its Subsidiaries that are to remain in effect after giving effect to the consummation of the Transaction (collectively, the "Management Agreements"); (iv) Senior Subordinated Note Documents and documents relating to the Holdings Preferred Stock and the Exchange Debentures; and (v) all agreements relating to the material leases of the Borrower and its Subsidiaries (collectively, the "Lease Agreements"); all of which Existing Indebtedness Agreements, Shareholders' Agreements, Management Agreements, Senior Subordinated Note Documents and Lease Agreements shall be in form and substance satisfactory to the Agent and shall be in full force and effect on the Closing Date. (k) Solvency Certificate; Evidence of Insurance. On the Closing Date, the Agent shall have received: (i) a solvency certificate from the Borrower, addressed to the Agent and each of the Lenders and dated the Closing Date and certifying, that, after giving effect to the Transaction and the incurrence of all financings contemplated herein, the Borrower (on a stand alone basis) and the Borrower and its Subsidiaries (taken as a whole) are not insolvent and will not be rendered insolvent by the indebtedness incurred in connection herewith, will not be left with unreasonably small capital with which to engage in their respective businesses and will not have incurred debts beyond their ability to pay such debts as they mature and become due; and (ii) evidence of insurance complying with the requirements of Section 7.03 for the business and properties of the Borrower and its Subsidiaries, in scope, form and substance reasonably satisfactory to the Agent and naming the Collateral Agent as an additional insured and/or loss payee, and stating that such insurance shall not be 35 cancelled or revised without at least 30 days' (or 10 days' in the case of non-payment of premium) prior written notice by the insurer to the Collateral Agent. (l) Pro Forma Balance Sheet and Sources and Uses of Proceeds. On or prior to the Closing Date, there shall have been delivered to the Agent, (i) an unaudited pro forma consolidated balance sheet of the Borrower and its Subsidiaries as of the Closing Date after giving effect to the Transaction and prepared in accordance with GAAP, together with a related statement of operations and (ii) a certificate of sources and uses of proceeds to be used to consummate the Transaction which pro forma balance sheets and statement of operations and certificates shall be reasonably satisfactory in form and substance to the Agent and the Required Lenders. (m) Projections. On or prior to the Closing Date, the Lenders shall have received the financial projections (the "Projections"), which include the projected results of the Borrower and its Subsidiaries for the five fiscal years ending after the Closing Date. (n) Existing Indebtedness. On the Closing Date and after giving effect to the Transaction to be consummated on the Closing Date and the Loans incurred, and the Letters of Credit issued, on the Closing Date, neither the Borrower nor any of its Subsidiaries shall have any preferred stock or Indebtedness outstanding except for the Obligations, the Senior Subordinated Notes and the Existing Indebtedness of the Borrower. On and as of the Closing Date, all of the Existing Indebtedness of the Borrower shall remain outstanding after giving effect to the Transaction to be consummated on the Closing Date and the other transactions contemplated hereby without any default or event of default existing thereunder or arising as a result of the Transaction and the other transactions contemplated hereby, and there shall not be any amendments or modifications to the Existing Indebtedness Agreements other than as requested or approved by the Agent or the Required Lenders. On and as of the Closing Date, the Agent and the Required Lenders shall be satisfied with the amount of and the terms and conditions of all Existing Indebtedness. (o) Consummation of the Transaction. (i) On the Closing Date, the Merger shall have been consummated in accordance with the Merger Documents and all applicable laws, and each of the conditions precedent to the consummation of the Merger (including, without limitation, the accuracy in all material respects of the representations and warranties contained in the Merger Agreement) shall have been satisfied and no material provision of the Merger Documents shall have been waived, amended, supplemented or otherwise modified, except in each case with the consent of the Agent and the Required Lenders, to the satisfaction of the Agent and the Required Lenders. The aggregate consideration to be received by the shareholder of the Borrower in connection with the Merger shall consist of cash in the amount of $410,000,000 (plus interest thereon less transaction expenses) as provided in the Merger Agreement. 36 (ii) On or prior to the Closing Date, the Borrower shall have received (in the case of clauses (B) and (C) below, by contribution from Holdings) gross cash proceeds of not less than: (A) $219,639,200 from the issuance and sale of Senior Subordinated Notes; (B) $80,000,000 from the issuance and sale of Holdings Preferred Stock; and (C) $100,000,000 from the issuance and sale of Holdings Common Stock, in each case on the terms and conditions satisfactory to the Agent. (iii) On or prior to the Closing Date, there shall have been delivered to the Agent true and correct copies of all Documents entered into on or prior to such date in connection with the Transaction, and all of the terms and conditions of such Documents, as well as the structure of the Transaction and the ownership interests in the Borrower prior to and after giving effect to the Transaction, shall be in form and substance reasonably satisfactory to the Agent and the Required Lenders. (iv) On the Closing Date, the Agent shall have received evidence in form, scope and substance reasonably satisfactory to it that the matters set forth in Section 5.01(o)(i) and (ii) have been satisfied on such date. (p) Payment of Fees. On the Closing Date, all costs, fees and expenses, and all other compensation contemplated by this Agreement, due to the Agent or the Lenders (including, without limitation, certain fees as agreed to between the Agent and the Borrower in that certain fee letter between them dated December 21, 1997, as amended and legal fees and expenses) shall have been paid to the extent due and the Agent is hereby authorized to deduct and pay such amounts from the disbursement of proceeds on the Closing Date. (q) Indebtedness. All Indebtedness of the Credit Parties and their Subsidiaries (other than Existing Indebtedness) shall be repaid in full and all commitments and loans relating thereto shall have been terminated and extinguished. Section 5.02. Conditions to Each Credit Event. The occurrence of the Closing Date and the obligation of each Lender to make Loans (including Loans made on the Closing Date, but excluding Mandatory Borrowings made thereafter, which shall be made as provided in Section 1.01.03), and the obligation of the Letter of Credit Issuer to issue (or cause to be deemed issued hereunder) any Letter of Credit, is subject, at the time of each such Credit Event (except as hereinafter indicated), to the satisfaction of the following conditions: (a) No Default; Representations and Warranties. At the time of each Credit Event and also after giving effect thereto (i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained herein and in the other Credit Documents in 37 effect at such time shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date. (b) Notice of Borrowing; Letter of Credit Request. The Agent shall have received a Notice of Borrowing satisfying the requirements of Section 1.03 with respect to each incurrence of Loans; and the Agent and the Letter of Credit Issuer shall have received a Letter of Credit Request satisfying the requirements of Section 2.03 with respect to each issuance of a Letter of Credit. The occurrence of the Closing Date and the acceptance of the benefits of each Credit Event shall constitute a representation and warranty by each Credit Party to the Agent and each of the Lenders that all of the applicable conditions specified above shall have been satisfied or waived as of the date of such Credit Event. All of the Notes, certificates, legal opinions and other documents and papers referred to in this Section 5 unless otherwise specified, shall be delivered to the Agent at its Notice Office for the account of each of the Lenders and, except for the Notes, in sufficient counterparts for each of the Lenders and shall be reasonably satisfactory in form and substance to the Agent and the Required Lenders. Section 5.03. Determinations under Section 5.01. For purposes of determining compliance with the conditions specified in Section 5.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Closing Date, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Closing Date. SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce the Lenders to enter into this Agreement and to make the Loans, and issue or deemed issued hereunder (and participate in) the Letters of Credit as provided herein, the Borrower makes the following representations, warranties and agreements, in each case after giving effect to the consummation of the Transaction on the Closing Date, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans and issuance of the Letters of Credit, with the occurrence of the Closing Date and the occurrence of each Credit Event on or after the Closing Date being deemed to constitute a representation and warranty that the matters specified in this Section 6 are true and correct in all material respects on and as of the Closing Date and on the date of each such Credit Event (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date). 38 Section 6.01. Corporate Status. Each of the Credit Parties and its Subsidiaries (i) is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction of its incorporation, (ii) has the power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified as a foreign corporation and in good standing in each jurisdiction where the ownership, leasing or operation of property or the conduct of its business requires such qualification except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the business, properties, assets, liabilities or financial condition of each of the Credit Parties or of the Credit Parties and their Subsidiaries taken as a whole. Section 6.02. Corporate Power and Authority. Each of the Credit Parties has the corporate power and authority to execute, deliver and perform the terms and provisions of each of the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance by it of each of such Credit Documents. Each of the Credit Parties has duly executed and delivered each of the Credit Documents to which it is a party, and each of such Credit Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). Section 6.03. No Violation. Neither the execution, delivery or performance by each of the Credit Parties of the Credit Documents to which it is a party, nor compliance by it with the terms and provisions thereof, nor the consummation of the transactions contemplated herein or therein (i) will contravene any material provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality (including, without limitation, the Confirmation Order and the Plan of Reorganization), (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or (other than pursuant to the Security Documents) result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of the Credit Parties or any of their Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or instrument to which any of the Credit Parties or any of their Subsidiaries is a party or by which it or any of its property or assets are bound or to which it may be subject (except that, as of the Closing Date, the Borrower has not obtained certain consents required in connection with the Merger, as set forth in Schedule 6.03) or (iii) will violate any provision of the certificate of incorporation or by-laws (or the equivalent charter documents) of the Credit Parties or any of their Subsidiaries. Section 6.04. Governmental Approvals. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made on or prior to the Closing Date and which remain in full force and effect), or exemption by, any governmental or public body or authority, or any subdivision thereof, 39 is required to authorize, or is required in connection with, (i) the execution, delivery and performance of any Credit Document, (ii) the legality, validity, binding effect or enforceability of any Credit Document or (iii) the consummation of the Transaction. Section 6.05. Financial Statements; Financial Conditions; Undisclosed Liabilities, etc. (a) The audited consolidated statements of financial condition of EPII and its Subsidiaries at November 30, 1997, and the related consolidated statements of income and retained earnings and cash flows of EPII and its Subsidiaries for the fiscal year ended on such date, and heretofore furnished to the Lenders present fairly in all material respects the consolidated financial condition of EPII and its Subsidiaries at the date of such statements of financial condition and the consolidated results of the operations of EPII and its Subsidiaries at the date of such statements of financial condition and the consolidated results of the operations of EPII and its Subsidiaries for such fiscal year. All such financial statements have been prepared in accordance with GAAP consistently applied (except as set forth in the notes to such financial statements). Except as set forth in Schedule 6.05, since November 30, 1997, there has been no material adverse change in the business, property, assets, liabilities or financial condition of EPII or of EPII and its Subsidiaries taken as a whole. (b) Except as fully reflected in the financial statements delivered pursuant to Section 6.05(a) and as specifically noted on Schedule 6.19 and the Indebtedness incurred under this Agreement, there are as of the Closing Date no material liabilities or obligations (excluding current obligations incurred in the ordinary course of business) with respect to the Borrower or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due), and the Borrower or any of its Subsidiaries does not know of any basis for the assertion against the Borrower or any of its Subsidiaries of any such liability or obligation which, either individually or in aggregate, are or would be reasonably likely to be material to the Borrower or to the Borrower and its Subsidiaries taken as a whole. (c) On and as of the Closing Date, the Projections previously delivered to the Agent and the Lenders are based on good faith estimates and assumptions made by the management of the Borrower and its Subsidiaries and on the Closing Date, such management believes that the Projections are reasonable and attainable, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections probably will differ from the projected results and that the differences may be material. (d) On and as of the Closing Date, on a pro forma basis after giving effect to the Transaction consummated on or prior to the Closing Date and to all Indebtedness (including the Loans and the Letters of Credit) being incurred, assumed or guaranteed in connection therewith, (a) the sum of the assets, at a fair valuation, of the Borrower (on a stand-alone basis) and the Borrower and its Subsidiaries (taken as a whole) will exceed the debts of the Borrower (on a stand-alone basis) or the Borrower and its Subsidiaries (taken as a whole), as applicable; (b) the Borrower (on a stand-alone basis) and the Borrower and its Subsidiaries (taken as a whole) have not incurred and do not intend to, or believe that they will, incur debts beyond their ability to pay such debts as such debts mature; and (c) the Borrower (on 40 a stand-alone basis) and the Borrower and its Subsidiaries (taken as a whole) will have sufficient capital and assets with which to conduct their businesses. For purposes of this Section 6.05(d) "debt" means any liability on a claim, and "claim" means (i) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or (ii) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. (e) The pro forma consolidated balance sheet of the Borrower and its Subsidiaries as of the Closing Date and the related pro forma consolidated statements of income for the fiscal three-month period ended on or about the Closing Date (all of which financial statements have been certified by the chief financial officer of the Borrower), copies of which have heretofore been furnished to each Lender, reflect the pro forma financial position of the Borrower and its Subsidiaries after giving effect to the Transaction, as if such transaction had occurred on December 1, 1997 for such balance sheet and as of December 1, 1997 for such income statements. Such financial statements are based on available information and on assumptions that the Borrower believes are reasonable. Section 6.06. Litigation. Except as set forth in Schedule 6.06, there are no actions, suits or proceedings pending or, to the best knowledge of the Credit Parties and their Subsidiaries, threatened (i) with respect to any Credit Document, (ii) with respect to any material Indebtedness of the Credit Parties or any of their Subsidiaries, (iii) that could reasonably be expected to materially and adversely affect the business, property, assets, liabilities or financial condition of any of the Credit Parties or of the Credit Parties and their Subsidiaries taken as a whole or (iv) that could reasonably be expected to have a material adverse effect on the rights or remedies of the Agents or the Lenders or on the ability of any Credit Party to perform its respective obligations to the Agents or the Lenders hereunder and under the other Credit Documents to which it is, or will be, a party. Additionally, to the best knowledge of the Credit Parties and their Subsidiaries, there does not exist any judgment, order or injunction prohibiting, or imposing material adverse conditions upon, the occurrence of any Credit Event. Section 6.07. True and Complete Disclosure. All factual information (taken as a whole) contemporaneously furnished by or on behalf of the Credit Parties or any of their Subsidiaries in writing to the Agent or any Lender (including, without limitation, all information contained in the Confidential Information Memorandum and in the Preliminary Offering Memorandum dated February 4, 1998 relating to the Senior Subordinated Notes and the Holdings Preferred Stock (to the extent such information relates to the Credit Parties and their Subsidiaries) and the Credit Documents but excluding the Projections and any other forecasts and projections of financial information and results submitted to the Agent or any Lender) for purposes of or in connection with this Agreement, or any transaction contemplated herein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of any such Persons in writing to the Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or 41 certified and not incomplete by omitting to state any factnecessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided. Section 6.08. Use of Proceeds; Margin Regulations. (a) All proceeds of Loans shall be used by the Borrower (i) to repay all Indebtedness of EPII and its Subsidiaries (except Existing Indebtedness) as required by Section 5.01(q), (ii) to effectuate the Merger (including the purchase of the common stock of EPII), (iii) to pay the transaction costs of the Merger and (iv) for working capital and general corporate purposes (excluding acquisitions) of the Borrower and its Subsidiaries. (b) No part of the proceeds of any Loan will be used by the Borrower or any Subsidiary thereof to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulations G, T, U or X of the Board of Governors of the Federal Reserve System. Section 6.09. Tax Returns and Payments. Each of the Borrower and each of its Subsidiaries has timely filed or caused to be timely filed, on the due dates thereof or pursuant to applicable extensions thereof, with the appropriate taxing authority, all Federal, state and other material returns, statements, forms and reports for taxes (the "Returns") required to be filed by, or with respect to the income, properties or operations of, the Borrower and/or any of its Subsidiaries. The Returns accurately reflect all liability for taxes of the Borrower and its Subsidiaries for the periods covered thereby. Each of the Borrower and each of its Subsidiaries has paid all taxes payable by them other than taxes which are not delinquent, and other than those contested in good faith and for which adequate reserves have been established in accordance with GAAP. Except as disclosed in the financial statements referred to in Section 6.05(a) or Schedule 6.05, there is no material action, suit, proceeding, investigation, audit, or claim now pending or, to the best knowledge of the Borrower and its Subsidiaries, threatened by any authority rewarding any taxes relating to the Borrower or any of its Subsidiaries. United States Federal income tax returns of EPII and its Subsidiaries have been examined and closed through the fiscal year ended November 30, 1993. As of the Closing Date neither the Borrower nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of material taxes of the Borrower or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of the Borrower or any of its Subsidiaries not to be subject to the normally applicable statute of limitations. Neither the Borrower nor any of its Subsidiaries has provided, with respect to themselves or property held by them, any consent under Section 341 of the Code. To the best knowledge of the Borrower and its Subsidiaries, neither the Borrower nor any of its Subsidiaries has incurred, or will incur, any material tax liability in connection with the Transaction and the other transactions contemplated hereby. 42 Section 6.10. Compliance with ERISA. Each Plan is in substantial compliance with ERISA and the Code; except as set forth on Schedule 6.10, no Reportable Event has occurred with respect to a Plan as a result of which the Borrower or any Subsidiary or any ERISA Affiliate has incurred or will under existing circumstances incur material liability under ERISA; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current Liability giving rise to a lien under ERISA or the Code, and no Plan has an accumulated or waived funding deficiency, has permitted decrease in its funding standard account or has applied for a waiver of the minimum funding standard or an extension of any amortization period within the meaning of Section 412 of the Code; all contributions required to be made with respect to a Plan have been timely made; neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has incurred any material liability to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any material liability (including any indirect, contingent or secondary liability) under any of the foregoing Sections with respect to any Plan; no proceedings have been instituted to terminate, or to appoint a trustee to administer, any Plan other than pursuant to Section 4041(b) of ERISA; no condition exists which presents a material risk to the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate of incurring a material liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the Borrower and its Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Plan ended prior to the date of the most recent Credit Event, would not result in a Material Adverse Effect, no lien imposed under the Code or ERISA on the assets of the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate exists or under existing circumstances, will arise on account of any Plan; and except as set forth on Schedule 6.10, each of the Borrower and its Subsidiaries may cease contributions to or terminate any employee benefit plan maintained by them which provides benefits to retired employees or other former employees without incurring any material liability; and except as set forth on Schedule 6.10, the Borrower and its Subsidiaries do not maintain or contribute to any material Retiree Welfare Plan or Foreign Pension Plan. Section 6.11. Subsidiaries. Schedule 6.11 correctly sets forth, as of the Closing Date, each Subsidiary of the Borrower and the percentage ownership (direct and indirect) of the Borrower in each class of capital stock of each of its Subsidiaries and also identifies the direct owner thereof. Section 6.12. Compliance with Statutes, etc. Except as set forth in Schedule 6.13, the Borrower and each of its Subsidiaries is, to its best knowledge, in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of their businesses and the ownership of their property, except such noncompliances as could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. 43 Section 6.13. Environmental Matters. Except as set forth in Schedule 6.13 and except to the extent that the aggregate effect of all failures and noncompliances of the types described below in this Section 6.13 could not reasonably be expected to have a Material Adverse Effect: (a) Each of the Borrower and each of its Subsidiaries is in compliance with all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws. There are no pending or, to the best knowledge of the Borrower and its Subsidiaries after due inquiry, threatened Environmental Claims, including any such claims (regardless of materiality) for liabilities under CERCLA relating to the disposal of Hazardous Materials since January 7, 1991, against the Borrower or any of its Subsidiaries or any Real Property owned or operated by the Borrower or any of its Subsidiaries. There are no facts, circumstances, conditions or occurrences on any Real Property owned or operated by the Borrower or any of its Subsidiaries that, to the best knowledge of the Borrower and its Subsidiaries after due inquiry, could reasonably be expected (i) to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property, or (ii) to cause any such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability of such Real Property by the Borrower or any of its Subsidiaries under any applicable Environmental Law. (b) Hazardous Materials have not been generated, used, treated or stored on, or transported to or from, any Real Property owned or operated by the Borrower or any of its Subsidiaries where such generation, use, treatment or storage has violated, is in violation of, or to the best knowledge of the Borrower and its Subsidiaries after due inquiry may be in violation of any Environmental Law. Hazardous Materials have not been Released on or from any Real Property owned or operated by the Borrower or any of its Subsidiaries where such Release, individually, may reasonably be expected to require in excess of $50,000 in response costs under any applicable Environmental Law. (c) The Real Property owned or operated by the Borrower or any of its Subsidiaries does not contain: (i) underground storage tanks, (ii) any landfills or dumps, (iii) hazardous waste treatment, storage, or disposal facilities as defined pursuant to RCRA or any comparable state law, or (iv) a site on or nominated for the National Priority List promulgated pursuant to CERCLA or any analogous state remedial priority list promulgated or published pursuant to any comparable state law. Section 6.14. Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 6.15. Public Utility Holding Company Act. Neither the Borrower nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding 44 company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. Section 6.16. Patents, Licenses, Franchises and Formulas. Each of the Borrower and each of its Subsidiaries owns all the patents, trademarks, permits, service marks, trade names, copyrights, franchises and formulas, or rights with respect to the foregoing, or each has obtained licenses of all other rights of whatever nature necessary for the present conduct of its businesses, in each case without any known conflict with the rights of others which, or the failure to obtain which, as the case may be, could reasonably be expected to result in a Material Adverse Effect. Section 6.17. Properties. All Real Property owned by the Borrower or any of its Subsidiaries and all material Leaseholds leased by the Borrower or any of its Subsidiaries, in each case as of the Closing Date and after giving effect to the Transaction, and the nature of the interest therein, is correctly set forth in Schedule 6.17. Each of the Borrower and each of its Subsidiaries has good and marketable title to, or a validly subsisting leasehold interest in, all material properties owned or leased by it, including all Real Property reflected in Schedule 6.17, free and clear of all Liens, other than Permitted Liens. Section 6.18. Labor Relations. To the best knowledge of the Borrower and its Subsidiaries, neither the Borrower nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower and its Subsidiaries, threatened against any of them, before the National Labor Relations Board, and no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower and its Subsidiaries, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower and its Subsidiaries, threatened against the Borrower or any of its Subsidiaries and (iii) to the best knowledge of the Borrower and its Subsidiaries, no union representation proceeding is pending with respect to the employees of the Borrower or any of its Subsidiaries and no union organizing activities are taking place, except (with respect to any matter specified in clause (i), (ii) or (iii) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect. Section 6.19. Indebtedness. Schedule 6.19 sets forth a true and complete list of all Indebtedness of the Borrower and its Subsidiaries as of the Closing Date and which is to remain outstanding after giving effect to the Transaction and the incurrence of the Loans on such date (excluding the Loans and the Letters of Credit, all such non-excluded Indebtedness, the "Existing Indebtedness"), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any other entity which directly or indirectly guaranteed such Indebtedness. Section 6.20. Security Interests. On and after the Closing Date, each of the Security Documents (to the extent so provided therein) creates (or after the execution and delivery 45 thereof will create), as security for the Obligations, a valid and enforceable perfected security interest in and Lien on all of the Collateral subject thereto, superior to and prior to the rights of all third Persons, and subject to no other Liens (except that the Security Agreement Collateral, the Mortgaged Properties and the Collateral covered by the Additional Security Documents may be subject to Permitted Liens relating thereto), in favor of the Collateral Agent for the benefit of Secured Creditors. No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings required in connection with any such Security Document which shall have been made on or prior to the Closing Date as contemplated by Section 5.01(h)(iii) or on or prior to the execution and delivery thereof as contemplated by Sections 7.09, 7.11 and 8.14 or which shall be made on or promptly after the Closing Date as contemplated by Section 5.01(i). Section 6.21. Representations and Warranties in Other Documents. All representations and warranties of the Credit Parties set forth in the other Documents were true and correct in all material respects as of the time such representations and warranties were made and shall be true and correct in all material respects as of the Closing Date as if such representations and warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date, and, the Borrower has no knowledge that any of the representations and warranties of the other parties set forth in the other Documents, were untrue or incorrect in any material respect as of the time such representations and warranties were made and as of the Closing Date as if such representations and warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date. Section 6.22. Transaction. At the time of consummation thereof, the Transaction shall have been consummated in accordance with the terms of the respective Documents and all applicable laws, in effect at such time. All applicable waiting periods with respect thereto have or, prior to the time when required, will have, expired without, in all such cases, any action being taken by any competent authority which restrains, prevents, or imposes material adverse conditions upon the Transaction. Additionally, there does not exist any judgment, order or injunction prohibiting or imposing material adverse conditions upon the Transaction, or the occurrence of any Credit Event or the performance by any Credit Party of its obligations under the Documents and all applicable laws. Section 6.23. Capitalization. On the Closing Date and after giving effect to the Transaction, the authorized and issued capital stock of the Borrower and its Subsidiaries shall be as set forth on Schedule 6.23. All outstanding shares of capital stock of the Borrower have been duly and validly issued, and are fully paid and nonassessable. The Borrower and its Subsidiaries do not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock, except as set forth on Schedule 6.23. 46 Section 6.24. Senior Subordinated Notes. The applicable subordination provisions contained in the Senior Subordinated Note Documents are enforceable against the Borrower, each Guarantor and the holders thereof, and all Obligations and Guaranteed Obligations are within the definition of "Senior Indebtedness" included in such subordination provisions. This Agreement is the "New Credit Agreement" under the Senior Subordinated Note Indenture. SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that on and after the Closing Date and until the Total Commitment and all Letters of Credit have terminated, and the Loans, any Unpaid Drawings and the Notes, together with interest, Fees and all other obligations incurred hereunder and thereunder, are paid in full: Section 7.01. Information Covenants. The Borrower will furnish to the Agent with sufficient copies for each Lender (upon receipt thereof, the Agent shall distribute to each Lender): (a) Monthly Reports. Within 45 days after the end of each fiscal month of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal month and the related consolidated statements of income and retained earnings and of cash flows for such fiscal month and for the elapsed portion of the fiscal year ended with the last day of such fiscal month, in each case setting forth comparative figures for the corresponding fiscal month in the prior fiscal year and comparable budgeted figures for such fiscal month, all of which shall be certified by the chief financial officer or other Authorized Officer of the Borrower, subject to normal year-end audit adjustments and the absence of footnotes. (b) Quarterly Financial Statements. (i) Within 45 days after the close of each quarterly accounting period in each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated statements of income and retained earnings and of cash flows for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, in each case setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be in reasonable detail and certified by the chief financial officer or other Authorized Officer of the Borrower that they fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes. (ii) Within 45 days after the close of each quarterly accounting period in each fiscal year of the Borrower, a certificate setting forth the calculations necessary to support compliance with Sections 8.07, 8.08, 8.09 and 8.10 for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day 47 of such quarterly accounting period; all of which shall be in reasonable detail and certified by the chief financial officer or other Authorized Officer of the Borrower. (c) Annual Financial Statements. (i) Within 90 days after the close of each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for such fiscal year, in each case setting forth comparative figures for the preceding fiscal year and comparable budgeted figures for such fiscal year and certified by independent certified public accountants of recognized national standing acceptable to the Agent, in each case to the effect that such statements fairly present the financial condition of the Borrower and its Subsidiaries as of the dates indicated and the results of their operations and changes in cash flows, together with a certificate of such accounting firm stating that in the course of its regular audit of the business of the Borrower and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, no Default or Event of Default which has occurred and is continuing has come to their attention or, if such a Default or an Event of Default has come to their attention a statement as to the nature thereof. The certificate of the accountant shall be free from qualifications. (ii) Within 90 days after the close of each fiscal year of the Borrower, a Certificate setting forth the calculations necessary to support compliance with Sections 8.07, 8.08, 8.09 and 8.10 for such fiscal year; all of which shall be in reasonable detail and certified by the chief financial officer or other Authorized Officer of the Borrower that they fairly present the information contained therein for the periods indicated. (d) Budgets. As promptly as same are approved by the Board of Directors of the Borrower, but in any event within 45 days after the first day of each fiscal year of the Borrower, a budget in form satisfactory to the Agent (including, without limitation, a breakdown of the projected results of each line of business of the Borrower and its Subsidiaries, and budgeted statements of income, and sources and uses of cash and balance sheets for the Borrower and its Subsidiaries taken as a whole) of the Borrower and its Subsidiaries in reasonable detail for each of the four fiscal quarters of such fiscal year and for the immediately succeeding fiscal year taken as a whole, in each case as customarily prepared by management for its internal use setting forth, with appropriate discussion, the principal assumptions upon which such budgets are based. Together with each delivery of financial statements pursuant to Section 7.01(a), (b) and (c), a comparison of the current year to date financial results (other than in respect of the balance sheets included therein) against the budgets required to be submitted pursuant to this clause (d) shall be presented. (e) Officer's Certificates. At the time of the delivery of the financial statements provided for in Section 7.01(a), (b) and (c), (i) a certificate of the chief financial officer of the Borrower to the effect that, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default does exist, 48 specifying the nature and extent thereof, and (ii) a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for the period covered by such financial statements. In addition, at the time of the delivery of the financial statements provided for in Section 7.01(c)(i), a certificate of the chief financial officer or other Authorized Officer of the Borrower setting forth (i) the amount of, and calculations required to establish the amount of, Excess Cash Flow for the Excess Cash Flow Period ending on the last day of the respective fiscal year and (ii) the calculations required to establish whether the Borrower was in compliance with Section 4.02.01(f) for the respective fiscal year. (f) Notice of Default or Litigation. Promptly, and in any event within five Business Days (or three Business Days with respect to an event described in clause (i) below) after any officer of the Borrower obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto, (ii) the commencement of, or threat of, or any significant development in, any litigation or governmental proceeding pending against the Borrower or any of its Subsidiaries (x) in which the amount involved is $5,000,000 or more, (y) which is likely to have a Material Adverse Effect, or a material adverse effect on the ability of any Credit Party to perform its respective obligations hereunder or under any other Credit Document or (z) with respect to any Credit Document, and (iii) the commencement of, or any significant development of (x) any action affecting the Confirmation Order, the Plan of Reorganization or the Permanent Injunction to the extent that such action materially and adversely affects the Transaction or (y) any material claim by the Borrower against the PI Trust under the Merger Agreement. (g) Management Letters. Promptly after the Borrower's receipt thereof, a copy of each report or any "management letter" submitted to the Borrower or any of its Subsidiaries by its certified public accountants and the management's responses thereto. (h) Other Reports and Filings. Promptly, copies of all financial information, proxy materials and other material information, certificates and reports, if any, which the Borrower or any of its Subsidiaries (x) has filed with the Securities and Exchange Commission or any governmental agencies substituted therefor (the "SEC") or any comparable agency outside of the United States or (y) has delivered to holders of, or to any agent or trustee with respect to, Indebtedness of the Borrower or any of its Subsidiaries in their capacity as such a holder, agent or trustee to the extent that the aggregate principal amount of such Indebtedness exceeds (or upon the utilization of any unused commitments may exceed) $5,000,000. (i) Environmental Matters. Promptly upon, and in any event within ten Business Days after any officer of the Borrower obtains knowledge thereof, notice of one or more of the following environmental matters which individually, or in the aggregate, may reasonably be expected to have a Material Adverse Effect: 49 (i) any notice of Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property owned or operated by the Borrower or any of its Subsidiaries; (ii) any condition or occurrence on or arising from any Real Property owned or operated by the Borrower or any of its Subsidiaries that (a) results in noncompliance by the Borrower or any of its Subsidiaries with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property; (iii) any condition or occurrence on any Real Property owned or operated by the Borrower or any of its Subsidiaries that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability by the Borrower or any of its Subsidiaries of such Real Property under any Environmental Law; and (iv) any removal or remedial actions to be taken in response to the actual or alleged presence of any Hazardous Material on any Real Property owned or operated by the Borrower or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency. All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Borrowers' or such Subsidiary's response thereto. In addition, the Borrower agrees to provide the Lenders with copies of all material written communications by the Borrower or any of its Subsidiaries with any Person, government or governmental agency relating to any of the matters set forth in clauses (i)-(iv) above, and such detailed reports relating to any of the matters set forth in clauses (i)-(iv) above as may reasonably be requested by the Agent or the Required Lenders. (j) promptly after entering into any tax sharing or tax allocation agreements by the Borrower or any of its Subsidiaries, copies of such agreements. (k) Other Information. From time to time, such other information or documents (financial or otherwise) of any Credit Party as any Lender may reasonably request. Section 7.02. Books, Records and Inspections. The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of applicable law shall be made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit officers and designated representatives and agents of the Agent or any Lender, to visit and inspect any of the properties of the Borrower or such Subsidiary, and to examine the books of account of the Borrower or such Subsidiary and discuss the affairs, finances and accounts of the Borrower or such Subsidiary 50 with, and be advised as to the same by, its and their officers and independent accountants, all at such reasonable times and intervals, during reasonable business hours and to such reasonable extent as the Agent or any Lender may request provided, that all such visits and inspections shall be coordinated through the Agent with consultation with the Borrower. Section 7.03. Maintenance of Property, Insurance, Environmental Matters, etc. (a) The Borrower will, and will cause each of its Subsidiaries to, (i) ensure that its material properties and equipment used in its business are kept in good repair, working order and condition, normal wear and tear and damage by casualty excepted, and, subject to Section 8.07, that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto, to the extent and in the manner useful or customary for companies in similar businesses and (ii) maintain in full force and effect with financially sound and reputable insurance companies insurance which provides substantially the same (or greater) coverage and against at least such risks as is in accordance with industry practice, and shall furnish to the Agent upon written request full information as to the insurance so carried. The Borrower shall, and shall cause each of its Subsidiaries to, in any event maintain insurance on the Collateral to the extent required by the Security Documents. The Borrower shall assert its rights against the PI Trust as to these matters purported to be indemnified by the PI Trust under the terms of the Merger Agreement. (b) Without limiting the generality of this Section 7.03, the Borrower and its Subsidiaries: (i) shall maintain all Real Property in compliance in all material respects with any applicable Environmental Laws; (ii) shall obtain and maintain in full force and effect all governmental approvals required for its operations at or on its properties by any applicable Environmental Laws; (iii) shall cure as soon as reasonably practicable any violation of applicable Environmental Laws with respect to any of its properties which individually or in the aggregate may reasonably be expected to have a Material Adverse Effect; (iv) shall not, and shall not permit any other Person to, own or operate on any of its properties any landfill or dump or hazardous waste treatment, storage or disposal facility as defined pursuant to the RCRA, or any comparable state law except for those facilities or landfills owned as of the Closing Date as set forth in Schedule 6.13; and (v) shall not use, generate, treat, store, release or dispose of Hazardous Materials at or on any of the Real Property except in the ordinary course of its business and in compliance with all Environmental Laws. With respect to any Release of Hazardous Materials, the Borrower and its Subsidiaries shall conduct any necessary or required investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other response action necessary to remove, cleanup or abate any material quantity of Hazardous Materials released at or on any of its properties as required by any applicable Environmental Law. Section 7.04. Corporate Franchises. The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, authority to do business, licenses and patents; provided, however, that nothing in this Section 7.04 shall prevent (i) sales of assets by the Borrower or any of its Subsidiaries in accordance with Section 8.02, (ii) the dissolution or liquidation of any Subsidiary of the Borrower or the merger or consolidation 51 between or among the Subsidiaries of the Borrower, in each case in accordance with Section 8.02 or (iii) the withdrawal by the Borrower or any of its Subsidiaries of its qualification to do business as a foreign corporation in any jurisdiction where such withdrawal could not reasonably be expected to have a Material Adverse Effect. Section 7.05. Compliance with Statutes, etc. The Borrower will, and will cause each of its Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including, without limitation, all Environmental Laws applicable to the ownership or use of Real Property now or hereafter owned or operated by the Borrower or any of its Subsidiaries), non-compliance of which could have a Material Adverse Effect or could result in a Lien upon any of the Borrower's or any of its Subsidiaries' property. Section 7.06. ERISA. As soon as possible and, in any event, within 10 days after the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, the Borrower will deliver to each of the Lenders a certificate of the chief financial officer of the Borrower setting forth details as to such occurrence and the action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: that a Reportable Event has occurred; that an accumulated funding deficiency has been incurred or an application may be or has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan; that a contribution required to be made to a Plan, Multiemployer Plan or Foreign Pension Plan has not been timely made; that a Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA other than a termination pursuant to Section 4041(b) of ERISA; that a Plan has an Unfunded Current Liability giving rise to a lien under ERISA or the Code; that proceedings may be or have been instituted to terminate or appoint a trustee to administer a Plan; that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan; that the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or may incur any material liability (including any indirect, contingent or secondary liability) to or on account of the termination of or withdrawal from a Plan or Multiemployer Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) or ERISA; or that the Borrower or any Subsidiary of the Borrower has incurred any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA or applicable state or foreign law or as disclosed on Schedule 6.10). At the request of any Lender, the Borrower will deliver to such Lender a complete copy of the annual report (Form 5500) of each Plan required to be filed with the Internal Revenue Service. In addition to any certificates or notices delivered to the Lenders pursuant to the first sentence hereof, copies of annual reports and any notices received by the 52 Borrower or any Subsidiary of the Borrower or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan shall be delivered to the Lenders no later than 10 days after the date such report has been filed with the Internal Revenue Service or received by the Borrower or the Subsidiary or the ERISA Affiliate. Section 7.07. Performance of Obligations. The Borrower will, and will cause each of its Subsidiaries to, perform all of its material obligations under the terms of each mortgage, indenture, security agreement and other material agreements by which it is bound. Section 7.08. Payment of Taxes. The Borrower will, and will cause each of its Subsidiaries to, pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which any penalties attach thereto, and all lawful claims for sums that have become due and payable; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien (other than Permitted Liens described in Section 8.01(i)) resulting therefrom attaches to its property. Section 7.09. Collateral, Additional Security; Further Assurance. (a) The Borrower agrees that all Obligations and any other obligations and liabilities of the Borrower to the Agents, the Lenders and the Letter of Credit Issuer shall be secured by (A) valid, perfected and enforceable liens in all right, title and interest of Holdings, of the Borrower and of each Domestic Subsidiary (except Immaterial Subsidiaries) of the Borrower in all capital stock of the Borrower and each Domestic Subsidiary (except Immaterial Subsidiaries) of the Borrower and, subject to Section 7.11, in 65% of Voting Equity and 100% of Non-Voting Equity of each First Tier Foreign Subsidiary (except Immaterial Subsidiaries) of the Borrower, whether now owned or hereafter acquired, and all proceeds thereof and (B) valid, perfected (subject to the proviso appearing at the end of this sentence) and enforceable liens in all right, title and interest of the Borrower and of each Domestic Subsidiary (except Immaterial Subsidiaries) of the Borrower in all cash and cash equivalents, accounts, chattel paper, general intangibles, instruments, investment property, documents, inventory, equipment and real property (subject to Section 7.09(j) below) of every kind and description, whether now owned or hereafter acquired, (including, without limitation, the Real Property located in Kalkaska, Michigan and Manchester, Tennessee that is described in Schedule 6.17 upon release of the security documents now encumbering such Real Property or acquisition of the fee interest therein by the Borrower or any Affiliate thereof), and all proceeds thereof, including, without limitation, all rights under any leases of goods (except for real property located outside of the United States); provided, however, that until a Default or an Event of Default has occurred and is continuing and thereafter until otherwise required by the Required Lenders or the Agent, (i) liens on cash or deposit accounts maintained with Persons other than the Lenders need not be perfected, (ii) liens need not be perfected on note receivables having a fair market value of less than $5,000,000 in the aggregate, (iii) liens on investment property (other than the capital stock of the Borrower and each Domestic Subsidiary (except Immaterial Subsidiaries) of the Borrower) which cannot be perfected by the filing of a financing statement need not be perfected, (iv) liens on 53 vehicles which are subject to a certificate of title law need not be noted on the certificate of title, (v) liens on inventory and equipment located at job sites outside of the United States of America in the ordinary course of business need not be perfected and (vi) liens on government contracts need not be perfected. The liens in the Collateral shall be granted by the Borrower and Domestic Subsidiaries (except Immaterial Subsidiaries) to the Agent for the ratable account of the Lenders and shall be valid and perfected first liens subject, however, to the proviso appearing at the end of the immediately preceding sentence, Section 7.09(k) below and the Permitted Liens. Notwithstanding anything to the contrary contained herein, in no event will any of the Collateral described above be deemed to include (i) any interests in any leases or licenses to use real or personal property under which the Borrower or any Domestic Subsidiary of the Borrower is lessee or licensee and a Person other than the Borrower or an Affiliate of the Borrower is lessor or licensor to the extent the granting of a security interest or lien therein is prohibited by the agreement(s) pursuant to which such property is leased and such prohibition has not been or is not waived or the consent of the applicable party has not been or is not obtained, or (ii) any interest in any joint venture or in any contract, contract right, or other similar general intangible if the granting of a lien therein is prohibited by the terms of the written agreement creating such joint venture or creating or evidencing such contract, contract right, or similar general intangible; provided further, that (x) notwithstanding anything set forth in clause (ii) above to the contrary, to the extent not prohibited by law, the Agent has and shall at all times have a security interest in all rights to payments of money due or to become due under any joint venture, contract, contract right, or similar general intangible and all other proceeds thereof and (y) if and when the prohibition which prevents the granting of a security interest in any such property is removed, terminated or otherwise becomes unenforceable as a matter of law, the Agent will be deemed to have, and at all times to have had, a security interest in such property, and the Collateral will be deemed to include, and at all times to have included, such property. (b) The Borrower will, and will cause each of its Domestic Subsidiaries (and subject to Section 7.11, each of its Foreign Subsidiaries) (except Immaterial Subsidiaries) to, grant to the Collateral Agent for the benefit of Secured Creditors security interests and mortgages in such assets and properties of the Borrower and its Subsidiaries (to the extent described in Section 7.09(a)) as are not covered by the original Security Documents, and as may be requested from time to time by the Agent or the Required Lenders subject to applicable law. All such security interests and mortgages shall be granted pursuant to documentation satisfactory in form and substance to the Agent and substantially in the same form as the original Security Documents (collectively, the "Additional Security Documents") and shall constitute valid and enforceable perfected security interests and mortgages superior to and prior to the rights of all third Persons and subject to no other Liens except for Permitted Liens. The Additional Security Documents or instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall have been paid in full. 54 (c) The Borrower shall cause to be delivered to the Collateral Agent surveys in form and substance reasonably satisfactory to the Collateral Agent of each Mortgaged Property, dated a recent date reasonably acceptable to the Collateral Agent, accompanied by a certificate in the form of Exhibit O or otherwise certified in a manner reasonably satisfactory to the Collateral Agent by a licensed professional surveyor reasonably satisfactory to the Collateral Agent. Each of the licensed surveyors selected in good faith by Bock & Clark shall be deemed acceptable to the Collateral Agent. (d) The Borrower shall cause to be delivered to the Collateral Agent endorsements to the Mortgage Policies which shall (i) delete any exceptions for matters that would be disclosed by a survey of the property, (ii) provide coverage over any exceptions raised by the Title Insurers as a result of review of the surveys of the property in form and substance acceptable to Agent, and (iii) include such affirmative coverages and specific endorsements as are not available as of the Closing Date because of the unavailability of surveys or as Agent shall otherwise request, including, without limitation, comprehensive endorsements, 3.1 zoning endorsements (modified to include parking and loading docks), access endorsements and location endorsements, to the extent available under applicable laws and regulations. (e) The Borrower shall cause to be delivered to the Agent such estoppel letters, landlord waiver letters, no-disturbance letters and similar assurances as may have been requested (and not waived) by the Agent with respect to Mortgaged Properties that are Leaseholds, which letters shall be in form and substance reasonably satisfactory to the Agent. (f) The Borrower will, and will cause each of its Subsidiaries to, at the expense of the Borrower, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, real property surveys, reports and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Collateral Agent may reasonably require. Furthermore, the Borrower shall cause to be delivered to the Collateral Agent such opinions of counsel, title insurance and other related documents as may be reasonably requested by the Agent to assure themselves that this Section 7.09 has been complied with. (g) If the Agent or the Required Lenders determine that they are required by law or regulation to have appraisals prepared in respect of the Real Property of the Borrower and its Subsidiaries constituting Collateral, the Borrower shall pay, at the Agent's request, any costs and expenses incurred or to be incurred by the Agent in obtaining appraisals which satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of the Financial Institution Reform, Recovery and Enforcement Act of 1989 and which shall be in form and substance satisfactory to the Agent. (h) The Borrower agrees that all Obligations and any other obligations and liabilities of the Borrower hereunder and under the other Credit Documents shall at all times be jointly and severally guaranteed by each Guarantor pursuant to the Holdings Guaranty or 55 the Subsidiary Guaranty, as the case may be. In the event any Domestic Subsidiary (except Immaterial Subsidiary) of the Borrower is hereafter formed or acquired, the Borrower shall cause such Domestic Subsidiary to execute an assumption and supplement to the Subsidiary Guaranty pursuant to which such Domestic Subsidiary joins in and becomes obligated as a guarantor thereunder, which assumption and supplement shall be in form and substance satisfactory to the Agent, and the Borrower shall also cause such Domestic Subsidiary to execute an assumption and supplement to the Security Agreement granting the Agent for the benefit of the Lenders a security interest in and lien on the assets of such Domestic Subsidiary as collateral security for the Obligations and any other obligations and liabilities of the Borrower under the Credit Documents, together with such other instruments, documents, certificates and opinions reasonably required by the Agent in connection therewith. In addition the Borrower shall, or shall cause its Subsidiary (which owns capital stock of such Domestic Subsidiary) to, execute an assumption and supplemental pledge agreement to pledge all capital stock of such Domestic Subsidiary owned by the Borrower or such Subsidiary, as the case may be. (i) If on the Closing Date the Borrower does not deliver one or more opinions of local counsel with respect to real property matters or Mortgage Policies as contemplated by Sections 5.01(c) and 5.01(i)(B) for reasons other than those within Borrower's reasonable control, which reasons within Borrower's reasonable control shall include, but not be limited to, the Borrower's failure to deliver title affidavits or indemnities or corporate documents (such as, but not limited to, good standing certificates and certified resolutions), or Borrower's failure to pay premiums or fees or to make deposits required by a Title Insurer (but not including, solely for the purpose of this sentence, deposits on account of Liens other than Permitted Liens which may be released after the Closing Date in accordance with Section 7.09(k)), then the delivery of the same shall not be a condition precedent under Section 5.01 but a covenant of the Borrower as hereinafter set forth. Borrower agrees and acknowledges that closing of the transactions contemplated hereby without receipt of such items as are described above prior thereto does not constitute a waiver of the Borrower's obligation to deliver such items as set forth above. (j) If on the Closing Date any of the Mortgages to be delivered in connection with Mortgaged Properties in which the Borrower or a Credit Party holds a Leasehold as set forth in Schedule 6.17 has not been executed and delivered in recordable form, then the execution and delivery of same shall not be a condition precedent under Section 5.01 but a covenant of the Borrower as hereinafter set forth. Borrower agrees and acknowledges that closing of the transactions contemplated hereby without execution and delivery of such Mortgages prior thereto does not constitute a waiver of the Borrower's obligation to execute and deliver such Mortgages. (k) If on the Closing Date any of the Mortgaged Properties is subject to a Lien which is not a Permitted Lien, but such Lien or Liens do not have a material adverse effect, singly or in the aggregate, on the business, properties, assets, liabilities or financial condition of the Borrower or the Credit Party granting the lien on such Mortgaged Property, then the release of same shall not be a condition precedent under Section 5.01 but a covenant of the Borrower as hereinafter set forth. Borrower agrees and acknowledges that closing of the 56 transactions contemplated hereby without release of such Liens as are described above prior thereto does not constitute a waiver of the Borrower's obligation to release such Liens. (l) The Borrower agrees to use all reasonable efforts in order that each action required above by this Section 7.09 shall be completed within 90 days after such action is either requested to be taken by the Agent or the Required Lenders or required to be taken by the Borrower and its Subsidiaries pursuant to the terms of this Section 7.09 and agrees that each such action shall in all events be completed within 150 days of such request or requirement. Section 7.10. Interest Rate Protection. On or prior to the Closing Date at least 50% of the sum of outstanding Term Loans of the Borrower shall be subject to Interest Rate Protection Agreements, satisfactory to the Agent, with a term of at least 3 years from the Closing Date, or shall be subject to a fixed or maximum interest rate (with a term of at least 3 years from the Closing Date) acceptable to the Agent. Section 7.11. Foreign Subsidiaries Security. If following a change in the relevant sections of the Code or the regulations, rules, rulings, notices or other official pronouncements issued or promulgated thereunder, counsel for the Borrower reasonably acceptable to the Agent does not within 30 days after a request from the Agent or the Required Lenders deliver evidence, in form and substance mutually satisfactory to the Agent and the Borrower, with respect to any Foreign Subsidiary of the Borrower which has not already had all of its stock pledged pursuant to the Pledge Agreement that (i) a pledge (x) of 65% or more of the total combined voting power of all classes of capital stock of such Foreign Subsidiary entitled to vote, and (y) of any promissory note issued by such Foreign Subsidiary to the Borrower or any of its Domestic Subsidiaries, (ii) the entering into by such Foreign Subsidiary of a security agreement in substantially the form of the Security Agreement and (iii) the entering into by such Foreign Subsidiary of a guaranty in substantially the form of the Subsidiary Guaranty, in any such case would cause the undistributed earnings of such Foreign Subsidiary as determined for Federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary's United States parent for Federal income tax purposes, then in the case of a failure to deliver the evidence described in clause (i) above, that portion of such Foreign Subsidiary's outstanding capital stock or any promissory notes so issued by such Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge Agreement shall be pledged to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement in substantially similar form, if needed), and in the case of a failure to deliver the evidence described in clause (ii) above, such Foreign Subsidiary shall execute and deliver the Security Agreement (or another security agreement in substantially similar form, if needed), granting the Secured Creditors a security interest in all of such Foreign subsidiary's assets and securing the Obligations of the Borrower under the Credit Documents and under any Interest Rate Protection Agreement and, in the event the Subsidiary Guaranty shall have been executed by such Foreign Subsidiary, the obligations of such Foreign Subsidiary thereunder, and in the case of a failure to deliver the evidence described in clause (iii) above, such Foreign Subsidiary shall execute and deliver the Subsidiary Guaranty (or another guaranty in substantially similar form, if needed), guaranteeing the Obligations 57 of the Borrower under the Credit Documents and under any Interest Rate Protection Agreement, in each case to the extent that the entering into such Security Agreement or Subsidiary Guaranty is permitted by the laws of the respective foreign jurisdiction and is not restricted by any contract or agreement to which such Foreign Subsidiary is a party (to the extent such restriction is not insistent with this Agreement) and with all documents delivered pursuant to this Section 7.11 to be in form and substance reasonably satisfactory to the Agent. Notwithstanding the foregoing, the Borrower shall cause (i) any Voting Equity and Non-Voting Equity of any Foreign Subsidiary to be pledged to the Collateral Agent for the benefit of Secured Creditors, (ii) any Foreign Subsidiary to execute the Subsidiary Guaranty and (iii) any Foreign Subsidiary to execute the Security Agreement, in each case to the extent such action does not create any undesirable liability, tax or compliance issues under the laws of the United States or the jurisdiction of organization of such Foreign Subsidiary is not restricted by any contract or agreement to which such Foreign Subsidiary is a party (to the extent such restriction is not inconsistent with this Agreement) (including, without limitation, actual dividends being paid by any Foreign Subsidiary to the Borrower). SECTION 8. NEGATIVE COVENANTS. The Borrower covenants and agrees that on and after the Closing Date and until the Total Commitment and all Letters of Credit have terminated, and the Loans, any Unpaid Drawings and the Notes, together with interest, Fees and all other obligations incurred hereunder and thereunder, are paid in full: Section 8.01. Liens. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of the Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets, or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute; provided that the provisions of this Section 8.01 shall not prevent the creation, incurrence, assumption or existence of the following (the Liens described below, the "Permitted Liens"): (i) inchoate Liens for taxes, governmental assessments, charges or levies in the nature of taxes not yet due and payable, or Liens for taxes, governmental assessments, charges or levies and in the nature of taxes being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property and for which adequate reserves (in the good faith judgment of the management of the Borrower) have been established in accordance with GAAP; (ii) Liens in respect of property or assets of the Borrower or any of its Subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers', warehousemen's, materialmen's, repairmen's and mechanic's Liens and other similar 58 Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Borrower and its Subsidiaries or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien; (iii) Liens in existence on the Closing Date which are listed, and the property subject thereto described, in Schedule 8.01 including securing any refinancing of the Indebtedness secured, provided that the aggregate principal amount of the Indebtedness, if any, secured by such Lien does not increase from that amount outstanding on the Closing Date and Lien does not extend to any other property; (iv) Permitted Encumbrances; (v) Liens incurred or deposits made (x) in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, government contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money); and (y) to secure the performance of leases of Real Property, to the extent incurred or made in the ordinary course of business; (vi) Liens created by or pursuant to this Agreement and the Security Documents; (vii) Liens arising under Capitalized Leases to the extent permitted by this Agreement, provided that (x) such Liens only serve to secure the payment of Indebtedness arising under such Capitalized Leases, (y) the Lien encumbering the asset giving rise to the Capitalized Lease does not encumber any other asset of the Borrower or any of its Subsidiaries and (z) the aggregate principal amount of Indebtedness secured by Liens under this clause (vii) does not exceed $25,000,000 at any time outstanding; (viii) statutory and common law landlord's liens under leases to which the Borrower or any of its Subsidiaries is a party; (ix) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances arising after the Closing Date and not interfering in any material respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries; and (x) Non-Recourse Purchase Money Security Interests, securing Indebtedness permitted by Section 8.04(viii). 59 Section 8.02. Consolidation, Merger, Sale of Assets, etc. The Borrower will not, and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or assets, or enter into any sale-leaseback transactions, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any Person, except that: (i) the Transaction may be consummated; (ii) the Borrower and its Subsidiaries may sell and lease inventory, materials and equipment in the ordinary course of business; (iii) the Borrower and its Subsidiaries may sell or otherwise dispose of any assets which, in the reasonable judgment of such Person, have become uneconomic, obsolete or worn out; (iv) the Borrower and its Subsidiaries may sell assets, provided that (I) the aggregate sale proceeds from all assets subject to such sales pursuant to this clause (iv) (other than in the ordinary course of business, the Net Cash Proceeds of which are not required to be applied to the making of mandatory prepayments pursuant to Section 4.02.01(c)) shall not exceed $25,000,000 in any fiscal year of the Borrowers and (II) the Net Cash Proceeds from sales described in (I) above are either applied to repay Term Loans as provided in Section 4.02.01(c) or reinvested in replacement assets to the extent permitted by Section 4.02.01(c); (v) the Borrower and its Subsidiaries may sell or exchange any item of equipment, so long as the purpose of each such sale or exchange is to acquire (and results within 90 days before or after such sale or exchange in the acquisition of) replacement items of equipment which are functional equivalent of the item of equipment so sold or exchanged; (vi) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any one or more Wholly-Owned Subsidiary of the Borrower (provided that the Wholly-Owned Subsidiary or Subsidiaries shall be the continuing or surviving corporation) or the Borrower may merge with and into a Wholly-Owned Domestic Subsidiary of Holdings which was created solely for the purpose of changing the Borrower's jurisdiction of incorporation to another State of the United States; and (vii) any Wholly-Owned Subsidiary of the Borrower may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Wholly-Owned Domestic Subsidiary of the Borrower. 60 provided, however, that during the existence of any Default or Event of Default, any sale, transfer, lease, or other disposition of any such property will be subject to the terms of the relevant Security Documents relating to the permitted disposition thereof. So long as no Default or Event of Default has occurred and is continuing or would arise as a result thereof, upon the written request of the Borrower, the Agent shall release its Lien on any property sold pursuant to the foregoing provisions. Section 8.03. Dividends and Payment under Related Party Agreement. The Borrower will not authorize, declare, pay or make, or permit any of its Subsidiaries to authorize, declare, pay or make (a) any Dividends, except that any Subsidiary of the Borrower may pay Dividends to the Borrower or any Wholly-Owned Subsidiary of the Borrower and (b) any payment under any Related Party Agreement to the extent such payment is prohibited by the Senior Subordinated Note Documents, the Holdings Preferred Stock or the Exchange Debenture Documents. The foregoing does not prohibit (i) the Borrower's payments of up to $1,750,000 to Granaria Holdings or any of its Affiliates in the aggregate in any fiscal year of the Borrower pursuant to any Related Party Agreement entered into between Granaria Holdings or any of its Affiliates and the Borrower or its Subsidiaries to provide management and similar services to such Persons; (ii) during any period in which Holdings files consolidated income tax returns that include the Borrower, the Borrower's payments to Holdings in amounts not in excess of the amount that the Borrower would have paid if it had filed consolidated tax returns on a separate-company basis, solely in amounts and at the times necessary to permit Holdings to pay its consolidated income taxes; and (iii) commencing September 1, 2003, and semi-annually thereafter on each March 1 and September 1, the Borrower's payments of Dividends to Holdings in an amount equal to, and for the express purpose of paying, (x) the regularly scheduled cash dividend payments required to be paid by Holdings under the Holdings Preferred Stock as in effect on the Closing Date or (y) any regularly scheduled cash interest payments required to be paid by Holdings under the Exchange Debentures as in effect on the Closing Date. Section 8.04. Indebtedness. The Borrower will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except; (i) Indebtedness incurred pursuant to this Agreement and the other Credit Documents and Existing Indebtedness; (ii) surety and appeal bonds, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money) and accrued expenses incurred in the ordinary course of business; (iii) Indebtedness arising under Capitalized Leases to the extent permitted pursuant to Section 8.01(vii); (iv) Indebtedness under Interest Rate Protection Agreements relating to Indebtedness otherwise permitted under this Section 8.04; 61 (v) intercompany Indebtedness among the Borrower and its Subsidiaries to the extent permitted by Section 8.05(iii); (vi) Indebtedness of the Borrower and the Subsidiary Guarantors incurred under one or more Senior Subordinated Note Indentures and Senior Subordinated Notes and the other Senior Subordinated Note Documents delivered in connection therewith so long as (A) all of the terms and conditions (and the documentation) in connection therewith (including, without limitation, the issuer, amortization, maturities, interest rates, limitations on cash interest payable, covenants, defaults, remedies, sinking fund provisions, subordination provisions and other terms) taken as a whole, are not materially less favorable to the Borrower, and the subordination provisions thereof are not less favorable to the Lenders, than those set forth in the Senior Subordinated Note Indenture as in effect on the Closing Date and (B) the aggregate principal amount of outstanding Senior Subordinated Notes under the Senior Subordinated Note Indenture shall not exceed $220,000,000, minus the aggregate principal amount of all repayments thereof at any time; (vii) Indebtedness of Foreign Subsidiaries in the aggregate amount at any time outstanding not exceeding $25,000,000; and (viii) Indebtedness secured by Non-Recourse Purchase Money Security Interests which has not been designated Senior Indebtedness under the Senior Subordinated Note Documents provided that the aggregate principal amount of such Indebtedness does not exceed $25,000,000 at any time outstanding. Section 8.05. Advances, Investments and Loans. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, lend money or credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other Person, or enter into any partnerships or joint ventures, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, except that the following shall be permitted: (i) the Borrower and its Subsidiaries may acquire and hold receivables owing to them, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (ii) the Borrower and its Subsidiaries may acquire and hold cash and Cash Equivalents; (iii) the Borrower may make intercompany loans and advances to its Wholly-Owned Subsidiaries, and any Subsidiary of the Borrower may make intercompany loans and advances to the Borrower, to the Subsidiaries of such Subsidiary or to any Wholly-Owned Subsidiary of the Borrower (collectively, "Intercompany Loans") (I) for working capital purposes in the ordinary course of business, or (II) to consolidate cash management activities of the Borrower and its Subsidiaries in the 62 ordinary course of business, provided that each party to the Intercompany Loans shall execute the Subordination Agreement in the form of Exhibit M; (iv) the Borrower and its Subsidiaries may enter into Interest Rate Protection Agreements with respect to Indebtedness otherwise permitted to be incurred by the Borrower or its Subsidiaries, as the case may be, by this Agreement; (v) the Borrower and its Subsidiaries may acquire and own investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (vi) loans and advances by the Borrower and its Subsidiaries to employees of the Borrower and its Subsidiaries for moving and travel expenses and other similar expenses, in each case incurred in the ordinary course of business, in an aggregate outstanding principal amount not to exceed $1,000,000 at any time (determined without regard to any write-downs or write-offs of such loans and advances), shall be permitted; (vii) the Borrower may own existing investment in joint venture interests as described in Schedule 8.05; and (viii) loans by the Borrower to Fabricon Products, Inc. in an aggregate amount not exceeding $500,000 at any one time outstanding. Section 8.06. Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of the Borrower or any of its Subsidiaries, other than on terms and conditions substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm's-length transaction with a Person other than an Affiliate, except that (i) loans and advances may be incurred and made to the extent permitted by Sections 8.04 and 8.05; (ii) the Borrower and its Subsidiaries may effect intercompany transactions and transfers of goods and services in the ordinary course of business and in conformity with the business practices in effect on the Closing Date and as otherwise permitted pursuant to Section 8.02; (iii) the Borrower may pay, on behalf of Holdings, ministerial administrative and operating fees and expenses in the ordinary course to Persons other than to Affiliates of Holdings or the Borrower, provided that the aggregate amount thereof in any fiscal year of the Borrower does not exceed $750,000, (iv) the Borrower may make Specified Transaction Payments, (v) the Borrower may pay up to $1,750,000 to Granaria Holding or any of its Affiliates in the aggregate in any fiscal year of the Borrower pursuant to any Related Party Agreement entered into between Granaria Holdings or any of its Affiliates and the Borrower or its subsidiaries to provide management and similar service to such Persons and (vi) commencing September 1, 2003, the Borrower may pay dividends to Holdings in an amount equal to (x) any regularly scheduled cash dividend payments 63 required to be paid by Holdings under the Holdings Preferred Stock as in effect on the Closing Date or (y) any regularly scheduled cash interest payments required to be paid by the Holdings under the Exchange Debentures as in effect on the Closing Date. Section 8.07. Capital Expenditures. (a) The Borrower will not, and will not permit any of its Subsidiaries to, make or become obligated to make any Capital Expenditures, except that during any fiscal year the Borrower and its Subsidiaries may make and become obligated to make Capital Expenditures so long as the aggregate amount of such Capital Expenditures does not exceed in any fiscal year $40,000,000. (b) Notwithstanding the foregoing, in the event that the amount of Capital Expenditures permitted to be made by the Borrower and its Subsidiaries pursuant to clause (a) above in any fiscal year is greater than the amount of such Capital Expenditures made by the Borrower and its Subsidiaries during such fiscal year, such excess (the "Rollover Amount") may be carried forward and utilized to make Capital Expenditures (in addition to the amount permitted in clause (a) above) in the succeeding two fiscal years so long as no Default or Event of Default has occurred and is continuing or would result therefrom. (c) Notwithstanding the foregoing, the Borrower and its Subsidiaries may make Capital Expenditures (which Capital Expenditures will not be included in any determination under the foregoing clause (a)) with any proceeds received by the Borrower or any of its Subsidiaries from any Recovery Event so long as such Capital Expenditures are to replace or restore any properties or assets in respect of which such proceeds were paid within 360 days following the date of the receipt of such proceeds to the extent such proceeds are not required to be applied to repay Term Loans pursuant to Section 4.02.01(g). 64 Section 8.08. Interest Coverage Ratio. The Borrower will not permit the Interest Coverage Ratio for any Test Period ending on a date set forth below to be less than the ratio set forth opposite such date: DATE RATIO February 28, 1998 1.85:1.00 May 31, 1998 1.85:1.00 August 31, 1998 1.85:1.00 November 30, 1998 1.85:1.00 February 28, 1999 1.85:1.00 May 31, 1999 1.85:1.00 August 31, 1999 1.85:1.00 November 30, 1999 1.85:1.00 February 29, 2000 2.25:1.00 May 31, 2000 2.25:1.00 August 31, 2000 2.25:1.00 November 30, 2000 2.25:1.00 February 28, 2001 2.50:1.00 May 31, 2001 2.50:1.00 August 31, 2001 2.50:1.00 November 30, 2001 2.50:1.00 thereafter 3.00:1.00 Section 8.09. Leverage Ratio. The Borrower will not permit the Leverage Ratio on the last day of any fiscal quarter ending on or about any date set forth below to be more than the ratio set forth opposite such date: PERIOD RATIO February 28, 1998 5.60:1.00 May 31, 1998 5.60:1.00 August 31, 1998 5.60:1.00 November 30, 1998 5.60:1.00 February 28, 1999 5.60:1.00 May 31, 1999 5.60:1.00 August 31, 1999 5.60:1.00 November 30, 1999 5.60:1.00 February 29, 2000 4.50:1.00 May 31, 2000 4.50:1.00 August 31, 2000 4.50:1.00 November 30, 2000 4.50:1.00 February 28, 2001 3.50:1.00 May 31, 2001 3.50:1.00 August 31, 2001 3.50:1.00 November 30, 2001 3.50:1.00 thereafter 3.50:1.00 65 Section 8.10. Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed Charge Coverage Ratio for any Test Period ending on a date set forth below to be less than the ratio set forth opposite such date: DATE RATIO February 28, 1998 1.50:1.00 May 31, 1998 1.50:1.00 August 31, 1998 1.50:1.00 November 30, 1998 1.50:1.00 February 28, 1999 1.50:1.00 May 31, 1999 1.50:1.00 August 31, 1999 1.50:1.00 November 30, 1999 1.50:1.00 February 29, 2000 1.75:1.00 May 31, 2000 1.75:1.00 August 31, 2000 1.75:1.00 November 30, 2000 1.75:1.00 February 28, 2001 1.75:1.00 May 31, 2001 1.75:1.00 August 31, 2001 1.75:1.00 November 30, 2001 1.75:1.00 thereafter 1.75:1.00 Section 8.11. Limitation on Voluntary Payments and Modifications of Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; Issuances of Capital Stock; etc. The Borrower will not, and will not permit any of its Subsidiaries to: (i) make (or give any notice in respect of) any voluntary or optional payment or prepayment on or redemption or purchase or defeasance or acquisition for value of (including, without limitation, by way of depositing with the trustee with respect thereto or any other Person money or securities before due for the purpose of paying when due) any Indebtedness (except for Indebtedness under the Credit Documents) including, without limitation, Senior Subordinated Notes or Exchange Debentures; provided that any Foreign Subsidiary may prepay any Indebtedness of such Foreign Subsidiary; (ii) make (or give any notice in respect of) any prepayment or redemption or acquisition for value or purchase or defeasance as a result of any asset sale, change of control or similar event (including, without limitation, by way of depositing with the trustee with respect thereto or any other Person money or securities or other property before due for the purpose of paying when due) with respect to any Senior Subordinated Note or Exchange Debenture; 66 (iii) amend or modify, or permit the amendment or modification of, any provision of any Senior Subordinated Note Document which is in any way adverse to the interests of Lenders; and (iv) amend, modify or change in any way adverse to the interests of the Lenders, any Tax Allocation Agreement, any Management Agreement, any Merger Document, the Confirmation Order, the Plan of Reorganization, the Trust Agreement relating to the PI Trust, its certificate of incorporation (including, without limitation, by the filing or modification of any certificate of designation) or by-laws, or any agreement entered into by it, with respect to its capital stock (including any Shareholders' Agreement), or enter into any new agreement with respect to its capital stock which in any way could be adverse to the interests of the Lenders. Section 8.12.Limitation on Restrictions on Subsidiary Dividends and Other Distributions. The Borrower will not, and it will not permit any of its Subsidiaries (except for Foreign Subsidiaries with respect to clause (a) below) 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 (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits, owned by the Borrower or any Subsidiary of the Borrower or pay or repay any Indebtedness owed to the Borrower or any Subsidiary of the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of the Borrower, (c) transfer any of its properties or assets to the Borrower or any Subsidiary of the Borrower or (d) encumber or pledge any of its assets, except for Permitted Liens. Section 8.13. Limitation on Issuances of Capital Stock by Subsidiaries. The Borrower will not permit any of its Subsidiaries to issue any capital stock (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock, except for transfers and replacements of then outstanding shares of capital stock. Section 8.14. Limitation on the Creation of Subsidiaries. Notwithstanding anything to the contrary contained in this Agreement, the Borrower will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Closing Date any Subsidiary; provided that the Borrower and its Wholly-Owned Subsidiaries shall be permitted to establish or create Wholly-Owned Subsidiaries so long as (i) at least 30 days' prior written notice thereof is given to the Agent, (ii) the capital stock or any other equity interest in such new Subsidiary is pledged (or a security interest is granted therein) pursuant to, and to the extent required by, the Borrower and Subsidiary Pledge Agreement or the Security Agreement, as the case may be, and the certificates representing such stock, together with stock powers duly executed in blank, or such equity interest are delivered to the Collateral Agent, (iii) such new Subsidiary (other than a Foreign Subsidiary except to the extent otherwise required pursuant to Section 7.11) executes a counterpart of the Subsidiary Guaranty, the Borrower and Subsidiary Pledge Agreement (if it has any Subsidiaries) and the Security Agreement, and (iv) to the extent requested by the Agent, the Collateral Agent or the Required Lenders, takes all actions required pursuant to Section 7.09. In addition, the Borrower shall cause each new Wholly-Owned Subsidiary to execute and deliver, or 67 cause to be executed and delivered, all other relevant documentation of the type described in Section 5 as such new Subsidiary would have had to deliver if such new Subsidiary were a Credit Party on the Closing Date. Section 8.15. Maintenance of Corporate Separateness; etc. The Borrower will not, and will not permit any of its Subsidiaries to, (a) fail to satisfy customary corporate formalities, including, without limitation, (i) the holding of regular board of directors' and shareholders' meetings, (ii) the maintenance of separate corporate offices and records and (iii) the maintenance of separate bank accounts in its own name; (b) fail to act solely in its own corporate name and through its authorized officers and agents; (c) except in connection with the Borrower's cash management system, commingle any money or other assets of the Borrower or any of its Subsidiaries with any money or other assets of each other; or (d) take any action, or conduct its affairs in a manner, which could reasonably be expected to result in the separate corporate existence of the Borrower and each of its Subsidiaries being ignored, or the assets and liabilities of the Borrower or any of its Subsidiaries being substantively consolidated with those of each other in a bankruptcy, reorganization or other insolvency proceeding. Section 8.16. Business. The Borrower will not, and will not permit any of its Subsidiaries to, engage (directly or indirectly) in any business other than the business in which it is engaged on the Closing Date, reasonable extensions and expansions thereof and such business as may be incidental or related to such extension and expansions. SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the following specified events (each an "Event of Default"): Section 9.01. Payments. The Borrower shall (i) default in the payment when due of any payment of principal of the Loans or Notes or (ii) default, and such default shall continue unremedied for at least two Business Days, of any payment of interest on the Loans or Notes, of any Unpaid Drawing or any Fees or any other amounts owing by it hereunder or any other Credit Document; or Section 9.02. Representations, etc. Any representation, warranty or statement made by any Credit Party herein or in any other Credit Document or in any statement or certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect, or any other factual information (taken as a whole) furnished on behalf of the Borrower or any of its Subsidiaries in writing to any Lender shall prove to be untrue in any material respect on the date as of which made or deemed made; or Section 9.03. Covenants. The Borrower shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Sections 7 or 8 or (ii) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Sections 9.01 and 9.02 and clause (i) of this Section 9.03) 68 contained in this Agreement and such default shall continue unremedied for a period of 30 days after written notice to the Borrower by the Agent or the Required Lenders; or Section 9.04. Default under Other Agreements. (i) Holdings, the Borrower or any of its Subsidiaries shall (x) default in any payment of any Indebtedness of $5,000,000 or more (other than the Obligations) beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (y) default in the observance or performance of any agreement or condition relating to any Indebtedness of $5,000,000 or more (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity or (ii) any Indebtedness of $5,000,000 or more (other than Obligations) of Holdings, the Borrower or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid or purchased pursuant to put provisions, prior to the stated maturity thereof; or Section 9.05. Bankruptcy, etc. Holdings, the Borrower or any of its Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto or any similar laws under any foreign jurisdiction (the "Bankruptcy Code"); or an involuntary case is commenced against Holdings, the Borrower or any of its Subsidiaries, and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of Holdings, the Borrower or any of its Subsidiaries, or Holdings, the Borrower or any of its Subsidiaries commences any other proceeding under any reorganization, bankruptcy, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Holdings, the Borrower or any of its Subsidiaries, or there is commenced against Holdings, the Borrower or any of its Subsidiaries any such proceeding which remains undismissed for a period of 60 days, or Holdings, the Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Holdings, the Borrower or any of its Subsidiaries suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or Holdings, the Borrower or any of its Subsidiaries makes a general assignment for the benefit of creditors; or any corporate action is taken by Holdings, the Borrower or any of its Subsidiaries for the purpose of effecting any of the foregoing; or Section 9.06. ERISA. (a) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code, any Plan shall have had or will have a trustee appointed to administer such Plan, any Plan is, shall have been or will be terminated or be the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability giving rise to a lien under ERISA 69 or the Code, a contribution required to be made to a Plan or a Foreign Pension Plan has not been timely made, the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate has incurred or will incur a liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code, or the Borrower or any Subsidiary of the Borrower has incurred or will incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA or as disclosed on Schedule 6.10); (b) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability; and (c) which lien, security interest or liability, in the opinion of the Required Lenders, could reasonably be expected to have a material adverse effect on the business, operations, property, assets, liabilities, condition (financial or otherwise) or prospects of the Borrower or of the Borrower and its Subsidiaries taken as a whole; or Section 9.07. Security Documents. (a) Except in the event of the Collateral Agent's failure to file continuation statements, any Security Document shall cease to be in full force and effect in any material respect, or shall cease to give the Collateral Agent the Liens, rights, powers and privileges purported to be created thereby in favor of the Collateral Agent for the benefit of Secured Creditors (including, without limitation, a perfected security interest (purported to be created thereby) in, and Lien on, all of the Collateral) in any material respect, or (b) any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any such Security Document and such default shall continue unremedied for a period of 30 days; or Section 9.08. Guaranties. The Guaranties or any provision thereof shall cease to be in full force and effect in any material respect, or any Guarantor or any Person acting by or on behalf of such Guarantor shall deny, disaffirm or repudiate such Guarantor's obligations under any Guaranty or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any Guaranty or any "Event of Default" with respect to the Holdings Guaranty shall occur; or Section 9.09. Judgments. One or more final, non-appealable judgments or decrees shall be entered against Holdings, the Borrower or any of its Subsidiaries involving in the aggregate for Holdings, the Borrower and its Subsidiaries a liability (not paid or fully covered by insurance) of $5,000,000 or more, and all such judgments or decrees shall not have been satisfied, stayed, annulled or rescinded within 60 days from the entry thereof; or Section 9.10. Change in Control. A Change of Control shall occur; or Section 9.11. Matters Regarding the Permanent Injunction. The Permanent Injunction shall be stayed, voided, vacated or reversed or modified in any material respect which results in the Borrower becoming subject to asbestos or lead related claims that were otherwise enjoined as to the Borrower: 70 then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Agent shall upon the written request of the Required Lenders, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Agent, any Lender or the holder of any Note to enforce its claims against any Guarantor or the Borrower (provided, that, if an Event of Default specified in Section 9.05 shall occur with respect to Holdings, the Borrower or a Subsidiary Guarantor, the result which would occur upon the giving of written notice by the Agent to the Borrower as specified in clauses (i), (ii) and (vi) below shall occur automatically without the giving of any such notice): (i) declare the Total Commitment terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately and any Commitment Fee shall forthwith become due and payable without any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans and the Notes and all Obligations owing hereunder (including Unpaid Drawings) to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (iii) enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or all of the Liens and security interests created pursuant to the Security Documents; (iv) terminate any Letter of Credit which may be terminated in accordance with its terms; (v) direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default specified in Section 9.05, it will pay) to the Agent at its Payment Office such additional amounts of cash, to be held as security for the Borrower's reimbursement obligations for Drawings that may subsequently occur under outstanding Letters of Credit hereunder, equal to the aggregate Stated Amount of all Letters of Credit issued and then outstanding; and (vi) apply any cash collateral as provided in Section 4.02.01(a). SECTION 10. DEFINITIONS AND ACCOUNTING TERMS. Section 10.01. Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "ABN AMRO" shall mean ABN AMRO Bank N.V. in its individual capacity. "A Term Loan" shall have the meaning provided in Section 1.01.01(a). "A Term Loan Commitment" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name in Annex I directly below the column entitled "A Term Loan Commitment," as the same may be terminated or reduced pursuant to Section 3.03 and/or Section 9. "A Term Loan Facility" shall mean the Facility evidenced by the Total A Term Loan Commitment. "A Term Loan Maturity Date" shall mean the last Business Day in November, 2003. "A-Term Note" shall have the meaning provided in Section 1.05(a). 71 "A TL Percentage" shall mean, at any time, (i) prior to the disbursement of the A Term Loans, a fraction (expressed as a percentage) the numerator of which is the amount of the Total A Term Loan Commitment at such time and the denominator of which is the amount of the Total Term Loan Commitment at such time and (ii) after the disbursement of the A Term Loan, a fraction (expressed as a percentage) the numerator of which is equal to the sum of the aggregate principal amount of all A Term Loans outstanding at such time and the denominator of which is equal to the sum of the aggregate principal amount of all Term Loans outstanding at such time. "Additional Security Documents" shall have the meaning provided in Section 7.09(b). "Affiliate" shall mean, with respect to any Person, any other Person (i) directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person or (ii) that directly or indirectly owns more than 5% of the voting securities of such Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of, such corporation, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, none of the Lenders or any of their respective affiliates shall be deemed to be Affiliates of the Holdings, the Borrower or any of their Subsidiaries. "Agent" shall mean ABN AMRO Bank N.V., in its capacity as Agent for the Lenders hereunder, and shall include any successor to the Agent appointed pursuant to Section 11.09. "Agents" shall mean the Agent, the Documentation Agent, the Syndication Agent and the Collateral Agent. "Agreement" shall mean this Credit Agreement, as modified, supplemented, amended, restated, extended, renewed or replaced from time to time. "Applicable Base Rate Margin" shall mean initially (i) in the case of A Term Loans, Revolving Loans and Swingline Loans, 1.25%, (ii) in the case of B Term Loans, 1.625% and (iii) in the case of C Term Loans, 1.875%; provided that from and after the day that is six months after the Closing Date, the Applicable Base Rate Margin will be determined pursuant to the Pricing Grid. "Applicable Commitment Fee Rate" shall mean initially 0.50% and from and after the day that is six months after the Closing Date, the Applicable Commitment Fee Rate will be determined pursuant to the Pricing Grid. "Applicable Eurodollar Rate Margin" shall mean initially (i) in the case of A Term Loans and Revolving Loans, 2.25%, (ii) in the case of B Term Loans, 2.625% and (iii) in the case of C Term Loans, 2.875%; provided that from and after the day that is six months after the Closing Date, the Applicable Eurodollar Rate Margin will be determined pursuant to the Pricing Grid. 72 "Approved Lender" shall have the meaning provided in the definition of "Cash Equivalents." "Asset Sale" shall mean any sale, transfer or other disposition by the Borrower or any of its Subsidiaries to any Person other than the Borrower or any Wholly-Owned Subsidiary of the Borrower of any asset (including, without limitation, any capital stock or other securities of another Person, but excluding the sale by such Person of its own capital stock) of the Borrower or any such Subsidiary other than (i) sales, transfers or other dispositions of inventory made in the ordinary course of business and (ii) sales of assets pursuant to Sections 8.02(ii), (iii), (v) and (vii). "Assignment and Assumption Agreement" shall mean the Assignment and Assumption Agreement substantially in the form of Exhibit N (appropriately completed). "Authorized Officer" shall mean any officer of the Borrower designated as such in writing to the Agent by the Borrower, in each case to the extent reasonably acceptable to the Agent. "B Lenders" shall have the meaning provided in Section 4.02.03. "B Term Loan" shall have the meaning provided in Section 1.01.01(b). "B Term Loan Commitment" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name in Annex I directly below the column entitled "B Term Loan Commitment," as the same may be terminated pursuant to Section 3.03 and/or Section 9. "B Term Loan Facility" shall mean the Facility evidenced by the Total B Term Loan Commitment. "B Term Loan Maturity Date" shall mean the last Business Day in August, 2005. "B-Term Note" shall have the meaning provided in Section 1.05(a). "B TL Percentage" shall mean, at any time, (i) prior to the disbursement of the B Term Loans, a fraction (expressed as a percentage) the numerator of which is the amount of the Total B Term Loan Commitment at such time and the denominator of which is the amount of the Total Term Loan Commitment at such time and (ii) after the disbursement of the B Term Loan, a fraction (expressed as a percentage) the numerator of which is equal to the aggregate principal amount of all B Term Loans outstanding at such time and the denominator of which is equal to the sum of the aggregate principal amount of all Term Loans outstanding at such time. "Bankruptcy Code" shall have the meaning provided in Section 9.05. 73 "Base Rate" at any time shall mean the higher of (x) the rate which is 1/2 of 1% in excess of the Federal Funds Rate and (y) the Prime Rate as in effect at such time. "Base Rate Loans" shall mean (i) any Loan designated as such by the Borrower at the time of the incurrence thereof or conversion thereto and (ii) all Swingline Loans. "Borrower" shall mean E-P Acquisition, Inc., a Delaware corporation, and its successor Eagle-Picher Industries, Inc., an Ohio corporation, as survivor of the Merger. "Borrower Stock Release Date" shall mean the date of receipt by the Agent of a written request by the Borrower to release the pledge of all of the Borrower's capital stock pledged pursuant to the Holdings Pledge Agreement following the date on which the Leverage Ratio is less than 3.0 to 1.0. "Borrowing" shall mean (i) the incurrence by the Borrower of one Type of Loan pursuant to a single Facility from all of the Lenders having Commitments with respect to such Facility on a pro rata basis on a given date (or resulting from a conversion or conversions on such date) having in the case of Eurodollar Rate Loans the same Interest Period, provided that Base Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of the related Borrowing of Eurodollar Rate Loans and (ii) the borrowing by the Borrower of Swingline Loans from ABN AMRO on a given date. "Business Day" shall mean (i) for all purposes other than as covered by clause (ii) below, any day except Saturday, Sunday and any day which shall be in New York City or City of Chicago a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Rate Loans, any day which is a Business Day described in clause (i) above and which is also a day for trading by and between banks in U.S. Dollar deposits in the London interbank Eurodollar market. "CERCLA" shall mean Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "C Lenders" shall have the meaning provided in Section 4.02.03. "C Term Loan" shall have the meaning provided in Section 1.01.01(c). "C Term Loan Commitment" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name in Annex I directly below the column entitled "C Term Loan Commitment," as the same may be terminated pursuant to Section 3.03 and/or Section 9. "C Term Loan Facility" shall mean the Facility evidenced by the Total C Term Loan Commitment. 74 "C Term Loan Maturity Date" shall mean the last Business Day in August, 2006. "C-Term Note" shall have the meaning provided in Section 1.05(a). "C TL Percentage" shall mean, at any time, (i) prior to the disbursement of the C Term Loans, a fraction (expressed as a percentage) the numerator of which is the amount of the Total C Term Loan Commitment at such time and the denominator of which is the amount of the Total Term Loan Commitment at such time and (ii) after the disbursement of the C Term Loan, a fraction (expressed as a percentage) the numerator of which is equal to the aggregate principal amount of all C Term Loans outstanding at such time and the denominator of which is equal to the sum of the aggregate principal amount of all Term Loans outstanding at such time. "Capital Expenditures" shall mean any expenditure for fixed or capital assets (including, without limitation, expenditures for maintenance and repairs which are capitalized in accordance with GAAP and Capitalized Lease Obligations). "Capital Lease," as applied to any Person, shall mean any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Capitalized Lease Obligations" shall mean all obligations under Capital Leases of the Borrower or any of its Subsidiaries in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP. "Cash Equivalents" shall mean, as to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) from the date of acquisition having maturities of not more than one year, (ii) U.S. Dollar denominated time deposits and certificates of deposit of (x) any Lender or (y) any bank, or holding company of such bank, whose short-term commercial paper rating or that of its parent company from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank or Lender, an "Approved Lender"), in each case with maturities of not more than one year from the date of acquisition, (iii) commercial paper issued by any Approved Lender or by the parent company of any Approved Lender and commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or guaranteed by any industrial company with a long term unsecured debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as the case may be, and in each case maturing within one year after the date of acquisition, (iv) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's, (v) investments in money market funds substantially all the assets of which are comprised of securities of the types described in 75 clauses (i) through (iv) above and (vi) time deposits and certificates of deposit of any commercial bank of recognized standing having capital and surplus in excess of the local currency equivalent of $100,000,000 incorporated in a country where the Borrower has one or more locally operating Subsidiaries, and that is, as of the date hereof, providing banking services to the Borrower or any of its Subsidiaries. "Cash Proceeds" shall mean, with respect to any Asset Sale, the aggregate cash payments (including any cash received by way of deferred payment, but only as and when so received) received by the Borrower and/or any of its Subsidiaries from such Asset Sale. "Change of Control" shall mean (x) (i) any "Person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding Holdings and any employee benefit or stock ownership plan of the Borrower, is or shall become the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 10% or more on a fully diluted basis of the voting and economic interests of the Borrower or shall have the right to elect a majority of the directors of the Borrower or (ii) the Board of Directors of the Borrower shall cease to consist of a majority of Continuing Directors and (y) the occurrence of any Change of Control (as defined in the Senior Subordinated Note Documents) or any Change of Control as defined in the Certificate of Designation for the Holdings Preferred Stock or in the Exchange Debenture Documents. "Closing Date" shall mean the day (which shall be a Business Day) specified by the Borrower on which all of the conditions specified in Section 5 as conditions precedent to the Closing Date are fulfilled or waived pursuant to this Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement, and to any subsequent provisions of the Code amendatory thereof, supplemental thereto or substituted therefor. "Collateral" shall mean all properties, rights, interests and privileges from time to time subject to the Liens and security interests granted to the Collateral Agent for the benefit of the Secured Creditors by the Security Documents. "Collateral Agent" shall mean the Agent (or any replacement thereof with the consent of the Required Lenders) acting as collateral agent for the Secured Creditors. "Commitment" shall mean, with respect to each Lender, such Lender's A Term Loan Commitment, B Term Loan Commitment, C Term Loan Commitment and/or Revolving Credit Commitment. "Commitment Fee" shall have the meaning provided in Section 3.01(a) "Confidential Information Memorandum" shall mean the Confidential Information Memorandum dated January 1998 relating to the Facilities. 76 "Confirmation Order" shall mean the order of the United States District court for the Southern District of Ohio, Western Division, confirming the Plan of Reorganization. "Consolidated Current Assets" shall mean, at any time, the current assets (other than cash, Cash Equivalents and deferred income taxes to the extent included in current assets) of the Borrower and its Subsidiaries at such time determined on a consolidated basis. "Consolidated Current Liabilities" shall mean, at any time, the current liabilities of the Borrower and its Subsidiaries determined on a consolidated basis, but excluding deferred income taxes and the current portion of and accrued but unpaid interest on any Indebtedness under this Agreement and any other long-term Indebtedness which would otherwise be included therein. "Consolidated Debt" shall mean, at any time, all Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis which would be reflected on a consolidated balance sheet at such time in accordance with GAAP. "Consolidated EBIT" shall mean, for any period, Consolidated Net Income of the Borrower and its Subsidiaries, before total interest expense (whether cash or non-cash) and provisions for taxes based on income, and determined (i) without giving effect to any extraordinary gains or losses but with giving effect to gains or losses from sales of assets sold in the ordinary course of business, (ii) without giving effect to any impact from the LIFO method of inventory accounting, (iii) without giving effect to any noncash charge (other than depreciation or amortization) deducted in determining Consolidated Net Income for such period, including non-cash charges related to the issuance by the Borrower or any of its Subsidiaries of stock, warrants or options to management (or any exercise of any such warrants or options), (iv) without giving effect to any compensation expense incurred in connection with the Merger and (v) without giving effect to nonrecurring charges, noncash charges or documented cash charges, in each case deducted in determining Consolidated Net Income for such period and related to the Transaction (including for example, one-time expenses associated with the integration of corporate systems, temporary service fees and training, moving, relocation and other costs in connection with the Merger), in each case, to the extent such amounts have not been added back in determining Consolidated Net Income. "Consolidated EBITDA" shall mean, for any period, Consolidated EBIT, adjusted by adding thereto the amount of all depreciation expense and amortization expense that were deducted in determining Consolidated EBIT for such period. "Consolidated Fixed Charges" shall mean, for any period, the sum of (i) the aggregate amount of payments scheduled to be made by the Borrower and its Subsidiaries during such period in respect of principal on all Indebtedness (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment, acceleration or otherwise), on a consolidated basis, plus (ii) Consolidated Interest Expense for such period, plus (iii) taxes to the extent paid or payable in cash during such period plus (iv) any dividends paid by the Borrower pursuant to Section 8.03(iii) during such period. 77 "Consolidated Interest Expense" shall mean, for any period, total interest expense (including amounts properly attributable to interest with respect to capital leases in accordance with GAAP and amortization of debt discount and debt issuance costs) of the Borrower and its Subsidiaries on a consolidated basis for such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs or benefits under Interest Rate Protection Agreements, but excluding, however, amortization of original issue discount, any payments made to obtain any Interest Rate Protection Agreement, deferred financing costs and any interest expense on deferred compensation arrangements and any other non-cash interest to the extent included in total interest expense. "Consolidated Net Income" shall mean, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries for such period; provided that, (i) to the extent deducted in determining consolidated net income for such period and not otherwise added back, the amount of expenses in respect of Specified Transaction Payments attributable to such period shall be added back in determining Consolidated Net Income for such period, and (ii) to the extent not otherwise deducted in determining such consolidated net income for any period, all payments made to Holdings pursuant to the Tax Sharing Agreement or otherwise in respect of taxes for such period shall be deducted from the consolidated net income of the Borrower and (iii) any non-cash loss during the Borrower's fiscal year ending on November 30, 1998 reflecting the decrease in deferred tax assets resulting from the Merger and transactions consummated in connection therewith shall be excluded in determining consolidated net income. "Contingent Obligation" shall mean, without duplication, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. 78 "Continuing Directors" shall mean the directors of the Borrower on the Closing Date after giving effect to the Transaction and each other director, if such director's nomination for election to the Board of Directors of the Borrower is recommended by a majority of the then Continuing Directors. "Credit Documents" shall mean this Agreement, and once executed and delivered pursuant to the terms of this Agreement, each Note, each Letter of Credit Request, each Notice of Borrowing, each Notice of Conversion, each Letter of Credit, the Guaranties and each Security Document. "Credit Event" shall mean (i) the occurrence of the Closing Date and (ii) the making of any Loan (other than a Loan made pursuant to a Mandatory Borrowing) or the issuance of any Letter of Credit or the deemed issuance of any Existing Letter of Credit under this Agreement. "Credit Party" shall mean, the Borrower and each Guarantor. "Creditors" shall mean and include the Agent, each Lender and each Other Creditor. "Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "Defaulting Lender" shall mean any Lender with respect to which a Lender Default is in effect. "Dividend" with respect to any Person shall mean that such Person has declared or paid any dividend or returned any capital to its stockholders or authorized or made any other distribution, payment or delivery of property (other than common stock of the Borrower) or cash to its stockholders as such, or redeemed, retired, purchased, or otherwise acquired, directly or indirectly, for consideration, any shares of any class of its capital stock outstanding on or after the Closing Date (or any options or warrants issued by such Person with respect to its capital stock), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock of such Person outstanding on or after the Closing Date (or any options or warrants issued by such Person with respect to its capital stock). Without limiting the foregoing, "Dividends" with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights plans, equity incentive or achievement plans or any similar plans or the setting aside of any funds for the foregoing purposes. "Documentation Agent" shall have the meaning provided in the first paragraph of this Agreement. "Documents" shall mean the Credit Documents, the Merger Documents and the Senior Subordinated Note Documents. 79 "Dollars" and the sign "$" shall each mean freely transferable lawful money of the United States (expressed in dollars). "Domestic Subsidiary" shall mean each Subsidiary of the Borrower incorporated or organized in the United States or any State or territory thereof. "Drawing" shall have the meaning provided in Section 2.05(b). "Early Mandatory Redemption Event" shall mean any Early Mandatory Redemption Event as defined in the Certificate of Designation of Holdings with respect to Holdings Preferred Stock. "Effective Date" shall have the meaning provided in Section 12.10. "Eligible Transferee" shall mean and include a commercial bank, financial institution or other "accredited investor" (as defined in Regulation D of the Securities Act). "Environmental Claims" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations or proceedings relating in any way to any violation (or alleged violation) by the Borrower or any of its Subsidiaries under any Environmental Law (hereafter "Claims") or any permit issued under any such law, including, without limitation, (a) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health (other than product liability claims), safety or the environment. "Environmental Law" shall mean any federal, state or local statute, law, rule, regulation, ordinance, code, policy or rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to the environment, public health and safety, employee health and safety, or Hazardous Materials. "EPAI" shall mean E-P Acquisition, Inc., a Delaware corporation. "EPII" shall have the meaning provided in the second "Whereas" clause of this Agreement. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. 80 "ERISA Affiliate" shall mean each person (as defined in Section 3(9) of ERISA) which together with the Borrower or any of its Subsidiaries would be deemed to be a "single employer" (i) within the meaning of Section 414(b), (c), (m) and (o) of the Code or (ii) as a result of the Borrower or any of its Subsidiaries being or having been a general partner of such person. "Eurodollar Rate" shall mean for an Interest Period for a Borrowing of Eurodollar Loans, (I)(a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per annum (rounded upwards, if necessary, to the nearest 1/100% of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to the Agent at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest Period by three (3) or more major banks in the interbank eurodollar market selected by the Agent for delivery on the first day of and for a period equal to such Interest Period and in an amount equal or comparable to the principal amount of the Eurodollar Rate Loan schedule to be made by the Agent as part of such Borrowing, divided (and rounded upwards to the nearest 1/100 of 1%) by (II) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves required by applicable law) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D). "Eurodollar Rate Loan" shall mean any Loan designated as such by the Borrower at the time of the incurrence thereof or conversion thereto. "Event of Default" shall have the meaning provided in Section 9. "Excess Cash Flow" shall mean, for any period cash flows from operating activities, as defined by GAAP, minus an amount equal to the sum of (i) all Capital Expenditures (other than Capital Expenditures made pursuant to Section 8.07(c) made during such period that are not financed by Indebtedness (including Capitalized Lease Obligations but excluding Loans hereunder), (ii) the aggregate principal (and interest to the extent not deducted in the calculation of cash flows) amount of permanent principal payments of Indebtedness for borrowed money of the Borrower and its Subsidiaries (other than repayments of Loans, provided that repayments of Loans shall be deducted in determining Excess Cash Flow if such repayments were (x) required as a result of a Scheduled A Repayment, a Scheduled B Repayment or a Scheduled C Repayment under Section 4.02.01(b) or (y) made as a voluntary prepayment with internally generated funds (but in the case of a voluntary prepayment of Revolving Loans, only to the extent accompanied by a voluntary reduction to the Total Revolving Credit Commitment)), and (iii) the amount of unusual or non-recurring charges that decreased Working Capital during such period. 81 "Excess Cash Flow Period" shall mean each fiscal year of the Borrower commencing with the fiscal year ending November 30, 1998. "Excess Cash Payment Date" shall mean the date occurring 90 days after the last day of a fiscal year of the Borrower (beginning with its fiscal year ending November 30, 1998). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Exchange Debentures" shall mean the 11 3/4% Exchange Debentures due 2008 of Holdings. "Exchange Debenture Documents" shall mean and include each of the Exchange Debenture Indenture and the Exchange Debentures, as the same may be entered into, modified, supplemented or amended from time to time pursuant to the terms hereof and thereof. "Exchange Debenture Indenture" shall mean the Indenture between Holdings and a banking corporation chosen by Holdings to act as trustee thereunder in substantially the form described in the Offering Memorandum dated February 20, 1998 with respect thereto and as approved by Holdings and on file with the office of the Secretary of Holdings on the Closing Date, as the same may be entered into, modified, supplemented or amended from time to time in accordance with the terms hereof and thereof. "Existing Indebtedness" shall have the meaning provided in Section 6.19. "Existing Indebtedness Agreements" shall have the meaning provided in Section 5.01(j)(i). "Existing Letters of Credit" shall mean each letter of credit set forth in Schedule 2.01. "Facility" shall mean any of the credit facilities established under this Agreement, i.e., the A Term Loan Facility, the B Term Loan Facility, the C Term Loan Facility or the Revolving Credit Facility. "Facing Fee" shall have the meaning provided in Section 3.01(c). "Federal Funds Rate" shall mean for any period, a fluctuating interest rate (equal for each day during such period to 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 for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal Funds brokers of recognized standing selected by the Agent. 82 "Fees" shall mean all amounts payable pursuant to or referred to in Section 3.01. "First Tier Foreign Subsidiary" shall mean, at any date of determination, each Foreign Subsidiary in which any one or more of the Borrower and its Domestic Subsidiaries owns directly more than 50%, in the aggregate, of the voting stock of such Subsidiary. "Fixed Charge Coverage Ratio" shall mean, at any time, the ratio of Consolidated EBITDA for the Test Period last ended to Consolidated Fixed Charges for the Test Period last ended. "Foreign Pension Plan" shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Borrower or any one or more of its Subsidiaries primarily for the benefit of employees of the Borrower or such Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA. "Foreign Subsidiary" shall mean each Subsidiary of the Borrower other than a Domestic Subsidiary. "GAAP" shall mean generally accepted accounting principles and practices in the United States of America as promulgated by Financial Accounting Standards Board and as in effect from time to time and consistently applied; it being understood and agreed that determinations in accordance with GAAP for purposes of Section 8, including defined terms as used therein, are subject (to the extent provided therein) to Section 12.07(a). "Granaria Holdings" means Granaria Holdings N.V., a Dutch corporation, and its successors. "Guaranteed Creditors" shall mean and include each of the Agent, the Collateral Agent, the Lenders and each party (other than any Credit Party) party to an Interest Rate Protection Agreement to the extent that such party constitutes a Secured Creditor under the Security Documents. "Guaranteed Obligations" shall mean (i) the principal and interest on each Note issued by the Borrower to each Lender, and Loans made, under this Agreement and all reimbursement obligations and Unpaid Drawings with respect to Letters of Credit, together with all the other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due) and liabilities (including, without limitation, indemnities, 83 fees and interest thereon) of the Borrower to such Lender, the Agents now existing or hereafter incurred under, arising out of or in connection with this Agreement or any other Credit Document and the due performance of and compliance with, by any Credit Party, all the terms, conditions and agreements contained in each of the Credit Documents to which it is a party, (ii) all obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due) and liabilities of the Borrower owing under any Interest Rate Protection Agreement entered into by the Borrower with any Lender or any affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Lender or affiliate participates in such Interest Rate Protection Agreement, and their subsequent assigns, if any, whether now in existence or hereafter arising, and the due performance of and compliance with all terms, conditions and agreements contained therein and (iii) any other obligations or liabilities of any Credit Party under the Credit Documents guaranteed under the Guaranties. "Guarantor" shall mean each of Holdings and the Subsidiary Guarantors. "Guaranty" shall mean each of the Holdings Guaranty and the Subsidiary Guaranty (collectively, the "Guaranties"). "Hazardous Materials" shall mean (a) any petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (b) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous wastes," "restrictive hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants," or words of similar meaning and regulatory effect under any applicable Environmental Law. "Holdings" shall mean Eagle-Picher Holdings, Inc., a Delaware corporation. "Holdings Common Stock" shall mean common stock of Holdings. "Holdings Guaranty" shall have the meaning provided in Section 5.01(h)(i). "Holdings Pledge Agreement" shall have the meaning provided in Section 5.01(h)(ii). "Holdings Preferred Stock" shall mean 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock of Holdings. 84 "Immaterial Subsidiary" shall mean (i) any Subsidiary of the Borrower which does not own assets in excess of $50,000, (ii) any Name Holder Subsidiary (iii) Eagle-Picher, Inc., a Virgin Island foreign sales corporation; provided, however, that Immaterial Subsidiaries shall not include any Subsidiary of the Borrower which is a guarantor of Indebtedness with respect to the Senior Subordinated Notes. "Indebtedness" shall mean, as to any Person, without duplication, (i) all indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of property or services, but excluding current trade accounts payable incurred in the ordinary course of business, (ii) the maximum amount available to be drawn under all letters of credit issued for the account of such Person and all unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person, (iv) the aggregate amount required to be capitalized under leases under which such Person is the lessee, (v) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person and (vii) all obligations under any Interest Rate Protection Agreement. "Intercompany Loan" shall have the meaning provided in Section 8.05. "Interest Coverage Ratio" for any period shall mean the ratio of Consolidated EBITDA to Consolidated Interest Expense for such period. "Interest Determination Date" shall mean, with respect to any Eurodollar Rate Loan, the second Business Day prior to the commencement of any Interest Period relating to such Eurodollar Rate Loan. "Interest Period" shall have the meaning provided in Section 1.09. "Interest Rate Protection Agreement" shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement, interest rate futures agreement or other similar agreement or arrangement. "Judgment Currency" shall have the meaning provided in Section 12.17(a). "Judgment Currency Conversion Date" shall have the meaning provided in Section 12.17(a). 85 "L/C Supportable Indebtedness" shall mean (i) obligations of the Borrower or any of its Subsidiaries incurred in the ordinary course of business with respect to insurance obligations and workers' compensation, surety bonds and other similar statutory obligations and (ii) such other obligations of the Borrower or any of its Subsidiaries as are reasonably acceptable to the Agent and the Letter of Credit Issuer and otherwise permitted to exist pursuant to the terms of this Agreement. "Lease Agreements" shall have the meaning provided in Section 5.01(j)(v). "Leasehold" of any Person shall mean all of the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures. "Lender" shall mean each financial institution listed in Annex I, as well as any Person which becomes a "Lender" hereunder pursuant to Section 12.04. "Lender Default" shall mean (i) the refusal (which has not been retracted) of a Lender to make available its portion of any Borrowing (including any Mandatory Borrowing) or to fund its portion of any unreimbursed payment under Section 2.04(c) or (ii) a Lender having notified in writing the Borrower and/or the Agent that it does not intend to comply with its obligations under Section 1.01.01 or 1.01.03 or Section 2. "Letter of Credit" shall have the meaning provided in Section 2.01(a). "Letter of Credit Fee" shall have the meaning provided in Section 3.01(b). "Letter of Credit Issuer" shall mean (i) with respect to any Existing Letters of Credit, a bank identified as a letter of credit issuer for such Existing Letter of Credit in Schedule 2.01; (ii) with respect to the Letters of Credit issued on or after the Closing Date, ABN AMRO or any Revolving Lender designated as such pursuant to the last paragraph of Section 2.01(a). "Letter of Credit Outstandings" shall mean, at any time, the sum of (i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings. "Letter of Credit Request" shall have the meaning provided in Section 2.03(a). "Leverage Ratio" shall mean, at any time, the ratio of Consolidated Debt at such time to Consolidated EBITDA for the Test Period last ended. 86 "LIBOR Index Rate" shall mean, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100% of 1%) for deposits in U.S. Dollars for a period equal to such Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such Interest Period. "Lien" shall mean any mortgage, pledge, hypothecation, security interest, encumbrance, lien (statutory or other), or security agreement of any kind or nature whatsoever (including, without limitation, any agreement to give any of the foregoing any conditional sale or other title retention agreement any financing or similar statement or notice filed under the UCC or any similar recording or notice and any lease having substantially the same effect as any of the foregoing and any assignment or deposit arrangement in the nature of a security device). "Loan" shall mean each and every Loan made by any Lender hereunder, including A Term Loans, B Term Loans, C Term Loans, Revolving Loans or Swingline Loans. "Majority Lenders" of any Facility shall mean those Non-Defaulting Lenders which would constitute the Required Lenders under, and as defined in, this Agreement if all outstanding Obligations of the other Facilities under this Agreement were repaid in full and all Commitments with respect thereto were terminated. "Management Agreements" shall have the meaning provided in Section 5.01(j)(iii). "Mandatory Borrowing" shall have the meaning provided in Section 1.01.03. "Mandatory Redemption Event" shall mean "Mandatory Redemption Event" as defined in Holdings' certificate of designation with respect to the Holdings Preferred Stock. "Margin Adjustment Period" shall mean on a date (a) with respect to the first such period, the period which shall commence 6 months from the Closing Date and which shall end on the earlier of (i) the date of actual delivery of the next financial statements pursuant to Section 7.01(b)(i) or (c)(i), as the case may be, and (ii) the latest date on which the next financial statements are required to be delivered pursuant to Section 7.01(b)(i) or (c)(i), as the case may be and (b) thereafter, with respect to each succeeding period, each period which shall commence on a date on which the financial statements are delivered pursuant to Section 7.01(b)(i) or (c)(i), as the case may be, and which shall end on the earlier of (i) the date of actual delivery of the next financial statements pursuant to Section 7.01(b)(i) or (c)(i), as the case may be, and (ii) the latest date on which the next financial statements are required to be delivered pursuant to Section 7.01(b)(i) or (c)(i), as the case may be. 87 "Margin Stock" shall have the meaning provided in Regulation U. "Material Adverse Effect" shall mean a material adverse effect on the business, properties, assets, liabilities or financial condition of the Borrower or of the Borrower and its Subsidiaries taken as a whole. "Maturity Date" with respect to any Facility shall mean either the A Term Loan Maturity Date, the B Term Loan Maturity Date, the C Term Loan Maturity Date or the Revolving Loan Maturity Date, as the case may be. "Maximum Swingline Amount" shall mean $10,000,000. "Merger" shall mean the merger of EPAI with and into EPII pursuant to the Merger Agreement. "Merger Agreement" shall mean the Merger Agreement dated as of December 23, 1997 among the PI Trust, EPII, the Holdings and EPAI. "Merger Documents" shall mean the Merger Agreement and all other agreements and documents relating to the Merger. "Minimum Borrowing Amount" shall mean (i) for Term Loans, $5,000,000; (ii) for Revolving Loans, $2,500,000; and (iii) for Swingline Loans, $100,000 and in each case integral multiples thereof. "Moody's" shall mean Moody's Investors Service, Inc. "Mortgage" shall have the meaning provided in Section 5.01(i)(A). "Mortgage Policies" shall have the meaning provided in Section 5.01(i)(B). "Mortgaged Properties" shall mean and include the Real Properties owned or leased by the Borrower and its Domestic Subsidiaries to the extent designated as such on Schedule 6.17. "Multiemployer Plan" shall mean any multiemployer plan (within the meaning of section 4001(a)(3) of ERISA) to which the Borrower or any of its Subsidiaries has any liability or contributes (or has at any time within the past five years contributed to or had any liability to contribute). 88 "Name Holder Subsidiary" shall mean any Subsidiary of the Borrower or any of its Subsidiaries incorporated and existing solely for the purpose of reserving the corporate name of such Subsidiary and which does not conduct any business or hold any assets; provided that such Subsidiary may own another Name Holder Subsidiary. "Net Cash Proceeds" shall mean, with respect to any Asset Sale, the Cash Proceeds resulting therefrom net of (a) reasonable cash expenses of sale (including brokerage fees, if any, transfer taxes and payment of principal, premium and interest of Indebtedness other than the Loans required to be repaid as a result of such Asset Sale) and (b) incremental income taxes paid or payable as a result thereof. "1996 Credit Agreement" shall mean $60,000,000 Revolving Credit Facility Credit Agreement (dated as of November 29, 1996) by and among EPII, certain of its subsidiaries, the bank's party thereto and PNC Bank, Ohio, National Association, as agent, as amended. "Non-Defaulting Lender" shall mean each Lender other than a Defaulting Lender. "Non-Recourse Purchase Money Indebtedness" shall mean Indebtedness of the Borrower or any of its Subsidiaries incurred (a) to finance the purchase of any assets of the Borrower or any of its Subsidiaries within 90 days of such purchase, (b) to the extent the amount of Indebtedness thereunder does not exceed 100% of the purchase cost of such assets, (c) to the extent the purchase cost of such assets is or should be included in "additions to property, plant and equipment" in accordance with GAAP, and (d) to the extent that such Indebtedness is non-recourse to the Borrower or any of its Subsidiaries or any of their respective assets other than the assets so purchased. "Non-Recourse Purchase Money Security Interest" shall mean a Lien on assets of the Borrower or any of its subsidiaries to secure Non-Recourse Purchase Money Indebtedness with which such assets were purchased. "Non-Voting Equity" shall mean issued and outstanding shares of each class of capital stock or other ownership interest not entitled to vote (within the meaning of Tres. Reg., Section 1.956-2(c)(2). "Note" shall mean each A Term Note, each B Term Note, each C Term Note, each Revolving Note and the Swingline Note. "Notice of Borrowing" shall have the meaning provided in Section 1.03(a). "Notice of Conversion" shall have the meaning provided in Section 1.06. 89 "Notice Office" shall mean the office of the Agent located at 1325 Avenue of the Americas, New York, New York 10019, Attention: Agency Services, or such other office as the Agent may hereafter designate in writing as such to the other parties hereto. "Obligation Currency" shall have the meaning provided in Section 12.17(a). "Obligations" shall mean all amounts, direct or indirect, contingent or absolute, of every type or description, and at any time existing, owing to the Agent or any Lender pursuant to the terms of this Agreement or any other Credit Document. "Participant" shall have the meaning provided in Section 2.04(a). "Payment Office" shall mean the office of the Agent located at 1325 Avenue of the Americas, New York, New York 10019, or such other office as the Agent may hereafter designate in writing as such to the other parties hereto. "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA or any successor thereto. "Permanent Injunction" shall mean the order included in the Confirmation Order permanently staying, restraining and enjoining any entity from taking any actions with respect to asbestos or lead personal injury claims against EPII and certain of its Subsidiaries designated as "Debtors" in such order. "Permitted Encumbrances" shall mean (i) those liens, encumbrances and other matters affecting title to any Mortgaged Property listed in the Mortgage Policies in respect thereof as of the Closing Date and found reasonably acceptable by the Collateral Agent, (ii) as to any particular Mortgaged Property at any time, such additional easements, encroachments, covenants, rights of way, minor defects, irregularities or encumbrances on title which do not, in the reasonable opinion of the Collateral Agent, materially impair such Mortgaged Property for the purpose for which it is held by the mortgagor thereof, or the lien held by the Collateral Agent for the benefit of Secured Creditors, (iii) applicable laws, ordinances, regulations, including without limitation, zoning and other municipal ordinances which are not violated in any material respect by the existing improvements and the present use made by the mortgagor thereof of the Premises (as defined in the respective Mortgage), (iv) general real estate taxes and assessments not yet delinquent, and (v) such other items as the Agent may consent to. "Permitted Holdings Transactions" means (i) the execution, delivery and performance by Holdings of its obligations under, (x) any guarantees by Holdings of Obligations of the Borrower and/or its Subsidiaries with respect to this Agreement and/or the Notes and obligations of the 90 Borrowers under Interest Rate Protection Agreements and the pledge of capital stock of the Borrower as collateral for its obligations under any such guarantee, and the guarantee by Holdings of any other Indebtedness of the Borrower and/or its Subsidiaries which such Indebtedness is permitted to be incurred under this Agreement, (y) the Tax Sharing Agreement (ii) the establishment of a wholly-owned Subsidiary (other than a Subsidiary of the Company) for use as a vehicle for the consummation of an acquisition where all or a substantial part of the consideration thereof is common stock of Holdings, provided that (A) any such Subsidiary shall become a direct or indirect Wholly-Owned Subsidiary of the Borrower within 60 days after the consummation of such acquisition and (B) immediately after giving effect to such acquisition, no Mandatory Redemption Event, Default or Event of Default shall have occurred, (iii) any investment in the Borrower, (iv) payments with respect to the Holdings Preferred Stock and the Exchange Debenture and any Restricted Payment that is permitted in accordance with the "Limitations on Restricted Payments" covenant, and (v) the performance of ministerial activities and payment of taxes and administrative fees necessary for the Borrower and its Subsidiaries. "Permitted Liens" shall have the meaning provided in Section 8.01. "Person" shall mean any individual, partnership, joint venture, firm, corporation, limited liability company association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof. "PI Trust" shall mean the personal injury trust established pursuant to the Plan of Reorganization. "Plan" shall mean any multiemployer or single-employer plan (as each such term is defined in Section 4001 of ERISA) subject to Title IV of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute to) the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan. "Plan of Reorganization" shall mean the plan or reorganization relating to EPII issued by the United States Bankruptcy Court, Southern District of Ohio, Western Division. "Pledge Agreement" shall have the meaning provided in Section 5.01(h)(ii). "Pledge Agreement Collateral" shall mean all "Collateral" as defined in the Pledge Agreement. 91 "Pledged Securities" shall mean all the Pledged Securities as defined in the Pledge Agreement. "Pricing Grid" shall mean the pricing grid attached hereto as Annex II. "Prime Rate" shall mean the rate which ABN AMRO announces from time to time as its prime lending rate for U.S. Dollar loans, the Prime Rate to change when and as such prime lending rate changes. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. ABN AMRO may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "Projections" shall have the meaning provided in Section 5.01(m). "RCRA" shall mean Resource Conservation and Recovery Act, as amended. "Real Property" of any Person shall mean all of the right, title and interest of such Person in and to land, improvements and fixtures, including leaseholds. "Recovery Event" shall mean the receipt by the Borrower or any of its Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of theft, physical destruction or damage or any other similar event with respect to any properties or assets of the Borrower or any of its Subsidiaries, (ii) by reason of any condemnation, taking, seizing or similar event with respect to any properties or assets of the Borrower or any of its Subsidiaries and (iii) under any policy of insurance required to be maintained under Section 7.03. "Register" shall have the meaning provided in Section 12.16. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. "Regulation G" shall mean Regulation G of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or any portion thereof. "Regulation T" shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or any portion thereof. "Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof. 92 "Regulation X" shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or any portion thereof. "Related 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 advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Related Party Agreement" shall mean any management or advisory agreements or other arrangements with any Affiliate of the Borrower or with any other direct or indirect holder of more than 10% of any class of the Borrower's or Holdings, capital stock (except, in any such case, Holdings, the Borrower or any Subsidiary). "Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migration into the environment. "Replaced Lender" shall have the meaning provided in Section 1.13(a). "Replacement Lender" shall have the meaning provided in Section 1.13(a). "Reportable Event" shall mean an event described in Section 4043(b) of ERISA with respect to a Plan as to which the 30-day notice requirement has not been waived by the PBGC. "Required Lenders" shall mean collectively Non-Defaulting Lenders the sum of whose outstanding Term Loans, Term Loan Commitments, Revolving Credit Commitments (or, if after the Total Revolving Credit Commitment has been terminated, outstanding Revolving Loans and Revolving Percentages of outstanding Swingline Loans and Letter of Credit Outstandings) constitute greater than 50% of the sum of (i) the total outstanding Term Loans of Non-Defaulting Lenders, or the Total Term Loan Commitment then in effect and (ii) the Total Revolving Credit Commitment less the aggregate Revolving Credit Commitments of Defaulting Lenders (or, if after the Total Revolving Credit Commitment has been terminated, the total outstanding Revolving Loans of Non-Defaulting Lenders and the aggregate Revolving Percentages of all Non-Defaulting Lenders of the total outstanding Swingline Loans and Letter of Credit Outstandings at such time). "Retiree Welfare Plan" shall mean any employee welfare benefit plan (within the meaning of section 3(1) of ERISA) which provides benefits to retired or other former employees of the Borrower or any of its Subsidiaries (other than continuation of group health plan coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or pursuant to applicable state or foreign law). "Returns" shall have the meaning provided in Section 6.09. 93 "Revolving Credit Commitment" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name in Annex I directly below the column entitled "Revolving Credit Commitment," as the same may be reduced from time to time pursuant to Section 3.02, Section 3.03 and/or Section 9. "Revolving Credit Facility" shall mean the Facility evidenced by the Total Revolving Credit Commitment. "Revolving Lender" shall mean at any time each Lender with a Revolving Credit Commitment or with outstanding Revolving Loans. "Revolving Loan" shall have the meaning provided in Section 1.01.01(d). "Revolving Loan Maturity Date" shall mean the last Business Day in February, 2004. "Revolving Note" shall have the meaning provided in Section 1.05(a). "Revolving Percentage" shall mean at any time for each Revolving Lender, with respect to Revolving Loans, Swingline Loans and Letters of Credit, the percentage obtained by dividing such Revolving Lender's Revolving Credit Commitment by the Total Revolving Credit Commitment, provided that if the Total Revolving Credit Commitment has been terminated, the Revolving Percentage of each Revolving Lender shall be determined by dividing such Revolving Lender's Revolving Credit Commitment immediately prior to such termination by the Total Revolving Credit Commitment immediately prior to such termination. "Rollover Amount" shall have the meaning provided in Section 8.07(b). "Scheduled A Repayment" shall have the meaning provided in Section 4.02.01(b)(i). "Scheduled B Repayment" shall have the meaning provided in Section 4.02.01(b)(ii). "Scheduled C Repayment" shall have the meaning provided in Section 4.02.01(b)(iii). "Scheduled Repayment" shall mean any Scheduled A Repayment, any Scheduled B Repayment or any Scheduled C Repayment. "SEC" shall have the meaning provided in Section 7.01(h). "Section 4.04(b)(ii) Certificate" shall have the meaning provided in Section 4.04(b). 94 "Secured Creditors" shall have the meaning provided in the Security Documents. "Securities Act" shall mean the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder. "Security Agreement" shall have the meaning provided in Section 5.01(h)(iii). "Security Agreement Collateral" shall mean all "Collateral" as defined in the Security Agreement. "Security Documents" shall mean and include the Security Agreement, each Pledge Agreement, each Mortgage, and each Additional Security Document, if any. "Senior Subordinated Note Documents" shall mean and include each of the Senior Subordinated Note Indenture and the Senior Subordinated Notes, as the same may be entered into, modified, supplemented or amended from time to time pursuant to the terms hereof and thereof. "Senior Subordinated Note Indenture" shall mean the Indenture dated as of February 24, 1998 among the Borrower, the guarantors named therein and The Bank of New York, as trustee, and any other Indentures that may be entered into by and between the Borrower and the trustee for the holders of the Senior Subordinated Notes or the purchaser of the Senior Subordinated Notes, as applicable, in the form referred to in, or having the terms permitted by, Section 8.04(vi), as the same may be entered into, modified, supplemented or amended from time to time in accordance with the terms hereof and thereof. "Senior Subordinated Notes" shall mean the 9 3/8% Senior Subordinated Notes due 2008 of the Borrower and any other senior subordinated notes of the Borrower that may be issued pursuant to a Senior Subordinated Note Indenture and as the same may be modified, supplemented or amended from time to time pursuant to the terms hereof and thereof. "Shareholder's Agreements" shall have the meaning provided in Section 5.01(j)(ii). "Specified Transaction Payments" means the following payments made to or for the benefit of present or future officers and employees of the Borrower and its Affiliates, or to Granaria Holdings and its Affiliates, in each case in connection with the Transaction and on terms (including without limitation the amount thereof) substantially as described in the Offering Memorandum, but only to the extent that the aggregate amount thereof does not exceed $43.2 million for all periods from and after the Closing Date: (i) payments to finance or refinance the purchase by such officers and employees (or a trust for their benefit) of capital stock of Holdings 95 or its parent company, the grant or vesting of any award of such capital stock and the payment by such officers and employees of income taxes in respect thereof, (ii) stay put and other incentive bonuses, (iii) severance payments and (iv) transaction fees paid to Granaria Holdings. "S&P" shall mean Standard & Poor's Ratings Services, a division of McGraw Hill, Inc. "Stated Amount" of each Letter of Credit shall mean at any time the maximum amount available to be drawn thereunder at such time, determined without regard to whether any conditions to drawing could then be met. "Subsidiary" shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time. "Subsidiary Guarantor" shall mean each Subsidiary of the Borrower (other than a Foreign Subsidiary except to the extent otherwise provided in Section 7.11) (except Immaterial Subsidiaries) that is or becomes a party to the Subsidiary Guaranty. "Subsidiary Guaranty" shall have the meaning provided in Section 5.01(h)(i) "Swingline Expiry Date" shall mean the date which is two Business Days prior to the Revolving Loan Maturity Date. "Swingline Lender" shall mean ABN AMRO Bank N.V., in its capacity as a Swingline Lender, or any Lender acting in replacement thereof with the consent of the Borrower. "Swingline Loan" shall have the meaning provided in Section 1.01.02. "Swingline Note" shall have the meaning provided in Section 1.05(a). "Syndication Agent" shall have the meaning provided in the first paragraph of this Agreement. "Tax Sharing Agreement" means any tax sharing agreement or arrangement entered or to be entered into by Holdings, the Borrower and its Subsidiaries, providing for payments by or to 96 Holdings, the Borrower and its Subsidiaries that, in each case, are not in excess of the tax liabilities that would have been payable by such Person on a stand-alone basis. "Taxes" shall have the meaning provided in Section 4.04(a). "Telerate Page 3750" shall mean the display designated as Page 3750 on the Telerate Service (or such other page as may replace Page 3750 on that service or such other service as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying British Bankers' Association Interest Settlement Rates for U.S. Dollar deposits). "Term Loan" shall mean each A Term Loan, each B Term Loan and each C Term Loan. "Term Loan Commitment" shall mean, with respect to each Lender at any time, the sum of the A Term Loan Commitment, the B Term Loan Commitment and the C Term Loan Commitment of such Lender at such time. "Test Period" shall mean the four consecutive fiscal quarters of the Borrower then last ended, in each case taken as one accounting period. "Title Insurers" shall have the meaning provided in Section 5.01(i)(B). "Total A Term Loan Commitment" shall mean the sum of the A Term Loan Commitments of each of the Lenders. "Total B Term Loan Commitment" shall mean the sum of the B Term Loan Commitments of each of the Lenders. "Total C Term Loan Commitment" shall mean the sum of the C Term Loan Commitment of each of the Lenders. "Total Commitment" shall mean the sum of the Total Term Loan Commitment and the Total Revolving Credit Commitment "Total Revolving Credit Commitment" shall mean the sum of the Revolving Credit Commitments of each of the Lenders. "Total Term Loan Commitment" shall mean the sum of the Total A Term Loan Commitment, the Total B Term Loan Commitment and the Total C Term Loan Commitment. 97 "Total Unutilized Revolving Credit Commitment" shall mean, at any time, (i) the Total Revolving Credit Commitment at such time less (ii) the sum of the aggregate principal amount of all Revolving Loans and Swingline Loans outstanding at such time plus the Letter of Credit Outstandings at such time. "Transaction" shall mean, collectively, (i) the Merger, (ii) the incurrence of Loans and the issuance or deemed issuance of Letters of Credit on the Closing Date, (iii) the issuance and sale of the Senior Subordinated Notes, (iv) the refinancing on the Closing Date of substantially all Indebtedness of the Borrower and its Subsidiaries (other than the Senior Subordinated Notes and the Existing Indebtedness) and (v) the payment of fees and expenses in connection with the foregoing. "Type" shall mean any type of Loan determined with respect to the interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Rate Loan. "UCC" shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction. "Unfunded Current Liability" of any Plan means the amount, if any, by which the actuarial present value of the accumulated plan benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting Standards No. 35, based upon the actuarial assumptions used by the Plan's actuary in the most recent annual valuation of such Plan. "United States" and "U.S." shall each mean the United States of America. "Unpaid Drawings" shall have the meaning provided in Section 2.05(a). "U.S. Dollars" and the sign "$" shall each mean freely transferable lawful money of the United States of America. "Unutilized Revolving Credit Commitment" of any Lender at any time shall mean the Revolving Credit Commitment of such Lender at such time less the sum of (i) the aggregate principal amount of Revolving Loans made by such Lender and then outstanding and (ii) such Lender's Percentage of the Letter of Credit Outstandings at such time. "Voting Equity" shall mean the issued and outstanding shares of each class of capital stock or other ownership interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2). 98 "Waivable Mandatory Repayment" shall have the meaning provided in Section 4.02.03. "Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary. "Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary. "Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any corporation 100% of whose capital stock (other than director's qualifying shares and/or other nominal amounts of shares required to be held other than by such Person under applicable law) is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time. "Working Capital" shall mean the excess of Consolidated Current Assets minus Consolidated Current Liabilities. "Written" (whether lower or upper case) or "in writing" shall mean any form of written communication or a communication by means of telex, facsimile device, telegraph or cable. Section 10.02. Principles of Construction. (a) All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Agreement unless otherwise specified. (b) All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles in the United Sates in conformity with those used in the preparation of the financial statements referred to in Section 6.05(a). SECTION 11. THE AGENT. Section 11.01. Appointment. The Lenders hereby designate ABN AMRO as Agent to act as specified herein and in the other Credit Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Agent to take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through its respective officers, directors, agents, employees or affiliates. 99 Section 11.02. Nature of Duties. Notwithstanding any provision to the contrary elsewhere in this Agreement or in any other Credit Document, the Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement and the other Credit Documents. Neither the Agent nor any of its respective officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by its or their gross negligence or willful misconduct. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement or any other Credit Documents a fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein. Section 11.03. Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Lender and the holder of each Note, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Credit Parties in connection with the making and the continuance of the Loans and the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of the Credit Parties and, except as expressly provided in this Agreement, the Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter. The Agent shall not be responsible to any Lender or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of the Borrower and its Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of the Borrower and its Subsidiaries or the existence or possible existence of any Default or Event of Default. Section 11.04. Certain Rights of the Agent. If the Agent shall request instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with the Agreement or any Credit Document, the Agent shall be entitled to refrain from such act or taking such action unless and until the Agent shall have received instructions from the Required Lenders; and the Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender or the holder of any Note shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder or under any other Credit Document in accordance with the instructions of the Required Lenders. 100 Section 11.05. Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the Agent believed to be the proper Person, and, without respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice of counsel selected by the Agent. Section 11.06. Indemnification. In the event the Agents or Letter of Credit Issuer, as applicable, is not reimbursed and indemnified by the Borrower, the Lenders will reimburse and indemnify (but only to the extent required to be reimbursed or indemnified by the Borrower) the Agents, or Letter of Credit Issuer, as applicable, in proportion to their respective "percentages" as used in determining the Required Lenders, for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by the Agents or Letter of Credit Issuer, as applicable, in performing their respective duties as Agents or Letter of Credit Issuer, as applicable, hereunder or under any other Credit Document, in any way relating to or arising out of this Agreement or any other Credit Document; provided that no Lender shall be liable to the Agents or Letter of Credit Issuer, as applicable, for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agents, or Letter of Credit Issuer, as applicable, gross negligence or willful misconduct or any fees owing under Section 3.01(e). Section 11.07. The Agents in Their Individual Capacity. With respect to its obligation to make Loans and issue Letters of Credit under this Agreement, the Agents shall have the rights and powers specified herein for a "Lender" and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term "Lenders," "Required Lenders," "holders of Notes" or any similar terms shall, unless the context clearly otherwise indicates, include the Agents in their individual capacity. The Agents and its affiliates may accept deposits from, lend money to, and generally engaged in any kind of banking, trust, debt, equity or other business with any Credit Party or any Subsidiary or Affiliate of any Credit Party as if they were not performing the duties specified herein, and may accept fees and other consideration from the Borrower for services in connection with this Agreement and otherwise without having to account for the same to the Lenders. Section 11.08. Holders. The Agent shall deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent 101 holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor. Section 11.09. Resignation or Removal of the Agent. (a) The Agent may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents at any time by giving 15 Business Days' prior written notice to the Borrower and the Lenders, and the Agent may be removed at any time by written notice of removal from the Required Lenders to the Agent and the Borrower. Such resignation or removal shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below or as otherwise provided below. (b) Upon any such notice of resignation or removal, the Required Lenders shall appoint a successor Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Borrower. (c) If a successor Agent shall not have been so appointed within such 15 Business Day period, the Agent, with the consent of the Borrower, shall (or the Borrower, with the consent of the Required Lenders, may) then appoint a commercial bank or trust company with capital and surplus of not less than $500,000,000 as successor Agent who shall serve as Agent hereunder or thereunder until such time, if any, as the Required Lenders appoint a successor Agent as provided above. (d) If no successor Agent has been appointed pursuant to clause (b) or (c) above by the 20th Business Day after the date such notice of resignation was given by the Agent or the date of removal by the Required Lenders, the Agent's resignation or removal shall become effective and the Lenders shall thereafter perform all the duties of the Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Agent as provided above. Section 11.10. Release of Collateral. As promptly as practicable after the Borrower Stock Release Date, the Agent shall, and shall instruct the Collateral Agent to, take all necessary actions to release the Liens on the Borrower's capital stock created by the Pledge Agreement executed by Holdings. SECTION 12. MISCELLANEOUS. Section 12.01. Payment of Expenses, Etc. The Borrower shall: (i) whether or not the transactions contemplated herein are consummated, pay all reasonable out-of-pocket costs and expenses of the Agent (including, without limitation, the reasonable fees and disbursements of Chapman and Cutler and (to the extent retained in connection with the due diligence investigation 102 of and collateral arrangements relating to Real Property of the Borrower and its Subsidiaries) local counsel, subject to the cap as agreed by the Borrower and the Agent in a certain letter agreement) in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein and any amendment, waiver or consent relating hereto or thereto, of the Agent in connection with its syndication efforts with respect to this Agreement and of the Agent and, following an Event of Default, each of the Lenders in connection with the enforcement of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein (including, without limitation, the reasonable fees and disbursements of counsel for the Agent and, following an Event of Default, for each of the Lenders); (ii) pay and hold each of the Lenders harmless from and against any and all present and future stamp, excise and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; and (iii) indemnify the Agent and each Lender, and each of their respective officers, directors, trustees employees, representatives and agents from and hold each of them harmless against any and all liabilities, obligations (including removal or remedial actions), losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including reasonable attorneys' and consultants' fees and disbursements) incurred by, imposed on or assessed against any of them as a result of, or arising out of, or in any way related to, or by reason of, (a) any investigation, litigation or other proceeding (whether or not the Agent or any Lender is a party thereto) related to the entering into and/or performance of this Agreement or any other Credit Document or the use of any Letter of Credit or the proceeds of any Loans hereunder or the consummation of any transactions contemplated herein or in any other Credit Document or the exercise of any of their rights or remedies provided herein or in the other Credit Documents, or (b) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Real Property owned or at any time operated by any Credit Party or any of its Subsidiaries, the generation, storage, transportation, handling or disposal of Hazardous Materials at any location, whether or not owned or operated by any Credit Party or any of its Subsidiaries, the non-compliance of any Real Property with foreign, federal, state and local laws, regulations, and ordinances (including applicable permits thereunder) applicable to any Real Property, or any Environmental Claim asserted against any Credit Party, any of its Subsidiaries or any Real Property owned or at any time operated by any Credit Party or any of its Subsidiaries, including, in each case, without limitation, the reasonable fees and disbursements of counsel and other consultants incurred in connection with any such investigation, litigation or other proceeding (but excluding any losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified). To the extent that the undertaking to indemnify, pay or hold harmless the Agent or any Lender set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the 103 Borrower shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law. Section 12.02. Right of Setoff. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Borrower or any of its Subsidiaries or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (matured or unmatured and whatever currencies denominated) and any other Indebtedness at any time held or owing by such Lender (including, without limitation, by branches and agencies of such Lender wherever located) to or for the credit or the account of any Credit Party or any of its Subsidiaries against and on account of the Obligations and liabilities of any Credit Party or any of its Subsidiaries to such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 12.06(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Notwithstanding anything to the contrary contained in this Section 12.02, no Lender shall exercise any such right of set-off without the prior consent of the Agent or the Required Lenders so long as the Obligations shall be secured by any Real Property located in the State of California, it being understood and agreed, however, that this sentence is for the sole benefit of the Lenders and may be amended, modified or waived in any respect by the Required Lenders without the requirement of prior notice to or consent by any Credit Party and does not constitute a waiver of any rights against any Credit Party or against any Collateral. Section 12.03. Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, telecopier or cable communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at the Borrower's address or telecopier number specified opposite its signature below (with a copy to, in the case of a notice of Event of Default, Michael Hopkins, Esq., Howard Darby & Levin, 1330 Avenue of the Americas, New York, New York 10019); if to any other Credit Party, at such Credit Party's address or telecopier number specified opposite in Annex III; if to any Lender, at its address specified or telecopier number opposite its signature below; and if to the Agent, at its Notice Office; or, as to any Borrower or the Agent, at such other address or telecopier number as shall be designated by such party in a written notice to the other parties hereto and, as to each Lender, at such other address or telecopier number as shall be designated by such Lender in a written notice to the Borrower and the Agent. Each such notice or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and a confirmation of such telecopy 104 has been received by the sender, (ii) if given by mail, five (5) days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the addresses specified in this Section, except that notices and communications to the Agent shall not be effective until received by the Agent. Section 12.04. Benefit of Agreement, Etc. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided, however, the Borrower may not assign or transfer any of its rights, obligations or interest hereunder or under any other Credit Document without the prior written consent of the Lenders. Any Lender may at any time transfer, assign or grant participations in its rights hereunder, provided such Lender shall remain a "Lender" for all purposes hereunder (and may not transfer or assign all or any portion of its Commitments hereunder except as provided in Section 12.04(b)) and the transferee, assignee or participant, as the case may be, shall not constitute a "Lender" hereunder and, provided, further, that no Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (i) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Loan Maturity Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant's participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Total Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant's participation is not increased as a result thereof), (ii) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in which such participant is participating. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation. (b) Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (x) assign all or a portion of its Revolving Credit Commitment (and related outstanding Obligations hereunder) and/or its outstanding Term Loans to its parent company and/or any affiliate of such Lender which is at least 50% owned by such Lender or its 105 parent company or to one or more Lenders or to a Related Fund or (y) assign all, or if less than all, a portion equal to at least $5,000,000 (or at least $1,000,000 in the case of any assignment by ABN AMRO prior to March __, 1998) in the aggregate for the assigning Lender or assigning Lenders, of such Revolving Credit Commitments and/or its outstanding Term Loans (and related outstanding Obligations) hereunder to one or more Eligible Transferees, each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement, provided that (i) at such time Annex I shall be deemed modified to reflect the Commitments (and/or outstanding Term Loans, as the case may be) of such new Lender and of the existing Lenders, (ii) upon surrender of the old Notes, new Notes will be issued, at the Borrower's expense, to such new Lender and to the assigning Lender to the extent it is retaining any Commitments or Loans, such new Notes to be in conformity with the requirements of Section 1.05 (with appropriate modifications) to the extent needed to reflect the revised Commitments (and/or outstanding Term Loans, as the case may be), (iii) the consent of the Agent, Letter of Credit Issuers and, so long as no Event of Default has occurred and is continuing, the consent of the Borrower, shall be required in connection with any such assignment pursuant to clause (y) above (which consents shall not be unreasonably withheld) and (iv) the Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $3,500 and, provided, further, that such transfer or assignment will not be effective until recorded by the Agent on the Register pursuant to Section 12.16. To the extent of any assignment pursuant to this Section 12.04(b), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Commitments and/or Loans but shall continue to be entitled to the benefit of all indemnities hereunder with respect to matters arising out of the prior involvement of such assignor as a Lender hereunder. At the time of each assignment pursuant to this Section 12.04(b) to a Person which is not already a Lender hereunder and which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes, the respective assignee Lender shall provide to the Borrower and the Agent the appropriate Internal Revenue Service Forms (and, if applicable a Section 4.04(b)(ii) Certificate) described in Section 4.04(b). To the extent that an assignment of all or any portion of a Lender's Commitments and related outstanding Obligations pursuant to Section 1.13 or this Section 12.04(b) would, at the time of such assignment, result in increased costs under Section 1.10, 1.11 or 2.06 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment). (c) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank, and any Lender that is a fund that invests in bank loans may, without the consent of the Agent or Borrower, pledge all or any portion of its interest, rights 106 and obligations to any trustee or any other representative of holders of obligations owed or securities issued by such investment fund as security for such obligations or securities. Section 12.05. No Waiver; Remedies Cumulative. No failure or delay on the part of the Agent or any Lender or any holder of any Note in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between any Credit Party and the Agents or any Lender or any Letter of Credit Issuer or the holder of any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Credit Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Agents or any Lender or any Letter of Credit Issuer or the holder of any Note would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Agents or any Lender or any Letter of Credit Issuer or the holder of any Note to any other to further action in any circumstances without notice or demand. Section 12.06. Payments Pro Rata. (a) Except as otherwise provided in this Agreement, the Agent agrees that promptly after its receipt of each payment from or on behalf of any Credit Party in respect of any Obligations hereunder, it shall distribute such payment to the Lenders or the Letter of Credit Issuers, as the case may be, (other than any Lender that has consented in writing to waive its pro rata share of any such payment) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received. (b) Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans, Unpaid Drawings, Commitment Fees or Letter of Credit Fees, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the respective Credit Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 107 Section 12.07. Calculations; Computations. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lenders); provided that, except as otherwise specifically provided herein, all computations determining compliance with Sections 8.07 through 8.10, shall utilize accounting principles and policies in conformity with those used to prepare the historical financial statements delivered to the Lenders pursuant to Section 6.05(a). (b) Except as otherwise provided herein, all computations of interests, Commitment Fees and other Fees hereunder shall be made on the basis of a year of 360 days (or 365 or 366 days, as the case may be, in case of Base Rate Loans based on the Prime Rate) for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, Commitment Fees or other Fees are payable. (c) For purposes of determining compliance with the dollar amounts set forth in Section 8 and determining the Applicable Margin (to the extent based on the Leverage Ratio), the dollar equivalent of any Indebtedness or other obligation incurred in a currency other than Dollars shall be the dollar equivalent thereof as in effect on the last Business Day of the then most recently ended fiscal quarter of the Borrower and such dollar equivalent shall remain in effect until same is recalculated as of the last Business Day of the immediately succeeding fiscal quarter, and with such dollar equivalent to mean, at any time of determination thereof, the amount of Dollars which could be purchased with the amount of currency involved in such computation at the spot exchange rate therefor as published in the New York edition of The Wall Street Journal on the date one Business Day subsequent to the date of any determination of such dollar equivalent, provided that if the New York edition of The Wall Street Journal is not published on such date, reference shall be made to such rate as set forth in most recently published New York edition of The Wall Street Journal, and provided further, that if any time the New York edition of The Wall Street Journal ceases to publish such exchange rates, the Dollar Equivalent shall be the amount of Dollars which could be purchased with the amount of currency involved in such computation at the spot rate therefor as quoted by the Agent at approximately 11:00 a.m. (London time) on the date two Business Days prior to the date of any determination thereof for purchase on such date. Notwithstanding the foregoing, for purposes of determining compliance with Section 8.04 (vii), the Borrower shall be deemed in compliance with such Section as long as at the time of incurrence of any Indebtedness by Foreign Subsidiaries in a currency other than Dollars, the Dollar equivalent (calculated as provided above) of the sum of (i) such Indebtedness plus (ii) then outstanding Indebtedness of Foreign Subsidiaries shall not exceed the Dollar amount set forth in such Section. Section 12.08. Governing Law; Submission to Jurisdiction; Venture; Waiver of Jury Trial. (a) This Agreement and the other Credit Documents and the rights and obligations of the parties hereunder and thereunder shall be construed in accordance with and be governed by the law of the 108 State of New York. Any legal action or proceeding with respect to this Agreement or any other Credit Document may be brought in the courts of the State of New York or the United States for the Southern District of New York, and, by execution and delivery of this Agreement, each Credit Party hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each Credit Party hereby further irrevocably waives any claim that any such courts lack jurisdiction over such Credit Party, and agrees not to plead or claim, in any legal action or proceeding with respect to this Agreement or any other Credit Document brought in any of the aforesaid courts, that any such court lacks jurisdiction over such Credit Party. Each Subsidiary hereby irrevocably designates, appoints and empowers the Borrower, with offices on the date hereof at 250 East Fifth Street, Cincinnati, Ohio 45202 as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents which may be served in any such action or proceeding. If for any reason the Borrower shall cease to be available to act as such, each Subsidiary agrees to designate a new designee, appointee and agent in New York City on the terms and for the purposes of this provision satisfactory to the Agent under this Agreement. Each Credit Party further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such Credit Party at its address set forth opposite its signature below, such service to become effective 30 days after such mailing. Each Credit Party hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any other Credit Document that service of process was in any way invalid or ineffective. Nothing herein shall affect the right of the Agents under this Agreement, any Lender, any Letter of Credit Issuer or the holder of any Note to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against any Credit Party in any other jurisdiction. (b) Each Credit Party hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Credit Document brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) The Borrower hereby agrees with each other Credit Party, the Agent and each Lender that the Borrower irrevocably accepts such appointment as agent as set forth in clause (a) of this Section 12.08 and agrees that the Borrower (i) shall inform the Agent promptly in writing of any change of its address, (ii) shall notify the Agent of any termination of any of the agency relationships created by clause (a) of this Section 12.08, (iii) shall perform its obligations as such 109 Agent in accordance with the provisions of clause (a) of this Section 12.08 and (iv) shall forward promptly to each Subsidiary any legal process received by the Borrower in its capacity as process agent. As process agent, the Borrower agrees to discharge the above-mentioned obligations and will not refuse fulfillment of such obligations under clause (a) of this Section 12.08. In addition, the Borrower agrees that it shall maintain its qualification to do business in the State of New York and shall at all times have a registered agent in New York to receive service of process. (d) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. Section 12.09. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Agent. Section 12.10. Effectiveness. This Agreement shall become effective on the date (the "Effective Date") on which each Credit Party, each of the Lenders and the Agent shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered the same to the Agent at its Notice Office or, in the case of the Lenders, shall have given to the Agent telephonic (confirmed in writing), written, telex or facsimile notice (actually received) at such office that the same has been signed and mailed to it. The Agent will give each Borrower and each Lender prompt written notice of the occurrence of the Effective Date. Section 12.11. Headings Descriptive. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. Section 12.12. Amendment or Waiver; etc. (a) Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the Borrower and the Required Lenders, provided that no such change, waiver, discharge or termination shall, without the consent of each Lender (with Obligations being directly affected in the case of following clause (i)), (i) extend the final scheduled maturity of any Loan or Note, amend, modify or waive any Scheduled Repayment, or extend the stated maturity of any Letter of Credit beyond the applicable Maturity Date, or reduce the rate or extend the time of payment of interest or Fees thereon, or reduce the principal amount thereof (except to the extent repaid in cash), (ii) amend, modify or waive any provision of this Section 12.12, (iii) reduce the percentage specified in the definition of Required Lenders, 110 (iv) release any Guarantor from its obligations under any Guaranty or release any material portion of Collateral or amend the definition of Borrower Stock Release Date or (v) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement; provided further, that no such change, waiver, discharge or termination shall (u) increase the Commitments of any Lender over the amount thereof then in effect without the consent of such Lender (it being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default or of a mandatory reduction in the Total Commitment shall not constitute an increase of the Commitment of a Lender and an increase in the available portion of any Commitment of any Lender shall not constitute an increase in the Commitment of such Lender), (v) without the consent of the Swingline Lender or the Letter of Credit Issuers, as the case may be, amend, modify or waive any provision of Section 2 or alter its rights or obligations with respect to Letters of Credit or Swingline Loans, as the case may be, (w) without the consent of the Agent, amend, modify or waive any provision of Section 11 as same applies to the Agent or any other provision as same relates to the rights or obligations of the Agent, (x) without the consent of the Collateral Agent, amend, modify or waive any provision relating to the rights or obligations of the Collateral Agent, (y) without the consent of the Majority Lenders of each Facility which is being allocated a lesser prepayment or commitment reduction, alter the required application of any prepayments, as between the various Facilities pursuant to Section 4.02.01(c), (d), (e), (f) or (g) (although the Required Lenders may waive, in whole or in part, any such prepayment or commitment reduction so long as the application, as amongst the various Facilities, of any such prepayment or commitment reduction which is still required to be made is not altered), (z) without the consent of the Majority Lenders of the respective Facility, amend the definition of Majority Lenders or amend, modify or waive the order of the application of any payment or prepayment or (aa) without the consent of the Majority Lenders of the B Term Loan Facility and the Majority Lenders of the C Term Loan Facility, amend Section 4.02.03. If the Borrower requests a waiver of the terms of Section 8.02 and other related provisions of this Agreement in connection with the purchase or other acquisition of any part of the property or assets of any Person, the Agent and the Lenders shall use its best efforts to respond to such request within 21 days of such request. (b) If, in connection with any proposed change, waiver, discharge or termination with respect to any of the provisions of this Agreement as contemplated by clauses (i) through (v), inclusive, of the first proviso to Section 12.12(a), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrower shall have the right, so long as all non-consenting Lenders whose individual consent is required are treated as described below, to replace each such non-consenting Lender or Lenders with one or more Replacement Lenders pursuant to Section 1.13 so long as at the time of such replacement, each such Replacement Lender consents to the proposed change, waiver, discharge or termination, provided, that in any event the Borrower shall not have the right to 111 replace a Lender solely as a result of the exercise of such Lender's rights (and the withholding of any required consent by such Lender) pursuant to the second proviso to Section 12.12(a). Section 12.13. Survival. All indemnities set forth herein including, without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.01 and 12.06 shall survive the execution, delivery and termination of this Agreement and the Notes and the making, repayment and assignment of the Loans. Section 12.14. Domicile of Loans. Each Lender may transfer and carry its Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender. Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 12.14 would, at the time of such transfer, result in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from those being charged by the respective Lender prior to such transfer, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer). Section 12.15. Confidentiality. (a) Subject to the provisions of clause (b) of this Section 12.15, each Lender agrees that it will use its reasonable efforts not to disclose without the prior consent of the Borrower (other than to its employees, auditors, advisors or counsel or to another Lender if the Lender or such Lender's holding or parent company in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section 12.15 to the same extent as such Lender) any information with respect to the Borrower or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document and which is designated by the Borrower to the Lenders in writing as confidential (for purposes of this Section, all information and notices provided by the Borrower pursuant to Section 7.01(i) shall hereby be designated as confidential), provided that any Lender may disclose any such information (a) as has become generally available to the public, (b) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors or to the National Association of Insurance Commissioners, (c) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation or ruling applicable to such Lender, (e) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about such Lender's investment portfolio in connection with ratings issued with respect to such Lender, (f) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes, Commitments and/or Loans or any interest therein by such 112 Lender, provided, that such prospective transferee agrees to abide by the provisions contained in this Section and (g) to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty's professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section 12.15). (b) The Borrower hereby acknowledges and agrees that each Lender may share with any of its affiliates any information related to any Credit Party or any of its Subsidiaries (including, without limitation, any nonpublic customer information regarding the creditworthiness of the Borrower and its Subsidiaries, provided such Persons shall be subject to the provisions of this Section 12.15 to the same extent as such Lender). Section 12.16. Register. The Borrower hereby designates the Agent to serve as the Borrower's agent, solely for purposes of this Section 12.16, to maintain a register (the "Register") on which it will record the names and addresses of the Lenders and the Commitments from time to time of each of the Lenders, the Loans made by each of the Lenders and each repayment in respect of the principal amount of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation shall not affect the Borrower's obligations in respect of such Loans. With respect to any Lender, the transfer of the Commitment of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Commitment shall not be effective until such transfer is recorded on the Register maintained by the Agent with respect to ownership of such Commitment and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitment and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Commitments and Loans shall be recorded by the Agent on the Register only upon the acceptance by the Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 12.04(b). Coincident with the delivery of such an Assignment and Assumption Agreement to the Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender. The Borrower agrees to indemnify the Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Agent in performing its duties under this Section 12.16. Section 12.17. Judgment Currency. (a) The Borrower's obligation hereunder and under the other Credit Documents to make payments in Dollars (the "Obligation Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Agent or the respective Lender of the full amount of the Obligation Currency expressed to be payable to the Agent or such Lender under this Agreement or the other Credit Documents. If for the purpose of obtaining or enforcing judgment against the Borrower in any court or in any jurisdiction, it becomes necessary to convert 113 into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "Judgment Currency") an amount due in the Obligation Currency, the conversion shall be made, at the rate of exchange (as quoted by the Agent or if the Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by the Agent) determined, in each case, as of the day immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "Judgment Currency Conversion Date"). (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Borrower covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate or exchange prevailing on the Judgment Currency Conversion Date. (c) For purposes of determining any rate of exchange for this Section 12.17, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency. Section 12.18. Integration. This Agreement and the other Credit Documents represent the entire agreement of the Credit Parties, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Credit Party, any Agent or any Lender relative to subject matter hereof or thereof not expressly set forth or referred to herein or in the other Credit Documents. 114 IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written. E-P ACQUISITION, INC. By /s/ JOEL P. WYLER ------------------------------- Name: Joel P. Wyler ------------------------ Title: President ------------------------ Address: Suite 500 - ------------------------- 250 E. Fifth Street - ------------------------- Cincinnati, Ohio 45202 - ------------------------- Attention: President --------------------- Telephone: 513-721-7010 --------------------- Telecopy: 513-721-2431 --------------------- 115 IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written. E-P ACQUISITION, INC. By /s/ Joel P. Wyler -------------------------- Name: Joel P. Wyler Title: President Address: Suite 500 250 E. Fifth Street Cincinnati, Ohio 45202 Attention: President Telephone: 513-721-7010 Telecopy: 513-721-2431 ABN AMRO BANK N.V., individually and as Agent By /s/ Gregory D. Amoroso -------------------------- Name: Gregory D. Amoroso Title: Group Vice President By /s/ Paul Widuch -------------------------- Name: Paul Widuch Title: Group Vice President Address: 1325 Avenue of the Americas 9th Floor New York, NY 10019 Attention: Agency Services Telephone: (212) 314-1705 Telecopy: (212) 314-1709 PNC BANK, NATIONAL ASSOCIATION By /s/ Bruce A. Kintner -------------------------- Name: Bruce A. Kintner Title: Vice President Address: 201-East Fifth Street 3rd Floor Cincinnati, OH 45202 Attention: Sandy Wilson Telephone: (513) 651 -8984 Telecopy: (513) 651 -8951 DLJ CAPITAL FUNDING, INC. By /s/ Stephen P. Hickey -------------------------- Name: Stephen P. Hickey Title: Managing Director Address: Newport Tower 525 Washington Blvd. Jersey City, NJ 07310 Attention: Ed Vowinkel Telephone: (201) 610-1971 Telecopy: (201) 610-1965 THE BANK OF NOVA SCOCIA By /s/ F.C.H. Ashby --------------------------- Name: F.C.H. Ashby Title: Senior Manager Loan Operations Address: 600 Peachtree Street Suite 2700 Atlanta, GA 30308 Attention: Shannon Dancila Telephone: 404-888-1540 Telecopy: (404) 888-8998 BANK OF TOKYO - MITSUBISHI TRUST COMPANY By /s/ David C. McLaughlin -------------------------- Name: David C. McLaughlin Title: Vice President Address: 1251 Avenue of the Americas New York, NY 10020-1104 Attention: David McLaughlin, Vice President Telephone: (212) 782-4331 Telecopy: (212) 782-4981 BANK ONE, NA By /s/ Michael T. Vea -------------------------- Name: Michael T. Vea Title: President Address: 500 Throckmorton Fort Worth, TX Attention: Margie Bryant Telephone: (817) 884-4187 Telecopy: (817) 884-4651 COMERICA BANK By /s/ Nicholas G. Mester --------------------------- Name: Nicholas G. Mester Title: Account Representative Address: Mail Code 3265 500 Woodward Avenue Detroit, MI 48226 Attention: Nick Mester Telephone: (313) 222-9168 Telecopy: (313) 222-3776 CREDIT AGRICOLE INDOSUEZ By /s/ W. Leroy Startz ------------------------- Name: W. Leroy Startz Title: First Vice President By /s/ David Bouhl ------------------------- Name: David Bouhl, EVP Title: Head of Corporate Banking Chicago Address: 55 E. Monroe Street Suite 4700 Chicago, IL 60603 Attention: Jerome Leblond Telephone: (312) 917-7569 Telecopy: (312) 372-3724 CREDITANSTALT CORPORATE FINANCE, INC. By /s/ Richard P. Buckanavage ---------------------------- Name: Richard P. Buckanavage Title: Vice President By /s/ Maura K. Connor -------------------------- Name: Maura K. Connor Title: Senior Associate Address: 2 Greenwich Plaza Greenwich, CT 06830 Attention: Jennifer Poccia Telephone: (203) 861 -6423 Telecopy: (203) 861 -6594 Attention: Karen Marcella Telephone: (203) 861 -6421 Telecopy: (203) 861 -6594 NBD BANK, N.A. By /s/ Scott A. Dvornik -------------------------- Name: Scott A. Dvornik Title: Vice President Address: 1 Indiana Square Suite 7031 Indianapolis, IN 46266 Attention: Nina Windell Telephone: (317) 266-7736 Telecopy: (317) 266-4163 PROVIDENT BANK By /s/ Richard E. Wirthlin -------------------------- Name: Richard E. Wirthlin Title: Vice President Address: One East 4th Street 5th Floor Cincinnati, OH 45202 Attention: Richard E. Wirthlin Telephone: (513) 579-2022 Telecopy: (513) 579-2201 ARAB BANKING CORPORATION (B.S.C.) By /s/ Sheldon Tilney -------------------------------------- Name: Sheldon Tilney Title: Deputy General manager Address: 277 Park Avenue 32nd Floor New York, NY 10172-3299 Attention: Louise Bilbro Telephone: (212) 583-4758 Telecopy: (212) 583-0932/0921 THE BANK OF NEW YORK By Edward J. Dougherty ------------------------------- Name: Edward J. Dougherty III Title: Vice President U.S. Commercial Banking Address: One Wall Street 22nd Floor New York, NY 10286 Attention: Edward J. Dougherty Telephone: (212) 635-7842 Telecopy: (212) 635-6434 COMPAGNIE FINANCIERE de CIC et de 1'UNION EUROPEENNE By /s/ Anthony Rock ----------------------------------- Name: Anthony Rock Title: Vice President By /s/ Brian O'Leary ----------------------------------- Name: Brian O'Leary Title: Vice President Address: 520 Madison Avenue 37th Floor New York, NY 10022 Attention: Anthony Rock Telephone: (212) 715-4666 Telecopy: (212) 715-4535 FIFTH THIRD BANK By /s/ Kevin CM. Jones ----------------------------------- Name: Kevin CM. Jones Title: Assistant Vice President Address: 38 Fountain Square Plaza MD# 109054 Cincinnati, OH 45263 Attention: Kevin CM. Jones, Assistant Vice President Telephone: (513) 744-8662 Telecopy: (513) 579-5226 HARRIS TRUST AND SAVINGS BANK By /s/ W.A. McDonnell -------------------------------- Name: W.A. McDonnell Title: Vice President (312) 461-5244 Address: 111 West Monroe Street Chicago, IL 60603 Attention: Jennifer Miles-Muller Telephone: (312) 461-1516 Telecopy: (312) 293-5041 IMPERIAL BANK By /s/ John F. Farrace -------------------------------- Name: John F. Farrace Title: Vice President Address: 9920 South La Cienega Blvd. 14th Floor Inglewood, CA 90301 Attention: Judy Varner Telephone: (310) 417-5721 Telecopy: (310) 417-5997 THE MITSUBISHI TRUST AND BANKING CORPORATION By /s/ Beatrice E. Kossodo ------------------------------- Name: Beatrice E. Kossodo Title: Senior Vice President Address: 520 Madison Avenue 26th Floor New York, NY 10022 Attention: Mildred Chiu Telephone: (212) 891-8256 Telecopy: (212) 755-2349 or 486-0970 STAR BANK, NATIONAL ASSOCIATION By /s/ William J. Goodwin ------------------------------- Name: William J. Goodwin Title: Senior Vice President Address: 425 Walnut Street, 8th Floor Mail Location 9150 Cincinnati, OH 45201-1038 Attention: Cathy Siegel Telephone: (513) 632-4032 Telecopy: (513) 632-2965 THE SUMITOMO BANK, LIMITED, CHICAGO BRANCH By /s/ Ken-Ichiro Kobayashi -------------------------------------- Name: Ken-Ichiro Kobayashi Title: Joint General Manager Address: 233 S. Wacker Drive Suite 4800 Chicago, IL 60606-6448 Attention: Gary Rabishaw Telephone: (312) 879-7697 Telecopy: (312) 876-6436 MASSACHUSETTS MUTUAL LIFE INSURANCE CO. By /s/ John B. Wheeler ------------------------------ Name: John B. Wheeler Title: Manager Director Address: 1295 State Street Springfield, MA 01111 Attention: Laura Hamel Telephone: (413) 744-3978 Telecopy: (413) 744-7922 MASSMUTUAL HIGH YIELD PARTNERS LLC By: HYP Management, Inc. as Managing Member By /s/ Michael P. Hermsen ---------------------------------- Name: Michael P. Hermsen Title: Vice President Address: 1295 State Street Springfield, MA 01111 Attention: Laura Hamel Telephone: (413) 744-3978 Telecopy: (413)744-7922 VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By /s/ Jeffrey W. Maillet ---------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director Address: 1 Parkview Plaza Oakbrook Terrace, IL 60181 Attention: Brian Murphy Telephone: (630) 684-6479 Telecopy: (630) 684-6740/6741 Address: State Street Bank & Trust P.O. Box 778 Boston, MA 02102 Attention: Sean Emerson Telephone: (617) 664-5481 Telecopy: (617) 664-5366/5367 KZH-CRESCENT-2 CORPORATION By /s/ Virginia Conway ---------------------------------- Name: Virginia Conway Title: Authorized Agent Address: KZH-Crescent-2 Corporation c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, New York 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Telecopy: (212) 946-7776 PRIME INCOME TRUST By /s/ Rajesh K. Gupta ---------------------------------- Name: Rajesh K. Gupta Title: Senior Vice President Address: c/o Dean Witter Intercapital, Inc. 72nd Floor Two World Trade Center New York, NY 10048 Attention: April Chrysostomas Telephone: (212) 392-5709 Telecopy: (212) 392-5345 ARCHIMEDES FUNDING, L.L.C. By: ING CAPITAL ADVISORS, INC. as Collateral Manager By: /S/ MICHAEL D. HATLEY ____________________________________ Name: Michael D. Hatley Title: Vice President & Portfolio Manager Address: c/o ING Capital Advisors, Inc. 333 S. Grande Ave., Suite #4250 Los Angeles, CA 90071 Attention: Lenore Crummey-Benoit Telephone: (213) 346-3976 Telecopy: (213) 626-6552 KZH-ING-2 CORPORATION By /S/ ANDREW J. TAYLOR ____________________________________ Name: Andrew J. Taylor Title: Authorized Agent Address: KZH-ING-2 Corporation c/o The Chase Manhattan Bank 450 West 33rd Street -- 15th Floor New York, New York 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Telecopy: (212) 946-7776 OCTAGON CREDIT INVESTORS LOAN PORTFOLIO (A UNIT OF THE CHASE MANHATTAN BANK) By: /S/ JAMES P. FERGUSON ____________________________________ James P. Ferguson Managing Director Address: 380 Madison Avenue-12th Fl. New York, NY 10017 Phone: 212/622-3070 Fax: 212/622-3797 DELANO COMPANY By PACIFIC INVESTMENT MANAGEMENT COMPANY, as its Investment Advisor. By /S/ RAYMOND KENNEDY ____________________________________ Name: Raymond Kennedy Title: Vice President Address: Delano Company c/o Pacific Investment Management Co. 840 Newport Center Drive Newport Beach, CA 92658 Attention: Jason R. Rosiak Telephone: (714) 640-3407 Telecopy: (714) 720-8586 ROYALTON COMPANY By PACIFIC INVESTMENT MANAGEMENT COMPANY, as its Investment Advisor. By /S/ RAYMOND KENNEDY __________________________________ Name: Raymond Kennedy Title: Vice President Address: Royalton Company c/o Pacific Investment Management Co. 840 Newport Center Drive Newport Beach, CA 92658 Attention: Jason R. Rosiak Telephone: (714) 640-3407 Telecopy: (714) 720-8586 ALLSTATE INSURANCE COMPANY BY /S/ PATRICIA W. WILSON ____________________________________ Name: Patricia W. Wilson Title: Authorized Signatories By /S/ DANIEL C. LEIMBACH ____________________________________ Name: Daniel C. Leimbach Title: Authorized Signatories Address: 3075 Sanders Road Suite G4A Northbrook, IL 60062-7127 Attention: Mary Counley Telephone: (847) 402-7048 Telecopy: (847) 326-5040 EX-10.9 18 EXHIBIT 10.9 ASSUMPTION AGREEMENT THIS ASSUMPTION AGREEMENT (the "Agreement") dated as of February 24, 1998 by and between EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company"), as survivor and successor by merger with E-P Acquisition, Inc., and ABN AMRO Bank N.V., as Agent for the lenders from time to time party to the Credit Agreement (as hereinafter defined) for the benefit of the Agents, the Lenders, the Swingline Lender and the Letter of Credit Issuers. Capitalized terms used herein without definition which are defined in the Credit Agreement shall have the same meanings herein as ascribed to such terms in the Credit Agreement. WITNESSETH THAT: WHEREAS, E-P Acquisition, Inc., a Delaware corporation ("Acquisition") and ABN AMRO Bank N.V. ("ABN AMRO"), individually and as agent (ABN AMRO acting as such agent and any successor or successors to ABN AMRO in such capacity being hereinafter referred to as the "Agent") have entered into a Credit Agreement dated as of February 19, 1998 ("Credit Agreement") pursuant to which (i) ABN AMRO and such other banks, financial institutions and letter of credit issuers from time to time parties thereto (ABN AMRO, in its individual capacity, and such other banks and financial institutions being hereinafter referred to collectively as the "Lenders" and such letter of credit issuers being hereinafter referred to collectively as the "Letter of Credit Issuers") have agreed to extend various credit facilities to the Company on a condition, among others, that Acquisition shall have merged with and into the Company and (ii) Acquisition has undertaken certain obligations (the "Assumed Obligations") in contemplation of such merger; and WHEREAS, Acquisition has today merged itself into the Company pursuant to the laws of the States of Delaware and Ohio, with the Company as the surviving and continuing entity and, as a result of such merger, the Company has, by operation of law, assumed and become liable for the Assumed Obligations; and NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and for the purpose of acknowledging the Company's assumption of the Assumed Obligations, the Company agrees with the Agent, for the benefit of the Agents, the Lenders, the Swingline Lender and the Letter of Credit Issuers as follows: 1. The Company hereby acknowledges and confirms that it has assumed and is liable for the Assumed Obligations and agrees to pay the same to the Agents, the Lenders, the Swingline Lenders and the Letter of Credit Issuers, as applicable, together with interest thereon, on and subject to the terms and conditions of the Credit Agreement to the same extent and with the same force and effect as if the Company had originally executed the Credit Agreement. 2. The Assumed Obligations shall be deemed "Obligations" of the Company under and as defined in, and shall be subject to all of the terms and conditions of, the Credit Agreement as supplemented hereby and shall be secured by all the Collateral, and entitled to all other benefits and security, described or referred to in the Credit Agreement as so supplemented. 3. Notwithstanding the execution and delivery hereof, the Credit Agreement shall be and remain in full force and effect as supplemented hereby and any rights and remedies of the Agents, the Lenders, the Swingline Lender and the Letter of Credit Issuers, and obligations of Acquisition thereunder shall be and remain in full force and effect as contemplated hereby and shall not be discharged. 4. In evidence of the foregoing, the Company hereby adopts the Credit Agreement as a new and separate contract, all to the same extent and with the same force and effect as if the Company had originally executed the Credit Agreement and all references therein to Acquisition (as therein referenced as "Borrower") were instead references to the Company. The Company hereby acknowledges and agrees that all of the terms and conditions contained in the Credit Agreement, in each case as so adopted and otherwise supplemented hereby, shall be applicable to all Obligations of the Company, including the Assumed Obligations (the term "Obligations" as used herein to have the same meaning herein as such term has in the Credit Agreement). The Company agrees to observe and comply with all of the terms and conditions of the Credit Agreement adopted by the Company herein and hereby repeats and reaffirms for the benefit of the parties thereto all covenants, agreements, representations and warranties contained in the Credit Agreement as so supplemented hereby, each and all of which are and shall remain applicable to the Company and all the Obligations. 5. In order to induce the Lenders, the Swingline Lender and the Letter of Credit Issuers to extend credit to the Company under the Credit Agreement as supplemented hereby and to accept this Agreement, the Company hereby represents and warrants to the parties to the Credit Agreement that as of the date hereof, after giving effect to the Transaction, each of the representations and warranties set forth in the Credit Agreement is and shall be and remain true and correct and the Company shall be in full compliance with all of the terms and conditions of the Credit Agreement as so supplemented and no Default or Event of Default as defined in the Credit Agreement as so supplemented shall have occurred and be continuing. 6. The effectiveness of this Agreement is subject to the condition precedent that the merger of Acquisition into the Company has been successfully consummated and the Agent shall have received evidence thereof. 7. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed shall be an original but all of which to constitute one and the same instrument. The execution and acceptance of this Agreement by the Lenders, the Swingline Lender, the Letter of Credit Issuers and the Agents (other than the Agent) is not necessary for the effectiveness of this Agreement. The execution and acceptance of this Agreement by the Agent shall be deemed execution and acceptance of this Agreement by such parties. Except as specifically supplemented hereby, all of the terms and conditions of the Credit Agreement shall stand and remain unchanged and in full force and effect. No reference to this Agreement need to be made in any note, instrument or other document making reference to the Credit Agreement, any reference to the Credit Agreement in any of such to be deemed to be a reference to the Credit Agreement as supplemented hereby. This instrument shall be construed and governed by and in accordance with the internal laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first hereinabove written. EAGLE-PICHER INDUSTRIES, INC., as survivor and successor by merger with E-P Acquisition, Inc. By /s/ ANDRIES RUIJSSENAARS -------------------------------------- Its President -------------------------------------- ABN AMRO BANK N.V., as Agent By: /s/ GREGORY D. AMOROSO ---------------------------------------- Name: Gregory D. Amoroso ---------------------------------- Title: Group Vice President ---------------------------------- By: /s/ PAUL WIDUCH ---------------------------------------- Name: Paul Widuch ---------------------------------- Title: Group Vice President --------------------------------- EX-10.10 19 EXHIBIT 10.10 SECURITY AGREEMENT This Security Agreement (the "Agreement") is dated as of February 24, 1998, by and among EAGLE-PICHER INDUSTRIES, INC., a corporation organized and existing under the laws of Ohio, as survivor and successor by merger with E-P Acquisition, Inc., (as further defined in the Credit Agreement referred to below, the "Borrower"), and the other parties executing this Agreement under the heading "Debtors" (the Borrower and such other parties, along with any parties who execute and deliver to the Agent an agreement attached hereto as Schedule D, being hereinafter referred to collectively as the "Debtors" and individually as a "Debtor"), each with its mailing address as set forth on its signature page hereto, and ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands ("ABN AMRO"), with its mailing address at 1325 Avenue of the Americas, New York, New York 10019, acting as agent hereunder for the Secured Creditors hereinafter identified and defined (ABN AMRO acting as such agent and any successor or successors to ABN AMRO acting in such capacity being hereinafter referred to as the "Agent"); PRELIMINARY STATEMENTS A. The Borrower and ABN AMRO, individually and as agent, have entered into a Credit Agreement dated as of February 19, 1998 (such Credit Agreement as the same may be amended, modified or restated from time to time being hereinafter referred to as the "Credit Agreement"), pursuant to which ABN AMRO and such other banks and financial institutions and letter of issuers from time to time parties thereto (ABN AMRO, in its individual capacity, and such other banks and financial institutions being hereinafter referred to collectively as the "Lenders" and individually as a "Lender" and such letter of credit issuers being hereinafter referred to collectively as the "Letter of Credit Issuers" and individually as a "Letter of Credit Issuer") have agreed, subject to certain terms and conditions, to extend credit and make certain other financial accommodations available to the Borrower. B. The Borrower may from time to time enter into one or more Interest Rate Protection Agreements with one or more of the Lenders party to the Credit Agreement or affiliates thereof for the purpose of hedging or otherwise protecting the Borrower against changes in interest rates (the liability of the Borrower in respect of such agreements with such Lenders or affiliates being hereinafter referred to as the "Hedging Liability") (the Agent, the Lenders, the Letter of Credit Issuers and such affiliates party to Interest Rate Protection Agreements being hereinafter referred to collectively as the "Secured Creditors" and individually as a "Secured Creditor"). C. As a condition to extending credit to the Borrower under the Credit Agreement, the Secured Creditors have required, among other things, that each Debtor grant to the Agent a lien on and security interest in the personal property of such Debtor described herein subject to the terms and conditions hereof. D. The Borrower owns, directly or indirectly, equity interests in each other Debtor and the Borrower provides each other Debtor with financial, management, administrative, and technical support which enables such Debtor to conduct its business in an orderly and efficient manner in the ordinary course. E. Each Debtor will benefit, directly or indirectly, from credit and other financial accommodations extended by the Secured Creditors to the Borrower. NOW, THEREFORE, for and in consideration of the execution and delivery by the Secured Creditors of the Credit Agreement, and other good and valuable consideration, receipt whereof is hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Terms defined in Credit Agreement. All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. The term "Debtor" and "Debtors" as used herein shall mean and include the Debtors collectively and also each individually, with all grants, representations, warranties and covenants of and by the Debtors, or any of them, herein contained to constitute joint and several grants, representations, warranties and covenants of and by the Debtors; provided, however, that unless the context in which the same is used shall otherwise require, any grant, representation, warranty or covenant contained herein related to the Collateral shall be made by each Debtor only with respect to the Collateral owned by it or represented by such Debtor as owned by it. Section 2. Grant of Security Interest in the Collateral; Obligations Secured. (a) Each Debtor hereby grants to the Agent for the benefit of the Secured Creditors a lien on and security interest in, and acknowledges and agrees that the Agent has and shall continue to have for the benefit of the Secured Creditors a continuing lien on and security interest in, any and all right, title and interest of each Debtor, whether now owned or existing or hereafter created, acquired or arising, in and to the following: (i) Receivables. All Receivables, whether now owned or existing or hereafter created, acquired or arising, and however evidenced or acquired, or in which such Debtor now has or hereafter acquires any rights (the term "Receivables" means and includes all accounts, accounts receivable, contract rights, instruments, notes, drafts, acceptances, documents, chattel paper, any right of such Debtor to payment for goods sold or leased or for services rendered, whether or not earned by performance, and all other forms of obligations owing to such Debtor, and all of such Debtor's rights to any merchandise or other goods (including without limitation any returned or repossessed goods and the right of stoppage in transit) which is represented by, arises from or is related to any of the foregoing); (ii) General Intangibles. All General Intangibles, whether now owned or existing or hereafter created, acquired or arising, or in which such Debtor now has or hereafter acquires any rights (the term "General Intangibles" means and includes all general intangibles, all patents, patent applications, patent licenses, trademarks, trademark registrations, trademark licenses, trade styles, trade names, copyrights, -2- copyright registrations, copyright licenses and other licenses and similar intangibles, all customer, client and supplier lists (in whatever form maintained), all rights in leases and other agreements relating to real or personal property, all causes of action and tax refunds of every kind and nature, all privileges, franchises, immunities, licenses, permits and similar intangibles, and all other personal property (including things in action) not otherwise covered by this Agreement); (iii) Inventory. All Inventory, whether now owned or existing or hereafter created, acquired or arising, or in which such Debtor now has or hereafter acquires any rights and all documents of title at any time evidencing or representing any part thereof (the term "Inventory" means and includes all inventory and other goods which are held for sale or lease or are to be furnished under contracts of service or consumed in such Debtor's business, all goods which are raw materials, work-in-process, finished goods, materials or supplies of every kind and nature, in each case used or usable in connection with the acquisition, manufacture, processing, supply, servicing, storing, packing, shipping, advertising, selling, leasing or furnishing of such goods, and any constituents or ingredients thereof, and all goods which are returned or repossessed goods); (iv) Equipment. All Equipment, whether now owned or existing or hereafter created, acquired or arising, or in which such Debtor now has or hereafter acquires any rights (the term "Equipment" means and includes all equipment and other machinery, tools, fixtures, trade fixtures, furniture, furnishings, office equipment, vehicles (including vehicles subject to a certificate of title law) and all other goods now or hereafter used or usable in connection with such Debtor's business, together with all parts, accessories and attachments relating to any of the foregoing); (v) Investment Property. All Investment Property, whether now owned or existing or hereafter created, acquired or arising, or in which such Debtor now has or hereafter acquires any rights (the term "Investment Property" means and includes all investment property and all other securities (whether certificated or uncertificated), security entitlements, securities accounts, commodity contracts, and commodity accounts, including all substitutions and additions thereto, all dividends, distributions and sums distributable or payable from, upon, or in respect of such property, and all rights and privileges incident to such property); provided, however that in no event will any of the Investment Property described above be deemed to include any interest in any joint venture or in any contract, contract right, or other similar general intangible if the granting of a lien therein is prohibited by the terms of the written agreement creating such joint venture or creating or evidencing such contract, contract right, or similar general intangible; provided further, that (x) to the extent not prohibited by law, the Agent has and shall at all times have a security interest in all rights to payments of money due or to become due under any joint venture, contract, contract right, or similar general intangible and all other proceeds thereof and (y) if and when the prohibition which prevents the granting of a security interest in any such property is removed, terminated or otherwise becomes unenforceable as a matter of law, the Agent will be deemed to have, and at all times to have had, a security interest -3- in such property, and the Investment Property will be deemed to include, and at all times to have included, such property; (vi) Deposits and Property in Possession. All deposit accounts (whether matured or unmatured and in whatever currency denominated) of such Debtor maintained with any of the Secured Creditors and all sums now or hereafter on deposit therein or payable thereon, and any and all other property and interests in property which now is or may from time to time hereafter come into the possession, custody or control of any of the Secured Creditors, or any agent of any of them, in any way and for any purpose (whether for safekeeping, custody, pledge, transmission, collection or otherwise); (vii) Records. All supporting evidence and documents relating to any of the above-described property, including, without limitation, computer programs, disks, tapes and related electronic data processing media, and all rights of such Debtor to retrieve the same from third parties, written applications, credit information, account cards, payment records, correspondence, delivery and installation certificates, invoice copies, delivery receipts, notes and other evidences of indebtedness, insurance certificates and the like, together with all books of account, ledgers and cabinets in which the same are reflected or maintained, all whether now existing or hereafter arising; (viii) Accessions and Additions. All accessions and additions to and substitutions and replacements of any and all of the foregoing, whether now existing or hereafter arising; and (ix) Proceeds and Products. All proceeds and products of the foregoing and all insurance of the foregoing and proceeds thereof, whether now existing or hereafter arising; all of the foregoing being herein sometimes referred to as the "Collateral". All terms which are used herein which are defined in the Uniform Commercial Code of the State of New York ("UCC") shall have the same meanings herein as such terms are defined in the UCC, unless this Agreement shall otherwise specifically provide. (b) This Agreement is made and given to secure, and shall secure, the prompt payment and performance when due of (i) any and all indebtedness, obligations and liabilities of the Debtors, and of any of them individually, to the Secured Creditors, and to any of them individually, under or in connection with or evidenced by the Credit Agreement, the Notes of the Borrower heretofore or hereafter issued under the Credit Agreement and the obligations of the Borrower to reimburse the Secured Creditors for the amount of all drawings on all Letters of Credit issued pursuant to the Credit Agreement, and all other obligations of the Borrower under any and all applications for Letters of Credit, and any and all liability of the Debtors, and of any of them individually, arising under or in connection with or otherwise evidenced by agreements with any one or more of the Secured Creditors with respect to any Hedging Liability, and any and all liability of the Debtors, and -4- of any of them individually, arising under any guaranty issued by it relating to the foregoing or any part thereof, in each case whether now existing or hereafter arising (and whether arising before or after the filing of a petition in bankruptcy and including all interest accrued after the petition date), due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired and (ii) any and all reasonable expenses and charges, legal or otherwise, suffered or incurred by the Secured Creditors, and any of them individually, in collecting or enforcing any of such indebtedness, obligations and liabilities or in realizing on or protecting or preserving any security therefor, including, without limitation, the lien and security interest granted hereby (all of the indebtedness, obligations, liabilities, expenses and charges described above being hereinafter referred to as the "Obligations"). Notwithstanding anything in this Agreement to the contrary, the right of recovery against any Debtor (other than the Borrower to which this limitation shall not apply) under this Agreement shall not exceed $1.00 less than the amount which would render such Debtor's obligations under this Agreement void or voidable under applicable law, including fraudulent conveyance law. Section 3. Covenants, Agreements, Representations and Warranties. The Debtors hereby covenant and agree with, and represent and warrant to, the Secured Creditors that: (a) Each Debtor is duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization, is the sole and lawful owner of the Collateral for which a security interest is granted by it hereunder and has the power and authority to enter into this Agreement and to perform each and all of the matters and things herein provided for. Each Debtor's Federal tax identification number is set forth under its name under Column 1 on Schedule A. (b) Each Debtor's respective chief executive office is at the location listed under Column 2 on Schedule A attached hereto opposite such Debtor's name; and such Debtor has no other executive offices or places of business other than those listed under Column 3 on Schedule A attached hereto opposite such Debtor's name. The Collateral owned or leased by each Debtor is and shall remain in such Debtor's possession or control at the locations listed under Columns 2 and 3 on Schedule A attached hereto opposite such Debtor's name (collectively for each Debtor, the "Permitted Collateral Locations"), except as to any Collateral sold or otherwise disposed of in accordance with this Agreement and Section 8.02 of the Credit Agreement. If for any reason any Collateral is at any time kept or located at a location other than a Permitted Collateral Location, the Agent shall nevertheless have and retain a lien on and security interest therein. No Debtor shall move its chief executive office or maintain a place of business at a location other than those specified under Columns 2 or 3 on Schedule A or permit any Collateral to be located at a location other than a Permitted Collateral Location, in each case without first providing the Agent at least 30 days' prior written notice of the Debtor's intent to do so; provided that each Debtor shall at all times maintain its chief executive office and places of business in the United States of America and Permitted Collateral Locations in the United States of America or any province of Canada and, with respect to any new chief executive office or place of business or location of Collateral, such Debtor -5- shall have taken all action reasonably requested by the Agent to maintain the lien and security interest of Agent in the Collateral at all times fully perfected and in full force and effect. (c) The Collateral and every part thereof is and shall be free and clear of all security interests, liens (including, without limitation, mechanics', laborers' and statutory liens), attachments, levies and encumbrances of every kind, nature and description and whether voluntary or involuntary, except for the lien and security interest of the Agent therein, and other Liens permitted by Section 8.01 of the Credit Agreement (herein, the "Permitted Liens"). Each Debtor shall warrant and defend the Collateral against any claims and demands of all persons at any time claiming the same or any interest in the Collateral adverse to any of the Secured Creditors. (d) Each Debtor will promptly pay when due all taxes, assessments and governmental charges and levies upon or against it or its Collateral, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings which prevent attachment of any Lien resulting therefrom to, foreclosure on or other realization upon any Collateral and preclude interference with the operation of its business in the ordinary course and such Debtor shall have established adequate reserves therefor. (e) Each Debtor agrees it will not waste or destroy the Collateral or any part thereof and will not be negligent in the care or use of any Collateral. Each Debtor agrees it will not use, manufacture, sell or distribute any Collateral in violation of any statute, ordinance or other governmental requirement. Each Debtor will perform in all material respects its obligations under any contract or other agreement constituting part of the Collateral, it being understood and agreed that the Secured Creditors have no responsibility to perform such obligations. (f) Subject to Sections 4(d), 5(a), 6(b), 6(c), and 7(c) hereof and the terms of the Credit Agreement (including, without limitation, Section 8.02 thereof), each Debtor agrees it will not, without the Agent's prior written consent, sell, assign, mortgage, lease or otherwise dispose of the Collateral or any interest therein. (g) Each Debtor will insure its Collateral which is insurable against such risks and hazards as other companies similarly situated insure against, and including in any event loss or damage by fire, theft, burglary, pilferage, and loss in transit, in amounts and under policies containing loss payable clauses to the Agent as its interest may appear (and, if the Agent requests, naming the Secured Creditors as additional insureds therein) by insurers reasonably acceptable to the Agent. All premiums on such insurance shall be paid by the Debtors and the policies of such insurance (or certificates therefor) delivered to the Agent. All insurance required hereby shall provide that any loss shall be payable notwithstanding any act or negligence of the relevant Debtor, shall provide that no cancellation thereof shall be effective until at least 30 days after receipt by the relevant Debtor and the Agent of written notice -6- thereof, and shall be reasonably satisfactory to the Agent in all other respects. In case of any material loss, damage to or destruction of the Collateral or any part thereof, the relevant Debtor shall promptly give written notice thereof to the Secured Creditors generally describing the nature and extent of such damage or destruction. In case of any loss, damage to or destruction of the Collateral or any part thereof, the relevant Debtor, whether or not the insurance proceeds, if any, received on account of such damage or destruction shall be sufficient for that purpose, at such Debtor's cost and expense, will promptly repair or replace the Collateral so lost, damaged or destroyed, except to the extent such Collateral is not necessary to the conduct of such Debtor's business in the ordinary course. In the event any Debtor shall receive any proceeds of such insurance, such Debtor will immediately pay over such proceeds to the Agent; provided that, in the absence of any Default or Event of Default such Debtors shall be entitled to retain such insurance proceeds to the extent such proceeds are used for such repair or replacement in accordance with Section 4.02.01(g) of the Credit Agreement. Each Debtor hereby authorizes the Agent, at the Agent's option, to adjust, compromise and settle any losses under any insurance afforded at any time after the occurrence and during the continuation of any Event of Default, and such Debtor does hereby irrevocably constitute the Agent, its officers, agents and attorneys, as such Debtor's attorneys-in-fact, with full power and authority after the occurrence and during the continuation of any Event of Default to effect such adjustment, compromise and/or settlement and to endorse any drafts drawn by an insurer of the Collateral or any part thereof and to do everything necessary to carry out such purposes and to receive and receipt for any unearned premiums due under policies of such insurance. Net insurance proceeds received by the Agent under the provisions hereof or under any policy or policies of insurance covering the Collateral or any part thereof pursuant to the terms hereof shall be applied to the reduction of the Obligations (whether or not then due); provided, however, that the Agent agrees to release such insurance proceeds to the relevant Debtor for replacement or restoration of the portion of the Collateral lost, damaged or destroyed required by this Agreement to be so replaced or restored if, but only if, (i) at the time of release no Default or Event of Default exists hereunder, (ii) written application for such release is received from such Debtor within 10 days of receipt of, or in the event received by the Agent notice of Agent's receipt of, such proceeds and (iii) the Agent has received evidence reasonably satisfactory to it that the Collateral lost, damaged or destroyed has been or will be replaced or restored in accordance with Section 4.02.01(g) of the Credit Agreement. All insurance proceeds shall be subject to the lien and security interest of the Agent hereunder. (h) Subject to Section 7.02 of the Credit Agreement, each Debtor will allow the Secured Creditors, and their respective representatives free access to and right of inspection of the Collateral. (i) If any Collateral is in the possession or control of any agents or processors of a Debtor and the Agent so requests, such Debtor agrees to notify such agents or processors in writing of the Agent's security interest therein and instruct them to hold all such Collateral for the Agent's account and subject to the Agent's -7- instructions. Each Debtor will, upon the request of the Agent, authorize and instruct all bailees and any other parties, if any, at any time processing, labeling, packaging, holding, storing, shipping or transferring all or any part of the Collateral to permit the Secured Creditors and their respective representatives to examine and inspect any of the Collateral then in such party's possession and to verify from such party's own books and records any information concerning the Collateral or any part thereof which the Secured Creditors or their respective representatives may seek to verify. As to any premises not owned by a Debtor wherein any of the Collateral is located, if any, such Debtor shall, upon the Agent's request, cause each party having any right, title or interest in, or lien on, any of such premises to enter into an agreement (any such agreement to contain a legal description of such premises) whereby such party disclaims any right, title and interest in, and lien on, the Collateral, allowing the removal of such Collateral by the Agent and otherwise in form and substance reasonably acceptable to the Agent. (j) Upon the Agent's request, each Debtor agrees from time to time to deliver to the any Secured Creditor such evidence of the existence, identity and location of its Collateral and of its availability as collateral security pursuant hereto, in each case as such Secured Creditor may request. The Agent shall have the right to verify all or any part of the Collateral in any manner, and through any medium, which the Agent considers appropriate and reasonable, and each Debtor agrees to furnish all assistance and information, and perform any acts, which the Agent may require in connection therewith. (k) Each Debtor will comply in all material respects with the terms and conditions of any and all leases, easements, right-of-way agreements and other agreements binding upon such Debtor or affecting the Collateral, in each case which cover the premises wherein the Collateral is located, and any orders, ordinances, laws or statutes of any city, state or other governmental entity, department or agency having jurisdiction with respect to such premises or the conduct of business thereon. (l) No Debtor has invoiced Receivables or otherwise transacted business, and does not invoice Receivables or otherwise transact business, under any trade names other than its name set forth on its signature page to this Agreement or as otherwise set forth on Schedule B hereto. Each Debtor agrees it will not change its name or transact business under any other trade name, in each case without first giving the Agent at least 30 days' prior written notice of its intent to do so. (m) Each Debtor agrees to execute and deliver to the Agent such further agreements, assignments, instruments and documents, and to do all such other things, as the Agent may reasonably deem necessary or appropriate to assure the Agent its lien and security interest hereunder, including without limitation, (i) executing such financing statement or other instruments and documents as the Agent may from time to time reasonably require to comply with the UCC, and (ii) executing such patent, trademark, and copyright agreements as the Agent may from time to time reasonably require to comply with the filing requirements of the United States Patent and -8- Trademark Office and the United States Copyright Office. Each Debtor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Agent without prior notice thereof to such Debtor wherever the Agent deems necessary or desirable to perfect or protect the security interest granted hereby. In the event for any reason the law of any jurisdiction other than New York becomes or is applicable to the Collateral or any part thereof, or to any of the Obligations, each Debtor agrees to execute and deliver all such instruments and documents and to do all such other things as the Agent deems necessary or appropriate to preserve, protect and enforce the security interest of the Agent under the law of such other jurisdiction. (n) On failure of a Debtor to perform any of the covenants and agreements herein contained, the Agent may, at its option, perform the same and in so doing may expend such sums as the Agent deems advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, liens and encumbrances, expenditures made in defending against any adverse claims, and all other expenditures which the Agent may be compelled to make by operation of law or which the Agent may make by agreement or otherwise for the protection of the security hereof. All such sums and amounts so expended shall be repayable by such Debtor immediately upon demand, shall constitute additional Obligations secured hereunder, and shall bear interest from the date said amounts are expended at the rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days elapsed) determined by adding 2% to the Base Rate from time to time in effect plus the Applicable Base Rate Margin for Revolving Loans, with any change in such rate per annum as so determined by reason of a change in such Base Rate to be effective on the date of such change in said Base Rate (such rate per annum as so determined being hereinafter referred to as the "Default Rate"). No such performance of any covenant or agreement by the Agent on behalf of a Debtor, and no such advancement or expenditure therefor, shall relieve any Debtor of any default under the terms of this Agreement or in any way obligate any Secured Creditor to take any further or future action with respect thereto. The Agent in making any payment hereby authorized may do so according to any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien or title or claim. The Agent in performing any act hereunder shall be the sole judge of whether the relevant Debtor is required to perform the same under the terms of this Agreement. The Agent is hereby authorized to charge any depository or other account of any Debtor maintained with the Agent for the amount of such sums and amounts so expended. Section 4. Special Provisions Re: Receivables. (a) As of the time any Receivable becomes subject to the security interest provided for hereby and at all times thereafter, each Debtor shall be deemed to have warranted as to each and all of its Receivables that all warranties of such Debtor set forth in this Agreement are true and correct with respect to each such Receivable; that each of its Receivable and all papers and documents relating thereto are genuine and in all respects what they purport to be; that each of its Receivable is -9- valid and existing and, if such Receivable is an account, arises out of a bona fide sale of goods sold and delivered by such Debtor to, or in the process of being delivered to, or out of and for services theretofore actually rendered by such Debtor to, the account debtor named therein. (b) To the extent any Receivables or other item of Collateral is evidenced by an instrument, each Debtor shall cause such instrument to be pledged and delivered to the Agent; provided, however, that, prior to the existence of a Default or Event of Default and thereafter until otherwise required by the Agent or the Required Lenders, a Debtor shall not be required to deliver any such instrument if and only so long as the aggregate fair market value of all such instruments held by the Debtors and not delivered to the Agent under the Security Documents is less than $5,000,000 at any one time outstanding. (c) Unless and until an Event of Default hereunder occurs and is continuing, any merchandise or other goods which are returned by a customer or account debtor or otherwise recovered may be resold by the relevant Debtor in the ordinary course of its business as presently conducted in accordance with Section 6(b) hereof; upon the occurrence and during the continuation of any Event of Default hereunder, such merchandise and other goods shall be set aside at the request of the Agent and held by such Debtor as trustee for the Secured Creditors and shall remain part of the Collateral. Unless and until an Event of Default hereunder occurs and is continuing, the relevant Debtor may settle and adjust disputes and claims with its customers and account debtors, handle returns and recoveries and grant discounts, credits and allowances in the ordinary course of its business as presently conducted for amounts and on terms which such Debtor in good faith considers advisable. Upon the occurrence and during the continuation of any Event of Default hereunder, unless the Agent requests otherwise, each Debtor shall notify the Agent promptly of all returns and recoveries and, on the Agent's request, deliver any such merchandise or other goods to the Agent. Upon the occurrence and during the continuation of any Event of Default hereunder, unless the Agent requests otherwise, each Debtor shall also notify the Agent promptly of all disputes and claims and settle or adjust them at no expense to the Secured Creditors hereunder, but no discount, credit or allowance other than on normal trade terms in the ordinary course of business as presently conducted shall be granted to any customer or account debtor and no returns of merchandise or other goods shall be accepted by any Debtor without the Agent's consent. The Agent may, at all times upon the occurrence and during the continuation of any Event of Default hereunder, settle or adjust disputes and claims directly with customers or account debtors for amounts and upon terms which the Agent considers advisable. Section 5. Collection of Receivables. (a) Except as otherwise provided in this Agreement, each Debtor shall make collection of all of its Receivables and may use the same to carry on its business in accordance with sound business practice and otherwise subject to the terms hereof. (b) Upon the occurrence and during the continuation of any Default or Event of Default hereunder, whether or not the Agent has exercised any or all of its rights under other provisions of this Section 5, in the event the Agent requests any Debtor to do so: -10- (i) all instruments and chattel paper at any time constituting part of the Receivables (including any postdated checks) shall, upon receipt by such Debtor, be immediately endorsed to and deposited with Agent; and/or (ii) such Debtor shall instruct all of its customers and account debtors to remit all payments in respect of its Receivables to a lockbox or lockboxes under the sole custody and control of Agent and which are maintained at post offices selected by the Agent. (c) Upon the occurrence and during the continuation of any Default or Event of Default hereunder, whether or not the Agent has exercised any or all of its rights under other provisions of this Section 5, the Agent or its designee may notify the relevant Debtor's customers and account debtors at any time that Receivables have been assigned to the Agent or of the Agent's security interest therein, and either in its own name, or such Debtor's name, or both, demand, collect (including, without limitation, through a lockbox analogous to that described in Section 5(b)(ii) hereof), receive, receipt for, sue for, compound and give acquittance for any or all amounts due or to become due on Receivables, and in the Agent's discretion file any claim or take any other action or proceeding which the Agent may deem reasonably necessary or appropriate to protect and realize upon the security interest of the Agent in the Receivables. (d) Any proceeds of Receivables or other Collateral transmitted to or otherwise received by the Agent pursuant to any of the provisions of Sections 5(b) or 5(c) hereof may be handled and administered by the Agent in and through a remittance account or accounts maintained at the Agent or by the Agent at a commercial bank or banks selected by the Agent (collectively the "Depositary Banks" and individually a "Depositary Bank"), and each Debtor acknowledges that the maintenance of such remittance accounts by the Agent is solely for the Agent's convenience and that the Debtors do not have any right, title or interest in such remittance accounts or any amounts at any time standing to the credit thereof. Subject to Section 4.05 of the Credit Agreement, the Agent may apply all or any part of any proceeds of Receivables or other Collateral received by it from any source to the payment of the Obligations (whether or not then due and payable). The Agent need not apply or give credit for any item included in proceeds of Receivables or other Collateral until the Depositary Bank has received final payment therefor at its office in cash or final solvent credits current at the site of deposit acceptable to the Agent and the Depositary Bank as such. However, if the Agent does permit credit to be given for any item prior to a Depositary Bank receiving final payment therefor and such Depositary Bank fails to receive such final payment or an item is charged back to the Agent or any Depositary Bank for any reason, the Agent may at its election in either instance charge the amount of such item back against any such remittance accounts or any depository account of any Debtor maintained with the Agent, together with interest thereon at the rate then applicable to the Loan as to which such item was applied. Concurrently with each transmission of any proceeds of Receivables or other Collateral to any remittance account, upon the Agent's request, the relevant Debtor shall furnish the Agent with a report in such form as Agent shall reasonably require identifying the particular Receivable or such other Collateral from which the same arises or relates. Each Debtor hereby indemnifies the Secured Creditors from and against all -11- liabilities, damages, losses, actions, claims, judgments, and all reasonable costs, expenses, charges and attorneys' fees suffered or incurred by any Secured Creditor because of the maintenance of the foregoing arrangements; provided, however, that no Debtor shall be required to indemnify any Secured Creditor for any of the foregoing to the extent they arise solely from the gross negligence or willful misconduct of the person seeking to be indemnified. The Secured Creditors shall have no liability or responsibility to any Debtor for the Agent or any other Depositary Bank accepting any check, draft or other order for payment of money bearing the legend "payment in full" or words of similar import or any other restrictive legend or endorsement whatsoever or be responsible for determining the correctness of any remittance. Section 6. Special Provisions Re: Inventory and Equipment. (a) Each Debtor shall at its own cost and expense maintain, keep and preserve its Inventory in good and merchantable condition and keep and preserve its Equipment in good repair, working order and condition, ordinary wear and tear excepted, and, without limiting the foregoing, make all necessary and proper repairs, replacements and additions to its Equipment so that the operation thereof shall be fully preserved and maintained. (b) Each Debtor may, until an Event of Default has occurred and is continuing and thereafter until otherwise notified by the Agent, use, consume and sell the Inventory in the ordinary course of its business, but a sale in the ordinary course of business shall not under any circumstance include any transfer or sale in satisfaction, partial or complete, of a debt owing by such Debtor. (c) Each Debtor may, until an Event of Default has occurred and is continuing and thereafter until otherwise notified by the Agent, sell (x) obsolete, worn out or unusable Equipment which is concurrently replaced with similar Equipment at least equal in quality and condition to that sold and owned by such Debtor free of any lien, charge or encumbrance other than the security interest granted hereby and (y) Equipment to the extent permitted by Section 8.02 of the Credit Agreement. (d) As of the time any Inventory or Equipment of a Debtor becomes subject to the security interest provided for hereby and at all times thereafter, such Debtor shall be deemed to have warranted as to any and all of such Inventory and Equipment that all warranties of such Debtor set forth in this Agreement are true and correct with respect to such Inventory and Equipment; that all of such Inventory and Equipment is located at a location set forth pursuant to Section 3(b) hereof. Each Debtor warrants and agrees that none of its Inventory is or will be consigned to any other person or entity without the Agent's prior written consent. (e) Upon the Agent's or the Required Lenders' request, each Debtor shall at its own cost and expense cause the lien of the Agent in and to any portion of its Collateral subject to a certificate of title law to be duly noted on such certificate of title or to be otherwise filed in such manner as is prescribed by law in order to perfect such lien and will cause all such certificates of title and evidences of lien to be deposited with the Agent. -12- (f) Except for Equipment from time to time located on the real estate described on Schedule C attached hereto or as otherwise hereafter disclosed to the Secured Creditors in writing, none of the Equipment is or will be attached to real estate in such a manner that the same may become a fixture. (g) If any of the Inventory is at any time evidenced by a document of title, such document shall be promptly delivered by the relevant Debtor to the Agent. Section 7. Special Provisions Re: Investment Property. (a) Unless and until an Event of Default has occurred and is continuing and thereafter until notified to the contrary by the Agent pursuant to Section 9(d) hereof: (i) Each Debtor shall be entitled to exercise all voting and/or consensual powers pertaining to its Investment Property or any part thereof, for all purposes not inconsistent with the terms of this Agreement, the Credit Agreement or any other document evidencing or otherwise relating to any Obligations; and (ii) Each Debtor shall be entitled to receive and retain all cash dividends paid upon or in respect of its Investment Property. (b) Certificates for all securities now or at any time constituting Investment Property and part of the Collateral hereunder shall be promptly delivered by the relevant Debtor to the Agent duly endorsed in blank for transfer or accompanied by an appropriate assignment or assignments or an appropriate undated stock power or powers, in every case sufficient to transfer title thereto, including, without limitation, all stock received in respect of a stock dividend or resulting from a split-up, revision or reclassification of the Investment Property or any part thereof or received in addition to, in substitution of or in exchange for the Investment Property or any part thereof as a result of a merger, consolidation or otherwise. With respect to any Investment Property held by a securities intermediary, commodity intermediary, or other financial intermediary of any kind, the relevant Debtor shall execute and deliver, and shall cause any such intermediary to execute and deliver, an agreement among such Debtor, the Agent, and such intermediary in form and substance satisfactory to the Agent which provides, among other things, for the intermediary's agreement that it will comply with such entitlement orders, and apply any value distributed on account of any Investment Property maintained in an account with such intermediary, as directed by the Agent without further consent by such Debtor. The Agent may at any time after the occurrence and during the continuation of an Event of Default cause to be transferred into its name or the name of its nominee or nominees any and all of the Investment Property hereunder. (c) Unless and until an Event of Default has occurred and is continuing, each Debtor may sell or otherwise dispose of any of its Investment Property to the extent permitted by the Credit Agreement, provided that except to the extent permitted by Section 8.02 of the Credit Agreement, no Debtor shall sell or otherwise dispose of any capital stock or other equity interest in any direct or indirect Subsidiary without the prior written consent of the Agent. During the existence of any Event of Default, no Debtor shall -13- sell all or any part of the Investment Property without the prior written consent of the Agent. (d) Each Debtor represents that on the date of this Agreement, none of its Investment Property consists of margin stock (as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System) except to the extent such Debtor has delivered to the Agent a duly executed and completed Form U-1 with respect to such stock. If at any time the Investment Property or any part thereof consists of margin stock, the relevant Debtor shall promptly so notify the Agent and deliver to the Agent a duly executed and completed Form U-1 and such other instruments and documents reasonably requested by the Agent in form and substance satisfactory to the Agent. Section 8. Power of Attorney. In addition to any other powers of attorney contained herein, each Debtor hereby appoints the Agent, its nominee, or any other person whom the Agent may designate as such Debtor's attorney-in-fact, with full power to sign such Debtor's name on verifications of accounts and other Collateral; to send requests for verification of Collateral to such Debtor's customers, account debtors and other obligors; to endorse such Debtor's name on any checks, notes, acceptances, money orders, drafts and any other forms of payment or security that may come into the Agent's possession; to endorse the Collateral in blank or to the order of the Agent or its nominee; to sign such Debtor's name on any invoice or bill of lading relating to any Collateral, on claims to enforce collection of any Collateral, on notices to and drafts against customers and account debtors and other obligors, on schedules and assignments of Collateral, on notices of assignment and on public records; to notify the post office authorities to change the address for delivery of such Debtor's mail to an address designated by the Agent; to receive, open and dispose of all mail addressed to such Debtor; and to do all things necessary to carry out this Agreement. Each Debtor hereby ratifies and approves all acts of any such attorney and agrees that neither the Agent nor any such attorney will be liable for any acts or omissions nor for any error of judgment or mistake of fact or law other than such person's gross negligence or willful misconduct. The Agent may file one or more financing statements disclosing its security interest in any or all of the Collateral without any Debtor's signature appearing thereon, and each Debtor also hereby grants the Agent a power of attorney to execute any such financing statements, or amendments and supplements to financing statements, on behalf of such Debtor without notice thereof to any Debtor. The foregoing powers of attorney, being coupled with an interest, are irrevocable until the Obligations have been fully paid and satisfied and the commitments of the Lenders to extend credit to or for the account of the Borrower have expired or otherwise been terminated. Section 9. Defaults and Remedies. (a) The occurrence of any event or the existence of any condition which is specified as an "Event of Default" under the Credit Agreement shall constitute an "Event of Default" hereunder. (b) Upon the occurrence and during the continuation of any Event of Default, the Agent shall have, in addition to all other rights provided herein or by law, the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights or remedies are asserted and regardless of whether the UCC -14- applies to the affected Collateral), and further the Agent may, without demand and without advertisement, notice, hearing or process of law, all of which each Debtor hereby waives to the extent permitted by applicable law, at any time or times, sell and deliver any or all Collateral held by or for it at public or private sale, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole discretion. In the exercise of any such remedies, the Agent may sell the Collateral as a unit even though the sales price thereof may be in excess of the amount remaining unpaid on the Obligations. Also, if less than all the Collateral is sold, the Agent shall have no duty to marshal or apportion the part of the Collateral so sold as between the Debtors, or any of them, but may sell and deliver any or all of the Collateral without regard to which of the Debtors are the owners thereof. In addition to all other sums due any Secured Creditor hereunder, each Debtor shall pay the Secured Creditors all costs and expenses incurred by the Secured Creditors, including reasonable attorneys' fees and court costs, in obtaining, liquidating or enforcing payment of Collateral or the Obligations or in the prosecution or defense of any action or proceeding by or against any Secured Creditor or any Debtor concerning any matter arising out of or connected with this Agreement or the Collateral or the Obligations, including, without limitation, any of the foregoing arising in, arising under or related to a case under the United States Bankruptcy Code (or any successor statute). Any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to the Debtors in accordance with Section 13(b) hereof at least 10 days before the time of sale or other event giving rise to the requirement of such notice; provided, however, no notification need be given to a Debtor if such Debtor has signed, after an Event of Default hereunder has occurred, a statement renouncing any right to notification of sale or other intended disposition. The Agent shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. Any Secured Creditor may be the purchaser at any such sale. Each Debtor hereby waives all of its rights of redemption from any such sale. The Agent may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, be made at the time and place to which the sale was postponed or the Agent may further postpone such sale by announcement made at such time and place. In the event any of the Collateral shall constitute restricted securities within the meaning of any applicable securities laws, any disposition thereof in compliance with such laws shall not render the disposition commercially unreasonable. (c) Without in any way limiting the foregoing, upon the occurrence and during the continuation of any Event of Default hereunder, the Agent shall have the right, in addition to all other rights provided herein or by law, to take physical possession of any and all of the Collateral and anything found therein, the right for that purpose to enter without legal process any premises where the Collateral may be found (provided such entry be done lawfully), and the right to maintain such possession on the relevant Debtor's premises (each Debtor hereby agreeing, to the extent it may lawfully do so, to lease such premises without cost or expense to the Agent or its designee if the Agent so requests) or to remove the Collateral or any part thereof to such other places as the Agent may desire. Upon the occurrence and during the continuation of any Event of Default hereunder, the Agent shall have the right to exercise any and all rights with respect to deposit accounts of each Debtor maintained with any Secured Creditor, including, without limitation, the right to collect, -15- withdraw and receive all amounts due or to become due or payable under each such deposit account. Upon the occurrence and during the continuation of any Event of Default hereunder, each Debtor shall, upon the Agent's demand, assemble the Collateral and make it available to the Agent at a place designated by the Agent. If the Agent exercises its right to take possession of the Collateral, each Debtor shall also at its expense perform any and all other steps requested by the Agent to preserve and protect the security interest hereby granted in the Collateral, such as placing and maintaining signs indicating the security interest of the Agent, appointing overseers for the Collateral and maintaining Collateral records. (d) Without in any way limiting the foregoing, upon the occurrence and during the continuation of any Event of Default, all rights of a Debtor to exercise the voting and/or consensual powers which it is entitled to exercise pursuant to Section 7(a)(i) hereof and/or to receive and retain the distributions which it is entitled to receive and retain pursuant to Section 7(a)(ii) hereof, shall, at the option of the Agent, cease and thereupon become vested in the Agent, which, in addition to all other rights provided herein or by law, shall then be entitled solely and exclusively to exercise all voting and other consensual powers pertaining to the Investment Property and/or to receive and retain the distributions which such Debtor would otherwise have been authorized to retain pursuant to Section 7(a)(ii) hereof and shall then be entitled solely and exclusively to exercise any and all rights of conversion, exchange or subscription or any other rights, privileges or options pertaining to any Investment Property as if the Agent were the absolute owner thereof including, without limitation, the rights to exchange, at its discretion, any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other readjustment of the respective issuer thereof or upon the exercise by or on behalf of any such issuer or the Agent of any right, privilege or option pertaining to any Investment Property and, in connection therewith, to deposit and deliver any and all of the Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Agent may determine. (e) Without in any way limiting the foregoing, each Debtor hereby grants to the Secured Creditors a royalty-free irrevocable license and right to use all of such Debtor's patents, patent applications, patent licenses, trademarks, trademark registrations, trademark licenses, trade names, trade styles, and similar intangibles in connection with any foreclosure or other realization by the Agent or the Secured Creditors on all or any part of the Collateral to the extent permitted by law. (f) Failure by the Agent to exercise any right, remedy or option under this Agreement or any other agreement between any Debtor and the Agent or provided by law, or delay by the Agent in exercising the same, shall not operate as a waiver; and no waiver shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated. Neither any Secured Creditor, nor any party acting as attorney for any Secured Creditor, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct. The rights and remedies of the Secured Creditors under this Agreement shall be cumulative and not exclusive of any other -16- right or remedy which any Secured Creditor may have. For purposes of this Agreement, an Event of Default shall be construed as continuing after its occurrence until the same is waived in writing by the Lenders or the Required Lenders or cured, as the case may be, in accordance with the Credit Agreement. Section 10. Application of Proceeds. The proceeds and avails of the Collateral at any time received by the Agent upon the occurrence and during the continuation of any Event of Default shall, when received by the Agent in cash or its equivalent, be applied by the Agent in reduction of, or held as collateral security for, the Obligations in accordance with the terms of the Credit Agreement. The Debtors shall remain liable to the Secured Creditors for any deficiency. Any surplus remaining after the full payment and satisfaction of the Obligations shall be returned to the Borrower, as agent for the Debtors, or to whomsoever the Agent reasonably determines is lawfully entitled thereto. Section 11. Continuing Agreement. This Agreement shall be a continuing agreement in every respect and shall remain in full force and effect until all of the Obligations, both for principal and interest, have been fully paid and satisfied and the commitments of the Lenders to extend credit to or for the account of the Borrower under the Credit Agreement have expired or otherwise terminated. Upon such termination of this Agreement, the Agent shall, upon the request and at the expense of the Debtors, forthwith release its security interest hereunder and file appropriate termination statements with appropriate offices (including, The United States Patent and Trademark Office and The United States Copyright Office) or take other actions to evidence such termination. Section 12. The Agent. In acting under or by virtue of this Agreement, the Agent shall be entitled to all the rights, authority, privileges and immunities provided in Section 11 of the Credit Agreement, all of which provisions of said Section 11 are incorporated by reference herein with the same force and effect as if set forth herein in their entirety. The Agent hereby disclaims any representation or warranty to the other Secured Creditors or any other holders of the Obligations concerning the perfection of the liens and security interests granted hereunder or in the value of any of the Collateral. Section 13. Miscellaneous. (a) This Agreement cannot be changed or terminated orally. This Agreement shall create a continuing lien on and security interest in the Collateral and shall be binding upon each Debtor, its successors and assigns and shall inure, together with the rights and remedies of the Secured Creditors hereunder, to the benefit of the Secured Creditors and their successors and permitted assigns; provided, however, that no Debtor may assign its rights or delegate its duties hereunder without the Agent's prior written consent. Without limiting the generality of the foregoing, and subject to the provisions of the Credit Agreement, any Lender may assign or otherwise transfer any indebtedness held by it secured by this Agreement to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. -17- (b) All communications provided for herein shall be in writing, except as otherwise specifically provided for hereinabove, and shall be deemed to have been given or made, when given in accordance with Section 12.03 of the Credit Agreement. (c) No Secured Creditor (other than the Agent) shall have the right to institute any suit, action or proceeding in equity or at law for the foreclosure or other realization upon any Collateral subject to this Agreement or for the execution of any trust or power hereof or for the appointment of a receiver, or for the enforcement of any other remedy under or upon this Agreement; it being understood and intended that no one or more of the Secured Creditors (other than the Agent) shall have any right in any manner whatsoever to affect, disturb or prejudice the lien and security interest of this Agreement by its or their action or to enforce any right hereunder, and that all proceedings at law or in equity shall be instituted, had and maintained by the Agent in the manner herein provided for the benefit of the Secured Creditors. (d) In the event that any provision hereof shall be deemed to be invalid or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court, this Agreement shall be construed as not containing such provision, but only as to such jurisdictions where such law or interpretation is operative, and the invalidity or unenforceability of such provision shall not affect the validity of any remaining provisions hereof, and any and all other provisions hereof which are otherwise lawful and valid shall remain in full force and effect. Without limiting the generality of the foregoing, in the event that this Agreement shall be deemed to be invalid or otherwise unenforceable with respect to any Debtor, such invalidity or unenforceability shall not affect the validity of this Agreement with respect to the other Debtors. (e) The lien and security interest herein created and provided for stand as direct and primary security for the Obligations of the Borrower arising under or otherwise relating to the Credit Agreement as well as for any of the other Obligations secured hereby. No application of any sums received by the Secured Creditors in respect of the Collateral or any disposition thereof to the reduction of the Obligations or any part thereof shall in any manner entitle any Debtor to any right, title or interest in or to the Obligations or any collateral or security therefor, whether by subrogation or otherwise, unless and until all Obligations have been fully paid and satisfied and all agreements of the Secured Creditors to extend credit to or for the account of each Debtor and to or for the account of the Borrower have expired or otherwise have been terminated. Each Debtor acknowledges that the lien and security interest hereby created and provided are absolute and unconditional and shall not in any manner be affected or impaired by any acts of omissions whatsoever of any Secured Creditor or any other holder of any Obligations, and without limiting the generality of the foregoing, the lien and security interest hereof shall not be impaired by any acceptance by the Secured Creditors or any other holder of any Obligations of any other security for or guarantors upon any of the Obligations or by any failure, neglect or omission on the part of any Secured Creditor or any other holder of any Obligations to realize upon or protect any of the Obligations or any collateral or security therefor (including, without limitation, impairment of collateral or failure to perfect security interest in collateral). The lien and security interest hereof shall not in any manner be impaired or affected by (and the -18- Secured Creditors, without notice to anyone, are hereby authorized to make from time to time) any sale, pledge, surrender, compromise, settlement, release, renewal, extension, indulgence, alteration, substitution, exchange, change in, modification or disposition of any of the Obligations or of any collateral or security therefor, or of any guaranty thereof, or of any instrument or agreement setting forth the terms and conditions pertaining to any of the foregoing. The Secured Creditors may at their discretion at any time grant credit to the Borrower without notice to the other Debtors in such amounts and on such terms as the Secured Creditors may elect (all of such to constitute additional Obligations hereby secured) without in any manner impairing the lien and security interest created and provided for herein. In order to realize hereon and to exercise the rights granted the Secured Creditors hereunder and under applicable law, there shall be no obligation on the part of any Secured Creditor or any other holder of any Obligations at any time to first resort for payment to the Borrower or to any other Debtor or to any guaranty of the Obligations or any portion thereof or to resort to any other collateral, security, property, liens or any other rights or remedies whatsoever, and the Secured Creditors shall have the right to enforce this Agreement against any Debtor or any of its Collateral irrespective of whether or not other proceedings or steps seeking resort to or realization upon or from any of the foregoing are pending. (f) In the event the Secured Creditors shall at any time in their discretion permit a substitution of Debtors hereunder or a party shall wish to become a Debtor hereunder, such substituted or additional Debtor shall, upon executing an agreement in the form attached hereto as Schedule D, become a party hereto and be bound by all the terms and conditions hereof to the same extent as though such Debtor had originally executed this Agreement and, in the case of a substitution, in lieu of the Debtor being replaced. Any such agreement shall contain information as to such Debtor necessary to update Schedules A, B and C hereto with respect to it. No such substitution shall be effective absent the written consent of Agent nor shall it in any manner affect the obligations of the other Debtors hereunder. (g) This Agreement shall be deemed to have been made in the State of New York and shall be governed by, and construed in accordance with, the laws of the State of New York. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of any provision hereof. (h) Each Debtor hereby submits to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in the New York City for purposes of all legal proceedings arising out of or relating to this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby. Each Debtor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient form. EACH DEBTOR AND EACH SECURED CREDITOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. -19- (i) This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterpart signature pages, each constituting an original, but all together one and the same agreement. [SIGNATURE PAGES TO FOLLOW] -20- IN WITNESS WHEREOF, each Debtor has caused this Agreement to be duly executed and delivered in New York, New York as of the date first above written. "DEBTORS" EAGLE-PICHER INDUSTRIES, INC. By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title President --------------------------------- DAISY PARTS, INC. By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title Authorized Person --------------------------------- EAGLE-PICHER DEVELOPMENT COMPANY, INC. By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title President --------------------------------- -21- EAGLE-PICHER FAR EAST, INC. By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title Authorized Person --------------------------------- EAGLE-PICHER FLUID SYSTEMS, INC. By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title Authorized Person --------------------------------- EAGLE-PICHER MINERALS, INC. By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title Authorized Person --------------------------------- -22- HILLSDALE TOOL & MANUFACTURING CO. By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title Authorized Person --------------------------------- MICHIGAN AUTOMOTIVE RESEARCH CORPORATION By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title Authorized Person --------------------------------- EAGLE-PICHER TECHNOLOGIES, LLC By /s/ ANDRIES RUIJSSENAARS --------------------------------------- Name Andries Ruijssenaars ---------------------------------- Title Director-Manager --------------------------------- -23- Accepted and agreed to in New York, New York as of the date first above written. ABN AMRO BANK N.V., as Agent as aforesaid for the Secured Creditors By /s/ GREGORY D. AMOROSO -------------------------------------- Its Group Vice President ----------------------------------- By /s/ PAUL WIDUCH -------------------------------------- Its Group Vice President ----------------------------------- -24- SCHEDULE A LOCATIONS Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- EAGLE-PICHER INDUSTRIES, INC. 250 East Fifth Street 2424 John Daly Road (Building 11) (after merger with E-P Suite 500 Inkster, MI 48141-2453 Acquisition, Inc.) Cincinnati, OH 45202 (Offices) Tax ID# 31-0268670 13323 IL Highway 133 Paris, IL 61944 (Plant) 1802 East 50th Street Lubbock, TX 79404 (Plant) 1311 East 40th Street Lubbock, TX 79412-1801 (Warehouse) 3280 Hageman Street Sharonville, OH 45242 (Plant) 9036 Goldpark Drive Hamilton, OH 45011-9764 (Plant) 250 East Fifth Street Suite 500 Cincinnati, OH 45202 1500 Highway I-35 West Denton, TX 76202 (Vacant Plant) 815 North Oak Avenue Sidney, OH 45365 (Plant) 2500 Schenk Road Sidney, OH 45365 (Plant) 2322 Schenk Road Sidney, OH 45365 (Warehouse)
Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- 19 Ohio Avenue Norwich, CT 06360 (Plant) 382-384 Seymour Street Stratford, CT 06497 (Plant) 5320 Industrial Drive South Pine Bluff, AR 71602 (Plant) 7555-8 Tyler Boulevard Mentor, OH 44060-4866 (Repackaging & Shipping) 829 U.S. 131 NW Kalkaska, MI 49646 (Plant) 201 Industrial Park Road Blacksburg, VA 24060 (Plant) 2638 Princess Street Inkster, MI 48141 (Plant) 10825 CR 44 Leesburg, FL 34788 (Plant) 3175 State Street Blacksburg, VA 24060 (Plant) Vacant land located in Harris County, TX CINCINNATI INDUSTRIAL MACHINERY SALES COMPANY Block 26, 18D, 555 Victoria Road Hong Kong
A-2 Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- EQUIPOS DE ACUNA S.A. De C.V. Parque Industrial Modelo km 8.5 Presa de Amistad CD Acuna, Coahuila Mexico EAGLE-PICHER ESPANA S.A. Poligono Las Casas Apartado de Correos, 32 42080 Soria, Espana EPTEC, S.A. De C.V. Calle Avenida Libertad S/N Zona Industrial C.P. 78090 San Luis Potosi, S.L.P. Mexico EAGLE-PICHER INDUSTRIES OF CANADA LIMITED (Mike Belec Office) 9680 Saint Laurent Montreal, PQ, Canada EAGLE-PICHER WOLVERINE GmbH Verrenberger Weg 20 P. O. Box 1549 D-74605 Ohringen, Germany EAGLE-PICHER INDUSTRIES EUROPE B.V. Randwycksingel 20 P. O. Box 1376 NL-6201 BJ Maastricht Netherlands EAGLE-PICHER AUTOMOTIVE GmbH Technologiepark Friedrich-Ebert-Strasse D-51429 Bergisch-Gladbach Germany (EP AUTOMOTIVE GmbH) WOLFSBURG OFFICE Gerta-Overbeck-Ring, 9 D-38446 Wolfsburg EAGLE-PICHER MATERIALS GmbH An der Lehgrrube 14 P.O. Box 1549 D-74605 Ohringen, Germany
A-3 Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- EAGLE-PICHER HILLSDALE LIMITED 301, Relay Drive GB - Tamworth B77 5PT Staffordshire United Kingdom EAGLE-PICHER FLUID SYSTEMS LTD. Taith House Rockingham Road Market Harborough Leicestershire LE16 7QE United Kingdom Residential Properties near Inkster, MI - ----------------------------------------------------------------------------------------------------------- EAGLE-PICHER TECHNOLOGIES, LLC "C" and Porter Streets 737 Highway 69A Tax ID# 31-1587660 Joplin, MO 64801 Quapaw, OK 74363 (EOM Plant) 200 B.J. Tunnel Boulevard East Miami, OK 74354 (ESAT Plant) 36 B.J. Tunnel Boulevard East Miami, OK 74354 (ESAT Plant) 520 North Main Street Miami, OK 74354-4850 (ESAT Shipping Facility) 1001 "A" Street N.W. Miami, OK 74354-3206 (ESAT Plant) 510 North Main Street Miami, OK 74354-4850 (ESAT Plant) 410 Adele Avenue Joplin, MO 64801-3279 (Plant) "F" & Schifferdecker Avenue Joplin, MO 64801(Plant) 3970 Clearview Frontage Road Colorado Springs, CO 80911-1220 (Warehouse & Plant)
A-4 Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- 2850 Janitell Road Colorado Springs, CO 80906-4141 (Plant) Highway I-25, Exit 152 Socorro, NM 87801 (Vacant Plant) 425 North Main Street Miami, OK 74354-4809 (ESAT Plant) 1927 West 4th Street Joplin, MO 64801 (Plant) 3220 Industrial Road Joplin, MO 64801-6137 (Plant) Highway 10 & Industrial Park Road Grove, OK 74344 (Plant) 798 Highway 69A Quapaw, OK 74363 (Boron Plant) 3820 South Hancock Expressway Colorado Springs, CO 80911-1231 (Plant) 13605 West 96th Terrace Lenexa, KS 66215-1297 (Plant) 1701 South Vine Street Harrisonville, MO 64701 (Plant) Old Highway 66 - East Clark Avenue Galena, KS 66739 (Plant) North Bethel Road Seneca, MO 64865 (Plant)
A-5 Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- Northeast Edge of City Stella, MO 64867 (Plant) 1215 West "B" Street Joplin, MO 64801 (Plant) 20th & Irongate Joplin, MO 64804 (Plant) - --------------------------------------------------------------------------------------------------------- EAGLE-PICHER DEVELOPMENT 250 East Fifth Street None COMPANY, INC. Suite 500 Tax ID# 31-1215706 Cincinnati, OH 45202 - ----------------------------------------------------------------------------------------------------------- EAGLE-PICHER FAR EAST, INC. 250 East Fifth Street EAGLE-PICHER FAR EAST, INC. Tax ID# 31-1235685 Suite 500 Nagoya Chogin Bldg. 4F Cincinnati, OH 45202 1-17-19 Marunouchi Naka-ku, Nagoya, 460 Japan (EP FAR EAST) TOKYO OFFICE Nihonseimei Sakuragi-cho AN Building 3F 6-113, Aioi-cho, Naka-ku Yokohama, 231-0012 Japan - ---------------------------------------------------------------------------------------------------------- EAGLE-PICHER FLUID SYSTEMS, INC. 7854 Lochlin Drive None Tax ID# 31-1452637 Brighton, MI 48116 (Plant) - ---------------------------------------------------------------------------------------------------------- EAGLE-PICHER MINERALS, INC. 6110 Plumas Street Highway I-80, 18 miles east of Reno Tax ID# 31-1188662 Reno, NV 89509-6060 Clark Station, NV 89431 (Plant) (Division HQ) 2630 Graham Boulevard Vale, OR 97918 (Plant) 150 Coal Canyon Road Lovelock, NV 89419 (Plant) Colado Mining & Hauling Shop Corner of Sixth & Dartmouth Lovelock, NV 89419 (Mining Support)
A-6 Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- Intermodal 1382 Ipsen Road Belvidere, IL 61008 Raw Materials 3860 W. 11th Street, #B Houston, TX 77055 Mehaffey & Daigle 1200 Sams Avenue Harahan, LA 70123 Advanced Distribution 1140 Commerce Road Morrow, GA 30260 Oostdyk/Gerard Express 10 Industrial Road Carlstadt, NJ 07072 Peerless 1440 Miami Chapel Road Dayton, OH 4540 Burnham 9300 Van Horne Way Richmond, BC V6X-1W2 Kiki & Sons 585 Michel Creek Road Sparwood, BC V0B-2GO Kindersley Transport 350 Third Ave. S. Saskatoon, SK S7K-4J2 Burnham 2030 Notre-Dame Ave Winnipeg, MB R3H-0JB Groupe Robert 321 Orenda Road Brampton, ON L6T-1G5 Transit Industriel 1775 Mary Victorin St. Bruno, PQ J3V-6B7 Shoreline Fuels Shediac, NB E1E-3Y8
A-7 Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- Labon 1250 Newton Street Boucherville, PQ J4B-5H2 UNITED MINERALS GmbH & CO. KG Breloher Strasse 85-101 D-29633 Munster, Germany EAGLE-PICHER MINERAL INTERNATIONAL S.A.R.L. 9 Rue Auguste Buisson 92250 La Grareene Colombes France Mineral rights owned or Mining conducted in the following counties: Pershing County, NV Washoe County, NV Storey County, NV Churchill County, NV Siskiyou County, CA Harney County, OR Malheur County, OR - --------------------------------------------------------------------------------------------------------- HILLSDALE TOOL & MANUFACTURING 135 E. South Street 651 Beck Road CO. Tax ID# 38-0946293 Hillsdale, MI 49242 Jonesville, MI 49250 (Plant) (Plant) 215 Industrial Drive Hillsdale, MI 49242 (Plant) 54 Willow Street Hillsdale, MI (Vacant Plant) 52 Willow Street Hillsdale, MI (Vacant Plant)
A-8 Name of Debtor (and Federal Tax I.D. Number) Chief Executive Office Additional Places of Business - ----------------------------- ---------------------- ----------------------------- 221 Industrial Drive (a/k/a 210 Uran Drive) Hillsdale, MI 49242 (Plant) 263 Industrial Drive Hillsdale, MI 49242 (Tech Center) 7790 South Homestead Drive Hamilton, IN 46742 (Plant) 760 E. Huron Street Vassar, MI 48768 (Plant) Coffee County Interstate Industrial Park 285 Park Tower Drive Manchester, TN 37355 (Plant) - ---------------------------------- ---------------------------- --------------------------------------------- MICHIGAN AUTOMOTIVE RESEARCH 1254 North Main Street None CORPORATION Ann Arbor, MI 48104 Tax ID# 38-2185909 (Plant) - ---------------------------------- ---------------------------- --------------------------------------------- DAISY PARTS, INC. 135 E. South Street Tax ID# 38-1406772 Hillsdale, MI 49242 None (Plant) - ---------------------------------- ---------------------------- --------------------------------------------- A-9 SCHEDULE B TRADE NAMES
NAME OF DEBTOR TRADE NAMES OF SUCH DEBTOR - ----------------------------------------------------------------------------------------------- Eagle-Picher Industries, Inc. Eagle-Picher Eagle-Picher Industries Cincinnati Industrial Machinery Construction Equipment Ross Aluminum Rubber Molding Technologies Trim Wolverine Eagle-Picher Automotive Ross Aluminum Foundries Chemsyn Science Laboratories Eagle-Picher Espana Eagle-Picher Far East Eagle-Picher Industries Europe Eagle-Picher Industries Materials EPTEC Eagle-Picher Rubber Molding Equipos de ACUNA Wolverine Gasket Wolverine Gasket & Manufacturing - ------------------------------------------------------------------------------------------------ Daisy Parts, Inc. Eagle-Picher Eagle-Picher Industries - ------------------------------------------------------------------------------------------------ Eagle-Picher Development Company, Inc Eagle-Picher Eagle-Picher Industries - ------------------------------------------------------------------------------------------------ Eagle-Picher Far East, Inc Eagle-Picher Eagle-Picher Industries - ------------------------------------------------------------------------------------------------
NAME OF DEBTOR TRADE NAMES OF SUCH DEBTOR Eagle-Picher Fluid Systems, Inc. Eagle-Picher Eagle-Picher Industries Eagle-Picher Automotive Eagle-Picher Fluid Systems - ------------------------------------------------------------------------------------------------ Eagle-Picher Minerals, Inc. Eagle-Picher Eagle-Picher Industries Eagle-Picher Minerals Eagle-Picher Minerals International Eagle-Picher Minerals of Canada United Minerals (Europe only) - ------------------------------------------------------------------------------------------------ Hillsdale Tool & Manufacturing Co. Eagle-Picher Eagle-Picher Industries Eagle-Picher Automotive Daisy Parts Hillsdale Tool Hillsdale Tool & Manufacturing - ------------------------------------------------------------------------------------------------ Michigan Automotive Research Corporation Eagle-Picher Eagle-Picher Industries Eagle-Picher Automotive MARCO Michigan Automotive Research Corporation - ------------------------------------------------------------------------------------------------ Eagle-Picher Technologies, LLC Eagle-Picher Eagle-Picher Industries Technologies Chemsyn Science Laboratories - ------------------------------------------------------------------------------------------------
SCHEDULE C REAL ESTATE LEGAL DESCRIPTIONS 2424 John Daly Road (Building 11) Coffee County Interstate Industrial Park Inkster, MI 48141-2453 285 Park Tower Drive Manchester, TN 37355 1802 East 50th Street 829 U.S. 131 NW Lubbock, TX 79404 Kalkaska, MI 49646 3280 Hageman Street 1311 East 40th Street Sharonville, OH 45242 Lubbock, TX 1721 West Pleasant Avenue 9036 Goldpark Drive River Rouge, MI 48218 Hamilton, OH 1401 North American Street 7854 Lochlin Drive Philadelphia, PA 19140 Brighton, MI 48116 135 E. South Street 580 Walnut Street Hillsdale, MI 49242 Cincinnati, OH 45202-3175 651 Beck Road 250 East Fifth Street Johnsville, MI 49250 Suite 500 Cincinnati, OH 45202 215 Industrial Drive 760 E. Huron Street Hillsdale, MI 49242 Vassar, MI 48768 51 Willow Street 6110 Plumas Street Hillsdale, MI Reno, NV 89509-6060 52 Willow Street 1254 North Main Street Hillsdale, MI Ann Arbor, MI 48104 221 Industrial Drive 5320 Industrial Drive South Hillsdale, MI 49242 Pine Bluff, AR 71602 263 Industrial Drive 7555-8 Tyler Boulevard Hillsdale, MI 49242 Mentor, OH 7790 South Homestead Drive 410 Adele Avenue Hamilton, IN 46742 Joplin, MO 64802
C-1 150 Coal Canyon Road "F" & Schifferdecker Avenue Lovelock, NV 89419 Joplin, MO Highway I-80, 18 miles east of Reno 3970 Clearview Frontage Road Clark Station, NV 89431 Colorado Springs, CO 2630 Graham Boulevard 2850 Janitell Road Vale, OR 97918 Colorado Springs, CO 80906-4141 Colado Mining & Hauling Shop Highway I-25, Exit 152 Corner of Sixth & Dartmouth Socorro, NM 87801 Lovelock, NV 89419 1500 Highway I-35 West 520 North Main Street Denton, TX Miami, OK 815 North Oak Avenue 1001 "A" Street N.W. Sidney, OH 45365 Miami, OK 2500 Schenk Road 510 North Main Street Sidney, OH 45365 Miami, OK 2322 Schenk Road 425 North Main Street Sidney, OH 45365 Miami, OK 19 Ohio Avenue 3062/3064 Scott Blvd. Norwich, CT 06360 Santa Clara, CA 382-384 Seymour Street Approximately 153 acres acquired 12/16/85 Stratford, CT 06497 from Turner at Book 85, Page 809. 737 Highway 69A Approximately 83 acres acquired 4/26/88 Quapaw, OK 74363 from State of Oregon at Book 88, Page 17742. 1927 West 4th Street Approximately 142 acres acquired 4/18/89 Joplin, MO 64801 from Schneider at Book 89, Page 31466. "C" and Porter Streets Approximately 5.76 acres acquired 7/6/89 Joplin, MO 64810 from Bixby at Book 89, Page 35507. 3220 Industrial Road Approximately 5.52 acres acquired 10/16/90 Joplin, MO from Tolman at Book 93, Page 886. Highway 10 & Industrial Park Road Approximately 5.75 acres acquired 10/16/90 Grove, OK 74344 from Tolman at Book 93, Page 884.
C-2 3820 South Hancock Expressway Approximately 266 acres acquired 12/10/90 Colorado Springs, CO 80911-1231 from Tolman at Book 93, Page 888, and from Torrey on 10/26/90 at Book 93, Page 889. 13605 West 96th Terrace Properties located in Seneca City Lenexa, KS 66215-1297 200 B.J. Tunnel Boulevard East Eagle-Picher Espana S.A. Miami, OK 74354 Poligono Las Casas Apartado de Correos, 32 42080 Soria, Espana 1701 South Vine Street Eagle-Picher Fluid Systems Ltd. Harrisonville, MO 64701 Taith House Rockingham Road Market Harborough Leicestershier LE16 7QE United Kingdom Old Highway 66 - East Clark Avenue Eagle-Picher Hillsdale Limited Galena, KS 66739 301, Relay Drive GB - Tamworth B77 5PT Staffordshire United Kingdom North Bethel Road Eagle-Picher Materials GmbH Seneca, MO 64865 An der Lehmgrube 14 D-74605 Ohringen, Germany Northeast Edge of City Eagle-Picher Wolverine GmbH Stella, MO 64867 Verrenberger Weg 20 D-74605 Ohringen, Germany 1215 West "B" Street EPTEC, S.A. de C.V. Joplin, MO 64801 Calle Avenida Libertad S/N Zona Industrial C.P. 78090 San Luis Potosi, S.L.P Mexico 20th & Irongate Equipos de Acuna S.A. de C.V. Joplin, MO Parque Industrial Modelo km 8.5 Presa de Amistad CD Acuna, Coahuila Mexico 1915 Irongate (EP Automotive GmbH) Wolfsburg Office Joplin, MO Gerta-Overbeck-Ring, 9 D-38446 Wolfsburg Germany
C-3 36 B.J. Tunnel Boulevard East Tokyo Office Miami, OK Nihonseimei Sakuragi-cho AN Building 3F, 6-113 Aioi-cho, Naka-ku Yokohama, 231-0012 Japan 798 Highway 69A France Sales Office Quapaw, OK 74363 9 Rue Auguste Buisson 92250 La Gareene Colombes France Couples Plant Centronic Limited "C" and Porter Streets Centronic House Joplin, MO 64802 King Henry's Drive New Addington, Croydon CR9 OBG England 201 Industrial Park Road Cincinnati Industrial Machinery Sales Blacksburg, VA 24060 Company Block 26, 18D, 555 Victoria Road Hong Kong 2638 Princess Street Eagle-Picher Automotive GmbH Inkster, MI 48141 Technologiepark Friedrich-Ebert-Strasse D-51429 Bergisch-Gladbach Germany 10825 CR 44 Eagle-Picher Far East, Inc. Leesburg, FL 34788 Nagoya Chogin Bldg. 4F 1-17-19 Marunouchi Naka-ku, Nagoya, 460 Japan 3175 State Street Eagle-Picher Industries Europe B.V. Blacksburg, VA 24060 Randwycksingel 20 NL-6201 BJ Maastricht Netherlands 3950 South Clear View Loop Eagle-Picher Industries of Canada Limited Security, CO 9680 Saint Laurent Montreal, PQ, Canada Cherokee County United Minerals GmbH & Co. KG Lenexa, KS Breloher Strasse 85-101 D-29633 Munster, Germany
C-4 Cherokee County Yamanaka EP Corporation Lenexa, KS 20 Toderacho Ohara Sakyo-ku Kyoto Japan 211 Industrial Drive South of "C", North of "B" Hillsdale, MI Joplin, MO Wayne County C&A, Between Porter & Empire, Joplin, MO Inkster, MI 26731 Trowbridge & North of "C", West of Porter 26737 Trowbridge Joplin, MO Inkster, MI Kalkaska County North of "C", West of Harlem Kalkaska, MI Joplin, MO Kalkaska County North of Porter, East of Harlem Kalkaska, MI Joplin, MO 2418 John Dale Properties located in Ottawa County (Lots 94 & 95) OK Inkster, MI Lots on Trowbridge Approximately 80 acres acquired 2/17/94 in Wayne County from Asamera Minerals (US) Inc. at Book Inkster, MI 99, Page 344. Mineral rights acquired 7/27/95 from Donan Approximately 640 acres acquired 12/14/93 Baird & Marie Fancher at Book 291, Page 566. from Asamera Minerals (US) Inc. at Book 98, Page 993. Perlite mining rights leased from Walter M. Approximately 1.4 acres leased from So. Fisk from 7/1/87 to 6/30/2047. Pacific Transportation Co., Lease No. 65202 Approximately 3,718 acres leased from the Rights leased 9/1/45 from Thomas Copeland So. Pacific RR on 12/1/66. and James Knight d/b/a Nevada Celatom Co., recorded at Book 103, Page 370. Approximately 5 acres acquired 6/30/70 from Approximately 120 acres acquired 3/12/75 C.W. Malone, Treas. at Book 467, Page 88. from Wight at Book 83, Page 103. Approximately 5 acres acquired 6/30/70 from Rights on approximately 1,604 acres leased C.W. Malone, Treas. at Book 467, Page 91. from So. Pacific Land Co., recorded at Book 39, Page 113
C-5 Approximately 2.5 acres leased from So. Rights on approximately 1.38 acres leased Pacific Transportation Co., Lease No. from So. Pacific Transportation Co., Lease 173087, expired 10/10/93, now month to No. 190259 month. Approximately 516 acres acquired 12/18/85 Rights leased on approximately 480 acres C-W Nevada Inc. at Book 51, Page 514. in Lyon and Churchill Counties from Approximately 0.04 acres of this parcel now Catherine Tweedt, J.H. and Emma Chatelle leased to Airtouch Cellular until 3/31/01. Approximately 480 acres acquired 12/16/85 Rights on approximately 1,040 acres leased from Trner at Book 85, Page 809, presently Miles, et al. from under farming leases. Rights on approximately 640 acres leased Rights on approximately 1,480 acres leased from State of Oregon from Diatomite Products Co.
C-6 SCHEDULE D ASSUMPTION AND SUPPLEMENTAL SECURITY AGREEMENT THIS AGREEMENT dated as of this _____ day of ______________, ____ from [NEW DEBTOR], a __________ corporation (the "New Debtor"), to ABN AMRO Bank N.V. ("ABN AMRO"), as agent for the Secured Creditors (defined in the Security Agreement hereinafter identified and defined) (ABN AMRO acting as such agent and any successor or successors to ABN AMRO in such capacity being hereinafter referred to as the "Agent"); WITNESSETH THAT: WHEREAS, E-P Acquisition, Inc. (the "Borrower") and certain other parties have executed and delivered to the Agent that certain Security Agreement dated as of February __, 1998 (such Security Agreement, as the same may from time to time be modified or amended, including supplements thereto which add additional parties as Debtors thereunder, being hereinafter referred to as the "Security Agreement") pursuant to which such parties (the "Existing Debtors") have granted to the Agent for the benefit of the Secured Creditors a lien on and security interest in each such Existing Debtor's Collateral (as such term is defined in the Security Agreement) to secure the Obligations (as such term is defined in the Security Agreement); and WHEREAS, the Borrower provides the New Debtor with substantial financial, managerial, administrative, and technical support and the New Debtor will directly and substantially benefit from credit and other financial accommodations extended and to be extended by the Secured Creditors to the Borrower; NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or credit accommodations given or to be given, to the Borrower by the Secured Creditors from time to time, the New Debtor hereby agrees as follows: 1. The New Debtor acknowledges and agrees that it shall become a "Debtor" party to the Security Agreement effective upon the date the New Debtor's execution of this Agreement and the delivery of this Agreement to the Agent, and that upon such execution and delivery, all references in the Security Agreement to the terms "Debtor" or "Debtors" shall be deemed to include the New Debtor. Without limiting the generality of the foregoing, the New Debtor hereby repeats and reaffirms all grants (including the grant of a lien and security interest), covenants, agreements, representations and warranties contained in the Security Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral from time to time owned by the New Debtor or in which the New Debtor from time to time has any rights. Without limiting the foregoing, in order to secure payment of the Obligations, whether now existing or hereafter arising, the New Debtor does hereby grant to the Agent for the benefit of itself and the other Secured Creditors, and hereby agrees that the Agent has and shall continue to have for the benefit of itself and the other Secured Creditors a continuing lien on and security interest in, among other things, all of the New Debtor's Collateral (as such term is defined in the Security Agreement), including, without limitation, all of the New Debtor's Receivables, General Intangibles, Inventory, Equipment, Investment Property, and all of the other Collateral described in Section 2 of the Security Agreement, each and all of such granting clauses being incorporated herein by reference with the same force and effect as if set forth in their entirety except that all references in such clauses to the Existing Debtors or any of them shall be deemed to include references to the New Debtor. Nothing contained herein shall in any manner impair the priority of the liens and security interests heretofore granted in favor of the Agent under the Security Agreement. 2. Schedules A (Locations), B (Trade Names) and C (Real Estate) to the Security Agreement shall be supplemented by the information stated below with respect to the New Debtor: SUPPLEMENT TO SCHEDULE A NAME OF DEBTOR CHIEF (AND FEDERAL TAX EXECUTIVE ADDITIONAL PLACES I.D. NUMBER) OFFICE OF BUSINESS - ---------------------------- ------------------------ ---------------------- - ----------------------------- ------------------------ --------------------- SUPPLEMENT TO SCHEDULE B TRADE NAMES OF NAME OF DEBTOR SUCH DEBTOR - ------------------------------- ----------------------------- SUPPLEMENT TO SCHEDULE C REAL ESTATE LEGAL DESCRIPTIONS ----------------------------------- ----------------------------------- 3. The New Debtor hereby acknowledges and agrees that the Obligations are secured by all of the Collateral according to, and otherwise on and subject to, the terms and conditions of the Security Agreement to the same extent and with the same force and effect -2- as if the New Debtor had originally been one of the Existing Debtors under the Security Agreement and had originally executed the same as such an Existing Debtor. 4. All capitalized terms used in this Agreement without definition shall have the same meaning herein as such terms have in the Security Agreement, except that any reference to the term "Debtor" or "Debtors" and any provision of the Security Agreement providing meaning to such term shall be deemed a reference to the Existing Debtors and the New Debtor. Except as specifically modified hereby, all of the terms and conditions of the Security Agreement shall stand and remain unchanged and in full force and effect. 5. The New Debtor agrees to execute and deliver such further instruments and documents and do such further acts and things as the Agent may reasonably deem necessary or proper to carry out more effectively the purposes of this Agreement. 6. No reference to this Agreement need be made in the Security Agreement or in any other document or instrument making reference to the Security Agreement, any reference to the Security Agreement in any of such to be deemed a reference to the Security Agreement as modified hereby. 7. This Agreement shall be governed by and construed in accordance with the State of New York (without regard to principles of conflicts of law). [NEW DEBTOR] By --------------------------------- Its ------------------------------ Accepted and agreed to as of the date first above written. ABN AMRO BANK N.V., as Agent By --------------------------------- Its ------------------------------ By --------------------------------- Its ------------------------------ -3- EX-10.11 20 EXHIBIT 10.11 HOLDINGS PLEDGE AGREEMENT This Pledge Agreement (the "Agreement") is dated as of February 24, 1998 by and between Eagle-Picher Holdings, Inc., a Delaware corporation (the "Pledgor"), with its mailing address as set forth on its signature page hereto and ABN AMRO Bank N.V., a bank organized under the laws of the Netherlands ("ABN AMRO"), with its mailing address at 1325 Avenue of the Americas, New York, New York 10019, acting as collateral agent hereunder for the Secured Creditors hereinafter identified and defined (ABN AMRO acting as such agent and any successor or successors to ABN AMRO acting in such capacity being hereinafter referred to as the "Agent"). PRELIMINARY STATEMENTS A. E-P Acquisition, Inc., a Delaware corporation (which has merged with and into Eagle-Picher Industries, Inc.) (as further defined in the Credit Agreement referred to below, the "Borrower"), and ABN AMRO, individually and as agent, have entered into a Credit Agreement dated as of February 19, 1998 (such Agreement as the same may be amended, modified or restated from time to time being hereinafter referred to as the "Credit Agreement"), pursuant to which ABN AMRO and other banks and financial institutions and letter of credit issuers from time to time party to the Credit Agreement (ABN AMRO, in its individual capacity, and such other banks and financial institutions which from time to time become party to the Credit Agreement being hereinafter referred to collectively as the "Lenders" and individually as a "Lender" and such letter of credit issuers being hereinafter referred to collectively as the "Letter of Credit Issuers" and individually as a "Letter of Credit Issuer") have agreed, subject to certain terms and conditions, to extend credit and make certain other financial accommodations available to the Borrower. B. The Borrower may from time to time enter into one or more Interest Rate Protection Agreements with one or more of the Lenders party to the Credit Agreement or affiliates thereof for the purpose of hedging or otherwise protecting the Borrower against changes in interest rates (the liability of the Borrower in respect of such agreements with such Lenders or affiliates being hereinafter referred to as the "Hedging Liability") (the Agent, the Lenders, the Letter of Credit Issuers and such affiliates party to Interest Rate Protection Agreements being hereinafter referred to collectively as the "Secured Creditors" and individually as a "Secured Creditor"). C. As a condition to extending credit to the Borrower under the Credit Agreement, the Secured Creditors have required, among other things, that the Pledgor grant to the Agent for the benefit of the Secured Creditors a security interest in certain personal property of such Pledgor described herein subject to the terms and conditions hereof. D. The Pledgor owns all of the issued and outstanding capital stock of the Borrower. E. The Pledgor will benefit, directly and substantially, from credit and other financial accommodations extended by the Secured Creditors to the Borrower. NOW, THEREFORE, for and in consideration of the execution and delivery by the Secured Creditors of the Credit Agreement, and other good and valuable consideration, receipt whereof is hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Terms Defined in Credit Agreement. All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. Section 2. Grant of Security Interest in the Collateral. The Pledgor hereby grants to the Agent for the benefit of the Secured Creditors a lien on and security interest in, and acknowledges and agrees that the Agent has and shall continue to have for the benefit of the Secured Creditors a continuing lien on and security interest in, any and all right, title and interest of the Pledgor in and to the following, whether now owned or existing or hereafter created, acquired or arising, and in whatever form: (a) Pledged Securities. All of the issued and outstanding shares of capital stock owned by the Pledgor of the Borrower (as set forth on Schedule A attached hereto), together with the certificates (or other agreements or instruments), if any, representing such shares, and all options and other rights, contractual or otherwise, with respect thereto (collectively, together with the shares of capital stock described in Section 2(b) and 2(c) below and the rights and privileges described hereunder with respect thereto, the "Pledged Securities"), including, but not limited to, the following: (x) all shares of securities representing a dividend on any of the Pledged Securities, or representing a distribution or return of capital upon or in respect of the Pledged Securities, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder of, or otherwise in respect of, the Pledged Securities; and (y) without affecting the obligations of the Pledgor under any provision prohibiting such action hereunder, in the event of any consolidation or merger in which the Borrower is not the surviving corporation, all shares of each class of the capital stock of the successor corporation formed by or resulting from such consolidation or merger. (b) Other Equity Interests. Any and all other equity interests of the Pledgor in the Borrower. (c) Proceeds. All proceeds and products of the foregoing, however and whenever acquired and in whatever form. -2- all of the foregoing being herein sometimes referred to as the "Collateral." All terms which are used in this Agreement which are defined in the Uniform Commercial Code of the State of New York ("UCC") shall have the same meanings herein as such terms are defined in the UCC, unless this Agreement shall otherwise specifically provide. Section 3. Obligations Hereby Secured. This Agreement is made and given to secure, and shall secure, the prompt payment and performance of (i) any and all indebtedness, obligations and liabilities of the Borrower to the Secured Creditors, and to any of them individually, under or in connection with or evidenced by the Credit Agreement, the Notes of the Borrower heretofore or hereafter issued under the Credit Agreement and the obligations of the Borrower to reimburse the Secured Creditors for the amount of all drawings on all Letters of Credit issued pursuant to the Credit Agreement, and all other obligations of the Borrower under any and all applications for Letters of Credit, and any and all liability of the Borrower arising under or in connection with or otherwise evidenced by agreements with any one or more of the Secured Creditors with respect to any Hedging Liability, and any and all liabilities of the Pledgor arising under the Guaranty Agreement of even date herewith (the "Holdings Guaranty") executed by the Pledgor relating to the foregoing or any part thereof, in each case whether now existing or hereafter arising (and whether arising before or after the filing of a petition in bankruptcy and including all interest accrued after the petition date), due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired and (ii) any and all expenses and charges, legal or otherwise, suffered or incurred by the Secured Creditors, and any of them individually, in collecting or enforcing any of such indebtedness, obligations and liabilities or in realizing on or protecting or preserving any security therefor, including, without limitation, the lien and security interest granted hereby (all of the indebtedness, obligations, liabilities, expenses and charges described above being hereinafter referred to as the "Obligations"). Section 4. Covenants, Agreements, Representations and Warranties. The Pledgor hereby covenants and agrees with, and represents and warrants to, the Secured Creditors that: (a) The Pledgor is and shall be the sole and lawful legal, record and beneficial owner of its Collateral. The Pledgor's chief executive office is at the address listed under the Pledgor's name on Schedule A. The Pledgor agrees that it will not change any location set forth on the applicable Schedule hereto without at least 30 days' prior written notice to the Agent. The Pledgor shall not, without the Agent's prior written consent, sell, assign, or otherwise dispose of the Collateral or any interest therein. The Collateral, and every part thereof, is and shall be free and clear of all security interests, liens, rights, claims, attachments, levies and encumbrances of every kind, nature and description and whether voluntary or involuntary, except for the security interest of the Agent hereunder. The Pledgor shall warrant and defend the Collateral against any claims and demands of all persons at any time claiming the same or any interest in the Collateral adverse to any Secured Creditor. -3- (b) The Pledgor agrees to execute and deliver to the Agent such further agreements, assignments, instruments and documents and to do all such other things as the Agent may deem reasonably necessary or appropriate to assure the Agent its lien and security interest hereunder, including such assignments, acknowledgments, stock powers, financing statements, instruments and documents as the Agent may from time to time require in order to comply with the UCC. The Pledgor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Agent without prior notice thereof to the Pledgor wherever the Agent in its discretion desires to file the same. In the event for any reason the law of any jurisdiction other than New York becomes or is applicable to the Collateral or any part thereof, or to any of the Obligations, the Pledgor agrees to execute and deliver all such agreements, assignments, instruments and documents and to do all such other things as the Agent in its discretion deems necessary or appropriate to preserve, protect and enforce the lien and security interest of the Agent under the law of such other jurisdiction. (c) If, as and when the Pledgor delivers any securities for pledge hereunder in addition to those listed on Schedule A hereto, the Pledgor shall furnish to the Agent a duly completed and executed amendment to such Schedule in substantially the form (with appropriate insertions) of Schedule B hereto reflecting the additional securities pledged hereunder after giving effect to such addition. (d) None of the Collateral constitutes margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System). (e) On failure of the Pledgor to perform any of the agreements and covenants herein contained, the Agent may, at its option, perform the same and in so doing may expend such sums as the Agent deems advisable in the performance thereof, including, without limitation, the payment of any taxes, liens and encumbrances, expenditures made in defending against any adverse claim, and all other expenditures which the Agent may be compelled to make by operation of law or which Agent may make by agreement or otherwise for the protection of the security hereof. All such sums and amounts so expended shall be repayable by the Pledgor immediately without notice or demand, shall constitute additional Obligations secured hereunder and shall bear interest from the date said amounts are expended at the rate per annum (computed on the basis of a year of 360 days, for the actual number of days elapsed) determined by adding 2% to the Base Rate from time to time in effect plus the Applicable Base Rate Margin for Revolving Loans, with any change in such rate per annum as so determined by reason of a change in such Base Rate to be effective on the date of such change in said Base Rate (such rate per annum as so determined being hereinafter referred to as the "Default Rate"). No such performance of any covenant or agreement by the Agent on behalf of the Pledgor, and no such advancement or expenditure therefor, shall relieve the Pledgor of any default under the terms of this Agreement or in any way obligate any Secured Creditor to take any further or future action with respect thereto. The Agent, in making any payment hereby authorized, may do so according to any bill, statement or estimate -4- procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate, or into the validity of any tax assessment, sale, forfeiture, tax lien or title or claim. The Agent, in performing any act hereunder, shall be the sole judge of whether the Pledgor is required to perform the same under the terms of this Agreement. The Agent is hereby authorized to charge any depository or other account of the Pledgor maintained with the Agent for the amount of such sums and amounts so expended. Section 5. Special Provisions Re: Pledged Securities. (a) The Pledgor has the right to vote the Pledged Securities and there are no restrictions upon the voting rights associated therewith, or the transfer of, any of the Pledged Securities, except as provided by federal and state laws applicable to the sale of securities generally and the terms of this Agreement. (b) The certificates for all shares of the Pledged Securities shall be delivered by the Pledgor to the Agent duly endorsed in blank for transfer or accompanied by an appropriate assignment or assignments or an appropriate undated stock power or powers, in every case sufficient to transfer title thereto. The Agent may at any time after the occurrence of an Event of Default cause to be transferred into its name or into the name of its nominee or nominees any and all of the Pledged Securities. The Agent shall at all times have the right to exchange the certificates representing the Pledged Securities for certificates of smaller or larger denominations. (c) The Pledged Securities have been validly issued and, except as described on Schedule A, are fully paid and non-assessable. Except as set forth on Schedule A, there are no outstanding commitments or other obligations of the issuers of any of the Pledged Securities to issue, and no options, warrants or other rights of any individual or entity to acquire, any share of any class or series of capital stock of such issuers. The Pledged Securities listed and described on Schedule A attached hereto constitute all of the issued and outstanding capital stock of each series and class of the Borrower. The Pledgor further agrees that in the event the Borrower shall issue any additional capital stock of any series or class (whether or not entitled to vote) to the Pledgor or otherwise on account of its ownership interest therein, the Pledgor will forthwith pledge and deposit hereunder, or cause to be pledged and deposited hereunder, all such additional shares of such capital stock. Section 6. Voting Rights and Dividends. Unless and until an Event of Default hereunder has occurred and is continuing and thereafter until notified by the Agent pursuant to Section 8(b) hereof: (a) The Pledgor shall be entitled to exercise all voting and/or consensual powers pertaining to the Collateral of the Pledgor, or any part thereof, for all purposes not inconsistent with the terms of this Agreement or any other document evidencing or otherwise relating to any of the Obligations. -5- (b) The Pledgor shall be entitled to receive and retain all dividends and distributions in respect of the Collateral which are paid in cash of whatsoever nature; provided, however, that such dividends and distributions representing stock or liquidating dividends or a distribution or return of capital upon or in respect of the Pledged Securities or any part thereof or resulting from a split-up, revision or reclassification of the Pledged Securities or any part thereof or received in addition to, in substitution of or in exchange for the Pledged Securities or any part thereof as a result of a merger, consolidation or otherwise shall be paid, delivered or transferred, as appropriate, directly to the Agent immediately upon the receipt thereof by the Pledgor and may, in the case of cash, be applied by the Agent to the Obligations, whether or not the same may then be due or otherwise adequately secured and shall, in the case of all other property, together with any cash received by the Agent and not applied as aforesaid, be held by the Agent pursuant hereto as part of the Collateral pledged under and subject to the terms of this Agreement. (c) In order to permit the Pledgor to exercise such voting and/or consensual powers which it is entitled to exercise under subsection (a) above and to receive such distributions which the Pledgor is entitled to receive and retain under subsection (b) above, the Agent will, if necessary, upon the written request of the Pledgor, from time to time execute and deliver to the Pledgor appropriate proxies and dividend orders. Section 7. Power of Attorney. The Pledgor hereby appoints the Agent, its nominee, or any other person whom the Agent may designate as the Pledgor's attorney-in-fact, with full power and authority to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all sums or properties which may be or become due, payable or distributable in respect of the Collateral or any part thereof, with full power to settle, adjust or compromise any claim thereunder or therefor as fully as the Pledgor could itself do, to endorse or sign the Pledgor's name on any assignments, stock powers, or other instruments of transfer and on any checks, notes, acceptances, money orders, drafts, and any other forms of payment or security that may come into the Agent's possession and on all documents of satisfaction, discharge or receipt required or requested in connection therewith, and, in its discretion, to file any claim or take any other action or proceeding, either in its own name or in the name of the Pledgor, or otherwise, which the Agent deems necessary or appropriate to collect or otherwise realize upon all or any part of the Collateral, or effect a transfer thereof, or which may be necessary or appropriate to protect and preserve the right, title and interest of the Agent in and to such Collateral and the security intended to be afforded hereby. The Pledgor hereby ratifies and approves all acts of any such attorney and agrees that neither the Agent nor any such attorney will be liable for any such acts or omissions nor for any error of judgment or mistake of fact or law other than such person's gross negligence or willful misconduct. The Agent may file one or more financing statements disclosing its security interest in all or any part of the Collateral without the Pledgor's signature appearing thereon, and the Pledgor also hereby grants the Agent a power of attorney to execute any such financing statements, and any amendments or supplements thereto, on behalf of the Pledgor without notice thereof to the Pledgor. The foregoing powers of attorney, being coupled with an interest, are irrevocable until the -6- Obligations have been fully satisfied and all commitments of the Secured Creditors to extend credit to or for the account of the Borrower have expired or otherwise been terminated. Section 8. Defaults and Remedies. (a) The occurrence of any event or the existence of any condition which is specified as an "Event of Default" under the Credit Agreement or the occurrence of any default by the Pledgor in respect to any of its obligations under the Holdings Guaranty shall constitute an "Event of Default" hereunder. (b) Upon the occurrence and during the continuation of any Event of Default, all rights of the Pledgor to receive and retain the distributions which they are entitled to receive and retain pursuant to Section 6(b) hereof shall, at the option of the Agent cease and thereupon become vested in the Agent which, in addition to all other rights provided herein or by law, shall then be entitled solely and exclusively to receive and retain the distributions which the Pledgor would otherwise have been authorized to retain pursuant to Section 6(b) hereof and all rights of the Pledgor to exercise the voting and/or consensual powers which they are entitled to exercise pursuant to Section 6(a) hereof shall, at the option of the Agent, cease and thereupon become vested in the Agent which, in addition to all other rights provided herein or by law, shall then be entitled solely and exclusively to exercise all voting and other consensual powers pertaining to the Collateral and to exercise any and all rights of conversion, exchange or subscription and any other rights, privileges or options pertaining thereto as if the Agent were the absolute owner thereof including, without limitation, the right to exchange, at its discretion, the Collateral or any part thereof upon the merger, consolidation, reorganization, recapitalization or other readjustment of the respective issuer thereof or upon the exercise by or on behalf of any such issuer or the Agent of any right, privilege or option pertaining to the Collateral or any part thereof and, in connection therewith, to deposit and deliver the Collateral or any part thereof with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Agent may determine. In the event the Agent in good faith believes any of the Collateral constitutes restricted securities within the meaning of any applicable securities law, any disposition thereof in compliance with such laws shall not render the disposition commercially unreasonable. (c) Upon the occurrence and during the continuation of any Event of Default, the Agent shall have, in addition to all other rights provided herein or by law, the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights or remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further the Agent may, without demand and without advertisement, notice, hearing or process of law, all of which the Pledgor hereby waives to the extent permitted by applicable law, at any time or times, sell and deliver any or all of the Collateral held by or for it at public or private sale, at any securities exchange or broker's board or at any of the Agent's offices or elsewhere, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole discretion. In the exercise of any such remedies, the Agent may sell the Collateral as a unit even though the sales price thereof may be in excess of the amount remaining unpaid on the Obligations. In addition to all other sums due any Secured Creditor hereunder, the Pledgor shall pay the Secured Creditors all costs and expenses incurred by the Secured Creditors, including -7- reasonable attorneys' fees and court costs, in obtaining, liquidating or enforcing payment of Collateral or the Obligations or in the prosecution or defense of any action or proceeding by or against any Secured Creditor or the Pledgor concerning any matter arising out of or connected with this Agreement or the Collateral or the Obligations including, without limitation, any of the foregoing arising in, arising under or related to a case under the United States Bankruptcy Code (or any successor statute). Any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to the Pledgor in accordance with Section 13(b) hereof at least 10 days before the time of sale or other event giving rise to the requirement of such notice; provided, however, no notification need be given to the Pledgor if the Pledgor has signed, after an Event of Default has occurred, a statement renouncing any right to notification of sale or other intended disposition. The Agent shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. Any Secured Creditor may be the purchaser at any such sale. The Pledgor hereby waives all of its rights of redemption from any such sale. The Agent may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, be made at the time and place to which the sale was postponed or the Agent may further postpone such sale by announcement made at such time and place. THE PLEDGOR AGREES THAT IF ANY PART OF THE COLLATERAL IS SOLD AT ANY PUBLIC OR PRIVATE SALE, THE AGENT MAY ELECT TO SELL ONLY TO A BUYER WHO WILL GIVE FURTHER ASSURANCES, SATISFACTORY IN FORM AND SUBSTANCE TO THE AGENT, RESPECTING COMPLIANCE WITH THE REQUIREMENTS OF THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, AND A SALE SUBJECT TO SUCH CONDITION SHALL BE DEEMED COMMERCIALLY REASONABLE. THE PLEDGOR FURTHER AGREES THAT IN ANY SALE OF ANY PART OF THE COLLATERAL, THE AGENT IS HEREBY AUTHORIZED TO COMPLY WITH ANY LIMITATION OR RESTRICTION IN CONNECTION WITH SUCH SALE AS IT MAY BE ADVISED BY COUNSEL IS NECESSARY IN ORDER TO AVOID ANY VIOLATION OF APPLICABLE LAW (INCLUDING, WITHOUT LIMITATION, COMPLIANCE WITH SUCH PROCEDURES AS MAY RESTRICT THE NUMBER OF PROSPECTIVE BIDDERS AND PURCHASERS AND/OR FURTHER RESTRICT SUCH PROSPECTIVE BIDDERS OR PURCHASERS TO PERSONS WHO WILL REPRESENT AND AGREE THAT THEY ARE PURCHASING FOR THEIR OWN ACCOUNT FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR RESALE OF SUCH COLLATERAL), OR IN ORDER TO OBTAIN ANY REQUIRED APPROVAL OF THE SALE OR OF THE PURCHASER BY ANY GOVERNMENTAL REGULATORY AUTHORITY OR OFFICIAL, AND THE PLEDGOR FURTHER AGREES THAT SUCH COMPLIANCE SHALL NOT RESULT IN SUCH SALE BEING CONSIDERED OR DEEMED NOT TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE MANNER, NOR SHALL THE AGENT BE LIABLE OR ACCOUNTABLE TO THE PLEDGOR FOR ANY DISCOUNT ALLOWED BY REASON OF THE FACT THAT SUCH COLLATERAL IS SOLD IN COMPLIANCE WITH ANY SUCH LIMITATION OR RESTRICTION. (d) The powers conferred upon the Agent hereunder are solely to protect its interest in the Collateral and shall not impose on it any duties to exercise such powers. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of -8- the Collateral in its possession if the Collateral is accorded treatment substantially equivalent to that which the Agent accords its own property, consisting of similar types securities, it being understood, however, that the Agent shall have no responsibility for (i) ascertaining or taking any action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, (ii) taking any necessary steps to preserve rights against any parties with respect to any Collateral, or (iii) initiating any action to protect the Collateral or any part thereof against the possibility of a decline in market value. This Agreement constitutes an assignment of rights only and not an assignment of any duties or obligations of the Pledgor in any way related to the Collateral, and the Agent shall have no duty or obligation to discharge any such duty or obligation. By its acceptance hereof, the Agent does not undertake to perform or discharge and shall not be responsible or liable for the performance or discharge of any such duties or responsibilities. Neither any Secured Creditor, nor any party acting as attorney for any Secured Creditor, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than such person's gross negligence or willful misconduct. (e) Failure by the Agent to exercise any right, remedy or option under this Agreement or any other agreement between the Pledgor and the Agent or provided by law, or delay by the Agent in exercising the same, shall not operate as a waiver; and no waiver shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated. The rights and remedies of the Secured Creditors under this Agreement shall be cumulative and not exclusive of any other right or remedy which any Secured Creditor may have. For purposes of this Agreement, an Event of Default shall be construed as continuing after its occurrence until the same is waived in writing by the Lenders or the Required Lenders, as the case may be, in accordance with the Credit Agreement. Section 9. Application of Proceeds. The proceeds and avails of the Collateral at any time received by the Agent upon the occurrence and during the continuation of any Event of Default shall, when received by the Agent in cash or its equivalent, be applied by the Agent in reduction of, or held as collateral security for, the Obligations in accordance with the terms of Section 4.05 the Credit Agreement. The Pledgor shall remain liable to the Secured Creditors for any deficiency. Any surplus remaining after the full payment and satisfaction of the Obligations shall be returned to the Borrower, as agent for the Pledgor, or to whomsoever the Agent reasonably determines is lawfully entitled thereto. Section 10. Continuing Agreement. This Agreement shall be a continuing agreement in every respect and shall remain in full force and effect until the earlier to occur of the following: (i) all of the Obligations, both for principal and interest, have been fully paid and satisfied and the commitments of the Secured Creditors to extend credit to or for the account of the Borrower shall have expired or otherwise terminated or (ii) the Borrower Stock Release Date, provided that no Event of Default has occurred and is continuing on such date. Upon such termination of this Agreement, the Agent shall, upon the request and at the expense of the Pledgor, forthwith release all its liens and security interests hereunder. -9- Section 11. Primary Security; Obligations Absolute. The lien and security herein created and provided for stand as direct and primary security for the Obligations. No application of any sums received by the Agent in respect of the Collateral or any disposition thereof to the reduction of the Obligations or any portion thereof shall in any manner entitle the Pledgor to any right, title or interest in or to the Obligations or any collateral security therefor, whether by subrogation or otherwise, unless and until all Obligations have been fully paid and satisfied and all commitments to extend credit constituting Obligations to the Borrower shall have expired or otherwise terminated. The Pledgor acknowledges and agrees that the lien and security hereby created and provided for are absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of any Secured Creditor or any other holder of any of the Obligations, and without limiting the generality of the foregoing, the lien and security hereof shall not be impaired by any acceptance by any Secured Creditor or any other holder of any of the Obligations of any other security for or guarantors upon any Obligations or by any failure, neglect or omission on the part of any Secured Creditor or any other holder of any of the Obligations to realize upon or protect any of the Obligations or any collateral security therefor (including, without limitation, impairment of collateral or failure to perfect security interest in collateral). The lien and security hereof shall not in any manner be impaired or affected by (and the Secured Creditors, without notice to anyone, are hereby authorized to make from time to time) any sale, pledge, surrender, compromise, settlement, release, renewal, extension, indulgence, alteration, substitution, exchange, change in, modification or disposition of any of the Obligations, or of any collateral security therefor, or of any guaranty thereof, or of any instrument or agreement setting forth the terms and conditions pertaining to any of the foregoing. The Secured Creditors may at their discretion at any time grant credit to the Borrower without notice to the Pledgor in such amounts and on such terms as the Secured Creditors may elect without in any manner impairing the lien and security hereby created and provided for. In order to realize hereon and to exercise the rights granted the Secured Creditors hereunder and under applicable law, there shall be no obligation on the part of any Secured Creditor or any other holder of any of the Obligations at any time to first resort for payment to the Borrower or any other pledgor or to any guaranty of the Obligations or any portion thereof or to resort to any other collateral security, property, liens or any other rights or remedies whatsoever, and the Secured Creditors shall have the right to enforce this Agreement as against the Pledgor or any of its Collateral irrespective of whether or not other proceedings or steps seeking resort to or realization upon or from any of the foregoing are pending. Section 12. The Agent. In acting under or by virtue of this Agreement, the Agent shall be entitled to all the rights, authority, privileges and immunities provided in Section 11 of the Credit Agreement, all of which provisions of said Section 11 are incorporated by reference herein with the same force and effect as if set forth herein in their entirety. The Agent hereby disclaims any representation or warranty to the other Secured Creditors or any other holders of the Obligations concerning the perfection of the liens and security interests granted hereunder or in the value of the Collateral. Section 13. Miscellaneous. (a) This Agreement cannot be changed or terminated orally. This Agreement shall create a continuing lien on and security interest in the -10- Collateral and shall be binding upon the Pledgor, its successors and permitted assigns, and shall inure, together with the rights and remedies of the Secured Creditors hereunder, to the benefit of the Secured Creditors, and their successors and assigns; provided, however, that the Pledgor may not assign its rights or delegate its duties hereunder without the Agent's prior written consent. Without limiting the generality of the foregoing, and subject to the provisions of the Credit Agreement, any Secured Creditor may assign or otherwise transfer any indebtedness held by it secured by this Agreement to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Creditor herein or otherwise. (b) All communications provided for herein shall be in writing, except as otherwise specifically provided for hereinabove, and shall be deemed to have been given or made, if to the Pledgor when given to the Borrower in accordance with Section 12.03 of the Credit Agreement, or if to any Secured Creditor, when given to such party in accordance with Section 12.03 of the Credit Agreement. (c) No Secured Creditor (other than the Agent) shall have the right to institute any suit, action or proceeding in equity or at law for the foreclosure or other realization upon any Collateral subject to this Agreement or for the execution of any trust or power hereof or for the appointment of a receiver, or for the enforcement of any other remedy under or upon this Agreement; it being understood and intended that no one or more of the Secured Creditors (other than the Agent) shall have any right in any manner whatsoever to affect, disturb or prejudice the lien and security interest of this Agreement by its or their action or to enforce any right hereunder, and that all proceedings at law or in equity shall be instituted, had and maintained by the Agent in the manner herein provided for the benefit of the Secured Creditors. (d) In the event that any provision hereof shall be deemed to be invalid or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court, this Agreement shall be construed as not containing such provision, but only as to such jurisdictions where such law or interpretation is operative, and the invalidity or unenforceability of such provision shall not affect the validity of any remaining provision hereof, and any and all other provisions hereof which are otherwise lawful and valid shall remain in full force and effect. (e) The Pledgor hereby submits to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement, the other Credit Documents or the transactions contemplated hereby or thereby. The Pledgor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient form. EACH OF THE PLEDGOR AND THE SECURED CREDITORS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. -11- (f) This Agreement shall be deemed to have been made in the State of New York and shall be governed by, and construed in accordance with, the laws of the State of New York. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of any provision hereof. (g) This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterpart signature pages, each constituting an original, but all together one and the same instrument. [SIGNATURE PAGES TO FOLLOW] -12- IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly executed and delivered as of the date first above written. "PLEDGOR" EAGLE-PICHER HOLDINGS, INC. By /s/ JOEL P. WYLER ________________________ Name Joel P. Wyler ____________________ Title President ____________________ Acknowledged and agreed to in New York, New York as of the date first above written. ABN AMRO BANK N.V., as Agent as aforesaid for the Secured Creditors By /s/ GREGORY D. AMOROSO ---------------------------- Its Gregory D. Amoroso ------------------------ Group Vice President By /s/ PAUL WIDUCH ---------------------------- Its Paul Widuch ------------------------ Group Vice President -13- SCHEDULE A TO HOLDINGS PLEDGE AGREEMENT THE PLEDGED SECURITIES
NAME AND PERCENTAGE LOCATION OF NAME OF ISSUER JURISDICTION OF NO. OF CERTIFICATE OF ISSUER'S PLEDGOR INCORPORATION SHARES CLASS NO. STOCK Eagle-Picher Holdings, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Eagle-Picher Common Industries, Inc. Ohio 100 Stock 1 100%
SCHEDULE B TO HOLDINGS PLEDGE AGREEMENT AMENDMENT TO HOLDINGS PLEDGE AGREEMENT Reference is hereby made to that certain Holdings Pledge Agreement dated as of February 24, 1998 (as the same may be amended, the "Pledge Agreement"), from the Pledgor to ABN AMRO Bank N.V., as Agent. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Pledge Agreement. Subsequent to the Pledgor's delivery of the Pledge Agreement, certain shares of stock or equity interests have been added as Collateral under the Pledge Agreement. As a result of such addition, Schedule A of the Pledge Agreement does not accurately describe the shares of capital stock or other equity interest currently held by the Agent as collateral under the Pledge Agreement. The Pledgor now desires to amend Schedule A to the Pledge Agreement to reflect such addition, and this instrument shall constitute an agreement between the Pledgor and the Agent amending the Pledge Agreement in the respects, but only in the respects, hereinafter set forth: 1. Schedule A of the Pledge Agreement shall be and hereby is amended and as so amended shall be restated in its entirety to read as Annex A attached hereto. 2. As collateral security for the Obligations, the Pledgor hereby grants to the Agent a continuing lien on and security interest in, and acknowledges and agrees that the Agent has and shall continue to have a continuing lien on and security interest in, all the shares of capital stock or other equity interest of each issuer listed and described on Annex A attached hereto and all the other properties, rights, interests and privileges comprising the Collateral (as such term is defined in the Pledge Agreement after giving effect to this Amendment), to the same extent and with the same force and effect as if the shares of stock or other equity interest described on Annex A had originally been included on Schedule A to the Pledge Agreement. The foregoing granting clause is in addition to and supplemental of and not in substitution for the granting clause contained in the Pledge Agreement. Neither the Pledgor nor the Agent intends by this Amendment to in any way impair or otherwise affect the lien of the Pledge Agreement on such of the Collateral which was subject to the Pledge Agreement prior to giving effect to this Amendment. 3. The Pledgor hereby repeats and reaffirms all of its covenants, agreements, representations and warranties contained in the Pledge Agreement, each and all of which shall be applicable to all of the properties, rights, interests and privileges subject to the lien of the Pledge Agreement after giving effect to this Amendment. The Pledgor hereby certifies that no Event of Default or event which, with notice or lapse of time or both, would constitute an Event of Default exists under the Pledge Agreement after giving effect to this Amendment. 4. No reference to this Amendment need be made in any note, instrument or other document at any time referring to the Pledge Agreement, any reference in any of such to the Pledge Agreement to be deemed to reference to the Pledge Agreement as modified hereby. 5. Except as specifically modified hereby, all the terms and conditions of the Pledge Agreement shall stand and remain unchanged and in full force and effect. PLEDGOR: EAGLE-PICHER HOLDINGS, INC. By ________________________________ Its____________________________ Acknowledged and agreed to as of the date first above written. ABN AMRO BANK N.V., as Agent By ________________________________ Its____________________________ By ________________________________ Its____________________________ -2- ANNEX A TO AMENDMENT TO HOLDINGS PLEDGE AGREEMENT THE PLEDGED SECURITIES
NAME AND PERCENTAGE LOCATION OF NAME OF JURISDICTION OF NO. OF CERTIFICATE OF ISSUER'S PLEDGOR ISSUER INCORPORATION SHARES CLASS NO. STOCK
EX-10.12 21 EXHIBIT 10.12 BORROWER AND SUBSIDIARY PLEDGE AGREEMENT This Pledge Agreement (the "Agreement") is dated as of February 24, 1998 by and among EAGLE-PICHER INDUSTRIES, INC., a corporation organized and existing under the laws of Ohio, as survivor and successor by merger with E-P Acquisition, Inc., (as further defined in the Credit Agreement referred to below, the "Borrower"), and the other parties executing this Agreement under the heading "Pledgors" (the Borrower and such other parties, along with any parties who execute and deliver to the Agent an agreement in the form attached hereto as Schedule C being hereinafter referred to collectively as the "Pledgors" and individually as a "Pledgor"), each with its mailing address as set forth on its signature page hereto and ABN AMRO Bank N.V., a bank organized under the laws of the Netherlands ("ABN AMRO"), with its mailing address at 1325 Avenue of the Americas, New York, New York 10019, acting as collateral agent hereunder for the Secured Creditors hereinafter identified and defined (ABN AMRO acting as such agent and any successor or successors to ABN AMRO acting in such capacity being hereinafter referred to as the "Agent"); PRELIMINARY STATEMENTS A. The Borrower and ABN AMRO, individually and as agent, have entered into a Credit Agreement dated as of February 19, 1998 (such Agreement as the same may be amended, modified or restated from time to time being hereinafter referred to as the "Credit Agreement"), pursuant to which ABN AMRO and other banks and financial institutions and letter of credit issuers from time to time party to the Credit Agreement (ABN AMRO, in its individual capacity, and such other banks and financial institutions which from time to time become party to the Credit Agreement being hereinafter referred to collectively as the "Lenders" and individually as a "Lender" and such letter of credit issuers being hereinafter referred to collectively as the "Letter of Credit Issuers" and individually as a "Letter of Credit Issuer") have agreed, subject to certain terms and conditions, to extend credit and make certain other financial accommodations available to the Borrower. B. The Borrower may from time to time enter into one or more Interest Rate Protection Agreements with one or more of the Lenders party to the Credit Agreement or affiliates thereof for the purpose of hedging or otherwise protecting the Borrower against changes in interest rates (the liability of the Borrower in respect of such agreements with such Lenders or affiliates being hereinafter referred to as the "Hedging Liability") (the Agent, the Lenders, the Letter of Credit Issuers and such affiliates party to Interest Rate Protection Agreements being hereinafter referred to collectively as the "Secured Creditors" and individually as a "Secured Creditor"). C. As a condition to extending credit to the Borrower under the Credit Agreement, the Secured Creditors have required, among other things, that each Pledgor grant to the Agent for the benefit of the Secured Creditors a security interest in certain personal property of such Pledgor described herein subject to the terms and conditions hereof. D. The Borrower owns, directly or indirectly, equity interests in each other Pledgor and the Borrower provides each other Pledgor with financial, management, administrative, and technical support which enables such Pledgor to conduct its business in an orderly and efficient manner in the ordinary course. E. Each Pledgor will benefit, directly or indirectly, from credit and other financial accommodations extended by the Secured Creditors to the Borrower. NOW, THEREFORE, for and in consideration of the execution and delivery by the Secured Creditors of the Credit Agreement, and other good and valuable consideration, receipt whereof is hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Terms Defined in Credit Agreement. All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. The term "Pledgor" and "Pledgors" as used herein shall mean and include the Pledgors collectively and also each individually, with all grants, representations, warranties and covenants of and by the Pledgors, or any of them, herein contained to constitute joint and several grants, representations, warranties and covenants of and by the Pledgors; provided, however, that unless the context in which the same is used shall otherwise require, any grant, representation, warranty or covenant contained herein related to the Collateral shall be made by each Pledgor only with respect to the Collateral owned by it or represented by such Pledgor as owned by it. Section 2. Grant of Security Interest in the Collateral. Each Pledgor hereby grants to the Agent for the benefit of the Secured Creditors a lien on and security interest in, and acknowledges and agrees that the Agent has and shall continue to have for the benefit of the Secured Creditors a continuing lien on and security interest in, any and all right, title and interest of such Pledgor in and to the following, whether now owned or existing or hereafter created, acquired or arising, and in whatever form: (a) Pledged Securities. (i) 100% (or, if less, the full amount owned by such Pledgor) of the issued and outstanding shares of capital stock owned by such Pledgor of each Domestic Subsidiary (as set forth on Schedule A attached hereto) and (ii) 65% (or, if less, the full amount owned by such Pledgor) of the issued and outstanding shares of each class of capital stock or other ownership interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) ("Voting Equity") and 100% (or, if less, the full amount owned by such Pledgor) of the issued and outstanding shares of each class of capital stock or other ownership interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) ("Non-Voting Equity") owned by such Pledgor of each First Tier Foreign Subsidiary (as set forth on Schedule A attached hereto), in each case together with the certificates (or other agreements or instruments), if any, representing such shares, and all options and other rights, contractual or otherwise, with respect thereto (collectively, together with the shares of capital stock described in Section 2(b) and 2(c) below and the rights and privileges described hereunder with respect thereto, the "Pledged Securities"), including, but not limited to, the following: -2- (x) all shares of securities representing a dividend on any of the Pledged Securities, or representing a distribution or return of capital upon or in respect of the Pledged Securities, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder of, or otherwise in respect of, the Pledged Securities; and (y) without affecting the obligations of such Pledgor under any provision prohibiting such action hereunder, in the event of any consolidation or merger in which a Person set forth on Schedule A is not the surviving corporation, all shares of each class of the capital stock of the successor corporation formed by or resulting from such consolidation or merger (or 65% of Voting Equity and/or 100% of Non-Voting Equity if the successor corporation is a First Tier Foreign Subsidiary). (b) Additional Securities. 100% (or, if less, the full amount owned by such Pledgor) of the issued and outstanding shares of capital stock owned by such Pledgor of any Person which hereafter becomes a Domestic Subsidiary and 65% (or, if less, the full amount owned by such Pledgor) of the Voting Equity and 100% (or, if less, the full amount owned by such Pledgor) of the Non-Voting Equity owned by such Pledgor of any Person which hereafter becomes a First Tier Foreign Subsidiary, including, without limitation, the certificates (or other agreements or instruments), if any, representing such shares or Equity. (c) Other Equity Interests. Any and all other equity interests of each Pledgor in any Domestic Subsidiary or any First Tier Foreign Subsidiary; provided that with respect to any Voting Equity in any First Tier Foreign Subsidiary, not more than 65% of the capital stock or equity interest in any such Foreign Subsidiary is pledged hereunder. (d) Proceeds. All proceeds and products of the foregoing, however and whenever acquired and in whatever form. all of the foregoing being herein sometimes referred to as the "Collateral." All terms which are used in this Agreement which are defined in the Uniform Commercial Code of the State of New York ("UCC") shall have the same meanings herein as such terms are defined in the UCC, unless this Agreement shall otherwise specifically provide. Section 3. Obligations Hereby Secured. This Agreement is made and given to secure, and shall secure, the prompt payment and performance of (i) any and all indebtedness, obligations and liabilities of the Borrower to the Secured Creditors, and to any of them individually, under or in connection with or evidenced by the Credit Agreement, the Notes of the Borrower heretofore or hereafter issued under the Credit Agreement and the obligations of the Borrower to reimburse the Secured Creditors for the amount of all drawings on all Letters of Credit issued pursuant to the Credit Agreement, and all other obligations of the Borrower under any and all applications for Letters of Credit, and any -3- and all liability of the Borrower arising under or in connection with or otherwise evidenced by agreements with any one or more of the Secured Creditors with respect to any Hedging Liability, and any and all liability of the Pledgors, and of any of them individually, arising under any guaranty issued by it relating to the foregoing or any part thereof, in each case whether now existing or hereafter arising (and whether arising before or after the filing of a petition in bankruptcy and including all interest accrued after the petition date), due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired and (ii) any and all expenses and charges, legal or otherwise, suffered or incurred by the Secured Creditors, and any of them individually, in collecting or enforcing any of such indebtedness, obligations and liabilities or in realizing on or protecting or preserving any security therefor, including, without limitation, the lien and security interest granted hereby (all of the indebtedness, obligations, liabilities, expenses and charges described above being hereinafter referred to as the "Obligations"). Notwithstanding anything in this Agreement to the contrary, the right of recovery against any Pledgor (other than the Borrower to which this limitation shall not apply) under this Agreement shall not exceed $1.00 less than the amount which would render such Pledgor's obligations under this Agreement void or voidable under applicable law, including fraudulent conveyance law. Section 4. Covenants, Agreements, Representations and Warranties. Each Pledgor hereby covenants and agrees with, and represents and warrants to, the Secured Creditors that: (a) Each Pledgor is and shall be the sole and lawful legal, record and beneficial owner of its Collateral. Each Pledgor's chief executive office is at the address listed under such Pledgor's name on Schedule A. Each Pledgor agrees that it will not change any location set forth on the applicable Schedule hereto without at least 30 days' prior written notice to the Agent (provided in the case of any Domestic Subsidiary such locations shall be within the United States of America). No Pledgor shall, without the Agent's prior written consent, sell, assign, or otherwise dispose of the Collateral or any interest therein, except to the extent permitted by Section 8.02 of the Credit Agreement. The Collateral, and every part thereof, is and shall be free and clear of all security interests, liens, rights, claims, attachments, levies and encumbrances of every kind, nature and description and whether voluntary or involuntary, except for the security interest of the Agent hereunder. Each Pledgor shall warrant and defend the Collateral against any claims and demands of all persons at any time claiming the same or any interest in the Collateral adverse to the any Secured Creditor. (b) Each Pledgor agrees to execute and deliver to the Agent such further agreements, assignments, instruments and documents and to do all such other things as the Agent may deem reasonably necessary or appropriate to assure the Agent its lien and security interest hereunder, including such assignments, acknowledgments, stock powers, financing statements, instruments and documents as the Agent may from time to time require in order to comply with the UCC. Each Pledgor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Agent without prior -4- notice thereof to such Pledgor wherever the Agent in its discretion desires to file the same. In the event for any reason the law of any jurisdiction other than New York becomes or is applicable to the Collateral or any part thereof, or to any of the Obligations, each Pledgor agrees to execute and deliver all such agreements, assignments, instruments and documents and to do all such other things as the Agent in its discretion deems necessary or appropriate to preserve, protect and enforce the lien and security interest of the Agent under the law of such other jurisdiction. (c) If, as and when any Pledgor delivers any securities for pledge hereunder in addition to those listed on Schedule A hereto, the Pledgors shall furnish to the Agent a duly completed and executed amendment to such Schedule in substantially the form (with appropriate insertions) of Schedule B hereto reflecting the additional securities pledged hereunder after giving effect to such addition. (d) None of the Collateral constitutes margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System). (e) On failure of any Pledgor to perform any of the agreements and covenants herein contained, the Agent may, at its option, perform the same and in so doing may expend such sums as the Agent deems advisable in the performance thereof, including, without limitation, the payment of any taxes, liens and encumbrances, expenditures made in defending against any adverse claim, and all other expenditures which the Agent may be compelled to make by operation of law or which Agent may make by agreement or otherwise for the protection of the security hereof. All such sums and amounts so expended shall be repayable by the Pledgors immediately without notice or demand, shall constitute additional Obligations secured hereunder and shall bear interest from the date said amounts are expended at the rate per annum (computed on the basis of a year of 360 days, for the actual number of days elapsed) determined by adding 2% to the Base Rate from time to time in effect plus the Applicable Base Rate Margin for Revolving Loans, with any change in such rate per annum as so determined by reason of a change in such Base Rate to be effective on the date of such change in said Base Rate (such rate per annum as so determined being hereinafter referred to as the "Default Rate"). No such performance of any covenant or agreement by the Agent on behalf of such Pledgor, and no such advancement or expenditure therefor, shall relieve such Pledgor of any default under the terms of this Agreement or in any way obligate any Secured Creditor to take any further or future action with respect thereto. The Agent, in making any payment hereby authorized, may do so according to any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate, or into the validity of any tax assessment, sale, forfeiture, tax lien or title or claim. The Agent, in performing any act hereunder, shall be the sole judge of whether the relevant Pledgor is required to perform the same under the terms of this Agreement. The Agent is hereby authorized to charge any depository or other account of any Pledgor maintained with the Agent for the amount of such sums and amounts so expended. -5- Section 5. Special Provisions Re: Pledged Securities. (a) Each Pledgor has the right to vote the Pledged Securities (in the case of Foreign Subsidiaries, which are Voting Equity) and there are no restrictions upon the voting rights associated therewith, or the transfer of, any of the Pledged Securities, except as provided by federal and state laws applicable to the sale of securities generally and the terms of this Agreement. (b) The certificates for all shares of the Pledged Securities shall be delivered by the relevant Pledgor to the Agent duly endorsed in blank for transfer or accompanied by an appropriate assignment or assignments or an appropriate undated stock power or powers, in every case sufficient to transfer title thereto. The Agent may at any time after the occurrence of an Event of Default cause to be transferred into its name or into the name of its nominee or nominees any and all of the Pledged Securities. The Agent shall at all times have the right to exchange the certificates representing the Pledged Securities for certificates of smaller or larger denominations. (c) The pledge of shares of the Foreign Subsidiaries listed on Schedule D shall be effected as set forth in such Schedule. (d) The Pledged Securities have been validly issued and, except as described on Schedule A, are fully paid and non-assessable. Except as set forth on Schedule A, there are no outstanding commitments or other obligations of the issuers of any of the Pledged Securities to issue, and no options, warrants or other rights of any individual or entity to acquire, any share of any class or series of capital stock of such issuers. The Pledged Securities listed and described on Schedule A attached hereto constitute the percentage of the issued and outstanding capital stock of each series and class of the issuers thereof as set forth thereon owned by the relevant Pledgor. Each Pledgor further agrees that in the event any such issuer shall issue any additional capital stock of any series or class (whether or not entitled to vote) to such Pledgor or otherwise on account of its ownership interest therein, each Pledgor will forthwith pledge and deposit hereunder, or cause to be pledged and deposited hereunder, all such additional shares of such capital stock provided that with respect to Voting Equity of any First Tier Foreign Subsidiary, not more than 65% of Voting Equity of such Foreign Subsidiary is pledged hereunder. Section 6. Voting Rights and Dividends. Unless and until an Event of Default hereunder has occurred and is continuing and thereafter until notified by the Agent pursuant to Section 8(b) hereof: (a) Each Pledgor shall be entitled to exercise all voting and/or consensual powers pertaining to the Collateral of such Pledgor, or any part thereof, for all purposes not inconsistent with the terms of this Agreement or any other document evidencing or otherwise relating to any of the Obligations. -6- (b) Each Pledgor shall be entitled to receive and retain all dividends and distributions in respect of the Collateral which are paid in cash of whatsoever nature; provided, however, that such dividends and distributions representing stock or liquidating dividends or a distribution or return of capital upon or in respect of the Pledged Securities or any part thereof or resulting from a split-up, revision or reclassification of the Pledged Securities or any part thereof or received in addition to, in substitution of or in exchange for the Pledged Securities or any part thereof as a result of a merger, consolidation or otherwise shall be paid, delivered or transferred, as appropriate, directly to the Agent immediately upon the receipt thereof by such Pledgor and may, in the case of cash, be applied by the Agent to the Obligations, whether or not the same may then be due or otherwise adequately secured and shall, in the case of all other property, together with any cash received by the Agent and not applied as aforesaid, be held by the Agent pursuant hereto as part of the Collateral pledged under and subject to the terms of this Agreement. (c) In order to permit each Pledgor to exercise such voting and/or consensual powers which it is entitled to exercise under subsection (a) above and to receive such distributions which such Pledgor is entitled to receive and retain under subsection (b) above, the Agent will, if necessary, upon the written request of such Pledgor, from time to time execute and deliver to such Pledgor appropriate proxies and dividend orders. Section 7. Power of Attorney. Each Pledgor hereby appoints the Agent, its nominee, or any other person whom the Agent may designate as such Pledgor's attorney-in-fact, with full power and authority to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all sums or properties which may be or become due, payable or distributable in respect of the Collateral or any part thereof, with full power to settle, adjust or compromise any claim thereunder or therefor as fully as such Pledgor could itself do, to endorse or sign the Pledgor's name on any assignments, stock powers, or other instruments of transfer and on any checks, notes, acceptances, money orders, drafts, and any other forms of payment or security that may come into the Agent's possession and on all documents of satisfaction, discharge or receipt required or requested in connection therewith, and, in its discretion, to file any claim or take any other action or proceeding, either in its own name or in the name of such Pledgor, or otherwise, which the Agent deems necessary or appropriate to collect or otherwise realize upon all or any part of the Collateral, or effect a transfer thereof, or which may be necessary or appropriate to protect and preserve the right, title and interest of the Agent in and to such Collateral and the security intended to be afforded hereby. Each Pledgor hereby ratifies and approves all acts of any such attorney and agrees that neither the Agent nor any such attorney will be liable for any such acts or omissions nor for any error of judgment or mistake of fact or law other than such person's gross negligence or willful misconduct. The Agent may file one or more financing statements disclosing its security interest in all or any part of the Collateral without any Pledgor's signature appearing thereon, and each Pledgor also hereby grants the Agent a power of attorney to execute any such financing statements, and any amendments or supplements thereto, on behalf of such Pledgor without notice thereof to such Pledgor. The foregoing powers of attorney, being coupled with an interest, are irrevocable until the -7- Obligations have been fully satisfied and all commitments of the Secured Creditors to extend credit to or for the account of the Borrower have expired or otherwise been terminated. Section 8. Defaults and Remedies. (a) The occurrence of any event or the existence of any condition which is specified as an "Event of Default" under the Credit Agreement shall constitute an "Event of Default" hereunder. (b) Upon the occurrence and during the continuation of any Event of Default, all rights of the Pledgors to receive and retain the distributions which they are entitled to receive and retain pursuant to Section 6(b) hereof shall, at the option of the Agent cease and thereupon become vested in the Agent which, in addition to all other rights provided herein or by law, shall then be entitled solely and exclusively to receive and retain the distributions which the Pledgors would otherwise have been authorized to retain pursuant to Section 6(b) hereof and all rights of the Pledgors to exercise the voting and/or consensual powers which they are entitled to exercise pursuant to Section 6(a) hereof shall, at the option of the Agent, cease and thereupon become vested in the Agent which, in addition to all other rights provided herein or by law, shall then be entitled solely and exclusively to exercise all voting and other consensual powers pertaining to the Collateral and to exercise any and all rights of conversion, exchange or subscription and any other rights, privileges or options pertaining thereto as if the Agent were the absolute owner thereof including, without limitation, the right to exchange, at its discretion, the Collateral or any part thereof upon the merger, consolidation, reorganization, recapitalization or other readjustment of the respective issuer thereof or upon the exercise by or on behalf of any such issuer or the Agent of any right, privilege or option pertaining to the Collateral or any part thereof and, in connection therewith, to deposit and deliver the Collateral or any part thereof with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Agent may determine. In the event the Agent in good faith believes any of the Collateral constitutes restricted securities within the meaning of any applicable securities law, any disposition thereof in compliance with such laws shall not render the disposition commercially unreasonable. (c) Upon the occurrence and during the continuation of any Event of Default, the Agent shall have, in addition to all other rights provided herein or by law, the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights or remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further the Agent may, without demand and without advertisement, notice, hearing or process of law, all of which each Pledgor hereby waives to the extent permitted by applicable law, at any time or times, sell and deliver any or all of the Collateral held by or for it at public or private sale, at any securities exchange or broker's board or at any of the Agent's offices or elsewhere, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole discretion. In the exercise of any such remedies, the Agent may sell the Collateral as a unit even though the sales price thereof may be in excess of the amount remaining unpaid on the Obligations. Also, if less than all the Collateral is sold, the Agent shall have no duty to marshal or apportion the part of the Collateral so sold as between the Pledgors, or any of them, but may sell and deliver any or all of the Collateral without regard to which of the Pledgors are the -8- owners thereof. In addition to all other sums due any Secured Creditor hereunder, each Pledgor shall pay the Secured Creditors all costs and expenses incurred by the Secured Creditors, including reasonable attorneys' fees and court costs, in obtaining, liquidating or enforcing payment of Collateral or the Obligations or in the prosecution or defense of any action or proceeding by or against any Secured Creditor or any Pledgor concerning any matter arising out of or connected with this Agreement or the Collateral or the Obligations including, without limitation, any of the foregoing arising in, arising under or related to a case under the United States Bankruptcy Code (or any successor statute). Any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to the Pledgors in accordance with Section 13(b) hereof at least 10 days before the time of sale or other event giving rise to the requirement of such notice; provided, however, no notification need be given to a Pledgor if such Pledgor has signed, after an Event of Default has occurred, a statement renouncing any right to notification of sale or other intended disposition. The Agent shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. Any Secured Creditor may be the purchaser at any such sale. Each Pledgor hereby waives all of its rights of redemption from any such sale. The Agent may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, be made at the time and place to which the sale was postponed or the Agent may further postpone such sale by announcement made at such time and place. EACH PLEDGOR AGREES THAT IF ANY PART OF THE COLLATERAL IS SOLD AT ANY PUBLIC OR PRIVATE SALE, THE AGENT MAY ELECT TO SELL ONLY TO A BUYER WHO WILL GIVE FURTHER ASSURANCES, SATISFACTORY IN FORM AND SUBSTANCE TO THE AGENT, RESPECTING COMPLIANCE WITH THE REQUIREMENTS OF THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, AND A SALE SUBJECT TO SUCH CONDITION SHALL BE DEEMED COMMERCIALLY REASONABLE. EACH PLEDGOR FURTHER AGREES THAT IN ANY SALE OF ANY PART OF THE COLLATERAL, THE AGENT IS HEREBY AUTHORIZED TO COMPLY WITH ANY LIMITATION OR RESTRICTION IN CONNECTION WITH SUCH SALE AS IT MAY BE ADVISED BY COUNSEL IS NECESSARY IN ORDER TO AVOID ANY VIOLATION OF APPLICABLE LAW (INCLUDING, WITHOUT LIMITATION, COMPLIANCE WITH SUCH PROCEDURES AS MAY RESTRICT THE NUMBER OF PROSPECTIVE BIDDERS AND PURCHASERS AND/OR FURTHER RESTRICT SUCH PROSPECTIVE BIDDERS OR PURCHASERS TO PERSONS WHO WILL REPRESENT AND AGREE THAT THEY ARE PURCHASING FOR THEIR OWN ACCOUNT FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR RESALE OF SUCH COLLATERAL ), OR IN ORDER TO OBTAIN ANY REQUIRED APPROVAL OF THE SALE OR OF THE PURCHASER BY ANY GOVERNMENTAL REGULATORY AUTHORITY OR OFFICIAL, AND EACH PLEDGOR FURTHER AGREES THAT SUCH COMPLIANCE SHALL NOT RESULT IN SUCH SALE BEING CONSIDERED OR DEEMED NOT TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE MANNER, NOR SHALL THE AGENT BE LIABLE OR ACCOUNTABLE TO ANY PLEDGOR FOR ANY DISCOUNT ALLOWED BY REASON OF THE FACT THAT SUCH COLLATERAL IS SOLD IN COMPLIANCE WITH ANY SUCH LIMITATION OR RESTRICTION. -9- (d) The powers conferred upon the Agent hereunder are solely to protect its interest in the Collateral and shall not impose on it any duties to exercise such powers. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equivalent to that which the Agent accords its own property, consisting of similar types securities, it being understood, however, that the Agent shall have no responsibility for (i) ascertaining or taking any action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, (ii) taking any necessary steps to preserve rights against any parties with respect to any Collateral, or (iii) initiating any action to protect the Collateral or any part thereof against the possibility of a decline in market value. This Agreement constitutes an assignment of rights only and not an assignment of any duties or obligations of the Pledgors in any way related to the Collateral, and the Agent shall have no duty or obligation to discharge any such duty or obligation. By its acceptance hereof, the Agent does not undertake to perform or discharge and shall not be responsible or liable for the performance or discharge of any such duties or responsibilities. Neither any Secured Creditor, nor any party acting as attorney for any Secured Creditor, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than such person's gross negligence or willful misconduct. (e) Failure by the Agent to exercise any right, remedy or option under this Agreement or any other agreement between any Pledgor and the Agent or provided by law, or delay by the Agent in exercising the same, shall not operate as a waiver; and no waiver shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated. The rights and remedies of the Secured Creditors under this Agreement shall be cumulative and not exclusive of any other right or remedy which any Secured Creditor may have. For purposes of this Agreement, an Event of Default shall be construed as continuing after its occurrence until the same is waived in writing by the Lenders or the Required Lenders, as the case may be, in accordance with the Credit Agreement. Section 9. Application of Proceeds. The proceeds and avails of the Collateral at any time received by the Agent upon the occurrence and during the continuation of any Event of Default shall, when received by the Agent in cash or its equivalent, be applied by the Agent in reduction of, or held as collateral security for, the Obligations in accordance with the terms of Section 4.05 of the Credit Agreement. The Pledgors shall remain liable to the Secured Creditors for any deficiency. Any surplus remaining after the full payment and satisfaction of the Obligations shall be returned to the Borrower, as agent for Pledgors, or to whomsoever the Agent reasonably determines is lawfully entitled thereto. Section 10. Continuing Agreement. This Agreement shall be a continuing agreement in every respect and shall remain in full force and effect until all of the Obligations, both for principal and interest, have been fully paid and satisfied and the commitments of the Secured Creditors to extend credit to or for the account of the Borrower shall have expired or otherwise terminated. Upon such termination of this -10- Agreement, the Agent shall, upon the request and at the expense of the Pledgors, forthwith release all its liens and security interests hereunder. Section 11. Primary Security; Obligations Absolute. The lien and security herein created and provided for stand as direct and primary security for the Obligations. No application of any sums received by the Agent in respect of the Collateral or any disposition thereof to the reduction of the Obligations or any portion thereof shall in any manner entitle any Pledgor to any right, title or interest in or to the Obligations or any collateral security therefor, whether by subrogation or otherwise, unless and until all Obligations have been fully paid and satisfied and all commitments to extend credit constituting Obligations to the Borrower shall have expired or otherwise terminated. Each Pledgor acknowledges and agrees that the lien and security hereby created and provided for are absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of any Secured Creditor or any other holder of any of the Obligations, and without limiting the generality of the foregoing, the lien and security hereof shall not be impaired by any acceptance by any Secured Creditor or any other holder of any of the Obligations of any other security for or guarantors upon any Obligations or by any failure, neglect or omission on the part of any Secured Creditor or any other holder of any of the Obligations to realize upon or protect any of the Obligations or any collateral security therefor (including, without limitation, impairment of collateral or failure to perfect security interest in collateral). The lien and security hereof shall not in any manner be impaired or affected by (and the Secured Creditors, without notice to anyone, are hereby authorized to make from time to time) any sale, pledge, surrender, compromise, settlement, release, renewal, extension, indulgence, alteration, substitution, exchange, change in, modification or disposition of any of the Obligations, or of any collateral security therefor, or of any guaranty thereof, or of any instrument or agreement setting forth the terms and conditions pertaining to any of the foregoing. The Secured Creditors may at their discretion at any time grant credit to the Borrower without notice to the other Pledgors in such amounts and on such terms as the Secured Creditors may elect without in any manner impairing the lien and security hereby created and provided for. In order to realize hereon and to exercise the rights granted the Secured Creditors hereunder and under applicable law, there shall be no obligation on the part of any Secured Creditor or any other holder of any of the Obligations at any time to first resort for payment to the Borrower or any other Pledgor or to any guaranty of the Obligations or any portion thereof or to resort to any other collateral security, property, liens or any other rights or remedies whatsoever, and the Secured Creditors shall have the right to enforce this Agreement as against any Pledgor or any of its Collateral irrespective of whether or not other proceedings or steps seeking resort to or realization upon or from any of the foregoing are pending. Section 12. The Agent. In acting under or by virtue of this Agreement, the Agent shall be entitled to all the rights, authority, privileges and immunities provided in Section 11 of the Credit Agreement, all of which provisions of said Section 11 are incorporated by reference herein with the same force and effect as if set forth herein in their entirety. The Agent hereby disclaims any representation or warranty to the other Secured Creditors or any other holders of the Obligations concerning the perfection of the liens and security interests granted hereunder or in the value of the Collateral. -11- Section 13. Miscellaneous. (a) This Agreement cannot be changed or terminated orally. This Agreement shall create a continuing lien on and security interest in the Collateral and shall be binding upon each Pledgor, its successors and permitted assigns, and shall inure, together with the rights and remedies of the Secured Creditors hereunder, to the benefit of the Secured Creditors, and their successors and assigns; provided, however, that no Pledgor may assign its rights or delegate its duties hereunder without the Agent's prior written consent. Without limiting the generality of the foregoing, and subject to the provisions of the Credit Agreement, any Lender may assign or otherwise transfer any indebtedness held by it secured by this Agreement to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. (b) All communications provided for herein shall be in writing, except as otherwise specifically provided for hereinabove, and shall be deemed to have been given or made, if to any Pledgor when given to the Borrower in accordance with Section 12.03 of the Credit Agreement, or if to any Secured Creditor, when given to such party in accordance with Section 12.03 of the Credit Agreement. (c) No Secured Creditor (other than the Agent) shall have the right to institute any suit, action or proceeding in equity or at law for the foreclosure or other realization upon any Collateral subject to this Agreement or for the execution of any trust or power hereof or for the appointment of a receiver, or for the enforcement of any other remedy under or upon this Agreement; it being understood and intended that no one or more of the Secured Creditors (other than the Agent) shall have any right in any manner whatsoever to affect, disturb or prejudice the lien and security interest of this Agreement by its or their action or to enforce any right hereunder, and that all proceedings at law or in equity shall be instituted, had and maintained by the Agent in the manner herein provided for the benefit of the Secured Creditors. (d) In the event that any provision hereof shall be deemed to be invalid or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court, this Agreement shall be construed as not containing such provision, but only as to such jurisdictions where such law or interpretation is operative, and the invalidity or unenforceability of such provision shall not affect the validity of any remaining provision hereof, and any and all other provisions hereof which are otherwise lawful and valid shall remain in full force and effect. Without limiting the generality of the foregoing, in the event that this Agreement shall be deemed to be invalid or otherwise unenforceable with respect to any Pledgor, such invalidity or unenforceability shall not affect the validity of this Agreement with respect to the other Pledgors. (e) In the event the Secured Creditors shall at any time in their discretion permit a substitution of Pledgors hereunder or a party shall wish to become a Pledgor hereunder, such substituted or additional Pledgor shall, upon executing an agreement in the form attached hereto as Schedule C become a party hereto and be bound by all the terms and conditions hereof to the same extent as though such Pledgor had originally executed this Agreement and, in the case of a substitution, in lieu of the Pledgor being replaced. Any such -12- agreement shall contain information as to such Pledgor necessary to update Schedule A with respect to it. No such substitution shall be effective absent the written consent of Agent nor shall it in any manner affect the obligations of the other Pledgors hereunder. (f) Each Pledgor hereby submits to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement, the other Credit Documents or the transactions contemplated hereby or thereby. Each Pledgor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient form. EACH PLEDGOR AND EACH SECURED CREDITOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. (g) This Agreement shall be deemed to have been made in the State of New York and shall be governed by, and construed in accordance with, the laws of the State of New York. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of any provision hereof. (h) This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterpart signature pages, each constituting an original, but all together one and the same instrument. [SIGNATURE PAGES TO FOLLOW] -13- IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly executed and delivered as of the date first above written. "PLEDGORS" EAGLE-PICHER INDUSTRIES, INC. By /s/ ANDRIES RUIJSSENAARS -------------------------------------- Name Andries Ruijssenaars --------------------------------- Title President --------------------------------- EAGLE-PICHER DEVELOPMENT COMPANY, INC. By /s/ ANDRIES RUIJSSENAARS -------------------------------------- Name Andries Ruijssenaars --------------------------------- Title Authorized Person --------------------------------- EAGLE-PICHER MINERALS, INC. By /s/ ANDRIES RUIJSSENAARS ------------------------------------- Name Andries Ruijssenaars --------------------------------- Title Authorized Person -------------------------------- -14- Acknowledged and agreed to in New York, New York as of the date first above written. ABN AMRO BANK N.V., as Agent as aforesaid for the Secured Creditors By /s/ GREGORY D. AMOROSO ----------------------------------- Its Group Vice President ------------------------------- By /s/ PAUL WIDUCH ----------------------------------- Its Group Vice President ------------------------------- -15-
SCHEDULE A TO BORROWER AND SUBSIDIARY PLEDGE AGREEMENT THE PLEDGED SECURITIES PERCENTAGE NAME AND LOCATION NAME OF JURISDICTION NO. OF CERTIFICATE OF OF PLEDGOR ISSUER OF SHARES CLASS NO. ISSUER'S INCORPORATION STOCK Eagle-Picher Common Industries, Inc. Daisy Parts, Inc. Michigan 1,890 Stock 32 100% 250 East Fifth Street, Eagle-Picher Cincinnati, Ohio Development Common 45202 Company, Inc. Delaware 100 Stock 1 100% Eagle-Picher Common Far East, Inc. Delaware 100 Stock 100 100% Eagle-Picher Fluid Common Systems, Inc. Michigan 100 Stock 1 100% Eagle-Picher Common Minerals, Inc. Nevada 1 Stock 1 100% Hillsdale Tool & Manufacturing Common Co. Michigan 98,845 Stock 289 100% EPTEC, S.A. de Common C.V. Mexico 18,578,390 Share 3 65% Series A Equipo de Acuna Common S.A. de C.V. Mexico 650 Share 11-A 65% Series B Common 12,866,621 Share 4-B 65% Series C 980,362 Common 2-C 65% Share Eagle-Picher Industries Europe B.V. Netherlands 13,000 Shares N/A 65%
PERCENTAGE NAME AND LOCATION NAME OF ISSUER JURISDICTION NO. OF CERTIFICATE OF ISSUER'S OF PLEDGOR OF SHARES CLASS NO. STOCK INCORPORATION Eagle-Picher Development Company, Inc. Michigan 250 East Fifth Street Automotive Cincinnati, Ohio Research Common 45202 Corporation Michigan 24,500 Stock 22 100% Eagle-Picher Eagle-Picher Minerals, Inc. Minerals 6110 Plumas Street, International Reno, Nevada 89509, S.A.R.L. France 51,887 Shares N/A 65%
-2- SCHEDULE B TO BORROWER AND SUBSIDIARY PLEDGE AGREEMENT AMENDMENT TO PLEDGE AGREEMENT Reference is hereby made to that certain Borrower and Subsidiary Pledge Agreement dated as of February 24, 1998 (as the same may be amended, the "Pledge Agreement"), from the Pledgors which are signatories thereto to ABN AMRO Bank N.V., as Agent. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Pledge Agreement. Subsequent to the Pledgors' delivery of the Pledge Agreement, certain shares of stock or equity interests have been added as Collateral under the Pledge Agreement. As a result of such addition, Schedule A of the Pledge Agreement does not accurately describe the shares of capital stock or other equity interest currently held by the Agent as collateral under the Pledge Agreement. The Pledgors now desire to amend Schedule A to the Pledge Agreement to reflect such addition, and this instrument shall constitute an agreement between the Pledgors and the Agent amending the Pledge Agreement in the respects, but only in the respects, hereinafter set forth: 1. Schedule A of the Pledge Agreement shall be and hereby is amended and as so amended shall be restated in its entirety to read as Annex A attached hereto. 2. As collateral security for the Obligations, each Pledgor hereby grants to the Agent a continuing lien on and security interest in, and acknowledges and agrees that the Agent has and shall continue to have a continuing lien on and security interest in, all the shares of capital stock or other equity interest of each issuer listed and described on Annex A attached hereto and all the other properties, rights, interests and privileges comprising the Collateral (as such term is defined in the Pledge Agreement after giving effect to this Amendment), to the same extent and with the same force and effect as if the shares of stock or other equity interest described on Annex A had originally been included on Schedule A to the Pledge Agreement. The foregoing granting clause is in addition to and supplemental of and not in substitution for the granting clause contained in the Pledge Agreement. Neither the Pledgors nor the Agent intends by this Amendment to in any way impair or otherwise affect the lien of the Pledge Agreement on such of the Collateral which was subject to the Pledge Agreement prior to giving effect to this Amendment. 3. Each Pledgor hereby repeats and reaffirms all of its covenants, agreements, representations and warranties contained in the Pledge Agreement, each and all of which shall be applicable to all of the properties, rights, interests and privileges subject to the lien of the Pledge Agreement after giving effect to this Amendment. Each Pledgor hereby certifies that no Event of Default or event which, with notice or lapse of time or both, would constitute an Event of Default exists under the Pledge Agreement after giving effect to this Amendment. 4. No reference to this Amendment need be made in any note, instrument or other document at any time referring to the Pledge Agreement, any reference in any of such to the Pledge Agreement to be deemed to reference to the Pledge Agreement as modified hereby. 5. Except as specifically modified hereby, all the terms and conditions of the Pledge Agreement shall stand and remain unchanged and in full force and effect. PLEDGOR(S): [NAME OF PLEDGORS] By ---------------------------------------- Its ------------------------------------ Acknowledged and agreed to as of the date first above written. ABN AMRO BANK N.V., as Agent By ----------------------------------------- Its ------------------------------------- By ----------------------------------------- Its ------------------------------------- -2- ANNEX A TO AMENDMENT TO PLEDGE AGREEMENT THE PLEDGED SECURITIES
NAME AND PERCENTAGE LOCATION OF NAME OF JURISDICTION OF NO. OF CERTIFICATE OF ISSUER'S PLEDGOR ISSUER INCORPORATION SHARES CLASS NO. STOCK
SCHEDULE C TO BORROWER AND SUBSIDIARY PLEDGE AGREEMENT ASSUMPTION AND SUPPLEMENTAL PLEDGE AGREEMENT THIS AGREEMENT dated as of this _____ day of ______________, ___ from [NEW PLEDGOR], a __________ corporation/partnership/limited liability company (the "New Pledgor"), to ABN AMRO Bank N.V. ("ABN AMRO") as collateral agent for the Secured Creditors (defined in the Pledge Agreement hereinafter identified and defined) (ABN AMRO acting as such agent and any successor or successors to ABN AMRO in such capacity being hereinafter referred to as the "Agent"); PRELIMINARY STATEMENTS A. Eagle-Picher Industries, Inc. (the "Borrower") and certain other Pledgors have executed and delivered to the Agent that certain Pledge Agreement dated as of February 24, 1998 (such Pledge Agreement, as the same may from time to time be modified or amended, including supplements thereto which add additional parties as Pledgors thereunder, being hereinafter referred to as the "Pledge Agreement") pursuant to which such parties (the "Existing Pledgors") have granted to the Agent for the benefit of the Secured Creditors a lien on and security interest in such Existing Pledgors' Collateral (as such term is defined in the Pledge Agreement) to secure the Obligations (as such term is defined in the Pledge Agreement); B. The Borrower provides the New Pledgor with substantial financial, managerial, administrative, and technical support and the New Pledgor will benefit from credit and other financial accommodations extended and to be extended by the Secured Creditors to the Borrower. NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or credit accommodations given or to be given, to the Borrower by the Secured Creditors from time to time, the New Pledgor hereby agrees as follows: 1. The New Pledgor acknowledges and agrees that it shall become a "Pledgor" party to the Pledge Agreement effective upon the date the New Pledgor's execution of this Agreement and the delivery of this Agreement to the Agent, and that upon such execution and delivery, all references in the Pledge Agreement to the terms "Pledgor" or "Pledgors" shall be deemed to include the New Pledgor. Without limiting the generality of the foregoing, the New Pledgor hereby repeats and reaffirms all grants (including the grant of a lien and security interest), covenants, agreements, representations and warranties contained in the Pledge Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral from time to time owned by the New Pledgor or in which the New Pledgor from time to time has any rights. Without limiting the foregoing, in order to secure payment of the Obligations, whether now existing or hereafter arising, the New Pledgor does hereby grant to the Agent for the benefit of the Secured Creditors, and hereby agrees that the Agent has and shall continue to have for the benefit of the Secured Creditors a continuing security interest in, among other things, all of the New Pledgor's Collateral (as such term is defined in the Pledge Agreement) described in Section 2 of the Pledge Agreement, each and all of such granting clauses being incorporated herein by reference with the same force and effect as if set forth in their entirety except that all references in such clauses to the Existing Pledgor or any of them shall be deemed to include references to the New Pledgor. Nothing contained herein shall in any manner impair the priority of the liens and security interests heretofore granted in favor of the Agent under the Pledge Agreement. 2. The following information shall be added to Schedules A to the Pledge Agreement: SCHEDULE A THE PLEDGED SECURITIES
PERCENTAGE NAME AND NAME OF JURISDICTION OF NO. OF CERTIFICATE OF ISSUER'S LOCATION OF ISSUER INCORPORATION SHARES CLASS NO. STOCK PLEDGOR
3. The New Pledgor hereby acknowledges and agrees that the Obligations are secured by all of the Collateral according to, and otherwise on and subject to, the terms and conditions of the Pledge Agreement to the same extent and with the same force and effect as if the New Pledgor had originally been one of the Existing Pledgors under the Pledge Agreement and had originally executed the same as such an Existing Pledgor. 4. All capitalized terms used in this Agreement without definition shall have the same meaning herein as such terms have in the Pledge Agreement, except that any reference to the term "Pledgor" or "Pledgors" and any provision of the Pledge Agreement providing meaning to such term shall be deemed a reference to the Existing Pledgors and the New Pledgor. Except as specifically modified hereby, all of the terms and conditions of the Pledge Agreement shall stand and remain unchanged and in full force and effect. 5. The New Pledgor agrees to execute and deliver such further instruments and documents and do such further acts and things as the Agent may reasonably deem necessary or proper to carry out more effectively the purposes of this Agreement. 6. No reference to this Agreement need be made in the Pledge Agreement or in any other document or instrument making reference to the Pledge Agreement, any reference to the Pledge Agreement in any of such to be deemed a reference to the Pledge Agreement as modified hereby. -2- 7. This Agreement shall be governed by and construed in accordance with the State of New York (without regard to principles of conflicts of law). [NEW PLEDGOR] By ------------------------------------- Its --------------------------------- Acknowledged and agreed to as of the date first above written. ABN AMRO BANK N.V., as Agent as aforesaid for the Secured Creditors By ------------------------------------- Its --------------------------------- By ------------------------------------- Its ---------------------------------- -3- SCHEDULE D 1. Eagle-Picher Minerals International S.A.R.L. A pledge of 51,887 shares of Eagle-Picher Minerals International S.A.R.L., a French corporation ("EPMI SARL"), representing 65% of its corporate capital, shall be effected by (i) the execution of the pledge agreement (the "French Pledge") substantially in the form of Exhibit A attached to this Schedule D, (ii) the filling of the French Pledge with the French Tax Administration, and (iii) the notification of such filing being sent to EPMI SARL through a bailiff. 2. Eagle-Picher Industries Europe B.V. A pledge of 13,000 shares of Eagle-Picher Industries Europe B.V., a Dutch corporation ("EPIE BV"), representing 65% of the issued and outstanding capital of EPIE BV shall be effected by (i) the execution of the powers of attorney (the "Powers of Attorney"), substantially in the form of Exhibit B attached to this Schedule D, which will allow the notary in The Netherlands to pass the share pledge agreement (the "Dutch Pledge") substantially in the form of Exhibit C attached to this Schedule D and (ii) the delivery of the fully executed Powers of Attorney, the Credit Agreement and this Agreement to Moret Ernst & Young of Rotterdam, The Netherlands. EX-10.13 22 EXHIBIT 10.13 HOLDINGS GUARANTY AGREEMENT This Holdings Guaranty Agreement (the "Guaranty") dated as of February 24, 1998, by Eagle-Picher Holdings, Inc., a Delaware corporation (the "Guarantor"). WITNESSETH: WHEREAS, the Guarantor owns all of the issued and outstanding capital stock of EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation, as survivor and successor by merger with E-P Acquisition, Inc. (as further defined in the Credit agreement referred to below, the "Borrower"); and WHEREAS, the Borrower and ABN AMRO Bank N.V. ("ABN AMRO"), individually and as agent (ABN AMRO acting as such agent and any successor or successors to ABN AMRO in such capacity being hereinafter referred to as the "Agent") have entered into a Credit Agreement dated as of February 19, 1998 (such Credit Agreement as the same may from time to time hereafter be modified, amended or restated being hereinafter referred to as the "Credit Agreement") pursuant to which ABN AMRO and such other banks, financial institutions and letter of credit issuers from time to time parties thereto (ABN AMRO, in its individual capacity, and such other banks and financial institutions being hereinafter referred to collectively as the "Lenders" and individually as a "Lender" and such letter of credit issuers being hereinafter referred to collectively as the "Letter of Credit Issuers" and individually as a "Letter of Credit Issuer") have extended various credit facilities to the Borrower; and WHEREAS, the Borrower may from time to time enter into one or more Interest Rate Protection Agreements with one or more of the Lenders party to the Credit Agreement or affiliates thereof for the purpose of hedging or otherwise protecting the Borrower against changes in interest rates (the liability of the Borrower in respect of such agreements with such Lenders or affiliates being hereinafter referred to as the "Hedging Liability") (the Agent, the Lenders, the Letter of Credit Issuers and such affiliates party to Interest Rate Protection Agreements being hereinafter referred to collectively as the "Guaranteed Creditors" and individually as a "Guaranteed Creditor"); and WHEREAS, as a condition to extending the credit facilities to the Borrower under the Credit Agreement, the Guaranteed Creditors have required, among other things, that the Guarantor execute and deliver this Guaranty; and WHEREAS, the Guarantor will directly and substantially benefit from credit and other financial accommodations extended and to be extended by the Guaranteed Creditors to the Borrower; and NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or credit accommodations given or to be given, to the Borrower by the Guaranteed Creditors from time to time, the Guarantor hereby makes the following representations and warranties to the Guaranteed Creditors and hereby covenants and agrees with the Guaranteed Creditors as follows: Section 1. Definitions. All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. Section 2. Guaranty. (a) The Guarantor hereby guarantees to the Guaranteed Creditors, the due and punctual payment when due of (i) any and all indebtedness, obligations and liabilities of the Borrower to the Guaranteed Creditors, and to any of them individually, under or in connection with or evidenced by the Credit Agreement, the Notes of the Borrower heretofore or hereafter issued under the Credit Agreement and the obligations of the Borrower to reimburse the Guaranteed Creditors, or any of them individually, for the amount of all drawings on all Letters of Credit issued pursuant to the Credit Agreement, and all other obligations of the Borrower under any and all applications for Letters of Credit, and any and all liability of the Borrower arising under or in connection or otherwise evidenced by agreements with any one or more of the Guaranteed Creditors with respect to any Hedging Liability, in each case whether now existing or hereafter arising (and whether arising before or after the filing of a petition in bankruptcy and including all interest accrued after the petition date), due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired and (ii) any and all expenses and charges, legal or otherwise, suffered or incurred by the Guaranteed Creditors, and any of them, in collecting or enforcing any of such indebtedness, obligations and liabilities or in realizing on or protecting or preserving any security therefor. The indebtedness, obligations and liabilities described in the immediately preceding clauses (i) and (ii) are hereinafter referred to as the "indebtedness hereby guaranteed". In case of failure by the Borrower punctually to pay any indebtedness hereby guaranteed, the Guarantor hereby agrees to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, and as if such payment were made by the Borrower. All payments hereunder by the Guarantor shall be made in immediately available funds in Dollars without setoff, counterclaim or other defense or withholding or deduction of any nature. (b) The Guarantor further agrees to pay on demand all reasonable expenses, legal and/or otherwise (including court costs and reasonable attorneys' fees), paid or incurred by any Guaranteed Creditor in endeavoring to collect the indebtedness hereby guaranteed, or any part thereof, or in enforcing or endeavoring to enforce the Guarantor's obligations hereunder, or any part thereof, or in protecting, defending or enforcing this Guaranty in any litigation, bankruptcy or insolvency proceedings or otherwise. (c) The Guarantor agrees that, upon demand, it will then pay to the Agent for the benefit of the Guaranteed Creditors the full amount of the indebtedness hereby guaranteed then due whether or not any one or more of the other guarantors shall then or thereafter pay any amount whatsoever in respect to their obligations under any other guaranty. -2- (d) The Guarantor agrees that it will not exercise or enforce any right of exoneration, contribution, reimbursement, recourse or subrogation available to it against any person liable for payment of the indebtedness hereby guaranteed, or as to any security therefor, unless and until the full amount owing to the Guaranteed Creditors of the indebtedness hereby guaranteed has been fully paid and satisfied and each of the commitments by the Guaranteed Creditors to extend any indebtedness hereby guaranteed shall have expired or otherwise terminated. The payment by the Guarantor of any amount or amounts to the Guaranteed Creditors pursuant hereto shall not in any way entitle the Guarantor, either at law, in equity or otherwise, to any right, title or interest (whether by way of subrogation or otherwise) in and to the indebtedness hereby guaranteed or any part thereof or any collateral security therefor or any other rights or remedies in any way relating thereto or in and to any amounts theretofor, then or thereafter paid or applicable to the payment thereof howsoever such payment may be made and from whatsoever source such payment may be derived unless and until all of the indebtedness hereby guaranteed and all costs and expenses suffered or incurred by the Guaranteed Creditors in enforcing this Guaranty have been paid and satisfied in full and each of the commitments by the Guaranteed Creditors to extend any indebtedness hereby guaranteed shall have expired or otherwise terminated and unless and until such payment in full and termination, any payments made by the Guarantor hereunder and any other payments from whatsoever source derived on account of or applicable to the indebtedness hereby guaranteed or any part thereof shall be held and taken to be merely payments in gross to the Guaranteed Creditors reducing pro tanto the indebtedness hereby guaranteed. (e) To the extent permitted by the Credit Agreement, each Guaranteed Creditor may, without any notice whatsoever to the Guarantor, sell, assign, or transfer all of the indebtedness hereby guaranteed, or any part thereof, and in that event each and every immediate and successive assignee or transferee, of all or any part of the indebtedness hereby guaranteed, shall have the right through the Agent pursuant to Section 6(c) hereof to enforce this Guaranty, by suit or otherwise, for the benefit of such assignee or transferee as fully as if such assignee or transferee were herein by name specifically given such rights, powers and benefits; but each Guaranteed Creditor through the Agent pursuant to Section 6(c) hereof shall have an unimpaired right to enforce this Guaranty for its own benefit, as to so much of the indebtedness hereby guaranteed that it has not sold, assigned or transferred. (f) This Guaranty is a continuing, absolute and unconditional Guaranty, and shall remain in full force and effect until written notice of its discontinuance executed by the Borrower and the Guarantor shall be actually received by the Guaranteed Creditors, and also until any and all of the indebtedness hereby guaranteed which was created or existing before receipt of such notice shall be fully paid and satisfied and each of the commitments by the Guaranteed Creditors to extend any indebtedness hereby guaranteed shall have expired or otherwise terminated. The dissolution of the Guarantor shall not terminate this Guaranty until notice of such dissolution shall have been actually received by the Guaranteed Creditors, nor until all of the indebtedness hereby guaranteed, created or existing or committed to be extended in each case before receipt of such notice shall be fully paid and satisfied. The Guaranteed Creditors may at any time or from time to time release any -3- guarantor from its obligations under any other guaranty or effect any compromise with any such guarantor and no such release or compromise shall in any manner impair or otherwise affect the obligations hereunder of the Guarantor. No release, compromise, or discharge of any guarantor under any other guaranty shall release, compromise or discharge the obligations of the Guarantor hereunder. (g) In case of the dissolution, liquidation or insolvency (howsoever evidenced) of, or the institution of bankruptcy or receivership proceedings against the Guarantor, the Borrower or any of its Subsidiaries, all of the indebtedness hereby guaranteed which is then existing shall immediately become due or accrued and payable from the Guarantor. All payments received from the Borrower or on account of the indebtedness hereby guaranteed from whatsoever source, shall be taken and applied as payment in gross, and this Guaranty shall apply to and secure any ultimate balance that shall remain owing to the Guaranteed Creditors. (h) The liability hereunder shall in no way be affected or impaired by (and the Guaranteed Creditors are hereby expressly authorized to make from time to time, without notice to the Guarantor), any sale, pledge, surrender, compromise, settlement, release, renewal, extension, impairment, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the indebtedness hereby guaranteed, either express or implied, or of any Credit Document or any other contract or contracts evidencing any thereof, or of any security or collateral therefor or any guaranty thereof. The liability hereunder shall in no way be affected or impaired by any acceptance by the Guaranteed Creditors of any security for or other guarantors upon any of the indebtedness hereby guaranteed, or by any failure, neglect or omission on the part of the Guaranteed Creditors to realize upon or protect any of the indebtedness hereby guaranteed, or any collateral or security therefor (including, without limitation, impairment of collateral and failure to perfect security interest in any collateral), or to exercise any lien upon or right of appropriation of any moneys, credits or property of the Borrower or any guarantor, possessed by any of the Guaranteed Creditors, toward the liquidation of the indebtedness hereby guaranteed, or by any application of payments or credits thereon. The Guaranteed Creditors shall have the exclusive right to determine how, when and what application of payments and credits, if any, shall be made on said indebtedness hereby guaranteed, or any part of same. In order to hold the Guarantor liable hereunder, there shall be no obligation on the part of the Guaranteed Creditors, at any time, to resort for payment to the Borrower or to any other guarantor, or to any other person, its property or estate, or resort to any collateral, security, property, liens or other rights or remedies whatsoever, and the Guaranteed Creditors shall have the right to enforce this Guaranty against the Guarantor irrespective of whether or not other proceedings or steps are pending seeking resort to or realization upon or from any of the foregoing are pending. (i) All diligence in collection or protection, and all presentment, demand, protest and/or notice, as to any and everyone, whether or not the Borrower or the Guarantor or others, of dishonor and of default and of non-payment and of the creation and existence of any and all of said indebtedness hereby guaranteed, and of any security and collateral -4- therefor, and of the acceptance of this Guaranty, and of any and all extensions of credit and indulgence hereunder, are expressly waived. (j) No act of commission or omission of any kind, or at any time, upon the part of the Guaranteed Creditors in respect to any matter whatsoever, shall in any way affect or impair this Guaranty. (k) The Guarantor waives any and all defenses, claims and discharges of the Borrower, or any other obligor or guarantor, pertaining to the indebtedness hereby guaranteed, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, the Guarantor will not assert, plead or enforce against the Guaranteed Creditors any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statue of frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to the Borrower or any other person liable in respect of any of the indebtedness hereby guaranteed, or any set-off available against the Guaranteed Creditors to the Borrower or any such other person, whether or not on account of a related transaction. The Guarantor agrees that it shall be and remain liable for any deficiency remaining after foreclosure or other realization on any lien or security interest securing the indebtedness hereby guaranteed, whether or not the liability of the Borrower or any other obligor for such deficiency is discharged pursuant to statute or judicial decision. (l) If any payment applied by the Guaranteed Creditors to the indebtedness hereby guaranteed is thereafter set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of the Borrower or any other obligor), the indebtedness hereby guaranteed to which such payment was applied shall for the purposes of this Guaranty be deemed to have continued in existence, notwithstanding such application, and this Guaranty shall be enforceable as to such of the indebtedness hereby guaranteed as fully as if such application had never been made. (m) The liability of the Guarantor under this Guaranty is in addition to and shall be cumulative with all other liabilities of the Guarantor after the date hereof to the Guaranteed Creditors as a Guarantor of the indebtedness hereby guaranteed, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary. Section 3. Representations and Warranties. In order to induce the Guaranteed Creditors to enter into the Credit Agreement, to make the Loans, issue (or deemed issued) (and participate in) the Letters of Credit as provided therein and/or enter into the Interest Rate Protection Agreements, the Guarantor makes the following representations and warranties, in each case after giving effect to the consummation of the Transaction on the Closing Date, all of which shall survive the execution and delivery of this Guaranty, with the occurrence of the Closing Date and the occurrence of each Credit Event on or after the Closing Date being deemed to constitute a representation and warranty that the matters specified in this Section 3 are true and correct in all material respects on and as of the Closing Date and on the date of each such Credit Event. -5- (a) The Guarantor (i) is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware, (ii) has the power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified as a foreign corporation and in good standing in each jurisdiction where the ownership of property or the conduct of its business requires such qualification except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the business, properties, assets, liabilities or financial condition of the Guarantor. (b) The Guarantor has the corporate power and authority to execute, deliver and perform the terms and provisions of each of the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance by it of each of such Credit Documents. The Guarantor has duly executed and delivered each of the Credit Documents to which it is a party, and each of such Credit Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). (c) Neither the execution, delivery or performance by the Guarantor of the Credit Documents to which it is a party, nor compliance by it with the terms and provisions thereof, nor the consummation of the transactions contemplated herein or therein (i) will contravene any material provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or (other than pursuant to the Security Documents) result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of the Guarantor pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or instrument to which any of the Credit Parties or any of their Subsidiaries is a party or by which it or any of its property or assets are bound or to which it may be subject (except that, as of the Closing Date, the Borrower has not obtained certain consents required in connection with the Merger, as set forth in Schedule 6.03 to the Credit Agreement) or (iii) will violate any provision of the certificate of incorporation or by-laws (or the equivalent charter documents) of the Guarantor. (d) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made on or prior to the Closing Date and which remain in full force and effect), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance of any Credit Document to which the Guarantor is a party, (ii) the legality, validity, binding effect or enforceability of any Credit Document to which the Guarantor is a party or (iii) the consummation of the Transaction. -6- (e) The pro forma consolidated balance sheet of the Guarantor and its Subsidiaries as of the Closing Date reflects the pro forma financial position of the Guarantor and its Subsidiaries after giving effect to the Transaction, as if such Transaction had occurred on December 1, 1997. Section 4. Covenants. The Guarantor shall not, directly or indirectly, (i) enter into or permit to exist any transaction or agreement (including without limitation any transaction or agreement with respect to any incurrence or assumption of Indebtedness, any purchase, sale, lease or exchange of any property or the rendering of any service or payment of any funds) between itself and any other Person (including any Affiliate), other than Permitted Holdings Transactions, (ii) issue any capital stock other than the Holdings Preferred Stock or Holding Common Stock, or incur or assume any Indebtedness other than pursuant to Permitted Holdings Transactions, (iii) engage in any business or conduct any activity (including the making of any investment or payment) other than the ownership of the capital stock of the Borrower and the performance of Permitted Holdings Transactions in accordance with the terms thereof, or sell, exchange or otherwise transfer any of its assets, (iv) consolidate or merge with or into any other Person, (v) redeem or purchase any of the Holdings Preferred Stock or the Exchange Debentures or any portion thereof, (vi) make any dividend payment in respect of the Holdings Preferred Stock prior to September 1, 2003 or make any interest payment on the Exchange Debentures prior to September 1, 2003, or (vii) amend or modify its certificate of incorporation, including its certificate of designations and any terms of the Holding Preferred Stock or Exchange Debentures. The Guarantor shall preserve, renew and keep in full force and effect its corporate existence and any rights, privileges and franchises necessary or desirable in the conduct of its business, and shall comply in all material respects with all material applicable laws, ordinances, rules, regulations, and requirements of governmental authorities, provided that the Guarantor may terminate any such right, privilege or franchise (other than its corporate existence) if its board of directors in good faith determines that such termination is in the best interest of the Guarantor and not materially disadvantageous to the Guaranteed Creditors. The Guarantor shall apply any dividends which it receives from the Borrower to the payment of dividends on the Holdings Preferred Stock or interest on the Exchange Debenture, as the case may be, and for no other purpose. Section 5. Event of Default. Upon the occurrence of (i) any default by the Guarantor in respect of any of its covenants hereunder or (ii) any Mandatory Redemption Event (as defined in the Holdings Preferred Stock) in respect of the Holdings Preferred Stock, or (iii) any Event of Default in respect of the Exchange Debentures (as defined in the Exchange Debentures), all of the indebtedness hereby guaranteed which is then existing shall immediately become due and payable from the Guarantor irrespective of whether such indebtedness is otherwise then due and payable. Section 6. Miscellaneous. (a) Any invalidity or unenforceability of any provision or application of this Guaranty shall not affect other lawful provisions and applications hereof, and to this end the provisions of this Guaranty are declared to be severable. (b) Any demand for payment on this Guaranty or any other notice required or desired to be given hereunder to the Guarantor shall be in writing (including, without -7- limitation, notice by telecopy) and shall be given to it in accordance with Section 12.03 of the Credit Agreement, or such other address or telecopier number as such party may hereafter specify by notice to the Agent given by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and a confirmation of such telecopy has been received by the sender, (ii) if given by mail, five (5) days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the addresses specified in this Section. (c) No Guaranteed Creditor (other than the Agent) shall have the right to institute any suit, action or proceeding in equity or at law in connection with this Guaranty for the enforcement of any remedy under or upon this Guaranty; it being understood and intended that no one or more of the Guaranteed Creditors (other than the Agent) shall have any right in any manner whatsoever to enforce any right hereunder, and that all proceedings at law or in equity shall be instituted, had and maintained by the Agent in the manner herein provided and for the benefit of the Guaranteed Creditors. (d) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE OF NEW YORK (without regard to principles of conflicts of laws) in which state it shall be performed by the Guarantor and may not be waived, amended, released or otherwise changed except by a writing signed by the Guaranteed Creditors. This Guaranty and every part thereof shall be effective upon delivery to the Agent, without further act, condition or acceptance by the Guaranteed Creditors, shall be binding upon the Guarantor and upon the legal representatives, successors and assigns of the Guarantor, and shall inure to the benefit of the Guaranteed Creditors, their successors, legal representatives and assigns. The Guarantor waives notice of the Guaranteed Creditors' acceptance hereof. This Guaranty may be executed in counterparts and by different parties hereto on separate counterparts each of which shall be an original, but all together to be one and the same instrument. (e) The Guarantor's obligation hereunder to make payments in Dollars (the "Obligation Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Guaranteed Creditors of the full amount of the Obligation Currency expressed to be payable to the Guaranteed Creditors under this Guaranty. If for the purpose of obtaining or enforcing judgment against the Guarantor in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "Judgment Currency") an amount due in the Obligation Currency, the conversion shall be made at the rate of exchange (as quoted by the Agent or if the Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by the Agent) determined, in each case, as of the day immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "Judgment Currency Conversion Date"). If there is a change -8- in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Guarantor covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate or exchange prevailing on the Judgment Currency Conversion Date. For purposes of determining any rate of exchange for this Section, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency. (f) The Guarantor hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Guaranty or the transactions contemplated hereby. The Guarantor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such court has been brought in an inconvenient forum. EACH OF THE GUARANTOR, THE AGENT AND THE GUARANTEED CREDITORS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. [SIGNATURE PAGES TO FOLLOW] -9- IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed and delivered as of the date first above written. "GUARANTOR" EAGLE-PICHER HOLDINGS, INC. By /s/ JOEL P. WYLER ________________________ Name Joel P. Wyler ___________________ Title President ___________________ -10- Accepted and agreed to in New York, New York as of the date first above written. ABN AMRO BANK N.V., as Agent as aforesaid for the Guarantee Creditors By /s/ GREGORY D. AMOROSO ___________________________ Its Group Vice President _______________________ By /s/ PAUL WIDUCH ___________________________ Its Group Vice President _______________________ Address: 1325 Avenue of the Americas New York, New York Attention: Agency Services Telephone: (212) 314-1705 Telecopy: (212) 314-1709 -11- EX-10.14 23 EXHIBIT 10.14 SUBSIDIARY GUARANTY AGREEMENT This Subsidiary Guaranty Agreement (the "Guaranty") dated as of February 24, 1998, by the parties who have executed this Guaranty (such parties, along with any other parties who execute and deliver to the Agent hereinafter identified and defined an agreement in the form attached hereto as Exhibit A, being herein referred to collectively as the "Guarantors" and individually as a "Guarantor"). WITNESSETH: WHEREAS, each of the Guarantors is a direct or indirect subsidiary of Eagle-Picher Industries, Inc., an Ohio corporation, as survivor and successor by merger with E-P Acquisition, Inc. (as further defined in the Credit Agreement defined below, the "Borrower"); and WHEREAS, E-P Acquisition, Inc. and ABN AMRO Bank N.V. ("ABN AMRO"), individually and as agent (ABN AMRO acting as such agent and any successor or successors to ABN AMRO in such capacity being hereinafter referred to as the "Agent") have entered into a Credit Agreement dated as of February 19, 1998 (such Credit Agreement as the same may from time to time hereafter be modified, amended or restated being hereinafter referred to as the "Credit Agreement") pursuant to which ABN AMRO and such other banks, financial institutions and letter of credit issuers from time to time parties thereto (ABN AMRO, in its individual capacity, and such other banks and financial institutions being hereinafter referred to collectively as the "Lenders" and individually as a "Lender" and such letter of credit issuers being hereinafter referred to collectively as the "Letter of Credit Issuers" and individually as a "Letter of Credit Issuer") have extended various credit facilities to the Borrower; and WHEREAS, the Borrower may from time to time enter into one or more Interest Rate Protection Agreements with one or more of the Lenders party to the Credit Agreement or affiliates thereof for the purpose of hedging or otherwise protecting the Borrower against changes in interest rates (the liability of the Borrower in respect of such agreements with such Lenders or affiliates being hereinafter referred to as the "Hedging Liability") (the Agent, the Lenders, the Letter of Credit Issuers and such affiliates party to Interest Rate Protection Agreements being hereinafter referred to collectively as the "Guaranteed Creditors" and individually as a "Guaranteed Creditor"); and WHEREAS, the Borrower provides each of the Guarantors with substantial financial, management, administrative, and technical support; and WHEREAS, as a condition to extending the credit facilities to the Borrower under the Credit Agreement, the Guaranteed Creditors have required, among other things, that the Guarantors execute and deliver this Guaranty; and WHEREAS, each Guarantor will directly and substantially benefit from credit and other financial accommodations extended and to be extended by the Guaranteed Creditors to the Borrower; and NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or credit accommodations given or to be given, to the Borrower by the Guaranteed Creditors from time to time, each Guarantor hereby makes the following representations and warranties to the Guaranteed Creditors and hereby covenants and agrees with the Guaranteed Creditors as follows: 1. All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. 2. Each Guarantor hereby jointly and severally guarantees to the Guaranteed Creditors, the due and punctual payment when due of (i) any and all indebtedness, obligations and liabilities of the Borrower and the Guarantors, and of any of them individually, to the Guaranteed Creditors, and to any of them individually, under or in connection with or evidenced by the Credit Agreement, the Notes of the Borrower heretofore or hereafter issued under the Credit Agreement and the obligations of the Borrower to reimburse the Guaranteed Creditors, or any of them individually, for the amount of all drawings on all Letters of Credit issued pursuant to the Credit Agreement, and all other obligations of the Borrower under any and all applications for Letters of Credit, and any and all liability of the Borrower and the Guarantors, and of any of them individually, arising under or in connection or otherwise evidenced by agreements with any one or more of the Guaranteed Creditors with respect to any Hedging Liability, in each case whether now existing or hereafter arising (and whether arising before or after the filing of a petition in bankruptcy and including all interest accrued after the petition date), due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired and (ii) any and all expenses and charges, legal or otherwise, suffered or incurred by the Guaranteed Creditors, and any of them, in collecting or enforcing any of such indebtedness, obligations and liabilities or in realizing on or protecting or preserving any security therefor. The indebtedness, obligations and liabilities described in the immediately preceding clauses (i) and (ii) are hereinafter referred to as the "indebtedness hereby guaranteed". In case of failure by the Borrower punctually to pay any indebtedness hereby guaranteed, each Guarantor hereby jointly and severally agrees to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, and as if such payment were made by the Borrower. All payments hereunder by any Guarantor shall be made in immediately available funds in Dollars without setoff, counterclaim or other defense or withholding or deduction of any nature. Notwithstanding anything in this Guaranty to the contrary, the right of recovery against a Guarantor under this Guaranty shall not exceed $1 less than the amount which would render such Guarantor's obligations under this Guaranty void or voidable under applicable law, including fraudulent conveyance law. 3. Each Guarantor further jointly and severally agrees to pay on demand all reasonable expenses, legal and/or otherwise (including court costs and reasonable attorneys' -2- fees), paid or incurred by any Guaranteed Creditor in endeavoring to collect the indebtedness hereby guaranteed, or any part thereof, or in enforcing or endeavoring to enforce any Guarantor's obligations hereunder, or any part thereof, or in protecting, defending or enforcing this Guaranty in any litigation, bankruptcy or insolvency proceedings or otherwise. 4. Each Guarantor agrees that, upon demand, such Guarantor will then pay to the Agent for the benefit of the Guaranteed Creditors the full amount of the indebtedness hereby guaranteed then due (subject to the right of recovery from such Guarantor pursuant to the last sentence of Section 2 above) whether or not any one or more of the other Guarantors shall then or thereafter pay any amount whatsoever in respect to their obligations hereunder. 5. Each of the Guarantors agrees that such Guarantor will not exercise or enforce any right of exoneration, contribution, reimbursement, recourse or subrogation available to such Guarantor against any person liable for payment of the indebtedness hereby guaranteed, or as to any security therefor, unless and until the full amount owing to the Guaranteed Creditors of the indebtedness hereby guaranteed has been fully paid and satisfied and each of the commitments by the Guaranteed Creditors to extend any indebtedness hereby guaranteed shall have expired or otherwise terminated. The payment by any Guarantor of any amount or amounts to the Guaranteed Creditors pursuant hereto shall not in any way entitle any such Guarantor, either at law, in equity or otherwise, to any right, title or interest (whether by way of subrogation or otherwise) in and to the indebtedness hereby guaranteed or any part thereof or any collateral security therefor or any other rights or remedies in any way relating thereto or in and to any amounts theretofor, then or thereafter paid or applicable to the payment thereof howsoever such payment may be made and from whatsoever source such payment may be derived unless and until all of the indebtedness hereby guaranteed and all costs and expenses suffered or incurred by the Guaranteed Creditors in enforcing this Guaranty have been paid and satisfied in full and each of the commitments by the Guaranteed Creditors to extend any indebtedness hereby guaranteed shall have expired or otherwise terminated and unless and until such payment in full and termination, any payments made by any Guarantor hereunder and any other payments from whatsoever source derived on account of or applicable to the indebtedness hereby guaranteed or any part thereof shall be held and taken to be merely payments in gross to the Guaranteed Creditors reducing pro tanto the indebtedness hereby guaranteed. 6. To the extent permitted by the Credit Agreement, each Guaranteed Creditor may, without any notice whatsoever to any of the Guarantors, sell, assign, or transfer all of the indebtedness hereby guaranteed, or any part thereof, and in that event each and every immediate and successive assignee or transferee of all or any part of the indebtedness hereby guaranteed, shall have the right through the Agent pursuant to Section 18 hereof to enforce this Guaranty, by suit or otherwise, for the benefit of such assignee or transferee, as fully as if such assignee or transferee were herein by name specifically given such rights, powers and benefits; but each Guaranteed Creditor through the Agent pursuant to Section 18 hereof shall have an unimpaired right to enforce this Guaranty for its own benefit, as to so much of the indebtedness hereby guaranteed that it has not sold, assigned or transferred. -3- 7. This Guaranty is a continuing, absolute and unconditional Guaranty, and shall remain in full force and effect until written notice of its discontinuance executed by the Borrower and all the Guarantors shall be actually received by the Guaranteed Creditors, and also until any and all of the indebtedness hereby guaranteed which was created or existing before receipt of such notice shall be fully paid and satisfied and each of the commitments by the Guaranteed Creditors to extend any indebtedness hereby guaranteed shall have expired or otherwise terminated. The dissolution of any Guarantor shall not terminate this Guaranty as to such Guarantor until notice of such dissolution shall have been actually received by the Guaranteed Creditors, nor until all of the indebtedness hereby guaranteed, created or existing or committed to be extended in each case before receipt of such notice shall be fully paid and satisfied. The Guaranteed Creditors may at any time or from time to time release any Guarantor from its obligations hereunder or effect any compromise with any Guarantor and no such release or compromise shall in any manner impair or otherwise affect the obligations hereunder of the other Guarantors. No release, compromise, or discharge of any one or more of the Guarantors shall release, compromise or discharge the obligations of the other Guarantors hereunder. 8. In case of the dissolution, liquidation or insolvency (howsoever evidenced) of, or the institution of bankruptcy or receivership proceedings against Holdings, the Borrower or any Guarantor, all of the indebtedness hereby guaranteed which is then existing shall immediately become due or accrued and payable from the Guarantors. All payments received from the Borrower or on account of the indebtedness hereby guaranteed from whatsoever source, shall be taken and applied as payment in gross, and this Guaranty shall apply to and secure any ultimate balance that shall remain owing to the Guaranteed Creditors. 9. The liability hereunder shall in no way be affected or impaired by (and the Guaranteed Creditors are hereby expressly authorized to make from time to time, without notice to any of the Guarantors), any sale, pledge, surrender, compromise, settlement, release, renewal, extension, impairment, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the indebtedness hereby guaranteed, either express or implied, or of any Credit Document or any other contract or contracts evidencing any thereof, or of any security or collateral therefor or any guaranty thereof. The liability hereunder shall in no way be affected or impaired by any acceptance by the Guaranteed Creditors of any security for or other guarantors upon any of the indebtedness hereby guaranteed, or by any failure, neglect or omission on the part of the Guaranteed Creditors to realize upon or protect any of the indebtedness hereby guaranteed, or any collateral or security therefor (including, without limitation, impairment of collateral and failure to perfect security interest in any collateral), or to exercise any lien upon or right of appropriation of any moneys, credits or property of Holdings, the Borrower or any Guarantor, possessed by any of the Guaranteed Creditors, toward the liquidation of the indebtedness hereby guaranteed, or by any application of payments or credits thereon. The Guaranteed Creditors shall have the exclusive right to determine how, when and what application of payments and credits, if any, shall be made on said indebtedness hereby guaranteed, or any part of same. In order to hold any Guarantor liable hereunder, there shall be no obligation on the part of the Guaranteed Creditors, at any time, to resort for -4- payment to the Borrower or to any other Guarantor, or to any other person, its property or estate, or resort to any collateral, security, property, liens or other rights or remedies whatsoever, and the Guaranteed Creditors shall have the right to enforce this Guaranty against any Guarantor irrespective of whether or not other proceedings or steps are pending seeking resort to or realization upon or from any of the foregoing are pending. 10. In the event the Guaranteed Creditors shall at any time in their discretion permit a substitution of Guarantors hereunder or a party shall wish to become Guarantor hereunder, such substituted or additional Guarantor shall, upon executing an agreement in the form attached hereto as Exhibit A, become a party hereto and be bound by all the terms and conditions hereof to the same extent as though such Guarantor had originally executed this Guaranty and in the case of a substitution, in lieu of the Guarantor being replaced. No such substitution shall be effective absent the written consent of the Guaranteed Creditors delivered in accordance with the terms of the Credit Agreement, nor shall it in any manner affect the obligations of the other Guarantors hereunder. 11. All diligence in collection or protection, and all presentment, demand, protest and/or notice, as to any and everyone, whether or not the Borrower or the Guarantors or others, of dishonor and of default and of non-payment and of the creation and existence of any and all of said indebtedness hereby guaranteed, and of any security and collateral therefor, and of the acceptance of this Guaranty, and of any and all extensions of credit and indulgence hereunder, are expressly waived. 12. No act of commission or omission of any kind, or at any time, upon the part of the Guaranteed Creditors in respect to any matter whatsoever, shall in any way affect or impair this Guaranty. 13. The Guarantors waive any and all defenses, claims and discharges of the Borrower, or any other obligor or guarantor, pertaining to the indebtedness hereby guaranteed, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, the Guarantors will not assert, plead or enforce against the Guaranteed Creditors any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statue of frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to the Borrower or any other person liable in respect of any of the indebtedness hereby guaranteed, or any set-off available against the Guaranteed Creditors to the Borrower or any such other person, whether or not on account of a related transaction. The Guarantors agree that the Guarantors shall be and remain jointly and severally liable for any deficiency remaining after foreclosure or other realization on any lien or security interest securing the indebtedness hereby guaranteed, whether or not the liability of the Borrower or any other obligor for such deficiency is discharged pursuant to statute or judicial decision. 14. If any payment applied by the Guaranteed Creditors to the indebtedness hereby guaranteed is thereafter set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of the Borrower or any other obligor), the indebtedness hereby guaranteed to which such payment -5- was applied shall for the purposes of this Guaranty be deemed to have continued in existence, notwithstanding such application, and this Guaranty shall be enforceable as to such of the indebtedness hereby guaranteed as fully as if such application had never been made. 15. The liability of the Guarantors under this Guaranty is in addition to and shall be cumulative with all other liabilities of the Guarantors after the date hereof to the Guaranteed Creditors as a Guarantor of the indebtedness hereby guaranteed, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary. 16. Any invalidity or unenforceability of any provision or application of this Guaranty shall not affect other lawful provisions and applications hereof, and to this end the provisions of this Guaranty are declared to be severable. Without limiting the generality of the foregoing, any invalidity or unenforceability against any Guarantor of any provision or application of the Guaranty shall not affect the validity or enforceability of the provisions or application of this Guaranty as against the other Guarantors. 17. Any demand for payment on this Guaranty or any other notice required or desired to be given hereunder to any Guarantor shall be in writing (including, without limitation, notice by telecopy) and shall be given to the relevant party in accordance with Section 12.03 of the Credit Agreement, or such other address or telecopier number as such party may hereafter specify by notice to the Agent given by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and a confirmation of such telecopy has been received by the sender, (ii) if given by mail, five (5) days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the addresses specified in this Section. 18. No Guaranteed Creditor (other than the Agent) shall have the right to institute any suit, action or proceeding in equity or at law in connection with this Guaranty for the enforcement of any remedy under or upon this Guaranty; it being understood and intended that no one or more of the Guaranteed Creditors (other than the Agent) shall have any right in any manner whatsoever to enforce any right hereunder, and that all proceedings at law or in equity shall be instituted, had and maintained by the Agent in the manner herein provided and for the benefit of the Guaranteed Creditors. 19. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE OF NEW YORK (without regard to principles of conflicts of laws) in which state it shall be performed by the Guarantors and may not be waived, amended, released or otherwise changed except by a writing signed by the Guaranteed Creditors. This Guaranty and every part thereof shall be effective upon delivery to the Agent, without further act, condition or acceptance by the Guaranteed Creditors, shall be binding upon the Guarantors and upon the legal representatives, successors and assigns of the Guarantors, and -6- shall inure to the benefit of the Guaranteed Creditors, their successors, legal representatives and assigns. The Guarantors waive notice of the Guaranteed Creditors' acceptance hereof. This Guaranty may be executed in counterparts and by different parties hereto on separate counterparts each of which shall be an original, but all together to be one and the same instrument. 20. The Guarantors' obligation hereunder to make payments in Dollars (the "Obligation Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Guaranteed Creditors of the full amount of the Obligation Currency expressed to be payable to the Guaranteed Creditors under this Guaranty. If for the purpose of obtaining or enforcing judgment against any Guarantor in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "Judgment Currency") an amount due in the Obligation Currency, the conversion shall be made at the rate of exchange (as quoted by the Agent or if the Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by the Agent) determined, in each case, as of the day immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "Judgment Currency Conversion Date"). If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Guarantors covenant and agree to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate or exchange prevailing on the Judgment Currency Conversion Date. For purposes of determining any rate of exchange for this Section 20, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency. 21. Each Guarantor hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Guaranty or the transactions contemplated hereby. Each Guarantor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such court has been brought in an inconvenient forum. EACH OF THE GUARANTORS, THE AGENT AND THE GUARANTEED CREDITORS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. [SIGNATURE PAGES TO FOLLOW] -7- IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be executed and delivered as of the date first above written. "GUARANTORS" DAISY PARTS, INC. By /s/ ANDRIES RUIJSSENAARS -------------------------------------------- Name Andries Ruijssenaars --------------------------------------- Title Authorized Person -------------------------------------- EAGLE-PICHER TECHNOLOGIES, LLC By /s/ ANDRIES RUIJSSENAARS -------------------------------------------- Name Andries Ruijssenaars --------------------------------------- Title Director-Manager -------------------------------------- -8- EAGLE-PICHER DEVELOPMENT COMPANY, INC. By /s/ ANDRIES RUIJSSENAARS -------------------------------------------- Name Andries Ruijssenaars ---------------------------------------- Title President ---------------------------------------- EAGLE-PICHER FAR EAST, INC. By /s/ ANDRIES RUIJSSENAARS -------------------------------------------- Name Andries Ruijssenaars ---------------------------------------- Title Authorized Person --------------------------------------- EAGLE-PICHER FLUID SYSTEMS, INC. By /s/ ANDRIES RUIJSSENAARS -------------------------------------------- Name Andries Ruijssenaars --------------------------------------- Title Authorized Person -------------------------------------- -9- EAGLE-PICHER MINERALS, INC. By /s/ ANDRIES RUIJSSENAARS ----------------------------------------------- Name Andries Ruijssenaars --------------------------------------------- Title Authorized Person -------------------------------------------- HILLSDALE TOOL & MANUFACTURING CO. By /s/ ANDRIES RUIJSSENAARS ----------------------------------------------- Name Andries Ruijssenaars ----------------------------------------- Title Authorized Person ----------------------------------------- MICHIGAN AUTOMOTIVE RESEARCH CORPORATION By /s/ ANDRIES RUIJSSENAARS ----------------------------------------------- Name Andries Ruijssenaars --------------------------------------------- Title Authorized Person -------------------------------------------- -10- Accepted and agreed to in New York, New York as of the date first above written. ABN AMRO BANK N.V., as Agent as aforesaid for the Guaranteed Creditors By /s/ GREGORY D. AMOROSO ------------------------------------------- Its Group Vice President --------------------------------------- By /s/ PAUL WIDUCH ------------------------------------------- Its Group Vice President --------------------------------------- Address: 1325 Avenue of the Americas New York, New York Attention: Agency Services Telephone: (212) 314-1705 Telecopy: (212) 314-1709 -11- EXHIBIT A TO SUBSIDIARY GUARANTY AGREEMENT ASSUMPTION AND SUPPLEMENT TO SUBSIDIARY GUARANTY AGREEMENT This Assumption and Supplement to Subsidiary Guaranty Agreement (the "Agreement") is dated as of this _____ day of ____________, _____, made by [NEW GUARANTOR], a ___________ corporation (the "New Guarantor"); WITNESSETH THAT: WHEREAS, certain parties have executed and delivered to the Guaranteed Creditors that certain Subsidiary Guaranty Agreement dated as of February 24, 1998 (such Subsidiary Guaranty Agreement, as the same may from time to time be modified or amended, including supplements thereto which add or substitute parties as Guarantors thereunder, being hereinafter referred to as the "Guaranty") pursuant to which such parties (the "Existing Guarantors") have guaranteed to the Guaranteed Creditors the full and prompt payment of, among other things, any and all indebtedness, obligations and liabilities of the Borrower (as defined in the Guaranty) arising under or relating to the Credit Agreement and the Credit Documents as defined therein and certain Interest Rate Protection Agreements; and WHEREAS, the Borrower provides the New Guarantor with substantial financial, managerial, administrative and technical support and the New Guarantor will directly and substantially benefit from credit and other financial accommodations extended and to be extended by the Guaranteed Creditors to the Borrower; NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or credit accommodations given or to be given, to the Borrower by the Guaranteed Creditors from time to time, the New Guarantor hereby agrees as follows: 1. The New Guarantor acknowledges and agrees that it shall become a "Guarantor" party to the Guaranty effective upon the date of the New Guarantor's execution of this Agreement and the delivery of this Agreement to the Agent on behalf of the Guaranteed Creditors, and that upon such execution and delivery, all references in the Guaranty to the terms "Guarantor" or "Guarantors" shall be deemed to include the New Guarantor. 2. The New Guarantor hereby assumes and becomes liable (jointly and severally with all the other Guarantors) for the indebtedness hereby guaranteed (as defined in the Guaranty) and agrees to pay and otherwise perform all of the obligations of a Guarantor under the Guaranty according to, and otherwise on and subject to, the terms and conditions of the Guaranty to the same extent and with the same force and effect as if the New Guarantor had originally been one of the Existing Guarantors under the Guaranty and had originally executed the same as such an Existing Guarantor. 3. All capitalized terms used in this Agreement without definition shall have the same meaning herein as such terms have in the Guaranty, except that any reference to the term "Guarantor" or "Guarantors" and any provision of the Guaranty providing meaning to such term shall be deemed a reference to the Existing Guarantors and the New Guarantor. Except as specifically modified hereby, all of the terms and conditions of the Guaranty shall stand and remain unchanged and in full force and effect. 4. The New Guarantor agrees to execute and deliver such further instruments and documents and do such further acts and things as the Agent or the Guaranteed Creditors may deem necessary or proper to carry out more effectively the purposes of this Agreement. 5. No reference to this Agreement need be made in the Guaranty or in any other document or instrument making reference to the Guaranty, any reference to the Guaranty in any of such to be deemed a reference to the Guaranty as modified hereby. 6. This Agreement shall be governed by and construed in accordance with the State of New York (without regard to principles of conflicts of law) in which state it shall be performed by the New Guarantor. [NEW GUARANTOR] By ---------------------------------- Its --------------------------------- Acknowledged and agreed to in New York, New York as of the date first above written. ABN AMRO BANK N.V., as Agent as aforesaid for the Guaranteed Creditors By ------------------------------------ Its -------------------------------- By ------------------------------------ Its -------------------------------- -2- EX-10.15 24 EXHIBIT 10.15 TRADEMARK COLLATERAL AGREEMENT This 24th day of February, 1998, Eagle-Picher Industries, Inc., an Ohio corporation ("Assignor") with its principal place of business and mailing address at 250 East Fifth Street, Cincinnati, Ohio 45202, in consideration of ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, assigns, mortgages and pledges to ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, acting as agent for the Secured Creditors under that certain Security Agreement referred to below, with its mailing address at 1325 Avenue of the Americas, New York, New York 10019, and its successors and assigns ("Assignee"), and grants to Assignee a continuing security interest in, the following property: (i) Each trademark, trademark registration and trademark application listed on Schedule A-1 hereto, and all of the goodwill of the business connected with the use of, and symbolized by, each such trademark, trademark registration and trademark application; and (ii) Each trademark license listed on Schedule A-2 hereto and all royalties and other sums due or to become due under or in respect of each such trademark license, together with the right to sue for and collect all such royalties and other sums; and (iii) All proceeds of the foregoing, including without limitation any claim by Assignor against third parties for damages by reason of past, present or future infringement of any trademark or trademark registration listed on Schedule A-1 hereto or of any trademark licensed under a trademark license listed on Schedule A-2 or by reason of injury to the goodwill associated with any such trademark, trademark registration or trademark license, in each case together with the right to sue for and collect said damages; in each case, to secure performance of all Obligations of Assignor as set out in that certain Security Agreement bearing even date herewith by and between Assignor and Assignee (the "Agreement"). Assignor does hereby further acknowledge and affirm that the rights and remedies of Assignee with respect to the assignment, mortgage, pledge and security interest in the trademarks, trademark registrations, trademark applications and trademark licenses made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall have their respective meanings set forth therein, unless the context requires otherwise. IN WITNESS WHEREOF, Assignor has caused this Agreement to be duly executed as of the date and year last above written. EAGLE-PICHER INDUSTRIES, INC. (CORPORATE SEAL) By /s/ Andries Ruijssenaars ------------------------- Its President --------------------- ATTEST: Andries Ruijssenaars ------------------------- (Type or Print Name) /s/ James A. Ralston - ------------------------------- Its Secretary ABN AMRO BANK N.V., as agent James A. Ralston - ------------------------------- (Type or Print Name) By /s/ Gregory D. Amoroso / /s/ Paul Widuch --------------------------------------- Its Group Vice President GVP ----------------------------------- (Type or Print Name) Gregory D. Amoroso Paul Widuch --------------------------------------- (Type or Print Name) -2- STATE OF NEW YORK ) ) SS COUNTY OF NEW YORK) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Gregory D. Amoroso, Group Vice President of ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Group Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24 day of February, 1998. /s/ Catherine Jones ---------------------------- (NOTARIAL SEAL) Notary Public Catherine Jones ---------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- STATE OF NEW YORK ) ) SS COUNTY OF NEW YORK) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Paul Widuch, Group Vice President of ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Group Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24 day of February, 1998. /s/ Catherine Jones ---------------------------- (NOTARIAL SEAL) Notary Public Catherine Jones ---------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- STATE OF NEW YORK ) ) SS COUNTY OF NEW YORK) I, Catherine Jones a Notary Public in and for said County, in the State aforesaid, do hereby certify that Andries Ruijssenaars, President of Eagle-Picher Industries, Inc., an Ohio corporation, and James A. Ralston, _____________________ Secretary of said corporation, who are personally known to me to be the same persons whose names are subscribed to the foregoing instrument as such President and ________________ Secretary, respectively, appeared before me this day in person and acknowledged that they signed and delivered the said instrument as their own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth; and the said ___________________ Secretary then and there acknowledged that he, as custodian of the corporate seal of said corporation, did affix the corporate seal of said corporation to said instrument as his own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24th day of February, 1998. /s/ Catherine Jones ---------------------------- (NOTARIAL SEAL) Notary Public Catherine Jones ---------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- SCHEDULE A-1 TO TRADEMARK COLLATERAL AGREEMENT REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS FEDERAL TRADEMARK REGISTRATIONS
- ------------------------------------------------------------------------------ MARKS REG. NO. GRANTED - ----------------------------------------- ------------------------------------ SUPERSUBLIMED 198,268 5/12/25 - ------------------------------------------------------------------------------ ORCOTITE 395,057 5/12/42 - ------------------------------------------------------------------------------ VULKOL 397,529 9/8/42 - ------------------------------------------------------------------------------ LO-TORK 539,936 5/27/51 - ------------------------------------------------------------------------------ ORTEX 793,038 7/20/65 - ------------------------------------------------------------------------------ DIALOAM 794,297 8/17/65 - ------------------------------------------------------------------------------ ALUM-N 800,364 12/14/65 - ------------------------------------------------------------------------------ NEO-CORK 806,370 3/29/66 - ------------------------------------------------------------------------------ PRE-CO-FLOC 816,429 10/11/66 - ------------------------------------------------------------------------------ STEEL-N 819,099 11/22/66 - ------------------------------------------------------------------------------ EPISTATIC 896,288 8/11/70 - ------------------------------------------------------------------------------ LO-TORK 922,818 10/26/71 - ------------------------------------------------------------------------------ ROSS ALUMINUM FOUNDRIES AND DESIGN 952,424 1/30/73 - ------------------------------------------------------------------------------ CAREFREE 953,058 2/13/73 - ------------------------------------------------------------------------------ POWER TUBE 1,106,578 11/21/78 - ------------------------------------------------------------------------------ CAREFREE MAGNUM 1,124,671 9/4/79 - ------------------------------------------------------------------------------ MAGNUM 1,157,119 6/9/81 - ------------------------------------------------------------------------------ KEEPER AND DESIGN 1,179,937 12/1/81 - ------------------------------------------------------------------------------ DIALOSE 1,214,549 11/2/82 - ------------------------------------------------------------------------------ ORCOMATIC 1,221,728 12/28/82 - ------------------------------------------------------------------------------ ABSORB-O-SOX 1,471,838 1/12/88 - ------------------------------------------------------------------------------ SOLID-A-SORB 1,473,737 1/26/88 - ------------------------------------------------------------------------------ LAMISEAL 1,559,815 10/10/89 - ------------------------------------------------------------------------------ FOAMET 1,560,900 10/17/89 - ------------------------------------------------------------------------------ CASTEC 1,692,436 6/9/92 - ------------------------------------------------------------------------------ AXIS 1,830,754 4/12/94 - ------------------------------------------------------------------------------ ALL GONE! 1,886,900 4/4/95 - ------------------------------------------------------------------------------ QUALISORB 1,927,733 10/17/95 - ------------------------------------------------------------------------------ CELATOM 1,927,873 10/17/95 - ------------------------------------------------------------------------------ DIASORB 1,967,143 4/9/96 - ------------------------------------------------------------------------------ PLAY BALL! 2,005,259 10/1/96 - ------------------------------------------------------------------------------ HE AND DESIGN 2,059,020 5/6/97 - ------------------------------------------------------------------------------
PENDING FEDERAL TRADEMARK APPLICATIONS MARK SERIAL NO. FILED -- NONE KNOWN -- COMMON LAW MARKS AND TRADE NAMES CINCINNATI INDUSTRIAL MACHINERY EAGLE-PICHER CONSTRUCTION EQUIPMENT EAGLE-PICHER AUTOMOTIVE EAGLE-PICHER FLUID SYSTEMS EAGLE-PICHER INDUSTRIES DAISY PARTS HILLSDALE TOOL HILLSDALE TOOL & MANUFACTURING MARCO MICHIGAN AUTOMOTIVE RESEARCH CORPORATION EAGLE-PICHER MINERALS EAGLE-PICHER MINERALS INTERNATIONAL EAGLE-PICHER MINERALS OF CANADA UNITED MINERALS ROSS ALUMINUM ROSS ALUMINUM FOUNDRIES EAGLE-PICHER RUBBER MOLDING RUBBER MOLDING CHEMSYN SCIENCE LABORATORIES TECHNOLOGIES TRIM WOLVERINE GASKET WOLVERINE GASKET & MANUFACTURING EAGLE-PICHER ESPANA EAGLE-PICHER FAR EAST EAGLE-PICHER INDUSTRIES EUROPE EAGLE-PICHER INDUSTRIES MATERIALS EPTEC EQUIPOS DE ACUNA -2- REGISTERED STATE TRADEMARKS AND TRADEMARK APPLICATIONS -- NONE KNOWN -- REGISTERED FOREIGN TRADEMARKS AND TRADEMARK APPLICATIONS
MARK COUNTRY REG. NO. GRANTED - ------------------------------------------------------------------------------------------------------ CELATOM PERU 026,789 6/27/96 - ------------------------------------------------------------------------------------------------------ CELATOM BENELUX 056,508 11/8/71 - ------------------------------------------------------------------------------------------------------ CELATOM ITALY 278,780 1/13/72 - ------------------------------------------------------------------------------------------------------ CELATOM AUSTRALIA 289,728 8/15/75 - ------------------------------------------------------------------------------------------------------ CELATOM CHINA 328,058 4/20/89 - ------------------------------------------------------------------------------------------------------ CELATOM GERMANY 982,888 1/11/72 - ------------------------------------------------------------------------------------------------------ CELATOM ARGENTINA 1,432,116 12/17/70 - ------------------------------------------------------------------------------------------------------ CELATOM FRANCE 1,469,544 9/4/88 - ------------------------------------------------------------------------------------------------------ CELATOM JAPAN 2,283,178 11/30/90 - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER BENELUX 056,507 8/11/71 - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER FRANCE 1,065,778 9/4/78 - ------------------------------------------------------------------------------------------------------ ORCO CANADA 20,592 3/31/43 - ------------------------------------------------------------------------------------------------------ ORCOMATIC and GERMANY 1,030,779 3/12/82 DESIGN - ------------------------------------------------------------------------------------------------------ CAREFREE DENMARK 2382-1976 7/9/76 - ------------------------------------------------------------------------------------------------------ CAREFREE NORWAY 96,925 7/15/76 - ------------------------------------------------------------------------------------------------------
-3- - ------------------------------------------------------------------------------------------------------ CAREFREE VENEZUELA 144,830 6/3/91 - ------------------------------------------------------------------------------------------------------ CAREFREE SWEDEN 155,376 12/17/75 - ------------------------------------------------------------------------------------------------------ CAREFREE PORTUGAL 196,511 7/5/85 - ------------------------------------------------------------------------------------------------------ CAREFREE ITALY 325,560 3/9/81 - ------------------------------------------------------------------------------------------------------ CAREFREE BENELUX 336,648 2/20/76 - ------------------------------------------------------------------------------------------------------ CAREFREE SPAIN 863,400 11/25/77 - ------------------------------------------------------------------------------------------------------ FRANCE CAREFREE F/K/A 941,602 1,332,790 11/28/85 - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER CAREFREE AUSTRIA 87,561 2/22/78 - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER CAREFREE CANADA 229,828 8/18/78 - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER CAREFREE AUSTRALIA 352,662 N/A - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER CAREFREE GERMANY 954,333 3/29/76 - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER GREAT BRITAIN & N. 1,065,502 7/9/76 CAREFREE IRELAND - ------------------------------------------------------------------------------------------------------ EAGLE-PICHER CAREFREE and SWITZERLAND 282,771 3/30/76 DESIGN - ------------------------------------------------------------------------------------------------------
-4- SCHEDULE A-2 TO TRADEMARK COLLATERAL AGREEMENT TRADEMARK LICENSES 1. Use Restriction Agreement of 2/7/95 with SCRAS of Paris, France, limiting the appearance of the DIASORB mark of Eagle-Picher to avoid prior use by SCRAS of white letters in certain fonts on a particular red background for anti-diarrheal agents, and prohibiting certain uses by Eagle-Picher. EX-10.16 25 EXHIBIT 10.16 PATENT COLLATERAL AGREEMENT This 24th day of February, 1998, Eagle-Picher Industries, Inc., an Ohio corporation ("Assignor") with its principal place of business and mailing address at 250 East Fifth Street, Cincinnati, Ohio 45202, in consideration of ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, assigns, mortgages and pledges to ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, acting as agent for the Secured Creditors under that certain Security Agreement referred to below, with its mailing address at 1325 Avenue of the Americas, New York, New York 10019, and its successors and assigns ("Assignee"), and grants to Assignee a continuing security interest in, the following property: (i) Each patent and patent application listed on Schedule A-1 hereto and all of the inventions described and claimed therein and any and all reissues, continuations, continuations-in-part or extensions thereof; and (ii) Each patent license listed on Schedule A-2 hereto and all royalties and other sums due or to become due under or in respect of each such patent license, together with the right to sue for and collect all such royalties and other sums; and (iii) All proceeds of the foregoing, including without limitation any claim by Assignor against third parties for damages by reason of past, present or future infringement of any patent listed on Schedule A-1 hereto or of any patent licensed under a patent license listed on Schedule A-2 hereto, in each case together with the right to sue for and collect said damages; in each case, to secure performance of all Obligations of Assignor as set out in that certain Security Agreement bearing even date herewith by and between Assignor and Assignee (the "Agreement"). Assignor does hereby further acknowledge and affirm that the rights and remedies of Assignee with respect to the assignment, mortgage, pledge and security interest in the patents, patent applications and patent licenses made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall have their respective meanings set forth therein, unless the context requires otherwise. IN WITNESS WHEREOF, Assignor has caused this Agreement to be duly executed as of the date and year last above written. EAGLE-PICHER INDUSTRIES, INC. (CORPORATE SEAL) By /s/ ANDRIES RUIJSSENAARS ____________________________ Its President ________________________ ATTEST: Andries Ruijssenaars ---------------------------- (Type or Print Name) /s/ JAMES A. RALSTON - ------------------------------- Its Secretary ABN AMRO BANK N.V., as agent /s/ JAMES A. RALSTON - ------------------------------- By /s/ GEORGE D. AMOROSO /s/ PAUL WIDUCH (Type or Print Name) _______________________________________ Its Group Vice President GVP ----------------------------------- GEORGE D. AMOROSO PAUL WIDUCH _______________________________________ (Type or Print Name)
-2- STATE OF New York ) _______________ ) ) SS COUNTY OF New York ) ______________ ) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Andries Ruijssenaars, President of Eagle-Picher Industries, Inc., an Ohio corporation, and James A. Ralston, Secretary of said corporation, who are personally known to me to be the same persons whose names are subscribed to the foregoing instrument as such President and _______________ Secretary, respectively, appeared before me this day in person and acknowledged that they signed and delivered the said instrument as their own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth; and the said ________________ Secretary then and there acknowledged that he, as custodian of the corporate seal of said corporation, did affix the corporate seal of said corporation to said instrument as his own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24th day of February, 1998. /s/ CATHERINE JONES ---------------------------------- (NOTARIAL SEAL) Notary Public CATHERINE JONES ---------------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- -3- STATE OF New York ) _______________ ) ) SS COUNTY OF New York ) ______________ ) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Gregory D. Amoroso, Group Vice President of ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Group Vice President appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24th day of February, 1998. /s/ CATHERINE JONES ---------------------------------- (NOTARIAL SEAL) Notary Public CATHERINE JONES ---------------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- STATE OF New York ) _______________ ) ) SS COUNTY OF New York ) ______________ ) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Paul Widuch, Group Vice President of ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Group Vice President appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24th day of February, 1998. /s/ CATHERINE JONES ---------------------------------- (NOTARIAL SEAL) Notary Public CATHERINE JONES ---------------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- SCHEDULE A-1 TO PATENT COLLATERAL AGREEMENT U.S. PATENT NUMBERS AND PENDING U.S. PATENT APPLICATION NUMBERS
- ---------------------------------------------------------------------------------------------------------------- U.S. PATENT EXPIRATION NUMBER TITLE OF PATENT INVENTOR(S) DATE ISSUED DATE - ---------------------------------------------------------------------------------------------------------------- 4,249,930 Ionic Compounds Formed From Iron and Urea Atkisson 2/10/81 3/8/99 - ---------------------------------------------------------------------------------------------------------------------- 4,292,357 Zinc/Zinc Oxide Laminated Anode Assembly Erisman et al. 9/29/81 7/25/99 - ---------------------------------------------------------------------------------------------------------------------- 4,422,667 Suspension For A Tractor-Scraper Perry 12/27/83 12/30/2001 - ---------------------------------------------------------------------------------------------------------------------- 4,425,412 Lead/Acid Battery Having Horizontal Plates Dittmann et al. 1/10/84 5/26/2002 - ---------------------------------------------------------------------------------------------------------------------- 4,477,540 Metal-Gas Cell With Electrolyte Reservoir Miller et al. 10/16/84 10/3/2003 - ---------------------------------------------------------------------------------------------------------------------- 4,477,546 Lattice For A Battery Electrode Substrate Wheeler et al. 10/16/84 2/3/2003 - ---------------------------------------------------------------------------------------------------------------------- 4,537,759 Production Of Elemental Silicon From Impure Walker et al. 8/27/85 6/27/2003 Silane Feed - ---------------------------------------------------------------------------------------------------------------------- 4,554,056 Impregnation Of Nickel Electrodes Using Whitford 11/19/85 4/18/2005 Electric PH Control Circuits - ---------------------------------------------------------------------------------------------------------------------- 4,626,335 Lithium Alloy Anode For Thermal Cells Cupp et al. 12/2/86 9/26/2005 - ---------------------------------------------------------------------------------------------------------------------- 4,663,819 Method of Mounting A Metal Yoke To A Traylor 5/12/87 11/4/2005 Composite Tube - ---------------------------------------------------------------------------------------------------------------------- 4,699,965 Heat Curable Solventless Liquid Prepolymer Markle et al. 10/13/87 6/28/2005 And Novel Monomer Derived Hexylcarbitol For Use Therewith - ---------------------------------------------------------------------------------------------------------------------- 4,772,296 Method of Purifying And Depositing Group Potts 9/20/88 5/12/2007 IIIA and Group VA Compounds To Produce Epitaxial Films - ---------------------------------------------------------------------------------------------------------------------- 4,812,521 Elastomer Modified Epoxies Markle 3/14/89 9/21/2007 - ---------------------------------------------------------------------------------------------------------------------- 4,894,299 Cell Having A Dome-Shaped Solid Ceramic Morse 1/16/90 12/2/2008 Electrolyte - ---------------------------------------------------------------------------------------------------------------------- 4,939,271 Mercapto-Modified N-(R-Oxymethyl) Markle 7/3/90 1/5/2009 Acrylamide-Rubber/Formable Monomer/(Meth) Acrylonitrile Terpolymers - ----------------------------------------------------------------------------------------------------------------------
-5- 4,952,195 Graphite Drive Shaft Assembly Traylor 8/28/90 9/28/2007 - ---------------------------------------------------------------------------------------------------------------------- 4,979,632 Portable Vessel For The Safe Storage of Lee 12/25/90 5/9/2010 Explosives - ---------------------------------------------------------------------------------------------------------------------- 4,986,721 Extendable Boom Fork Life Vehicle Lowder et al. 1/22/91 9/17/2009 - ---------------------------------------------------------------------------------------------------------------------- 5,189,819 Trenching Apparatus Holloway et al. 3/2/93 5/8/2011 - ---------------------------------------------------------------------------------------------------------------------- 5,228,222 Digging And Propulsion Unit For A Trenching Holloway et al. 7/20/93 9/17/2012 Apparatus - ---------------------------------------------------------------------------------------------------------------------- 5,247,743 Method And Apparatus For Digging Trenches Holloway et al. 9/28/93 7/2/2012 - ---------------------------------------------------------------------------------------------------------------------- 5,249,379 Mounting Structure For The Linear Actuators Baker et al. 10/5/93 9/15/2012 Of A Trenching Apparatus - ---------------------------------------------------------------------------------------------------------------------- 5,257,463 Method And Apparatus For Cooling Or Heating Wheeler et al. 11/2/93 5/5/2012 Battery Cells During Electrical Testing - ---------------------------------------------------------------------------------------------------------------------- 5,416,962 Method of Manufacture of Vibration Damper Passarella 5/23/95 12/8/2013 - ---------------------------------------------------------------------------------------------------------------------- 5,464,701 Leakproof, Valve Regulated, Rey 11/7/95 2/27/2015 Maintenance-Free Lead Acid Battery - ---------------------------------------------------------------------------------------------------------------------- 5,518,833 Nonwoven Electrode Construction Repplinger et al. 5/21/96 5/24/2014 - ---------------------------------------------------------------------------------------------------------------------- 5,564,448 Container Washing Apparatus And System Lincoln 10/15/96 12/14/2014 - ---------------------------------------------------------------------------------------------------------------------- Des. 367,255 Battery Rey 2/20/96 2/20/2010 - ----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- SCHEDULE A-2 - -------------------------------------------------------------------------------- TO PATENT COLLATERAL AGREEMENT PATENT LICENSES -- NONE KNOWN -- EX-10.17 26 EXHIBIT 10.17 COPYRIGHT COLLATERAL AGREEMENT This 24th day of February, 1998, Eagle-Picher Industries, Inc., an Ohio corporation ("Assignor") with its principal place of business and mailing address at 250 East Fifth Street, Cincinnati, Ohio 45202, in consideration of ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, assigns, mortgages and pledges to ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, acting as agent for the Secured Creditors under that certain Security Agreement referred to below, with its mailing address at 1325 Avenue of the Americas, New York, New York 10019, and its successors and assigns ("Assignee"), and grants to Assignee a continuing security interest in, the following property: (i) Each copyright and copyright application listed on Schedule A-1 hereto and all works of authorship and other intellectual property rights therein; and (ii) Each copyright license listed on Schedule A-2 hereto and all royalties and other sums due or to become due under or in respect of each such copyright license, together with the right to sue for and collect all such royalties and other sums; and (iii) All proceeds of the foregoing, including without limitation any claim by Assignor against third parties for damages by reason of past, present or future infringement of any copyright listed on Schedule A-1 hereto or of any copyright licensed under a copyright license listed on Schedule A-2 hereto, in each case together with the right to sue for and collect said damages; in each case, to secure performance of all Obligations of Assignor as set out in that certain Security Agreement bearing even date herewith by and between Assignor and Assignee (the "Agreement"). Assignor does hereby further acknowledge and affirm that the rights and remedies of Assignee with respect to the assignment, mortgage, pledge and security interest in the copyrights, copyright applications and copyright licenses made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall have their respective meanings set forth therein, unless the context requires otherwise. IN WITNESS WHEREOF, Assignor has caused this Agreement to be duly executed as of the date and year last above written. EAGLE-PICHER INDUSTRIES, INC. (CORPORATE SEAL) By /s/ ANDRIES RUIJSSENAARS __________________________ Its President ______________________ ATTEST: ANDRIES RUIJSSENAARS --------------------------- (Type or Print Name) /s/ JAMES A. RALSTON - ------------------------------- Its Secretary ABN AMRO BANK N.V., as agent /s/ JAMES A. RALSTON - ------------------------------- (Type or Print Name) By /s/ GREGORY D. AMOROSO / /s/ PAUL WIDUCH ___________________________________ Its Group Vice President GVP ------------------------------- GREGORY D. AMOROSO PAUL WIDUCH ----------------------------------- (Type or Print Name) -2- STATE OF New York ) _______________ ) ) SS COUNTY OF New York ) ________________ ) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Andries Ruijssenaars, President of Eagle-Picher Industries, Inc., an Ohio corporation, and James A. Ralston, Secretary of said corporation, who are personally known to me to be the same persons whose names are subscribed to the foregoing instrument as such President and _______________ Secretary, respectively, appeared before me this day in person and acknowledged that they signed and delivered the said instrument as their own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth; and the said ________________ Secretary then and there acknowledged that he, as custodian of the corporate seal of said corporation, did affix the corporate seal of said corporation to said instrument as his own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24th day of February, 1998. /s/ Catherine Jones ------------------------------- (NOTARIAL SEAL) Notary Public Catherine Jones ------------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- STATE OF New York ) _______________ ) ) SS COUNTY OF New York ) ________________ ) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Gregory D. Amoroso, Group Vice President of ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Group Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24th day of February, 1998. /s/ Catherine Jones ------------------------------- (NOTARIAL SEAL) Notary Public Catherine Jones ------------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- STATE OF New York ) _______________ ) ) SS COUNTY OF New York ) ________________ ) I, Catherine Jones, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Paul Widuch, Group Vice President of ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Group Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this 24th day of February, 1998. /s/ Catherine Jones ------------------------------- (NOTARIAL SEAL) Notary Public Catherine Jones ------------------------------- My Commission Expires: (Type or Print Name) 11/17/99 - --------------------------------- SCHEDULE A-1 TO COPYRIGHT COLLATERAL AGREEMENT U.S. COPYRIGHT NUMBERS AND PENDING U.S. COPYRIGHT APPLICATION NUMBERS
- ------------------------------------------------------------------------------------------------------------- U.S. COPYRIGHT DATE EXPIRATION NUMBER TITLE OF COPYRIGHT AUTHOR ISSUED DATE - ------------------------------------------------------------------------------------------------------------- TX-269-361 Eagle-Picher industrial insulation, 50 EAGLE-PICHER 4/24/79 12/31/2054 years of insulation leadership INDUSTRIES, INC - ------------------------------------------------------------------------------------------------------------- TX-540-694 Six reasons why Pre-Co-Floc cellulose EAGLE-PICHER 7/22/80 12/31/2055 fiber filter aids provide superior INDUSTRIES, INC performance - ------------------------------------------------------------------------------------------------------------- TXu-292-266 Eagle-Picher surface analysis program EAGLE-PICHER 8/12/87 12/31/2062 INDUSTRIES, INC. - ------------------------------------------------------------------------------------------------------------- TX-37-119 20th Annual National Swimming Pool EAGLE-PICHER Exposition: November 3-6, 1977, Brooks INDUSTRIES, INC. 3/12/78 12/31/2053 Hall Civil Auditorium, San Francisco, California: souvenir guide - ------------------------------------------------------------------------------------------------------------- TX-173-697 21st Annual National Swimming Pool EAGLE-PICHER Exposition, November 15-18, 1978, INDUSTRIES, INC. 11/17/78 12/31/2053 Atlanta, Georgia, Georgia World Congress Center, Hall B: souvenir guide compliments of Celatom Products Department - ------------------------------------------------------------------------------------------------------------- TX-508-501 1-2-3 reasons why Eagle-Picher EAGLE-PICHER Floor-dry is America's largest selling INDUSTRIES, INC. 7/14/80 12/31/2055 diatomite floor absorbent - ------------------------------------------------------------------------------------------------------------- TX-942-209 Celatom diatomite from Eagle-Picher EAGLE-PICHER 7/19/82 12/31/2057 INDUSTRIES, INC. - -------------------------------------------------------------------------------------------------------------
SCHEDULE A-2 TO COPYRIGHT COLLATERAL AGREEMENT COPYRIGHT LICENSES -- NONE KNOWN -- EX-10.18 27 EXHIBIT 10.18 SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT is dated as of February 24, 1998 and by and among E-P ACQUISITION, INC., a Delaware corporation (the "BORROWER"), and EACH OF THE CORPORATIONS LISTED ON THE ATTACHED SUBSIDIARIES SCHEDULE I (the "SUBSIDIARIES" being collectively referred to herein together with Borrower as the "COMPANIES" and individually as a "COMPANY"), and for the benefit of the Guaranteed Creditors (as defined in the Credit Agreement defined below) and ABN AMRO BANK N.V., in its capacity as agent for the Guaranteed Creditors (the "AGENT"). Each capitalized term used herein shall, unless otherwise defined herein, have the same meaning given to such term in the Credit Agreement dated as of February 19, 1998 (as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT") by and among the Borrower, the Lenders (as defined in the Credit Agreement) and the Agent. WITNESSETH THAT: WHEREAS, pursuant to the Credit Agreement, the Lenders intend to extend certain credit facilities to the Borrower as provided therein; WHEREAS, the Companies are now or may hereafter become indebted to each other (all present and future indebtedness of the Companies to each other, whether created directly or acquired by assignment or otherwise, and interest and premiums, if any, thereon and other amounts payable in respect thereof are hereinafter collectively referred to as the "INTERCOMPANY DEBT"); and WHEREAS, the obligation of the Lenders to extend such credit facilities to the Borrower are subject to the condition, among others, that the Companies subordinate the Intercompany Debt to the Obligations of the Credit Parties to the Guaranteed Creditors pursuant to the Credit Documents and the obligations of the Borrower under Interest Rate Protection Agreements with any Lender or affiliate thereof (the "SENIOR DEBT") in the manner set forth herein. NOW, THEREFORE, intending to be legally bound hereby, the parties hereto covenant and agree as follows: 1. INTERCOMPANY DEBT SUBORDINATED TO SENIOR DEBT. The recitals set forth above are hereby incorporated by reference. All Intercompany Debt shall be subordinate and subject in right of payment to the prior indefeasible payment in full of all Senior Debt pursuant to the provisions contained herein. 2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. Upon any distribution of assets of any Company (a) in the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization, assignment for the benefit of creditors or other similar case or proceeding in connection therewith, relative to any such Company or to its assets, or (b) after the occurrence and during the continuance of an Event of Default or Default under the Credit Agreement or any liquidation, dissolution or other winding up of any such Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) in the event of any assignment for the benefit of creditors or any marshalling of assets and liabilities of any such Company (a Company distributing assets as set forth herein being referred to in such capacity as a "Distributing Company"), then and in any such event the Guaranteed Creditors shall be entitled to receive indefeasible payment in full of all amounts due or to become due (whether or not an Event of Default has occurred under the terms of the Credit Documents or the Senior Debt has been declared due and payable prior to the date on which it would otherwise have become due and payable) on or in respect of any and all Senior Debt before the holder of any Intercompany Debt owed by the Distributing Company is entitled to receive any payment on account of the principal of or interest on such Intercompany Debt, and to that end the Guaranteed Creditors shall be entitled to receive, for application to the payment of the Senior Debt, any payment or distribution of any kind or character, whether in cash, property or securities, which may be payable or deliverable in respect of the Intercompany Debt owed by the Distributing Company in any such case, proceeding, dissolution, liquidation or other winding up or event. 3. NO COMMENCEMENT OF ANY PROCEEDING. Each Company agrees that, so long as the Senior Debt shall remain unpaid, it will not commence, or join with any credit other than the Guaranteed Creditors or the Agent on behalf of the Guaranteed Creditors in commencing, any collection or enforcement proceeding against any other Company, including, but not limited to, those described in Section 2 hereof, or any other enforcement action of any kind against any Company in respect of the Intercompany Debt. 4. PRIOR PAYMENT OF SENIOR DEBT UPON ACCELERATION OF INTERCOMPANY DEBT. If any portion of the Intercompany Debt owed by any Company becomes or is declared due and payable before its stated maturity, then and in such event the Guaranteed Creditors shall be entitled to receive indefeasible payment in full of all amounts due and to become due on or in respect of the Senior Debt (whether or not an Event of Default has occurred under the terms of the Credit Agreement or the Senior Debt has been declared due and payable prior to the date on which it would otherwise have become due and payable) before the holder of any such Intercompany Debt is entitled to receive any payment thereon. 5. NO PAYMENT WHEN SENIOR DEBT IN DEFAULT. If any Event of Default under the Credit Agreement shall have occurred and be continuing or such an Event of Default would result from or exist after giving effect to a payment with respect to any portion of the Intercompany Debt, unless the Lenders or Required Lenders shall have consented to or waived the same, so long as any of the Senior Debt shall remain outstanding, no payment shall be made by the Company owing such Intercompany Debt on account of principal or interest on any portion of the Intercompany Debt. 6. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this Agreement shall prevent any of the Companies, at any time, except during the pendency of any of the conditions described in Sections 2, 4 and 5, from making the regularly scheduled payments of the Intercompany Debt, or the retention thereof by any of the Companies of any money deposited with it for the regularly scheduled payments of or on account of the Intercompany Debt. 7. RECEIPT OF PROHIBITED PAYMENTS. If, notwithstanding the foregoing provisions of Sections 2, 4, 5 and 6, a Company which is owed Intercompany Debt by a Distributing Company shall have received any payment or distribution of assets from the Distributing Company of any kind or character, whether in cash, property or securities, other than as expressly permitted by the terms of this Agreement, then and in such event such payment or distribution shall be held in trust for the benefit of the Guaranteed Creditors, shall be segregated from other funds and property held by such Company, and shall be forthwith paid over to the Agent for the benefit of the Guaranteed Creditors in the same form as so received (with any necessary endorsement) to be applied (in the case of cash) to or held as collateral (in the case of non-cash property) for the payment or prepayment of the Senior Debt in accordance with the terms of the Credit Agreement. 8. RIGHTS OF SUBROGATION. Each Company agrees that no payment or distribution to the Guaranteed Creditors pursuant to the provisions of this Agreement shall entitle the Company to exercise any rights of subrogation in respect thereof until the Senior Debt shall have been indefeasibly paid in full and the Commitments under the Credit Agreement shall have terminated. 9. INSTRUMENTS EVIDENCING INTERCOMPANY DEBT. At the request of the Agent, each Company shall cause each instrument which now or hereafter evidences all or a portion of the Intercompany Debt to be conspicuously marked as follows: "This instrument is subject to the terms of a Subordination Agreement dated as of February 24, 1998, in favor of ABN AMRO Bank N.V., as Agent, which Subordination Agreement is incorporated herein by reference. Notwithstanding any contrary statement contained in the within instrument, no payment on account of the principal thereof or interest thereon shall become due or payable except in accordance with the express terms of said Subordination Agreement." and promptly deliver such instrument to the Agent to be pledged under the Security Agreement. At the Agent's request, each Company will further mark its books of account in such a manner as shall be effective to give proper notice to the effect of this Agreement. 10. AGREEMENT SOLELY TO DEFINE RELATIVE RIGHTS. The purpose of this Agreement is solely to define the relative rights of the Companies, on the one hand, and the Guaranteed Creditors, on the other hand. Nothing contained in this Agreement is intended to or shall prevent the Companies from exercising all remedies otherwise permitted by applicable law upon default under any agreement pursuant to which the Intercompany Debt is created, subject to Sections 2, 3, 4, 5 and 6 hereof, including, without limitation, the rights under this Agreement of the Guaranteed Creditors to receive cash, property or securities otherwise payable or deliverable with respect to the Intercompany Debt. 11. NO IMPLIED WAIVERS OF SUBORDINATION. No right of the Guaranteed Creditors to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Company, by any act or failure to act by any Guaranteed Creditor, or by any non-compliance by any Company with the terms, provisions and covenants of any agreement pursuant to which the Intercompany Debt is created, regardless of any knowledge thereof any Guaranteed Creditor may have or be otherwise charged with. Each Company by its acceptance hereof agrees that, so long as there is Senior Debt outstanding or any Commitment is in effect under the Credit Agreement, such Company shall not agree to sell, assign, pledge, encumber or otherwise dispose of, the obligations of the Intercompany Debt, other than by means of payment of such Intercompany Debt according to its terms, without the prior written consent of the Agent. Without in any way limiting the generality of the foregoing paragraph, in accordance with the Credit Agreement, the Agent on behalf of the Lenders, the Lenders, or the Required Lenders, as the case may be, at any time and from time to time, without the consent of or notice to the Companies, except to the extent required by the Credit Agreement or other Credit Documents, without incurring responsibility to the Companies and without impairing or releasing the subordination provided in this Agreement or the obligations hereunder of the Companies to the Guaranteed Creditors, may do any one or more of the following: (i) change the manner, place or terms of payment, or extend the time of payment, renew or alter the Senior Debt or otherwise amend, restate, supplement or otherwise modify the Senior Debt or the Credit Documents; (ii) release any collateral or any person liable in any manner for the payment or collection of the Senior Debt; and (iii) exercise or refrain from exercising any rights against any of the Companies and any other person or entity. 12. ADDITIONAL SUBSIDIARIES. The Companies covenant and agree that each of them shall cause any Subsidiary (including, without limitation, each direct or indirect Subsidiary) which it creates or acquires after the date hereof to become a party to this Agreement by executing a joinder to this Agreement in a form acceptable to and approved by the Agent promptly after such Company acquires or creates such Subsidiary. 13. CONTINUING FORCE AND EFFECT. This Agreement shall continue in force until all of the Senior Debt is indefeasibly paid in full and the Commitments under the Credit Agreement have terminated, it being contemplated that this Agreement be of a continuing nature. 14. MODIFICATION, AMENDMENTS OR WAIVERS. Any and all agreements amending or changing any provision of this Agreement or the rights of the Agent on behalf of the Guaranteed Creditors or the Guaranteed Creditors hereunder, and any and all waivers or consents to any departures from the due performance of the Companies hereunder shall be made only by written agreement, waiver or consent signed by the Agent and the Credit Parties. 15. EXPENSES. In accordance with the Credit Agreement, the Companies each unconditionally and jointly and severally agree upon demand to pay to the Agent the amount of any and all reasonable and necessary out-of-pocket costs, expenses and disbursements, including but not limited to reasonable fees and expenses of counsel, which may be incurred by the Guaranteed Creditors in connection with (a) the exercise or enforcement of any of the rights of the Guaranteed Creditors hereunder, or (b) the failure by the Companies to perform or observe any of the provisions hereof. 16. SEVERABILITY. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. 17. GOVERNING LAW. This Agreement shall be a contract under the internal laws of the State of New York and for all purposes shall be construed in accordance with the laws of said State without giving effect to its conflicts of law principles. 18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of the Guaranteed Creditors and their respective successors and assigns, and the obligations of the Companies shall be binding upon their respective successors and assigns. The duties and obligations of each of the Companies may not be delegated or transferred by it. 19. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when executed and delivered, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. 20. ATTORNEYS-IN-FACT. Each Company hereby authorizes and empowers the Agent, at its election and in the name of either itself, or in the name of each Company after an Event of Default, to execute and file proofs and documents and take any other action the Agent may deem advisable to enforce the Guaranteed Creditors' interests relating to the Intercompany Debt created hereunder and their right of enforcement thereof as set forth herein, and to that end the Companies hereby irrevocably make, constitute and appoint the Agent, its officers, employees and agents, or any of them, with full power of substitution, as the true and lawful attorney-in-fact and agent of such Company and with full power for such Company and in the name, place and stead of such Company for the purpose of carrying out the provisions of this Agreement and taking any action and executing, delivering, filing and recording any instruments which the Agent may deem necessary or advisable to accomplish the purposes hereof, which power of attorney, being given for security, is coupled with an interest and irrevocable. Each Company hereby ratifies and confirms and agrees to ratify and confirm all action taken by the Agent, its officers, employees or agents pursuant to the foregoing power of attorney. 21. APPLICATION OF PAYMENTS. In the event any payments are received by the Agent on behalf of the Guaranteed Creditors or any Guaranteed Creditor under the terms of this Agreement for application to the Senior Debt at any time when the Senior Debt has not been declared due and payable and prior to the date on which it would otherwise become due and payable, such payment shall constitute a voluntary prepayment of the Senior Debt for all purposes under the Credit Agreement. 22. REMEDIES. In the event of a breach by any of the Companies in the performance of any of the terms of this Agreement, the Agent on behalf of the Guaranteed Creditors or any Guaranteed Creditor may demand specific performance of this Agreement and seek injunctive relief and may exercise any other remedy available at law or in equity, it being recognized that the remedies of the Guaranteed Creditors at law may not fully compensate the Guaranteed Creditors for the damages it may suffer in the event of a breach hereof. 23. CONSENT TO JURISDICTION; WAIVER OR JURY TRIAL. EACH COMPANY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND EACH COMPANY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT TO THE FULL EXTENT PERMITTED BY LAW. WITNESS the due execution hereof as of the day and year first above written. E-P ACQUISITION, INC. By:......................................... Name:....................................... Title:...................................... Each of the Subsidiaries listed on the attached Schedule I By:......................................... Name:....................................... Title:...................................... of each of the Subsidiaries listed on Schedule I SCHEDULE I TO SUBORDINATION AGREEMENT LIST OF SUBSIDIARIES EX-10.19 28 EXHIBIT 10.19 MANAGEMENT AGREEMENT, dated as of February 24, 1998 (the "Agreement"), between Granaria Holdings B.V., a Netherlands corporation ("Granaria"), and Eagle-Picher Industries, Inc., an Ohio corporation (the "Company"). INTRODUCTION Granaria has previously provided services to the Company in connection with the transactions contemplated by the Merger Agreement, dated as of December 23, 1997, as amended, among the Company, the Eagle-Picher Injury Settlement Trust, Eagle-Picher Holdings, Inc. and E-P Acquisition, Inc. The Company desires for Granaria to provide certain ongoing consulting and advisory services to the Company, and Granaria is willing to provide such services subject to the terms and conditions contained in this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows: 1. Services. The Company hereby engages Granaria for the term of this Agreement and upon the terms and conditions herein set forth to provide consulting and management advisory services to the Company, as reasonably requested by the Board of Directors of the Company. These services will be in connection with financial and strategic corporate planning and such other management services as Granaria and the Board of Directors of Company shall mutually agree. 2. Compensation. In consideration of the services previously provided and to be provided in accordance with Section 1, the Company shall pay to Granaria (and/or to such of Granaria's affiliates as Granaria may direct) an annual management fee equal to $1.75 million to be paid to Granaria by the Company in equal quarterly installments each year, payable in arrears beginning May 31, 1998. 3. Indemnification. In addition to its agreements and obligations under this Agreement, the Company agrees to indemnify and hold harmless Granaria, and its affiliates (including its officers, directors, stockholders, partners, members, employees and agents) from and against any and all claims, liabilities, losses and damages (or actions in respect thereof), relating to or arising out of the advisory and consulting services contemplated by this Agreement or the engagement of Granaria pursuant to, and the performance by the Granaria of the services contemplated by, this Agreement and to reimburse Granaria and any other such indemnified person for all costs and expenses incurred by it in connection with or relating to investigating, preparing to defend, or defending any actions, claims or other proceedings (including any investigation or inquiry) arising in any manner out of or in connection with Granaria's performance under this Agreement (whether or not such indemnified person is a named party in such proceeding); provided, however, that the Company will not be liable under the foregoing indemnification provision for any claims, liabilities, losses, damages or expenses to the extent that they are determined by a court, in a final judgment from which no appeal may be taken, to have resulted solely from the gross negligence or willful misconduct of Granaria (or such other indemnified person). 4. Permissible Activities. Subject to all applicable provisions of applicable law that impose fiduciary liabilities upon Granaria or its affiliates or their respective officers and directors, nothing in this Agreement shall in any way preclude Granaria, its affiliates or their respective officers and directors from engaging in any business activities or from performing services for its or their own account of others, including companies which may be in competition with the business conducted by the Company. 5. Notice. All notices hereunder, to be effective, shall be in writing and shall be mailed by certified mail, postage prepaid as follows: (i) If to Granaria: Granaria Holdings B.V. Lange Voorhout 16 P.O. Box 233 2501 CE The Hague The Netherlands Attention: Joel P. Wyler Chairman (ii) If to the Company: Eagle-Picher Industries, Inc. Suite 500 250 East Fifth Street Cincinnati, Ohio 45201 Attention: Andries Ruijssenaars President 6. Termination. This Agreement may be terminated by Granaria at any time by written notice to the Company. In addition, this Agreement will terminate automatically as of the earlier of (i) the tenth anniversary of this Agreement and (ii) the end of the fiscal year in which Granaria and its affiliates, in the aggregate, beneficially own less than 10% of the Company's outstanding common stock. 7. Modifications. This Agreement constitutes the entire agreement between the parties hereto with regard to the subject matter hereof, superseding all prior understandings and agreements whether written or oral. This Agreement may not be amended or revised except by a writing signed by the parties. 8. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns but may not be assigned by either party without the prior written consent of the other. Notwithstanding the foregoing, 2 Granaria may elect to have its obligations hereunder performed in whole or in part by a partnership or other entity affiliated with Granaria, and Granaria may direct that any compensation (including all or a portion of the management fee) be paid to the affiliate performing the services hereunder with respect thereto. 9. Captions. Captions have been inserted solely for the convenience of reference and in no way define, limit or describe the scope or substance of any provision and shall not affect the validity of any other provision. 10. Governing Law. This Agreement shall be construed under and governed by the laws of New York, without reference to its conflicts of law principles. 11. Counterparts. This Agreement may be signed in two counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. 3 IN WITNESS WHEREOF, the parties have duly executed this Agreement as a sealed instrument as of the date first above written. GRANARIA HOLDINGS B.V. By: /s/ JOEL P. WYLER --------------------------- Name: Joel P. Wyler Title: Chairman EAGLE-PICHER INDUSTRIES, INC. By: /S/ ANDRIES RUIJSSENAARS --------------------------- Name: Andries Ruijssenaars Title: President 4 EX-21.1 29 EXHIBIT 21.1 Subsidiaries
- -------------------------------------------------------------------------------------------------------- Name Jurisdiction Other names under which Subsidiary of Incorporation does business - -------------------------------------------------------------------------------------------------------- 1. DOMESTIC OPERATING SUBSIDIARIES - -------------------------------------------------------------------------------------------------------- Daisy Parts, Inc. Michigan Eagle-Picher Eagle-Picher Industries - -------------------------------------------------------------------------------------------------------- Eagle-Picher Development Company, Delaware Eagle-Picher Inc. Eagle-Picher Industries - -------------------------------------------------------------------------------------------------------- Eagle-Picher Far East, Inc. Delaware Eagle-Picher Eagle-Picher Industries - -------------------------------------------------------------------------------------------------------- Eagle-Picher Fluid Systems, Inc. Michigan Eagle-Picher Eagle-Picher Industries Eagle-Picher Automotive Eagle-Picher Fluid Systems - -------------------------------------------------------------------------------------------------------- Eagle-Picher Minerals, Inc. Nevada Eagle-Picher Eagle-Picher Industries Eagle-Picher Automotive Eagle-Picher Fluid Systems - -------------------------------------------------------------------------------------------------------- Hillsdale Tool & Manufacturing Co. Michigan Eagle-Picher Eagle-Picher Industries Eagle-Picher Automotive Daisy Parts Hillsdale Tool Hillsdale Tool & Manufacturing - -------------------------------------------------------------------------------------------------------- Michigan Automotive Research Michigan Eagle-Picher Corporation Eagle-Picher Industries Eagle-Picher Automotive MARCO Michigan Automotive Research Corporation - -------------------------------------------------------------------------------------------------------- Eagle-Picher Technologies, LLC Delaware Eagle-Picher Eagle-Picher Industries Technologies Chemsyn Science Laboratories - -------------------------------------------------------------------------------------------------------- 2. FOREIGN SUBSIDIARIES - -------------------------------------------------------------------------------------------------------- Eagle-Picher Automotive GmbH Germany - -------------------------------------------------------------------------------------------------------- Eagle-Picher Espana, S.A. Spain - -------------------------------------------------------------------------------------------------------- Eagle-Picher Fluid Systems Ltd. England & Wales - -------------------------------------------------------------------------------------------------------- Eagle-Picher Hillsdale Limited England & Wales - -------------------------------------------------------------------------------------------------------- Eagle-Picher Industries Europe B.V. Netherlands - -------------------------------------------------------------------------------------------------------- Eagle-Picher Technologies GmbH Germany - -------------------------------------------------------------------------------------------------------- Eagle-Picher Industries of Canada Ontario, Canada - --------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------- Name Jurisdiction Other names under which Subsidiary of Incorporation does business - -------------------------------------------------------------------------------------------------------- Limited - -------------------------------------------------------------------------------------------------------- Eagle-Picher Minerals International France S.A.R.L. - -------------------------------------------------------------------------------------------------------- Eagle-Picher UK Limited England & Wales - -------------------------------------------------------------------------------------------------------- Eagle-Picher Wolverine GmbH Germany - -------------------------------------------------------------------------------------------------------- Eagle-Picher, Inc. Virgin Islands - -------------------------------------------------------------------------------------------------------- EPTEC, S.A. de C.V. Mexico - -------------------------------------------------------------------------------------------------------- Equipos de Acuna, S.A. de C.V. Mexico - -------------------------------------------------------------------------------------------------------- United Minerals GmbH & Co. KG Germany - -------------------------------------------------------------------------------------------------------- United Minerals Verwaltungs-und Germany Beteiligungs GmbH - -------------------------------------------------------------------------------------------------------- 3. IMMATERIAL SUBSIDIARIES - -------------------------------------------------------------------------------------------------------- Fabricon Corporation Michigan - -------------------------------------------------------------------------------------------------------- Fabricon Products Corporation of Pennsylvania Pennsylvania - -------------------------------------------------------------------------------------------------------- Ross Aluminum Foundries, Inc. Ohio - -------------------------------------------------------------------------------------------------------- Wolverine Gasket and Manufacturing Michigan Company - -------------------------------------------------------------------------------------------------------- Cincinnati Industrial Machinery Sales Ohio Company - --------------------------------------------------------------------------------------------------------
EX-23.1 30 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the use in the Registration Statement of Eagle-Picher Industries, Inc. on Form S-4, related to the $220,000,000 Senior Subordinated Notes due 2008, of our reports dated January 15, 1998 on our audits of the consolidated financial statements of (1) Eagle-Picher Industries, Inc. as of and for the year ended November 30, 1997, and (2) Eagle-Picher Holdings, Inc. as of December 22, 1997, appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to us under the heading 'Experts' in such Prospectus. /s/ Deloitte & Touche LLP Cincinnati, Ohio April 10, 1998 EX-23.2 31 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Eagle-Picher Holdings, Inc.: We consent to the use of our report included herein and to the reference to our firm under the heading 'Experts' in the prospectus. Our report dated February 5, 1997 was unqualified except for consistency in the application of accounting principles as a result of the Company's change in its method of computing LIFO for certain inventories. KPMG Peat Marwick LLP Cincinnati, Ohio April 10, 1998 EX-25.1 32 EXHIBIT 25.1 THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 901(d) OF REGULATION S-T ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [ ] ------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------------- EAGLE-PICHER INDUSTRIES, INC. (Exact name of obligor as specified in its charter) Ohio 31-0268670 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Table of Additional Registrants Eagle-Picher Holdings, Inc. Delaware 13-3989553 Daisy Parts, Inc. Michigan 38-1406772 Eagle-Picher Development Company, Inc. Delaware 31-1215706 Eagle-Picher Far East, Inc. Delaware 31-1235685 Eagle-Picher Fluid Systems, Inc. Michigan 31-1452637 Eagle-Picher Minerals, Inc. Nevada 31-1188662 Eagle-Picher Technologies, LLC Delaware 31-1587660 Hillsdale Tool & Manufacturing Co. Michigan 38-0946293 Michigan Automotive Research Corporation Michigan 38-2185909 Suite 500 250 East Fifth Street Cincinnati, Ohio 45202 (Address of principal executive offices) (Zip code)
---------------------- 9-3/8% Senior Subordinated Notes due 2008 (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 8th day of April, 1998. THE BANK OF NEW YORK By: /s/ JAMES W.P. HALL -------------------------- Name: James W.P. Hall Title: Vice President -4- Exhibit 7 Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1997, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................ $ 5,004,638 Interest-bearing balances......................... 1,271,514 Securities: Held-to-maturity securities....................... 1,105,782 Available-for-sale securities..................... 3,164,271 Federal funds sold and Securities purchased under agreements to resell............... 5,723,829 Loans and lease financing receivables: Loans and leases, net of unearned income ............................. 34,916,196 LESS: Allowance for loan and lease losses ....................... 581,177 LESS: Allocated transfer risk reserve............................. 429 Loans and leases, net of unearned income, allowance, and reserve................. 34,334,590 Assets held in trading accounts..................... 2,035,284 Premises and fixed assets (including capitalized leases)............................... 671,664 Other real estate owned............................. 13,306 Investments in unconsolidated subsidiaries and associated companies......................................... 210,685 Customers' liability to this bank on acceptances outstanding........................... 1,463,446 Intangible assets................................... 753,190 Other assets........................................ 1,784,796 ----------- Total assets........................................ $57,536,995 =========== LIABILITIES Deposits: In domestic offices............................... $27,270,824 Noninterest-bearing .................. 12,160,977 Interest-bearing ..................... 15,109,847 In foreign offices, Edge and Agreement subsidiaries, and IBFs................. 14,687,806 Noninterest-bearing ................. 657,479 Interest-bearing ..................... 14,030,327 Federal funds purchased and Securities sold under agreements to repurchase............... 1,946,099 Demand notes issued to the U.S. Treasury.......................................... 283,793 Trading liabilities................................. 1,553,539 Other borrowed money: With remaining maturity of one year or less......................................... 2,245,014 With remaining maturity of more than one year through three years.................... 0 With remaining maturity of more than three years..................................... 45,664 Bank's liability on acceptances executed and outstanding.......................... 1,473,588 Subordinated notes and debentures................... 1,018,940 Other liabilities................................... 2,193,031 ----------- Total liabilities................................... 52,718,298 ----------- EQUITY CAPITAL Common stock........................................ 1,135,284 Surplus............................................. 731,319 Undivided profits and capital reserves.......................................... 2,943,008 Net unrealized holding gains (losses) on available-for-sale securities........................................ 25,428 Cumulative foreign currency translation adjustments........................... (16,342) ----------- Total equity capital................................ 4,818,697 ----------- Total liabilities and equity capital........................................... $57,536,995 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot ) Thomas A. Renyi ) Directors Alan R. Griffith ) -----END PRIVACY-ENHANCED MESSAGE-----