-----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, I47OV5QHhmZ9/4PQZEdSmrrI2QmNChKqPQv6VuII7j2OBLSWDqTPvPxcaK8DQbu1 qXTO8Y7yzS7SDdh1xSO7rw== 0000950123-03-013563.txt : 20031208 0000950123-03-013563.hdr.sgml : 20031208 20031208172422 ACCESSION NUMBER: 0000950123-03-013563 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 31 FILED AS OF DATE: 20031208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREGG INDUSTRIES INC CENTRAL INDEX KEY: 0001272209 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-07 FILM NUMBER: 031043147 MAIL ADDRESS: STREET 1: C/O NEENAH FOUNDRY CO STREET 2: 2121 BROOKS STREET P O BOX 729 CITY: NEENAH STATE: WI ZIP: 54957 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEENAH TRANSPORT INC CENTRAL INDEX KEY: 0001040597 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 391378433 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-04 FILM NUMBER: 031043144 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEENAH FOUNDRY CO CENTRAL INDEX KEY: 0001040599 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 391580331 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008 FILM NUMBER: 031043140 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 9207257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEETER FOUNDRY INC CENTRAL INDEX KEY: 0001077229 IRS NUMBER: 470355148 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-08 FILM NUMBER: 031043148 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCER FORGE CORP CENTRAL INDEX KEY: 0001077230 IRS NUMBER: 251511711 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-06 FILM NUMBER: 031043146 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: A&M SPECIALTIES INC CENTRAL INDEX KEY: 0001077231 IRS NUMBER: 251741756 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-05 FILM NUMBER: 031043145 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED CAST PRODUCTS INC CENTRAL INDEX KEY: 0001077232 IRS NUMBER: 251607691 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-14 FILM NUMBER: 031043154 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELCHER CORP CENTRAL INDEX KEY: 0001077233 IRS NUMBER: 521643193 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-02 FILM NUMBER: 031043142 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEERLESS CORP CENTRAL INDEX KEY: 0001077234 IRS NUMBER: 521644462 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-01 FILM NUMBER: 031043141 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DALTON CORP CENTRAL INDEX KEY: 0001077235 IRS NUMBER: 350259770 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-13 FILM NUMBER: 031043153 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DALTON CORP WARSAW MANUFACTURING FACILITY CENTRAL INDEX KEY: 0001077236 IRS NUMBER: 352054775 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-12 FILM NUMBER: 031043152 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DALTON CORP ASHLAND MANUFACTURING FACILITY CENTRAL INDEX KEY: 0001077237 IRS NUMBER: 341873079 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-10 FILM NUMBER: 031043150 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DALTON CORP KENDALVILLE MANUFACTURING FACILITY CENTRAL INDEX KEY: 0001077238 IRS NUMBER: 352054777 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-09 FILM NUMBER: 031043149 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DALTON CORP STRYKER MACHINING FACILITY CO CENTRAL INDEX KEY: 0001077239 IRS NUMBER: 340071223 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-11 FILM NUMBER: 031043151 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FORMER COMPANY: FORMER CONFORMED NAME: STRYKER MACHINING FACILITY CO DATE OF NAME CHANGE: 19990121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAST ALLOYS INC CENTRAL INDEX KEY: 0000873843 IRS NUMBER: 330071223 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-111008-03 FILM NUMBER: 031043143 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVENUE BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 FORMER COMPANY: FORMER CONFORMED NAME: NIEMIN PORTER & CO DATE OF NAME CHANGE: 19990121 S-4 1 y92210sv4.txt FORM S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 2003 NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- NEENAH FOUNDRY COMPANY (Exact name of registrant as specified in its charter) WISCONSIN 3220 39-1580331 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
2121 BROOKS AVENUE P.O. BOX 729 NEENAH, WISCONSIN 54957 (920) 725-7000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------------- WILLIAM M. BARRETT PRESIDENT AND CHIEF EXECUTIVE OFFICER 2121 BROOKS AVENUE P.O. BOX 729 NEENAH, WISCONSIN 54957 (920) 725-7000 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------- COPIES OF ALL COMMUNICATIONS, INCLUDING COMMUNICATIONS SENT TO AGENT FOR SERVICE, SHOULD BE SENT TO: CHRISTIAN O. NAGLER, ESQ. KIRKLAND & ELLIS LLP CITIGROUP CENTER 153 EAST 53RD STREET NEW YORK, NEW YORK 10022-4675 --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. --------------------- If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this Form is filed to registered 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(d) 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 TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER NOTE OFFERING PRICE(1) REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------------------- 11% Senior Secured Notes due 2010..... $133,130,000 100% $133,130,000 $10,770.00 - --------------------------------------------------------------------------------------------------------------------------- Guarantees of 11% Senior Secured Notes due 2010(2)......................... (3) (3) (3) None - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee. (2) See inside facing page for table of additional Registration guarantors. (3) Pursuant to Rule 457(h), no separate filing fee is payable for the guarantees of the New Senior Secured Notes being registered. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ADDITIONAL REGISTRANTS ADVANCED CAST PRODUCTS, INC. (Exact name of registrant as specified in its charter) DELAWARE 3321 25-1607691 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
DALTON CORPORATION (Exact name of registrant as specified in its charter) INDIANA 3321 35-0259770 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
DALTON CORPORATION, WARSAW MANUFACTURING FACILITY (Exact name of registrant as specified in its charter) INDIANA 3321 35-2054775 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
DALTON CORPORATION, STRYKER MACHINING FACILITY CO. (Exact name of registrant as specified in its charter) OHIO 3599 34-1873080 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY (Exact name of registrant as specified in its charter) OHIO 3321 34-1873079 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY (Exact name of registrant as specified in its charter) INDIANA 3321 35-2054777 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
DEETER FOUNDRY, INC. (Exact name of registrant as specified in its charter) NEBRASKA 3321 47-0355148 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
GREGG INDUSTRIES, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 3321 95-1498664 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
MERCER FORGE CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 3462 25-1511711 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
A&M SPECIALTIES, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 3599 25-1741756 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
NEENAH TRANSPORT, INC. (Exact name of registrant as specified in its charter) WISCONSIN 4213 39-1378433 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
CAST ALLOYS, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 3365 33-0071223 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
BELCHER CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 3321 52-1643193 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
PEERLESS CORPORATION (Exact name of registrant as specified in its charter) OHIO 3321 52-1644462 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND THIS IS NOT AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER AND SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED DECEMBER 8, 2003 PROSPECTUS NEENAH FOUNDRY COMPANY Offer for all outstanding 11% Senior Secured Notes due 2010 (which we refer to as the "Old Notes") in aggregate principal amount at maturity of $133,130,000 in exchange for up to $133,130,000 aggregate principal amount at maturity of 11% Senior Secured Notes due 2010 (which we refer to as the "New Notes") have been registered under the Securities Act of 1933, as amended. TERMS OF THE EXCHANGE OFFER - - Expires 5:00 p.m., New York City time, , 2004, unless extended. - - The Exchange Offer is not open to holders of Old Notes that are "affiliates" of Neenah Foundry Company within the meaning of Rule 405 of the Securities Act of 1933, as amended. - - Not subject to any condition other than that the exchange offer not violate applicable law or any interpretation of the staff of the Securities and Exchange Commission. - - We can amend or terminate the exchange offer. - - We will exchange all Old Notes that are validly tendered and not validly withdrawn. - - We will not receive any proceeds from the exchange offer. - - The exchange of notes will not be a taxable exchange for U.S. federal income tax purposes. - - You may withdraw tendered Old Notes any time before the expiration of the exchange offer. TERMS OF THE NEW NOTES - - The terms of the New Notes are identical to our outstanding 11% Senior Secured Notes due 2010 except for transfer restrictions and registration rights. - - The New Notes will rank pari passu in right of payment with our New Credit Facility, as defined below, and the associated guarantees, but the liens securing the New Notes will be subordinated to the liens securing the New Credit Facility. - - The New Notes mature on September 30, 2010. The New Notes will bear interest, which will be payable semi-annually in arrears, at a rate of 11% per annum payable on each January 1 and July 1, commencing January 1, 2004. - - After September 30, 2007, we may redeem the New Notes in whole or in part at any time. - - Upon a change of control, we may be required to offer to repurchase the New Notes. FOR A DISCUSSION OF SPECIFIC RISKS THAT YOU SHOULD CONSIDER BEFORE TENDERING YOUR OUTSTANDING 11% SENIOR SECURED NOTES DUE 2010 IN THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 8. There is no public market for our outstanding 11% Senior Secured Notes due 2010 or the New Notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the New Notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is [ ], 2003 YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR 11% SENIOR SECURED NOTES DUE 2010. EACH BROKER-DEALER THAT RECEIVES NEW SECURITIES FOR ITS OWN ACCOUNT PURSUANT TO THE EXCHANGE OFFER MUST ACKNOWLEDGE THAT IT WILL DELIVER A PROSPECTUS IN CONNECTION WITH ANY RESALE OF THESE NEW SECURITIES. 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 SECURITIES RECEIVED IN EXCHANGE FOR SECURITIES WHERE THOSE SECURITIES WERE ACQUIRED BY THIS BROKER-DEALER AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. WE HAVE AGREED THAT, STARTING ON THE EXPIRATION DATE AND ENDING ON THE CLOSE OF BUSINESS 180 DAYS AFTER THE EXPIRATION DATE, WE WILL MAKE THIS PROSPECTUS AVAILABLE TO ANY BROKER-DEALER FOR USE IN CONNECTION WITH ANY SUCH RESALE. SEE "PLAN OF DISTRIBUTION." TABLE OF CONTENTS Disclosure Regarding Forward-Looking Statements............. i Market and Industry Data.................................... i Prospectus Summary.......................................... 1 Summary Description of the Exchange Offer and New Notes..... 3 Ratio of Earnings to Fixed Charges.......................... 7 Risk Factors................................................ 8 The Exchange Offer.......................................... 16 The Refinancing Transactions................................ 22 Use of Proceeds............................................. 23 Capitalization.............................................. 24 Selected Consolidated Financial Data........................ 25 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 27 Business.................................................... 35 Management.................................................. 44 Certain Relationships and Related Transactions.............. 48 Security Ownership and Certain Beneficial Owners............ 49 Description of New Credit Facility.......................... 51 Description of the Notes.................................... 53 Book-Entry; Delivery and Form............................... 86 Certain U.S. Federal Income Tax Considerations.............. 88 Plan of Distribution........................................ 88 Legal Matters............................................... 89 Experts..................................................... 89 Available Information....................................... 89
As used in this prospectus and unless the context indicated otherwise, "Notes" refers, collectively, to our "Old Notes," and our "New Notes." DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS All statements other than statements of historical facts included in this prospectus, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "should", "could", "expect", "intend", "estimate", "anticipate", "believe" or "continue", "plan", "potential", "predicts" or the negative thereof or variations thereon or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by any forward-looking statements. These risks and uncertainties include, but are not limited to, the following: - general economic and business conditions, both nationally and in those areas in which we operate; - competition; - changes in our business strategy or plans; - changes in exchange rates; - the loss of any of our management or key personnel; - changes in our policy regarding interest rate and currency movements; - the availability and cost of raw materials; and - the availability of capital and trade credit to fund our business. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Important factors that could cause actual results to differ materially from our expectations, or "cautionary statements," are disclosed under "Risk Factors" and elsewhere in this prospectus, including, without limitation, in conjunction with the forward-looking statements included in this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform these statements to actual results. We will, upon the effectiveness of this prospectus, claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. MARKET AND INDUSTRY DATA Some of the market and industry data contained in this prospectus are based on independent industry publications or other publicly available information. Although we believe that these independent sources are reliable, we have not independently verified and cannot assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market and industry data contained in this prospectus, and our beliefs and estimates based on such data, may not be reliable. i PROSPECTUS SUMMARY The following summary contains basic information about us and highlights selected information from the prospectus. It likely does not contain all the information that is important to you. Because it is a summary, it does not contain all the information that you should consider before tendering your Old Notes. We encourage you to read this entire document and the documents to which we have referred you. As used in this prospectus, except as the context otherwise requires, the terms "company," "we," "our," "ours," and "us" refers to Neenah Foundry Company and its subsidiaries, collectively and individually, as appropriate from the context. OUR COMPANY We manufacture and market a wide range of metal castings and forgings for the heavy municipal market and selected segments of the industrial markets. We sell our products throughout the continental United States and believe that we are one of the largest manufacturers of heavy municipal iron castings in the United States. We began business in 1872 and have built a strong reputation for producing quality iron castings. Our broad range of heavy municipal iron castings includes manhole covers and frames, storm sewer frames and grates, heavy duty airport castings, specialized trench drain castings, specialty flood control castings and ornamental tree grates. We sell these municipal castings to state and local government entities, utility companies, precast concrete manhole structure producers and contractors for both new construction and infrastructure replacement throughout the United States. In addition, we believe that we are also a leading manufacturer of a wide range of complex industrial castings, including castings for the transportation industry, a broad range of castings for the farm equipment industry and specific components for compressors used in heating, ventilation and air conditioning, or HVAC, systems. We have two reportable segments, Castings and Forgings. The Castings segment is a leading producer of iron and other metal castings for use in heavy municipal and industrial applications. This segment sells directly to original equipment manufacturers and to industrial end users. The forgings segment, operated by Mercer Forge Corporation, hereinafter referred to as Mercer, is a leading producer of complex-shaped forged components for use in transportation, railroad, mining and heavy industrial applications. Mercer is also a leading producer of microalloy forgings. Mercer sells directly to original equipment manufacturers, as well as to industrial end users. Mercer's subsidiary, A&M Specialties, Inc., machines forgings and castings for Mercer and other industrial applications. Until the mid-1980's, Mercer produced military tank parts, but successfully converted from a defense contractor to a commercial manufacturer and today is an important supplier to the heavy duty truck sector. Mercer produces a broad range of forged components and has developed specialized expertise in forgings of microalloy steel. Neenah Foundry Company, which we refer to hereafter as Neenah, a wholly-owned subsidiary of NFC Castings, Inc. and its parent company, ACP Holding Company, which we refer to hereafter respectively as NFC and ACP, is a corporation organized under the laws of the State of Wisconsin and is the operating subsidiary of NFC and ACP. The principal executive offices of Neenah are located at 2121 Brooks Avenue, Neenah, Wisconsin 54957. Our telephone number is (920) 725-7000. RECENT REORGANIZATION On August 5, 2003, ACP, NFC, Neenah and all of its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, as amended, with the United States Bankruptcy Court for the District of Delaware. By order dated September 26, 2003, the Bankruptcy Court confirmed our Amended Prepackaged Joint Plan of Reorganization, which we refer to as the Plan of Reorganization. The Plan of Reorganization resulted in significant changes to our capital structure. Among other things, the Plan of Reorganization provided for the repayment in full of our old credit facility, the cancellation of $282.0 million in principal amount of 11 1/8% Notes, the cancellation of our PIK Note and 1 the elimination of the interests of the former equity owners of our indirect parent company, ACP. The cash proceeds necessary to consummate the Plan of Reorganization were provided from the consummation of the New Credit Facility and the issuance of the Old Notes. The claims and interests of our various creditors were satisfied as follows: - our old credit facility was repaid in cash; - our PIK Note was cancelled and Citicorp Mezzanine III, L.P., the holder of that note, received Old Notes with a principal amount equal to $13.134 million, and warrants to acquire 3.8 million shares of common stock of ACP and cash in the amount of $45,400; - our outstanding 11 1/8% Notes were cancelled and each holder of 11 1/8% Notes received its pro rata share of (i) $30.0 million in cash, (ii) $100.0 million in aggregate principal amount of new 13% Senior Subordinated Notes due 2013 of the Company, (iii) 38 million shares of common stock of ACP and (iv) rights to acquire for $110 million in cash in the aggregate, units for up to $119.996 million face amount of Old Notes and warrants to acquire up to 34.2 million shares of common stock of ACP; - the following debt and equity instruments were cancelled without further consideration: 12% senior subordinated notes issued by ACP, 12% senior subordinated notes issued by NFC and all equity interests of ACP; and - the following claims and equity interests passed through our Chapter 11 bankruptcy proceedings unimpaired: all tax claims, intercompany debt, other secured debt and general unsecured debt and the equity interests of ACP Holding Company in NFC Castings, Inc., equity interests of NFC Castings, Inc. in Neenah and equity interests of Neenah in its direct and indirect subsidiaries. 2 SUMMARY DESCRIPTION OF THE EXCHANGE OFFER AND NEW NOTES THE EXCHANGE OFFER Securities Offered............ Up to $133,130,000 aggregate principal amount at maturity of 11% Senior Notes due 2010. The terms of the New Notes and the Old Notes are identical in all material respects, except for certain transfer restrictions and registration rights relating to the Old Notes. The Exchange Offer............ We are offering to exchange the Old Notes for a like principal amount at maturity of New Notes. Old Notes may be exchanged only in multiples of $1,000. Expiration Date; Withdrawal of Tender........................ Our exchange offer will expire 5:00 p.m. New York City time, on , 2004, or a later time if we choose to extend this exchange offer. You may withdraw your tender of Old Notes at any time prior to the expiration date. All outstanding Old Notes that are validly tendered and not validly withdrawn will be exchanged. Any Old Notes not accepted by us for exchange for any reason will be returned to you at our expense as promptly as possible after the expiration or termination of the exchange offer. Resales....................... We believe that you can offer for resale, resell and otherwise transfer the New Notes without complying with the registration and prospectus delivery requirements of the Securities Act if: - you acquire the New Notes in the ordinary course of business; - you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the New Notes; and - you are not an "affiliate" of ours, as defined in Rule 405 of the Securities Act. If any of these conditions is not satisfied and you transfer any New Notes without delivering a proper prospectus or without qualifying for a registration exemption, you may incur liability under the Securities Act. We do not assume or indemnify you against this liability. Each broker-dealer acquiring New Notes issued for its own account in exchange for Old Notes, which it acquired through market-making activities or other trading activities, must acknowledge that it will deliver a proper prospectus when any New Notes issued in the exchange offer are transferred. A broker-dealer may use this prospectus for an offer to resell, a resale or other retransfer of the New Notes issued in the exchange offer. Conditions to the Exchange Offer......................... Our obligation to accept for exchange, or to issue the New Notes in exchange for, any Old Notes is subject to certain customary conditions relating to compliance with any applicable law, or any applicable interpretation by any staff of the Securities and Exchange Commission, or any order of any governmental agency or court of law. 3 See "The Exchange Offer -- Conditions to the Exchange Offer." Procedures for Tendering Old Notes......................... The Old Notes were issued as global securities and were deposited upon issuance with The Bank of New York. The Bank of New York issued certificate-less depositary interests in those outstanding Old Notes, which represent a 100% interest in those Old Notes, to The Depository Trust Company. Beneficial interests in the outstanding Old Notes, which are held by direct or indirect participants in The Depository Trust Company, are shown on, and transfers of the Old Notes can only be made through, records maintained in book-entry form by The Depository Trust Company. You may tender your outstanding Old Notes by instructing your broker or bank where you keep the Old Notes to tender them for you. In some cases you may asked to submit the BLUE-colored "Letter of Election and Instructions to Brokers or Bank" that may accompany this prospectus. By tendering your old notes you will be deemed to have acknowledged and agreed to be bound by the terms set forth under "The Exchange Offer." A timely confirmation of book-entry transfer of your outstanding Old Notes into the exchange agent's account at The Depository Trust Company, under the procedure described in this prospectus under the heading "The Exchange Offer" must be received by the exchange agent on or before 5:00 pm, New York City time, on the expiration date. United States Federal Income Tax Considerations............ The exchange offer should not result in any income, gain or loss to the holders of Old Notes or to us for United States Federal Income Tax Purposes. See "Certain U.S. Federal Income Tax Considerations." Use of Proceeds............... We will not receive any proceeds from the issuance of the New Notes in the exchange offer. The proceeds from the offering of the Old Notes were used to: - help satisfy the cash distributions required by the Plan of Reorganization; and - fund our ongoing working capital needs. Exchange Agent................ [ ] is serving as the exchange agent for the exchange offer. Shelf Registration Statement..................... In limited circumstances, holders of Old Notes may require us to register their Old Notes under a shelf registration statement. SUMMARY DESCRIPTION OF THE NEW NOTES Issuer........................ Neenah Foundry Company Securities Offered............ $133,130,000 principal amount of 11% Senior Secured Notes due 2010 Maturity...................... September 30, 2010 4 Interest Rate................. 11% per year (calculated using a 360-day year). Interest Payment Dates........ Each January 1 and July 1, beginning on January 1, 2004. Interest began to accrue on September 30, 2003. Ranking....................... The Notes will rank pari passu in right of payment to the New Credit Facility and the associated guarantees. The liens securing the New Notes will be junior to the liens securing the New Credit Facility and guarantees thereof. As of November 30, 2003, we estimate that we and our subsidiaries had approximately $47 million of senior secured debt outstanding under the New Credit Facility excluding approximately $45 million that, subject to certain limitations, we have available to borrow under our New Credit Facility. Guarantees.................... All of our domestic subsidiaries will unconditionally guarantee the Notes on a senior secured basis. If we cannot make payments required by the Notes, our guarantor subsidiaries must make them. The guarantees may be released under certain circumstances. Optional Redemption........... On or after September 30, 2007, we may redeem some or all of the Notes at the redemption prices listed in the "Description of Notes" section under the heading "Optional Redemption" plus accrued and unpaid interest. Change Of Control Offer....... If a change in control of our company occurs, we must, subject to certain conditions, give holders the opportunity to sell their notes to us at 101% of their face amount plus accrued and unpaid interest. We might not be able to pay the required price for Notes presented to us at the time of a change of control because: - we might not have enough funds at the time; or - the terms of our New Credit Facility may prevent us from paying. Asset Sale Proceeds........... If we or our subsidiaries engage in asset sales, we generally must first prepay debt under our New Credit Facility, then either invest the excess proceeds in our business or make an offer to purchase a principal amount of the Notes equal to the excess net cash proceeds. The purchase price of the Notes will be 100% of their principal amount plus accrued and unpaid interest. Certain Indenture Provisions.................... The indenture governing the Notes contains covenants that, among other things, limit our and our subsidiaries' ability to: - incur additional debt; - pay dividends or distributions on our capital stock or repurchase our capital stock; - issue preferred stock of subsidiaries; - make certain investments; - create liens on our assets to secure debt; - enter into transactions with affiliates; 5 - merge or consolidate with another company; - enter into sale and leaseback transactions; - transfer and sell assets; and - enter into certain lines of business. These covenants are subject to a number of important limitations and exceptions. See "Description of the Notes -- Certain Covenants." Risk Factors.................. See "Risk Factors" for a description of some of the risks you should consider before exchanging your Old Notes for New Notes. Delivery Requirements......... Each broker-dealer that receives new securities for its own account in exchange for securities, where those securities were acquired by this 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 those new securities. See "Plan of Distribution." 6 RATIO OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED SEPTEMBER 30, -------------------------------------------------- 1999 2000 2001 2002 2003 ------- ------- -------- -------- -------- Earnings to fixed charge calculation(1) Income (loss) from continuing operations before income taxes........................... $ 7,029 $10,021 $(17,133) $(11,870) $(31,411) Fixed charges..................... 41,003 44,898 44,380 44,515 48,407 ------- ------- -------- -------- -------- $48,032 $54,919 $ 27,247 $ 32,645 $ 16,996 ======= ======= ======== ======== ======== Fixed charges: Interest expense.................. $40,283 $43,949 $ 43,454 $ 43,466 $ 47,445 Interest portion of rent expense......................... 720 949 926 1,049 962 ------- ------- -------- -------- -------- $41,003 $44,898 $ 44,380 $ 44,515 $ 48,407 ======= ======= ======== ======== ======== Ratio of earnings to cover fixed charges......................... 1.17 1.22 N/A(2) N/A(2) N/A(2)
- --------------- (1) For purposes of the computation, the ratio of earnings to fixed charges has been calculated by dividing (a) income from continuing operations before income taxes plus fixed charges by (b) fixed charges. Fixed charges are equal to interest expense plus the portion of the rent expense estimated to represent interest. (2) Earnings were insufficient to cover fixed charges for the years ended September 30, 2001, 2002 and 2003 by $17.1 million, $11.9 million and $31.4 million, respectively. 7 RISK FACTORS You should consider carefully all of the information in this prospectus, including the following risk factors and warnings, before deciding whether to exchange your Old Notes for the New Notes to be issued in this exchange offer. Except for the first two risk factors described below, these risk factors apply to both the Old Notes and the New Notes. RISKS RELATED TO THE OFFERING YOU MAY HAVE DIFFICULTY SELLING THE OLD NOTES WHICH YOU DO NOT EXCHANGE, SINCE OUTSTANDING OLD NOTES WILL CONTINUE TO HAVE RESTRICTIONS ON TRANSFER AND CANNOT BE SOLD WITHOUT REGISTRATION UNDER SECURITIES LAWS OR EXEMPTIONS FROM REGISTRATION. If a large number of outstanding Old Notes are exchanged for New Notes issued in the exchange offer, it may be difficult for holders of outstanding Old Notes that are not exchanged in the exchange offer to sell their Old Notes, since those Old Notes may not be offered or sold unless they are registered or there are exemptions from registration requirements under the Securities Act of 1933, hereinafter referred to as the Securities Act, or state laws that apply to them. In addition, if there are only a small number of Old Notes outstanding, there may not be a very liquid market in those Old Notes. There may be few investors that will purchase unregistered securities in which there is not a liquid market. See "The Exchange Offer -- You May Suffer Adverse Consequences if You Fail to Exchange Outstanding Notes." In addition, if you do not tender your outstanding Old Notes or if we do not accept some outstanding Old Notes, those Old Notes will continue to be subject to the transfer and exchange provisions of the indenture and the existing transfer restrictions of the Old Notes that are described in the legend on the Old Notes and in the prospectus relating to the Old Notes. RESALE RESTRICTIONS -- IF YOU EXCHANGE YOUR OLD NOTES, YOU MAY NOT BE ABLE TO RESELL THE NEW NOTES YOU RECEIVE IN THE EXCHANGE OFFER WITHOUT REGISTERING THEM AND DELIVERING A PROSPECTUS. You may not be able to resell New Notes that you receive in the exchange offer without registering those New Notes or delivering a prospectus. Based on interpretations by the Securities and Exchange Commission, hereinafter referred to as the Commission, in no-action letters, we believe, with respect to New Notes issued in the exchange offer, that: - holders who are not "affiliates" of Neenah within the meaning of Rule 405 of the Securities Act; - holders who acquire their New Notes in the ordinary course of business; and - holders who do not engage in, intend to engage in, or have arrangements to participate in a distribution (within the meaning of the Securities Act) of the New Notes do not have to comply with the registration and prospectus delivery requirements of the Securities Act. Holders described in the preceding sentence must tell us in writing at our request that they meet these criteria. Holders that do not meet these criteria could not rely on interpretations of the Commission in no-action letters and would have to register the New Notes that they receive in the exchange offer and deliver a prospectus if they sold the New Notes. In addition, holders that are broker-dealers may be deemed "underwriters" within the meaning of the Securities Act in connection with any resale of New Notes acquired in the exchange offer. Holders that are broker-dealers must acknowledge that they acquired their outstanding New Notes in market-making activities or other trading activities and must deliver a prospectus when they resell the New Notes they acquire in the exchange offer in order not to be deemed an underwriter. You should review the more detailed discussion in "The Exchange Offer -- Procedures for Tendering Old Notes and Consequences of Exchanging Outstanding Old Notes." 8 SERVICING OUR DEBT WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH, AND OUR ABILITY TO GENERATE SUFFICIENT CASH DEPENDS UPON MANY FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL. Our ability to make payments on and refinance our debt and to fund planned capital expenditures depends on our ability to generate cash flow in the future. To some extent, this is subject to general economic, financial, competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will continue to generate cash flow from operations at current levels. If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may have to refinance all or a portion of our existing debt or obtain additional financing. We cannot assure you that any refinancing of this kind would be possible or that any additional financing could be obtained. The inability to obtain additional financing could have a material adverse effect on our financial condition and on our ability to meet our obligations to you under the Notes. RISK FACTORS RELATED TO THE COMPANY A RELATIVELY SMALL NUMBER OF CUSTOMERS ACCOUNT FOR A SUBSTANTIAL PORTION OF OUR REVENUES. Our industrial customer base is highly concentrated. A few large customers generate the majority of our net sales. - Sales to our largest customer accounted for approximately 9% of our total net sales for the fiscal year ended September 30, 2003. - Sales to our top five customers accounted for approximately 31% of our total net sales for the six months ended March 31, 2003; and 31% of our total net sales for the fiscal year ended September 30, 2003. DECREASES IN DEMAND FOR HEAVY MUNICIPAL TRUCKS; HVAC EQUIPMENT, CONSTRUCTION OR FARM EQUIPMENT COULD ADVERSELY AFFECT OUR BUSINESS. Our company has historically experienced moderate to severe cyclicality in most of our markets, including the truck and farm equipment markets. We cannot assure you that these major markets will not continue to experience fluctuations. A downturn in one or more of these markets could reduce demand for, and prices of, our products. Such a significant downturn in one or more of these major markets could have a significant negative impact on our profitability, cash flow and ability to service our indebtedness. Historically, our heavy municipal business has been less cyclical than our industrial markets. COMPETITION COULD ADVERSELY AFFECT OUR BUSINESS. The markets in which we compete are highly competitive and the foundry industry has significant excess capacity. We cannot assure you that we will be able to maintain or improve our competitive position in the markets in which we compete. Competition is based mostly on price, but also on quality of product, range of capability, level of service and reliability of delivery. We compete with numerous foreign and domestic foundries. We also compete with several large domestic manufacturers whose products are made with materials other than ductile and gray iron, such as steel or aluminum. Industry consolidation over the past 20 years has significantly reduced the number of foundries operating in the United States. While such consolidation has translated into greater market share for the remaining foundries, some of these remaining foundries have significantly greater financial resources than we do. Furthermore, despite the reduction in the number of operating foundries, lack of demand for castings and forgings means that the industry remains plagued by overcapacity. INTERNATIONAL ECONOMIC AND POLITICAL FACTORS COULD AFFECT DEMAND FOR IMPORTS AND EXPORTS. Our operations may be affected by actions of foreign governments and global or regional economic developments. Our markets are affected by fluctuations in the value of the U.S. dollar as compared to certain foreign currencies. Global economic events, such as foreign import/export policy or currency fluctuations, could also affect the level of imports and exports. Foreign subsidies can also impact the 9 domestic market for iron castings. In addition, foreign trade agreements and each country's adherence to the terms of such agreements can raise or lower demand for castings by domestic foundries. National and international boycotts and embargoes of other countries' or U.S. imports and/or exports together with the raising or lowering of tariff rates will affect the level of competition between domestic and foreign foundries. Changes in the value of the U.S. dollar relative to other currencies will also raise or lower demand for U.S. exports as well as U.S. demand for foreign produced raw materials and finished good imports. Such actions or developments could have a material adverse effect on our business, financial condition and results of operations. INCREASES IN THE PRICE OF RAW MATERIALS COULD ADVERSELY AFFECT OUR BUSINESS. The cost of raw materials represents a significant portion of our operating expenses. Raw materials and utilities prices are subject to fluctuation as a result of domestic and international events. We have single-source arrangements with many of our suppliers for the major raw materials that we use. We believe that these arrangements enable us to purchase raw materials at competitive prices, but we cannot assure you that we will continue to be able to make such purchases or that these single-source arrangements will always result in the most competitive price. Although the prices of the raw materials we use vary, fluctuations in the price of scrap metal are the most significant to us. We have arrangements with most of our industrial customers that enable us to adjust industrial casting prices to reflect scrap price fluctuations. In periods of rapidly rising or falling scrap prices, however, these adjustments will lag the current scrap price because they are generally based on average market prices for prior periods. Nevertheless, rapidly fluctuating scrap prices may have an adverse or positive effect on our business, financial condition and results of operations. OUR BUSINESS COULD SUFFER FROM THE LOSS OF KEY PERSONNEL. We are dependent on the continued services of our senior management team. The loss of such key personnel could have a material adverse effect on our business, financial condition and results of operations. See "Management." THE SEASONAL NATURE OF OUR BUSINESS COULD HAVE AN ADVERSE EFFECT ON OPERATIONS. Our business is seasonal, and our quarterly revenues and profits historically have been lower during the first and second fiscal quarters of the year (October through March) and higher during the third and fourth fiscal quarters (April through September). In addition, our working capital requirements fluctuate throughout the year. Adverse market or operating conditions during any seasonal part of the fiscal year could have a material adverse effect on our business, financial condition and results of operations. WE FACE THE RISK OF WORK STOPPAGES OR OTHER LABOR DISRUPTIONS. Although we believe that our relations with our employees and with the recognized labor unions that represent some of our employees are generally good, we cannot assure you that we will not be subject to work stoppages or other labor disruption and, if such events were to occur, that there would not be a material adverse effect on our business, financial condition and results of operations. See "Business -- Employees." THE NATURE OF OUR BUSINESS EXPOSES US TO LIABILITY FOR VIOLATIONS OF ENVIRONMENTAL, HEALTH AND SAFETY REQUIREMENTS. Our facilities are subject to numerous federal, state and local laws and regulations relating to permits to operate and the protection of the environment and worker health and safety, including: - those relating to discharges to air, water and land; - the handling and disposal of solid and hazardous waste; 10 - compliance with regulations governing the installation of equipment; - the operation of landfills; - the potential cleanup of properties affected by hazardous substances; - compliance with regulations published by the U.S. Occupational Safety and Health Administration, or OSHA; and - regulations governing workers' compensation laws in the various states in which we operate. The risk of environmental liability is inherent in the manufacturing of casting and forging products. Changes in environmental laws and regulations or the discovery of previously unknown contamination or other liabilities relating to our properties and operations could require us to sustain significant environmental liabilities which could make it difficult to pay the interest or principal amount of these New Notes when due. In addition, we might incur significant capital and other costs to comply with increasingly stringent emission control laws and enforcement policies which could decrease our cash flow available to service our indebtedness. Federal, state and local governments could in the future enact laws or regulations concerning environmental matters that affect our operations or facilities, increase our costs of operation, or adversely affect the demand for our services. We cannot predict the effect that such future laws or regulations could have on our business. Nor can we predict what environmental conditions may be found to exist at our current or past facilities or at other properties where we or our predecessors have arranged for the disposal of wastes and the extent of liability that may result from the discovery of such conditions. It is possible that such future laws or undiscovered conditions could have a material adverse effect on our business, financial condition and results of operations. See "Business Environmental Matters." Under the Federal Clean Air Act Amendments of 1990, the Environmental Protection Agency is directed to establish maximum achievable control technology, or MACT, standards for certain industrial operations that are major sources of hazardous air pollutants. The iron foundry industry will be required to implement the MACT emission limits, control technologies or work practices by October 1, 2006. Although we are not yet able to accurately estimate the costs to comply with the new MACT standard, the MACT standard, when implemented, and state laws governing the emission of toxic air pollutants may require that certain of our facilities incur significant costs for air emission control equipment, air emission monitoring equipment or process modifications. We are also subject to the OSHA regulations and workers' compensation laws. We cannot assure you that claims will not be made against us for work related illness or injury, or that the further adoption of occupational health and safety regulations in the United States will not adversely affect our business, financial condition and results of operations. See "Business -- Environmental and Other Regulatory Matters." In addition, we are subject to periodic nuisance complaints from neighbors and members of our community for things like damage to personal property. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL. Our ability to pay the principal of and interest on the New Credit Facility, the Notes and to finance additional indebtedness when necessary depends on our financial and operating performance, each of which is subject to prevailing global and national economic conditions and to financial, business, legislative, emerging third world competitors and regulatory factors as well as other factors beyond our control. There can be no assurance that we will generate sufficient cash flow from operations or obtain sufficient funding to satisfy all of our debt obligations. If we are unable to pay our debts, we will be required to pursue one or more alternative strategies, including refinancing or restructuring indebtedness or selling additional debt or equity securities. In addition, the ability to borrow funds under the New Credit Facility in the future will depend on our meeting the financial covenants set forth under the terms of the New Credit Facility and the indentures governing the Notes and our 13% Senior Subordinated Notes due 2013 including customary covenants and restrictions. There can be no assurance that our business will 11 generate cash flow from operations or that future borrowings will be available under the New Credit Facility in an amount sufficient to enable the payment of debt obligations or to fund other liquidity needs. As a result, we may need to refinance all or a portion of our debt on or before maturity. There can be no assurance, however, that any alternative strategies will be feasible at the time or prove adequate. Also, some alternative strategies will require the consent of the new lenders. FAILURE TO RAISE NECESSARY CAPITAL COULD RESTRICT OUR ABILITY TO OPERATE AND FURTHER DEVELOP OUR BUSINESS. We cannot be certain that our capital resources will be sufficient to enable us to maintain operating profitability. Failure to generate or raise sufficient funds may require us to delay or abandon some expansion plans or expenditures, which could harm our business and competitive position. We expect to meet funding needs through various sources, including existing cash balances, existing lines of credit, and cash flow from future operations. Estimated aggregate expenditure requirements include the projected costs of: - approximately $18.0 million to $24.0 million annually from 2004 through 2007, primarily for necessary maintenance capital expenditures and selected strategic capital investments required to maintain optimum operating efficiencies; these projected levels of capital expenditures, however, exclude the costs associated with complying with MACT, and since we are subject to MACT, the cost of complying with MACT could raise actual capital expenditures significantly above these projected levels; and - substantial funds required for general corporate, other expenses and additional funds for working capital fluctuations. We may choose to meet any additional financial needs by borrowing additional funds under the New Credit Facility or from other sources. There can be no assurance, however, that we will have timely access to any additional financing sources on acceptable terms. Our ability to issue debt securities, borrow funds from additional lenders and participate in vendor financing programs will be restricted under the terms of the New Credit Facility and the indentures governing the Notes and our 13% New Subordinated Notes due 2013. Furthermore, we cannot be certain that the lenders will waive these restrictions if additional financing is needed beyond that which is currently permitted. TERRORIST ATTACKS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS, OUR ABILITY TO RAISE CAPITAL OR OUR FUTURE GROWTH. The impact that terrorist attacks, such as those carried out on September 11, 2001, may have on our industry in general, and on us in particular, is unknown at this time. Such attacks, and the uncertainty surrounding them, may impact our operations in unpredictable ways, including disruptions of rail lines, highways and fuel supplies and the possibility that our facilities could be direct targets of, or indirect casualties of, an act of terror. In addition, war or risk of war may also have an adverse effect on the economy. A decline in economic activity could adversely affect our revenues or restrict our future growth. Instability in the financial markets as a result of terrorism or war could also affect our ability to raise capital. Such attacks may lead to increased volatility in fuel costs and availability and could affect the results of operations. In addition, the insurance premiums charged for some or all of the coverages we currently maintain could increase dramatically, or the coverages could be unavailable in the future. BECAUSE OF THE PLAN OF REORGANIZATION, OUR FINANCIAL INFORMATION AFTER OCTOBER 1, 2003 IS NOT COMPARABLE TO OUR FINANCIAL INFORMATION PRIOR THERETO. As a result of the consummation of the Plan of Reorganization, we are operating our business under a new capital structure. In addition, we are subject to the fresh-start reporting rules. Fresh-start reporting requires that, upon our emergence from Chapter 11 proceedings, we establish a "fair value" basis for the carrying value of the assets and liabilities of our reorganized company. Although the effective date of the Plan of Reorganization was October 8, 2003, hereinafter referred to as the Effective Date, due to the 12 immateriality of the results of operations for the period between October 1, 2003 and the Effective Date, we accounted for the consummation of the Plan of Reorganization as if it had occurred on October 1, 2003 and implemented fresh-start reporting as of that date. Accordingly, our financial condition and results of operations after October 1, 2003, the initial date of fresh-start reporting, is not comparable to the financial condition or results of operations reflected in the historical financial statements contained in this prospectus. See "Selected Consolidated Financial Data" and the financial statements and related footnotes attached hereto. RISKS RELATING TO OUR INDEBTEDNESS OUR SUBSTANTIAL INDEBTEDNESS MAY LIMIT CASH FLOW AVAILABLE TO INVEST IN THE ONGOING NEEDS OF OUR BUSINESS TO GENERATE FUTURE CASH FLOW. As a result of the Plan of Reorganization, our outstanding debt at November 30, 2003 was approximately $269 million. We may also incur additional debt from time to time to finance working capital, capital expenditures and other general corporate purposes. Our substantial indebtedness could have important consequences to holders of our Notes. For example, it could: - require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes; - increase the amount of interest expense that we have to pay, because certain of our borrowings are at variable rates of interest, which, if interest rates increase, could result in higher interest expense; - increase our vulnerability to adverse general economic or industry conditions; - limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; or - place us at a competitive disadvantage compared to our competitors that have less debt. See "Management's Discussion and Analysis of Financial Condition and Results of Operation -- Liquidity and Capital Resources -- Contractual Obligations and Commercial Commitments." CLAIMS OF HOLDERS OF THE NOTES WILL BE EFFECTIVELY SUBORDINATED TO CLAIMS OF HOLDERS OF LIENS SECURING OUR NEW CREDIT FACILITY AND THE NOTES. The Indenture governing the Notes stipulates that the Notes are pari passu in right of payment to the New Credit Facility and the associated guarantees. The liens securing the Notes are junior to the liens securing the New Credit Facility and guarantees thereof. Thus, in the event of any distribution or payment of our assets in any bankruptcy, liquidation or distribution or similar proceeding, holders of liens securing the New Credit Agreement will be paid before the liens securing the Notes. Both the liens securing the Credit Agreement and the liens securing the Notes will be satisfied before payment is made on the Notes. If any of these events occur, we cannot assure you that there would be sufficient assets to pay amounts due on the Notes. Holders of the Notes, may therefore, receive less, ratably, than holders of our liens securing the Credit Agreement and Notes. THE NOTES ARE SECURED BY OUR ASSETS ON A SUBORDINATED BASIS, AND THE LENDERS UNDER OUR NEW CREDIT FACILITY WILL BE ENTITLED TO REMEDIES AVAILABLE TO A SECURED LENDER, WHICH GIVES THEM PRIORITY OVER THE NOTE HOLDERS TO COLLECT AMOUNTS DUE ON OUR DEBT. The Notes and subsidiary guarantees will be secured by our assets on a subordinated basis. Our obligations under our credit facility are secured by, and among other things, a first priority pledge of all of our capital stock, mortgages upon most of the real property that we own in the United States and by substantially all of our assets and each of our existing and subsequently acquired or organized material domestic subsidiaries. If we become insolvent or are liquidated, or if payment under our credit facility or in respect of any other secured indebtedness that is senior to the Notes is accelerated, the lenders under 13 our credit facility or holders of other secured senior indebtedness will be entitled to exercise the remedies available to a secured lender under applicable law in addition to any remedies that may be available under documents pertaining to our credit facility or the other senior debt. Upon the occurrence of any default under the New Credit Facility, the lenders may be able to prohibit the payment of the Notes and subsidiary guarantees either by limiting our ability to access our cash flow or under the subordination provisions contained in the security documents in respect of the Notes. WE MAY NOT HAVE SUFFICIENT FUNDS, OR THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE GOVERNING THE NOTES. If certain specific kinds of change of control events occur, we will be required to offer to repurchase all outstanding Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. It is possible, however, that we will not have sufficient funds at the time of the change of control to make the required repurchase of the Notes or that restrictions in our credit facility will not allow those repurchases. The source of funds for that purchase of Notes will be our available cash or cash generated from our subsidiaries' operations or other sources, including borrowing, sales of assets or sales of equity. We cannot assure you that sufficient funds will be available at the time of any change of control to make required repurchases of Notes tendered. In addition, the terms of our New Credit Facility limit our ability to repurchase the Notes. Our future debt agreements may contain similar restrictions and provisions. If the holders of the Notes exercise their right to require us to repurchase all of the Notes upon a change of control, the financial effect of this repurchase could cause a default under our other debt, even if the change of control itself would not cause a default. Accordingly, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of Notes or that restrictions in our New Credit Facility and the indentures governing the Notes and our 13% Senior Subordinated Notes due 2013 will not allow such repurchases. See "Description of Notes -- Change of Control" and "Description of New Credit Facility" for additional information. FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee: - received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and - was insolvent or rendered insolvent by reason of such incurrence; or - was engaged in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or - intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if: - the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets; or 14 - if the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities as they become absolute and mature; or - it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee of these senior subordinated notes, will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making such determinations or that a court would agree with our conclusions in this regard. WE CANNOT ASSURE YOU THAT WE CAN COMPLY WITH OUR COVENANTS. The terms and conditions of the indenture governing the Notes and our New Credit Facility impose restrictions that limit, among other things, our ability to: - incur additional indebtedness; - create liens on assets; - sell assets; - engage in mergers or consolidations; - make acquisitions and investments; - engage in certain transactions with affiliates; and - make dividends, payments and certain other distributions. In addition, our New Credit Facility requires us to maintain specified financial ratios and satisfy certain financial condition tests that may require that we take action to reduce our debt or to act in a manner contrary to our business objectives. Events beyond our control, including changes in general economic and business conditions, may affect our ability to meet those financial ratios and financial condition tests. We cannot assure you that we will meet those tests or that the lenders under the New Credit Facility will waive any failure to meet those tests. A breach of any of these covenants would result in a default under our New Credit Facility and the indenture. If an event of default under our New Credit Facility occurs, the lenders could elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable. In such an event, we cannot assure you that we would have sufficient assets to pay amounts due on the Notes. As a result, you may receive less than the full amount you would be otherwise entitled to receive on the Notes. See "Description of New Credit Facility" and "Description of Notes" for additional information. 15 THE EXCHANGE OFFER TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OUTSTANDING NEW NOTES Pursuant to the Plan of Reorganization, we conducted a rights offering, whereby holders of the 11 1/8% Notes were given the opportunity to provide up to $110.0 million additional financing through the purchase of up to $119.996 million face amount of Old Notes and warrants to acquire up to 34.2 million shares of common stock of ACP. In case holders of the 11 1/8% Notes failed to subscribe for the full $110.0 million, we also obtained standby commitment agreements from Mackay Shields LLC, Exis Differential Holdings Ltd., Citicorp Mezzanine III, L.P., Trust Company of the West and Metropolitan Life Insurance Company whereby these Standby Purchasers collectively agreed to provide up to $110.0 million of financing for the Plan of Reorganization by participating in the rights offering (to the extent that they were holders of the 11 1/8% Notes) as well as purchasing any and all unsubscribed securities not subscribed for by the other holders of 11 1/8% Notes. Approximately 94% of the holders of the 11 1/8% Notes participated in the rights offering and the Standby Purchasers were, therefore, only required to fund the shortfall of approximately $6.4 million. We also offered $13.134 million of Old Notes, warrants to purchase 3.8 million shares of common stock of ACP and $0.05 million to Citicorp Mezzanine III, L.P. in exchange for surrender of the PIK Note. We issued the Old Notes on October 8, 2003 and entered into a registration rights agreement with the Standby Purchasers and Citicorp Mezzanine III, L.P. The registration rights agreement requires that we register the Old Notes with the Commission and offer to exchange the registered New Notes for the outstanding Old Notes issued on October 8, 2003. We will accept any validly tendered Old Notes that you do not withdraw before 5:00 p.m., New York City time, on the expiration date. We will issue $1,000 of principal amount at maturity of New Notes in exchange for each $1,000 principal amount at maturity of your outstanding Old Notes. You may tender some or all of your Old Notes in the exchange offer. The form and terms of the New Notes are the same as the form and terms of the outstanding Old Notes except that: (1) the New Notes being issued in the exchange offer will be registered under the Securities Act and will not have legends restricting their transfer; (2) the New Notes being issued in the exchange offer will not contain the registration rights and liquidated damages provisions contained in the outstanding Old Notes; and (3) interest on the New Notes will accrue from the last interest date on which interest was paid on your Old Notes. Outstanding Old Notes that we accept for exchange will not accrue interest after we complete the exchange offer. The exchange offer will expire at 5:00 p.m., New York City time, on [ ], 2004, unless we extend it. If we extend the exchange offer, we will issue a notice by press release or other public announcement before 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. We reserve the right, in our sole discretion: (1) to extend the exchange offer; (2) to delay accepting your Old Notes; (3) to terminate the exchange offer and not accept any Old Notes for exchange if any of the conditions have not been satisfied; or (4) to amend the exchange offer in any manner. 16 We will promptly give oral or written notice of any extension, delay, non-acceptance, termination or amendment. We will also file a post-effective amendment with the Commission if we amend the terms of the exchange offer. If we extend the exchange offer, Old Notes that you have previously tendered will still be subject to the exchange offer and we may accept them. We will promptly return your Old Notes if we do not accept them for exchange for any reason without expense to you after the exchange offer expires or terminates. PROCEDURES FOR TENDERING OLD NOTES HELD THROUGH BROKERS AND BANKS Since the Old Notes are represented by global book-entry notes, DTC, as depositary, or its nominee is treated as the registered holder of the notes and will be the only entity that can tender your Old Notes for New Notes. Therefore, to tender notes subject to this exchange offer and to obtain New Notes, you must instruct the institution where you keep your old notes to tender your notes on your behalf so that they are received on or prior to the expiration of this exchange offer. The BLUE-colored "Letter of Election and Instructions to Broker or Bank" that may accompany this prospectus may be used by you to give such instructions. YOU SHOULD CONSULT YOUR ACCOUNT REPRESENTATIVE AT THE BROKER OR BANK WHERE YOU KEEP YOUR NOTES TO DETERMINE THE PREFERRED PROCEDURE. IF YOU WISH TO ACCEPT THIS EXCHANGE OFFER, PLEASE INSTRUCT YOUR BROKER OR ACCOUNT REPRESENTATIVE IN TIME FOR YOUR OLD NOTES TO BE TENDERED BEFORE THE 5:00 PM (NEW YORK CITY TIME) DEADLINE ON , 2004. You may tender some or all of your Old Notes in this exchange offer. However, notes may be tendered only in integral multiples of $1,000. When you tender your outstanding Old Notes and we accept them, the tender will be a binding agreement between you and us in accordance with the terms and conditions in this prospectus. The method of delivery of outstanding Old Notes and all other required documents to the exchange agent is at your election and risk. We will decide all questions about the validity, form, eligibility, acceptance and withdrawal of tendered Old Notes, and our determination will be final and binding on you. We reserve the absolute right to: (1) reject any and all tenders of any particular note not properly tendered; (2) refuse to accept any Old Note if, in our judgment or the judgment of our counsel, the acceptance would be unlawful; and (3) waive any defects or irregularities or conditions of the exchange offer as to any particular Old Note either before or after the expiration date. This includes the right to waive the ineligibility of any holder who seeks to tender Old Notes in the exchange offer. Our interpretation of the terms and conditions of the exchange offer will be final and binding on all parties. You must cure any defects or irregularities in connection with tenders of Old Notes as we will determine. Neither Neenah, the exchange agent nor any other person will incur any liability for failure to notify you of any defect or irregularity with respect to your tender of Old Notes. DEEMED REPRESENTATIONS To participate in the exchange offer, we require that you represent to us that: (1) you or any other person acquiring New Notes for your outstanding Old Notes in the exchange offer is acquiring them in the ordinary course of business; 17 (2) neither you nor any other person acquiring New Notes in exchange for your outstanding Old Notes is engaging in or intends to engage in a distribution of the New Notes issued in the exchange offer; (3) neither you nor any other person acquiring New Notes in exchange for your outstanding Old Notes has an arrangement or understanding with any person to participate in the distribution of New Notes issued in the exchange offer; (4) neither you nor any other person acquiring New Notes in exchange for your outstanding Old Notes is our "affiliate" as defined under Rule 405 of the Securities Act; and (5) if you or another person acquiring New Notes for your outstanding Old Notes is a broker-dealer, you will receive New Notes for your own account, you acquired New Notes as a result of market-making activities or other trading activities, and you acknowledge that you will deliver a prospectus in connection with any resale of your New Notes. BY TENDERING YOUR OLD NOTES YOU ARE DEEMED TO HAVE MADE THESE REPRESENTATIONS. Broker-dealers who cannot make the representations in item (5) of the paragraph above cannot use this exchange offer prospectus in connection with resales of the New Notes issued in the exchange offer. If you are our "affiliate," as defined under Rule 405 of the Securities Act, you are a broker-dealer who acquired your outstanding Old Notes in the initial offering and not as a result of market-making or trading activities, or if you are engaged in or intend to engage in or have an arrangement or understanding with any person to participate in a distribution of New Notes acquired in the exchange offer, you or that person: (1) may not rely on the applicable interpretations of the staff of the Commission; and (2) must comply with the registration and prospectus delivery requirements of the Securities Act when reselling the New Notes. PROCEDURES FOR BROKERS AND CUSTODIAN BANKS; DTC ATOP ACCOUNT In order to accept this exchange offer on behalf of a holder of Old Notes you must submit or cause your DTC participant to submit an Agent's Message as described below. The exchange agent, on our behalf, will seek to establish an Automated Tender Offer Program ("ATOP") account with respect to the outstanding notes at DTC promptly after the delivery of this prospectus. Any financial institution that is a DTC participant, including your broker or bank, may make book-entry tender of outstanding old notes by causing the book-entry transfer of such notes into our ATOP account in accordance with DTC's procedures for such transfers. Concurrently with the delivery of Old Notes, an Agent's Message in connection with such book-entry transfer must be transmitted by DTC to, and received by, the exchange agent on or prior to 5:00 pm, New York City Time on the expiration date. The confirmation of a book-entry transfer into the ATOP account as described above is referred to herein as a "Book-Entry Confirmation." The term "Agent's Message" means a message transmitted by the DTC participants to DTC, and thereafter transmitted by DTC to the exchange agent, forming a part of the Book-Entry Confirmation which states that DTC has received an express acknowledgment from the participant in DTC described in such Agent's Message stating that such participant and beneficial holder agree to be bound by the terms of this exchange offer. Each Agent's Message must include the following information: 1. Name of the beneficial owner tendering such notes; 2. Account number of the beneficial owner tendering such notes; and 3. Principal amount of notes tendered by such beneficial owner. 18 BY SENDING AN AGENT'S MESSAGE THE DTC PARTICIPANT IS DEEMED TO HAVE CERTIFIED THAT THE BENEFICIAL HOLDER FOR WHOM NOTES ARE BEING TENDERED HAS BEEN PROVIDED WITH A COPY OF THIS PROSPECTUS. The delivery of notes through DTC, and any transmission of an Agent's Message through ATOP, is at the election and risk of the person tendering notes. We will ask the exchange agent to instruct DTC to return those Old Notes, if any, that were tendered through ATOP but were not accepted by us, to the DTC participant that tendered such notes on behalf of holders of the notes. Neither we nor the exchange agent is responsible or liable for the return of such notes to the tendering DTC participants or to their owners, nor as to the time by which such return is completed. ACCEPTANCE OF OUTSTANDING OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES ISSUED IN THE EXCHANGE OFFER We will accept validly tendered Old Notes when the conditions to the exchange offer have been satisfied or we have waived them. We will have accepted your validly tendered Old Notes when we have given oral or written notice to the exchange agent. The exchange agent will act as agent for the tendering holders for the purpose of receiving the New Notes from us. If we do not accept any tendered Old Notes for exchange because of an invalid tender or other valid reason, the exchange agent will return the certificates, without expense, to the tendering holder. If a holder has tendered Old Notes by book-entry transfer, we will credit the notes to an account maintained with The Depository Trust Company. We will credit the account at The Depository Trust Company as promptly as practicable after the exchange offer terminates or expires. THE AGENT'S MESSAGE MUST BE TRANSMITTED TO EXCHANGE AGENT ON OR BEFORE 5:00 PM, NEW YORK CITY TIME, ON THE EXPIRATION DATE. WITHDRAWAL RIGHTS You may withdraw your tender of outstanding notes at any time before 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective, you should contact your bank or broker where your Old Notes are held and have them send and ATOP notice of withdrawal so that it is received by the exchange agent before 5:00 p.m., New York City time, on the expiration date. Such notice of withdrawal must: (1) specify the name of the person that tendered the Old Notes to be withdrawn; (2) identify the Old Notes to be withdrawn, including the CUSIP number and principal amount at maturity of the Old Notes; (3) specify the name and number of an account at The Depository Trust Company to which your withdrawn Old Notes can be credited. We will decide all questions as to the validity, form and eligibility of the notices and our determination will be final and binding on all parties. Any tendered Old Notes that you withdraw will be not be considered to have been validly tendered. We will return any outstanding Old Notes that have been tendered but not exchanged, or credit them to The Depository Trust Company account, as soon as practicable after withdrawal, rejection of tender, or termination of the exchange offer. You may re-tender properly withdrawn Old Notes by following one of the procedures described above before the expiration date. 19 CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision herein, we are not required to accept for exchange, or to issue New Notes in exchange for, any outstanding Old Notes. We may terminate or amend the exchange offer, if at any time before the acceptance of outstanding notes: (1) any federal law, statute, rule or regulation has been adopted or enacted which, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer; (2) if any stop order is threatened or in effect with respect to the registration statement which this prospectus is a part of or the qualification of the indenture under the Trust Indenture Act of 1939; or (3) there is a change in the current interpretation by the staff of the Commission which permits holders who have made the required representations to us to resell, offer for resale, or otherwise transfer New Notes issued in the exchange offer without registration of the New Notes and delivery of a prospectus, as discussed above. These conditions are for our sole benefit and we may assert or waive them at any time and for any reason. However, the exchange offer will remain open for at least five business days following any waiver of the preceding conditions. Our failure to exercise any of the foregoing rights will not be a waiver of our rights. EXCHANGE AGENT You should direct questions, requests for assistance, and requests for additional copies of this prospectus and the BLUE-colored "Letter of elections and Instructions to Brokers or Bank" to the exchange agent at [ ]. FEES AND EXPENSES We will not make any payment to brokers, dealers, or others soliciting acceptances of the exchange offer except for reimbursement of mailing expenses. We will pay the estimated cash expenses connected with the exchange offer. We estimate that these expenses will be approximately $[ ]. ACCOUNTING TREATMENT The New Notes will be recorded at the same carrying value as the existing Old Notes, as reflected in our accounting records on the date of exchange. Accordingly, we will recognize no gain or loss for accounting purposes. The expenses of the exchange offer will be expensed over the term of the New Notes. TRANSFER TAXES If you tender outstanding Old Notes for exchange you will not be obligated to pay any transfer taxes. However, if you instruct us to register New Notes in the name of, or request that your Old Notes not tendered or not accepted in the exchange offer be returned to, a person other than you, you will be responsible for paying any transfer tax owed. YOU MAY SUFFER ADVERSE CONSEQUENCES IF YOU FAIL TO EXCHANGE OUTSTANDING OLD NOTES If you do not tender your outstanding Old Notes, you will not have any further registration rights, except for the rights described in the registration rights agreement and described above, and your Old Notes will continue to be subject to restrictions on transfer when we complete the exchange offer. Accordingly, if you do not tender your notes in the exchange offer, your ability to sell your Old Notes could be adversely affected. Once we have completed the exchange offer, holders who have not tendered 20 notes will not continue to be entitled to any increase in interest rate that the indenture provides for if we do not complete the exchange offer. Holders of the New Notes issued in the exchange offer and Old Notes that are not tendered in the exchange offer will vote together as a single class under the indenture governing the Notes. CONSEQUENCES OF EXCHANGING OUTSTANDING OLD NOTES If you make the representations that we discuss above, we believe that you may offer, sell or otherwise transfer the New Notes to another party without registration of your notes or delivery of a prospectus. We base our belief on interpretations by the staff of the Commission in no-action letters issued to third parties. If you cannot make these representations, you cannot rely on this interpretation by the Commission's staff and you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a resale of the Old Notes. A broker-dealer that receives New Notes for its own account in exchange for its outstanding Old Notes must acknowledge that it acquired as a result of market making activities or other trading activities and that it will deliver a prospectus in connection with any resale of the New Notes. Broker-dealers who can make these representations may use this exchange offer prospectus, as supplemented or amended, in connection with resales of New Notes issued in the exchange offer. However, because the Commission has not issued a no-action letter in connection with this exchange offer, we cannot be sure that the staff of the Commission would make a similar determination regarding the exchange offer as it has made in similar circumstances. SHELF REGISTRATION The registration rights agreement also requires that we file a shelf registration statement if: (1) we cannot file a registration statement for the exchange offer because the exchange offer is not permitted by law; (2) a law or Commission policy prohibits a holder from participating in the exchange offer; (3) a holder cannot resell the New Notes it acquires in the exchange offer without delivering a prospectus and this prospectus is not appropriate or available for resales by the holder; or (4) a holder is a broker-dealer and holds notes acquired directly from us or one of our affiliates. We will also register the New Notes under the securities laws of jurisdictions that holders may request before offering or selling notes in a public offering. We do not intend to register New Notes in any jurisdiction unless a holder requests that we do so. Old Notes may be subject to restrictions on transfer until: (1) a person other than a broker-dealer has exchanged the Old Notes in the exchange offer; (2) a broker-dealer has exchanged the Old Notes in the exchange offer and sells them to a purchaser that receives a prospectus from the broker, dealer on or before the sale; (3) the Old Notes are sold under an effective shelf registration statement that we have filed; or (4) the Old Notes are sold to the public under Rule 144 of the Securities Act. 21 THE REFINANCING TRANSACTIONS In connection with the Plan of Reorganization and concurrently with the issuance of the Old Notes, we consummated the following refinancing transactions: REPAYMENT OF OLD CREDIT FACILITY We paid in full our obligations under the old credit facility (including accrued interest) of $148.2 million. CANCELLATION OF SENIOR SUBORDINATED NOTES All of our outstanding 11 1/8% Notes (including accrued interest) were cancelled in exchange for (i) $30.0 million in cash, (ii) $100.0 million in aggregate principal amount of New Subordinated Notes and (iii) 38 million shares of common stock of ACP. Each of the holders of the 11 1/8% Notes was also offered the opportunity to purchase its pro rata share of Old Notes and warrants to acquire up to 34.2 million shares of the common stock of ACP. CANCELLATION OF PIK NOTE Our 14% senior secured paid-in-kind note in an original aggregate principal amount of $9.9 million (plus accrued and unpaid interest thereon), or PIK Note, was cancelled in exchange for (i) Old Notes with a principal amount equal to $13.134 million and warrants to acquire 3.8 million shares of common stock of ACP and (ii) cash in the amount of $45,400. CONSUMMATION OF NEW CREDIT FACILITY We entered into the New Credit Facility with a syndicate of financial institutions for which Fleet Capital Corporation acts as agent, Fleet Securities, Inc. acts as arranger, Congress Financial Corporation (Central) acts individually and as syndication agent and General Electric Capital Corporation acts individually and as documentation agent. The New Credit Facility is a five-year facility providing for a term loan of $22.085 million and a revolving credit facility (with a $5.0 million sublimit for the issuance of letters of credit) for borrowings of up to $70.0 million, of which $25.027 million was drawn at the Effective Date. See "Description of New Credit Facility." ISSUANCE OF OLD NOTES We conducted a rights offering, whereby holders of the 11 1/8% Notes were given the opportunity to provide up to $110.0 million of financing through the purchase of up to $119.996 million face amount of Old Notes and warrants to acquire up to 34.2 million shares of common stock of ACP. In case holders of the 11 1/8% Notes failed to subscribe for the full $110.0 million, we also obtained standby commitment agreements from Mackay Shields LLC, Exis Differential Holdings Ltd., Citicorp Mezzanine III, L.P., Trust Company of the West and Metropolitan Life Insurance Company whereby these Standby Purchasers collectively agreed to provide up to the full $110.0 million of financing for the Plan of Reorganization by participating in the rights offering (to the extent that they were holders of the 11 1/8% Notes) as well as purchasing any and all unsubscribed securities not subscribed for by the other holders of 11 1/8% Notes. Approximately 94% of the holders of the 11 1/8% Notes participated in the rights offering, purchasing approximately $113.0 million face amount of Old Notes for approximately $103.6 million. The Standby Purchasers were, therefore, only required to purchase approximately $7.0 million face amount of Old Notes for approximately $6.4 million. ISSUANCE OF 13% SENIOR SUBORDINATED NOTES DUE 2013 We issued $100.0 million in aggregate principal amount of 13% (of which 8% may be paid in kind) senior subordinated notes due September 30, 2013 to the holders of the 11 1/8% Notes in partial satisfaction 22 of the claims against us. The new subordinated notes are contractually subordinated to the New Credit Facility and the Old Notes and the liens and guarantees thereof. ISSUANCE OF NEW ACP HOLDINGS COMMON STOCK We issued 38 million shares of common stock in ACP Holding Company to the holders of the 11 1/8% Notes and 4 million shares to management. ISSUANCE OF WARRANTS EXERCISABLE FOR COMMON STOCK OF ACP We issued warrants exercisable for 38 million shares of common stock of ACP to the holders of the 11 1/8% Notes who participated in the rights offering, the Standby Purchasers and Citicorp Mezzanine III, L.P., the holder of the PIK Note. USE OF PROCEEDS The Old Notes were issued on October 8, 2003 to holders of the 11 1/8% Notes that participated in the rights offering, certain holders of the 11 1/8% Notes who agreed to act as standby purchasers and purchase up to $110.0 million of Old Notes and Citicorp Mezzanine III, L.P., as the holder of the PIK Note. We received approximately $103.6 million from holders of the 11 1/8% Notes and approximately $6.4 million from the Standby Purchasers. The net proceeds from the offering of the Old Notes were used to repay the old credit facility, pay transaction fees and expenses and for general corporate purposes. We will not receive any cash proceeds from the issuance of the New Notes in the exchange offer. In consideration for issuing the New Notes as contemplated in this prospectus, we will receive existing Old Notes in equal principal amount at maturity, the terms of which are the same in all material respects to the New Notes. The Old Notes surrendered in exchange for the New Notes will be retired or cancelled and not reissued. Accordingly, the issuance of the New Notes will not result in any increase or decrease in our debt. 23 CAPITALIZATION The following table sets forth our consolidated cash and cash equivalents and capitalization as of September 30, 2003 on a historical basis and on a pro forma basis after giving effect to the Plan of Reorganization. The terms of our Plan of Reorganization are described below in the section captioned "Business -- Bankruptcy Proceedings." This table should be read in conjunction with our consolidated financial statements and the related notes to the consolidated financial statements included elsewhere in this prospectus. All amounts are presented in thousands.
AS OF SEPTEMBER 30, 2003 ------------------------ ACTUAL PRO FORMA ---------- ----------- (IN THOUSANDS) Cash and cash equivalents................................... $ 24,356 $ -- ======== ======== Debt: Senior Bank Facility: Revolver............................................... $ 29,314 $ 25,027 Term facilities........................................ 118,127 22,085 11% Senior Secured Notes due 2010, net of discount of $11,692................................................ -- 121,438 13% Senior Subordinated Notes due 2013.................... -- 100,000 11 1/8% Senior Subordinated Notes due 2007................ 282,000 -- PIK Note.................................................. 9,900 -- Capital lease obligations................................. 4,229 4,229 Other debt................................................ 16 -- -------- -------- Total debt................................................ 443,586 272,779 Total stockholder's equity (deficit)........................ (39,016) 5,529 -------- -------- Total capitalization........................................ $404,570 $278,308 ======== ========
24 SELECTED CONSOLIDATED FINANCIAL DATA On August 5, 2003, ACP, NFC, Neenah and their domestic wholly-owned domestic subsidiaries filed for bankruptcy protection and emerged therefrom on October 8, 2003. Although the Plan of Reorganization became effective on October 8, 2003, due to the immateriality of the results of operations for the period between October 1, 2003 and the Effective Date, for financial reporting purposes we recorded the fresh-start adjustments necessitated by 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") on October 1, 2003. As a result of our emergence from Chapter 11 bankruptcy and the application of fresh-start reporting, our consolidated financial statements for the periods commencing on October 1, 2003 will be referred to as the "Successor Company" and will not be comparable with any periods prior to October 1, 2003, which are referred to as the "Predecessor Company" (see Notes 1, 2 and 3 to our consolidated financial statements). All references to years ending September 30, 2003, 2002, 2000, 2001 and 1999 are to the Predecessor Company. All references to the periods subsequent to October 1, 2003 are to the Successor Company. The following table presents our selected historical consolidated financial data as of and for the year ended September 30, 2003, and for each of the years in the four-year period ended September 30, 2002 for the Predecessor Company, derived from audited consolidated financial statements. The selected historical data should be read in conjunction with the financial statements and the related notes and other information contained elsewhere in this report, including the information set forth under the headings "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." All amounts are presented in thousands.
FISCAL YEAR ENDED SEPTEMBER 30, ------------------------------------------------------------------------ 1999(2)(3)(4) 2000(2)(3)(4)(5) 2001(2)(3)(4) 2002(3)(4) 2003(4) ------------- ---------------- ------------- ---------- -------- STATEMENT OF OPERATIONS DATA: Net sales.......................... $477,353 $488,195 $398,782 $387,707 $375,063 Cost of sales...................... 381,841 391,646 335,264 323,740 321,834 -------- -------- -------- -------- -------- Gross profit....................... 95,512 96,549 63,518 63,967 53,229 Selling, general and administrative expenses......................... 31,137 33,093 27,587 28,743 26,132 Amortization expense............... 10,958 10,379 10,489 3,829 3,819 Provision for impairment of assets........................... -- -- -- 74 -- Other expenses (income)(1)......... 7,518 85 (434) 544 195 -------- -------- -------- -------- -------- Operating income................... 45,899 52,992 25,876 30,777 23,083 Interest expense, net.............. 38,870 42,971 43,009 42,647 46,620 Reorganization expense............. -- -- -- -- 7,874 -------- -------- -------- -------- -------- Income (loss) from continuing operations before taxes.......... 7,029 10,021 (17,133) (11,870) (31,411) Provision (credit) for income taxes............................ 4,336 6,094 (4,004) (5,917) (8,541) -------- -------- -------- -------- -------- Income (loss) from continuing operations....................... 2,693 3,927 (13,129) (5,953) (22,870) Loss from discontinued operations, net of income taxes.............. (4,585) (9,070) (4,325) (41,750) (1,095) Gain (loss) on sale of discontinued operations, net of income taxes............................ -- -- 2,404 -- (1,596) -------- -------- -------- -------- -------- Net loss........................... $ (1,892) $ (5,143) $(15,050) $(47,703) $(25,561) ======== ======== ======== ======== ======== BALANCE SHEET DATA (AT END OF PERIOD): Cash and cash equivalents.......... $ 17,368 $ 19,478 $ 4,346 $ 26,164 $ 24,356 Working capital.................... 83,962 86,080 72,140 65,050 103,683 Total assets....................... 641,702 666,218 626,443 569,388 536,834 Total debt......................... 428,007 449,607 434,077 451,432 439,357 Total stockholder's equity (deficit)........................ 63,750 58,518 41,939 (12,146) (39,016)
25 - --------------- (1) In 1999, other expenses includes a $6,713 charge related to the closure of Dalton Corporation's Ashland facility. (2) On October 2, 2000, we sold all of the issued and outstanding shares of common stock of Hartley Controls Corporation. The results of the operations of Hartley Controls Corporation have been reported separately as discontinued operations for all periods presented. (3) During the year ended September 30, 2002, we discontinued the operations of Cast Alloys. The results of Cast Alloys have been reported separately as discontinued operations for all periods presented. (4) During the year ended September 30, 2003, we sold substantially all of the assets of Belcher Corporation. The results of Belcher Corporation have been reported separately as discontinued operations for all periods presented. (5) The amounts include the results of Gregg Industries, Inc. subsequent to November 30, 1999. 26 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the "Selected Consolidated Financial Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This prospectus contains, in addition to historical information, forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. RESULTS OF OPERATIONS We derive substantially all of our revenue from manufacturing and marketing a wide range of metal castings and forgings for the heavy municipal market and selected segments of the industrial markets. We have two reportable segments, Castings and Forgings. The Castings segment is a leading producer of iron castings for use in heavy municipal and industrial applications. This segment sells directly to original equipment manufacturers, hereinafter referred to as OEMs, as well as to industrial end users. The forgings segment, operated by Mercer, is a producer of complex-shaped forged components for use in transportation, railroad, mining and heavy industrial applications. Mercer is also a producer of microalloy forgings. Mercer sells directly to OEMs, as well as to industrial end users. Mercer's subsidiary, A&M Specialties, Inc., machines forgings and castings for Mercer and other industrial applications. Restructuring charges and certain other expenses, such as income taxes, general corporate expenses and financing costs, are not allocated between our two operating segments. BANKRUPTCY PROCEEDINGS On August 5, 2003, we, together with ACP, NFC, and all of our wholly-owned domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, as amended, with the United States Bankruptcy Court for the District of Delaware and submitted to the Bankruptcy Court for approval the Disclosure Statement for our Amended Prepackaged Joint Chapter 11 Plan of Reorganization, which we call the Plan of Reorganization. By order dated September 26, 2003, the Bankruptcy Court confirmed the Plan of Reorganization and the Plan of Reorganization became effective on October 8, 2003. October 8, 2003 is hereinafter referred to as the Effective Date. The Plan of Reorganization allowed us to emerge from bankruptcy with an improved capital structure. Because we had arranged to continue paying our trade debt on a timely basis, we had sufficient trade credit to continue operations in the ordinary course of business during the pendency of the Chapter 11 proceedings. On the Effective Date, we entered into a new senior credit facility. See "Liquidity and Capital Resources -- New Credit Facility" below for further discussion. The Plan of Reorganization resulted in significant changes to our capital structure. Among other things, the Plan of Reorganization provided for the repayment in full of our old credit facility, the cancellation of $282.0 million in principal amount of 11 1/8% Notes, the cancellation of our PIK Note and the elimination of the interests of the former equity owners of our indirect parent company, ACP. The cash proceeds necessary to consummate the Plan of Reorganization were provided from the consummation of the New Credit Facility and the issuance of the Old Notes. The claims and interests of our various creditors were satisfied as follows: - our old credit facility was repaid in cash; - our PIK Note was cancelled and Citicorp Mezzanine III, L.P., the holder of that note, received Old Notes with a principal amount equal to $13.134 million, warrants to acquire 3.8 million shares of common stock of ACP and cash in the amount of $45,400; - our outstanding 11 1/8% Notes were cancelled and each holder of 11 1/8% Notes received its pro rata share of (i) $30.0 million in cash, (ii) $100.0 million in aggregate principal amount of new 13% Senior Subordinated Notes due 2013 of the Company, (iii) 38 million shares of common stock of ACP and (iv) rights to acquire for $110 million in cash in the aggregate, units for up to 27 $119.996 million face amount of Old Notes and warrants to acquire up to 34.2 million shares of common stock of ACP; - the following debt and equity instruments were cancelled without further consideration: 12% senior subordinated notes issued by ACP, 12% senior subordinated notes issued by NFC and all equity interests of ACP; and - the following claims and equity interests passed through our Chapter 11 bankruptcy proceedings unimpaired: all tax claims, intercompany debt, other secured debt and general unsecured debt and the equity interests of ACP Holding Company in NFC Castings, Inc., equity interests of NFC Castings, Inc. in Neenah and equity interests of Neenah in its direct and indirect subsidiaries. As a result of the Plan of Reorganization, significant changes resulted to our capital structure. See "Business -- Bankruptcy Proceedings." Although the Plan of Reorganization became effective on October 8, 2003, due to the immateriality of the results of operations for the period between October 1, 2003 and the Effective Date, for financial reporting purposes we recorded the fresh-start adjustments necessitated by 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") on October 1, 2003. Reorganization value is defined by SOP 90-7 as "the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring." Our reorganization value was $290 million and was determined based on the consideration of many factors and by reliance on various valuation techniques, including comparable company analysis and discounted cash flow analyses. The factors considered included, but were not limited to, the following: - forecasted operating and cash flow results which gave effect to the estimated impact of the changes in our capital structure contemplated by the Plan of Reorganization; - discounted cash flow analyses using an EBITDA multiple or perpetual growth rate to determine a terminal value; - estimated values of our net operating loss carryforwards; - consideration of market values of comparable companies; - market share and position; and - competition and general economic considerations. As a result of our emergence from Chapter 11 bankruptcy and the application of fresh-start reporting, our consolidated financial statements for the periods commencing on October 1, 2003 will be referred to as the "Successor Company" and will not be comparable with any periods prior to October 1, 2003, which are referred to as the "Predecessor Company" (see Notes 1, 2 and 3 to our consolidated financial statements). All references to years ending September 30, 2003, 2002, 2000, 2001 and 1999 are to the Predecessor Company. All references to the periods subsequent to October 1, 2003 are to the Successor Company. PREDECESSOR COMPANY FISCAL YEAR ENDED SEPTEMBER 30, 2003 COMPARED TO THE FISCAL YEAR ENDED SEPTEMBER 30, 2002 Net Sales. Net sales for the year ended September 30, 2003 were $375.1 million, which was $12.6 million or 3.2% lower than the year ended September 30, 2002. The decrease in net sales resulted from a decreased demand for industrial castings used for the heavy duty truck market. This decrease in demand was caused by prior year demand being inflated by pre-buying to avoid new engine emission standards that became effective October 1, 2002. 28 Gross Profit. Gross profit was $53.2 million for the year ended September 30, 2003, which was $10.8 million or 16.9% lower than the year ended September 30, 2002. Gross profit as a percentage of net sales decreased to 14.2% during the year ended September 30, 2003 from 16.5% for the fiscal year ended September 30, 2002. The decrease in gross margin resulted from lower sales volume noted above, higher scrap metal prices and price compression in all market segments due to severe competitive pressures. Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended September 30, 2003 were $26.1 million, a decrease of $2.6 million from the $28.7 million for the year ended September 30, 2002. As a percentage of net sales, selling, general and administrative expenses decreased to 7.0% for the year ended September 30, 2003 from 7.4% for the fiscal year ended September 30, 2002. The decrease was due to cost cutting measures undertaken in response to the lower sales volume noted above. Amortization of Intangible Assets. Amortization of intangible assets for the years ended September 30, 2003 and 2002 was $3.8 million. Other Expenses. Other expenses for the years ended September 30, 2003 and 2002 consist of losses of $0.2 million and $0.5 million, respectively, for the disposal of long-lived assets in the ordinary course of business. Operating Income. Operating income was $23.1 million for the year ended September 30, 2003, a decrease of $7.7 million or 25.0% from the year ended September 30, 2002. The decrease was caused by the reasons discussed above under gross profit and was partially offset by lower selling, general and administrative expenses. As a percentage of net sales, operating income decreased from 7.9% for the year ended September 30, 2002 to 6.2% for the year ended September 30, 2003. Net Interest Expense. Net interest expense increased to $46.6 million for the year ended September 30, 2003 from $42.6 million for the year ended September 30, 2002. The increased interest expense resulted from interest accrued on the CVC PIK Note and an interest premium on our borrowings under our credit facility in the current year. In addition, $6.3 million of payments to bondholders in connection with the reorganization were classified as interest expense. We did not record $5.0 million of contractual interest expense for interest incurred on the 11 1/8% Notes subsequent to our filing voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. Reorganization Expense. We recorded $7.9 million of reorganization expenses in 2003 which related to professional fees incurred in connection with the restructuring of our company and our filing for Chapter 11 bankruptcy protection as well as the write-off of debt issuance costs and premiums related to the 11 1/8% Notes. Provision for Income Taxes. The credit for income taxes for the year ended September 30, 2003 is lower than the amount computed by applying our statutory rate of 35% to the loss before income taxes principally due to permanent differences related to the reorganization expenses incurred as noted above. Loss from Discontinued Operations. During December, 2002, we sold substantially all of the assets of Belcher. The disposition of Belcher resulted in a loss of $1,596 net of income taxes, which we recognized in the year ended September 30, 2003. In accordance with the provisions of Statement of Financial Accounting Standards No. 144, or SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the results of operations for Belcher have been reported as discontinued operations in the statement of operations for all periods presented. In January, 2002, management initiated a plan for the discontinuation of the operations of Cast Alloys, Inc., hereafter referred to as Cast Alloys, by closing its manufacturing facilities. In accordance with the provisions of SFAS 144, the results of operations for Cast Alloys have been reported as discontinued operations in the statement of operations for all periods presented. 29 PREDECESSOR COMPANY FISCAL YEAR ENDED SEPTEMBER 30, 2002 COMPARED TO THE FISCAL YEAR ENDED SEPTEMBER 30, 2001 Net Sales. Net sales for the year ended September 30, 2002 were $387.7 million, which was $11.1 million or 2.8% lower than the year ended September 30, 2001. The decrease in net sales resulted from weakness in the demand for industrial castings used for the HVAC market and an overall slowing of demand for castings in our other major markets. Gross Profit. Gross profit was $64.0 million for the year ended September 30, 2002, an increase of $5.0 million over the year ended September 30, 2001. Gross profit as a percentage of net sales increased to 16.5% during the year ended September 30, 2002 from 15.9% for the fiscal year ended September 30, 2001. Gross profit percentage was positively impacted during the year ended September 30, 2002 by modest reductions in raw material costs and improved efficiency in the manufacturing process. Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended September 30, 2002 were $28.7 million, an increase of $1.1 million from the $27.6 million for the year ended September 30, 2001. As a percentage of net sales, selling, general and administrative expenses increased to 7.4% for the year ended September 30, 2002 from 6.9% for the fiscal year ended September 30, 2001. The increase was due to increased professional fees paid in conjunction with debt refinancing and other corporate projects in 2002 and a favorable escrow refund received in 2001 which did not occur in 2002. Amortization of Intangible Assets. Amortization of intangible assets for the year ended September 30, 2002 was $3.8 million, a decrease of $6.7 million from the $10.5 million for the year ended September 30, 2001. The decrease was due to the adoption of Statement of Financial Accounting Standards No. 142, or SFAS 142, as of October 1, 2001. Under SFAS 142, goodwill is no longer amortized but instead is tested for impairment. Except for the discontinued operations of Cast Alloys there was no deemed impairment of intangible assets. Provision for Impairment of Assets. We recognized an impairment charge of $0.1 million related to a building held for sale during the year ended September 30, 2002. Other Expenses (Income). Other expenses (income) for the years ended September 30, 2002 and 2001 consist of losses of $0.5 million and gains of $0.4 million, respectively, for the disposal of long-lived assets in the ordinary course of business. Operating Income. Operating income was $30.8 million for the year ended September 30, 2002, an increase of $4.9 million or 18.9% from the year ended September 30, 2001. The increase was caused by the $6.7 million decrease in amortization expense, partially offset by a $1.1 million increase in selling, general and administrative expenses. As a percentage of net sales, operating income increased to 7.9% for the year ended September 30, 2002 from 6.5% for the year ended September 30, 2001. Net Interest Expense. Net interest expense decreased to $42.6 million for the year ended September 30, 2002 from $43.0 million for the year ended September 30, 2001. The decreased interest expense resulted from our principal debt repayments and lower interest rates on our credit facility, partially offset by the interest on the higher level of borrowings outstanding on our revolving credit facility during the year ended September 30, 2002 as compared to the year ended September 30, 2001. Provision for Income Taxes. The credit for income taxes for the year ended September 30, 2002 is higher than the amount computed by applying our statutory rate of approximately 35% to the loss before income taxes primarily due to permanent differences related to the discontinuance of Cast Alloys. Discontinued Operations. On October 2, 2000, we sold the common stock of Hartley Controls Corporation. The disposition of Hartley Controls Corporation resulted in a gain of $2.4 million, net of income taxes of $1.6 million, which was recorded during the year ended September 30, 2001. 30 LIQUIDITY AND CAPITAL RESOURCES New Credit Facility. In connection with our Chapter 11 filing and emergence therefrom, we entered into the New Credit Facility with a syndicate of financial institutions for which Fleet Capital Corporation acts as agent, Fleet Securities, Inc. acts as arranger, Congress Financial Corporation (Central) acts individually and as syndication agent and General Electric Capital Corporation acts individually and as documentation agent. The New Credit Facility has a five-year maturity and Neenah Foundry Company and all of its active domestic subsidiaries are the borrowers under the New Credit Facility. The New Credit Facility consists of a revolving credit facility of up to $70.0 million (with a $5.0 million sublimit available for letters of credit) and borrowing base term loans in the aggregate amount of $22.085 million. The New Credit Facility has a five-year maturity and bears interest at rates based on the lenders' Base Rate, as defined in the New Credit Facility or an adjusted rate based on LIBOR. Availability under the New Credit Facility is based on various advance rates against our accounts receivable and inventory. Amounts under the revolving credit facility may be borrowed, repaid and reborrowed subject to the terms of the facility. At October 8, 2003, we had approximately $25.0 million outstanding under the revolving credit facility and approximately $22.1 million outstanding under the term loan facility. No portion of the term loan, once repaid, may be reborrowed. The proceeds of the loan facility on the Effective Date were utilized to repay a portion of the old credit facility pursuant to the Plan of Reorganization and other cash distributions. NFC and the inactive subsidiaries of Neenah jointly and severally guarantee Neenah's obligations under the New Credit Facility, subject to customary exceptions for transactions of this type. The borrower's and guarantors' obligations under the New Credit Facility are secured by a first priority perfected security interest, subject to customary restrictions, in substantially all of Neenah's tangible and intangible assets. The Notes, and the guarantees in respect thereof, are equal in right of payment to the New Credit Facility, and the guarantees in respect thereof. The liens in respect of the Notes are junior to the liens securing the New Credit Facility and guarantees thereof. Voluntary prepayments may be made at any time on the term loan borrowings or the revolving borrowings upon customary prior notice. Prepayments on the term loan borrowings may be made at any time without premium or penalty unless a simultaneous prepayment is being made on the revolving borrowings or if any such prepayment has been made previously. For the first three years of the New Credit Facility, prepayments on the revolving borrowings are subject to certain premiums specified in the New Credit Facility. Mandatory repayments are required under certain circumstances, including a sale of assets or the issuance of debt or equity. The New Credit Facility requires Neenah to observe certain customary conditions, affirmative covenants and negative covenants including financial covenants. The New Credit Facility also contains events of default customary for these types of facilities, including, without limitation, payment defaults, material misrepresentations, covenant defaults, bankruptcy and a change of ownership of Neenah Foundry Company, NFC or ACP. 11% Senior Secured Notes due 2010. In connection with Neenah's Chapter 11 filing and emergence therefrom, Neenah issued Senior Secured Notes due 2010 in the principal amount of $133.1 million, with a coupon rate of 11%. The obligations under the senior secured notes are pari passu in right of payment to the New Credit Facility and the associated guarantees. The liens securing the senior secured notes are junior to the liens securing the New Credit Facility and guarantees thereof. The senior secured notes are subordinate to the New Credit Facility. Interest on the senior secured notes is payable on a semi-annual basis. Neenah's obligations under the notes are guaranteed on a secured basis by each of its wholly-owned subsidiaries. Subject to the restrictions in the New Credit Facility, the notes are redeemable at our option in whole or in part at any time after the fourth anniversary of their issuance, with not less than 30 days nor more than 60 days notice for an amount to be determined pursuant to a formula set forth in the indenture governing the notes. Upon the occurrence of a "change of control" as defined in the indenture governing the notes, Neenah Foundry Company may be required to make an offer to purchase the secured notes at 101% of the outstanding principal amount thereof, plus accrued and unpaid interest up to the 31 purchase date. The secured notes contain customary covenants typical to this type of financing, such as limitations on (1) indebtedness, (2) restricted payments, (3) liens, (4) restrictions on distributions from restricted subsidiaries, (5) sale of assets, (6) affiliate transactions, (7) mergers and consolidations and (8) lines of business. The secured notes also contain customary events of default typical to this type of financing, such as (1) failure to pay principal and/or interest when due, (2) failure to observe covenants, (3) certain events of bankruptcy, (4) the rendering of certain judgments or (5) the loss of any guarantee. 13% Senior Subordinated Notes due 2013. In connection with Neenah's Chapter 11 filing and emergence therefrom, Neenah Foundry Company issued Senior Subordinated Notes due 2013 in the principal amount of $100.0 million, with a coupon rate of 13%. The obligations under the senior subordinated notes are senior to all of Neenah Foundry Company's subordinated unsecured indebtedness and are subordinate to the New Credit Facility and the senior secured notes. Interest on the senior subordinated notes is payable on a semi-annual basis. Five percent of the interest on the senior subordinated notes will be paid in cash and 8% interest may be paid-in-kind. Neenah Foundry Company's obligations under the notes are guaranteed on an unsecured basis by each of its wholly-owned subsidiaries. Subject to the restrictions in the New Credit Facility, the notes are redeemable at our option in whole or in part at any time, with not less than 30 days nor more than 60 days notice for an amount to be determined pursuant to a formula set forth in the indenture governing the notes. Upon the occurrence of a "change of control" as defined in the indenture governing the notes, Neenah Foundry Company may be required to make an offer to purchase the subordinated notes at 101% of the outstanding principal amount thereof, plus accrued and unpaid interest up to the purchase date. The subordinated notes contain customary covenants typical to this type of financing, such as limitations on (1) indebtedness, (2) restricted payments, (3) liens, (4) restrictions on distributions from restricted subsidiaries, (5) sale of assets, (6) affiliate transactions, (7) mergers and consolidations and (8) lines of business. The subordinated notes also contain customary events of default typical to this type of financing, such as, (1) failure to pay principal and/or interest when due, (2) failure to observe covenants, (3) certain events of bankruptcy, (4) the rendering of certain judgments or (5) the loss of any guarantee. Future Capital Needs. Despite our significant decrease in leverage as a result of the Plan of Reorganization, we are still significantly leveraged and our ability to meet our debt obligations will depend upon future operating performance which will be affected by many factors, some of which are beyond our control. Based on our current level of operations, we anticipate that our operating cash flows and available credit facilities will be sufficient to fund our anticipated operational investments, including working capital and capital expenditure needs, for at least the next twelve months. If, however, we are unable to service our debt requirements as they become due or are unable to maintain ongoing compliance with restrictive covenants, we may be forced to adopt alternative strategies that may include reducing or delaying capital expenditures, selling assets, restructuring or refinancing indebtedness or seeking additional equity capital. There can be no assurances that any of these strategies could be effected on satisfactory terms, if at all. 32 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Projected payment due dates for the pro forma debt outstanding as of September 30, 2003 and estimated interest expense are as shown below (in millions):
EXPECTED PAYMENTS DUE BY PERIOD -------------------------------------------------------- AFTER TOTAL 2004 2005 2006 2007 2008 2008 ------ ----- ------ ----- ----- ----- ------ Long term debt....................... $243.5 $ 3.2 $ 3.2 $ 3.2 $ 3.2 $ 3.2 $227.5 Interest on long term debt........... 235.7 28.6 28.4 28.3 28.1 28.0 94.3 Revolving credit line................ 25.0 1.2 11.1 5.8 6.9 -- -- Interest and fees on revolving credit line............................... 2.8 1.4 0.8 0.4 0.2 -- -- Operating leases..................... 4.8 1.8 1.4 0.7 0.3 0.2 0.4 Capital lease obligations............ 4.6 2.9 1.7 -- -- -- -- ------ ----- ------ ----- ----- ----- ------ Total Contractual Cash Obligations..................... $516.4 $39.1 $ 46.6 $38.4 $38.7 $31.4 $322.2 ====== ===== ====== ===== ===== ===== ======
Please see "Executive Compensation -- Equity Incentive Plans" for discussion of other obligations we have committed to as a result of the Plan of Reorganization. CRITICAL ACCOUNTING POLICIES Critical accounting policies are those that are, in management's view, both very important to the portrayal of our financial condition and results of operations and they require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Future events and their effects cannot be determined with absolute certainty. The determination of estimates, therefore, requires the exercise of judgment. Actual results may differ from those estimates, and such differences may be material to the financial statements. Our accounting policies are more fully described in Note 4 to our consolidated financial statements included herein. We believe that the most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with the evaluation of the recoverability of certain assets including goodwill, other intangible assets and fixed assets as well as those estimates used in the determination of reserves related to the allowance for doubtful accounts, obsolescence, workers compensation and pensions and other post-retirement benefits. Various assumptions and other factors underlie the determination of these significant estimates. In addition to assumptions regarding general economic conditions, the process of determining significant estimates is fact-specific and accounts for such factors as historical experience, product mix and, in some cases, actuarial techniques. We constantly reevaluate these significant factors and make adjustments where facts and circumstances necessitate. Historically, our actual results have not significantly deviated from those determined using the estimates described above. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: - Defined-Benefit Pension Plans. We account for our defined benefit pension plans in accordance with SFAS No. 87, "Employers' Accounting for Pensions" which requires that amounts recognized in financial statements be determined on an actuarial basis. The most significant element in determining our pension expense in accordance with SFAS 87 is the expected return on plan assets. We have assumed that the expected long-term rate of return on plan assets will be 7.50% to 8.50%, depending on the plan. Over the long term, our pension plan assets have earned in excess of these rates; therefore, we believe that our assumption of future returns is reasonable. The plan assets, however, have earned a rate of return substantially less than these rates in the last two years. Should this trend continue, our future pension expense would likely increase. At the end of each year, we determine the discount rate to be used to discount plan liabilities. In developing this rate, 33 we use the Moody's Average AA Corporate Bonds index. At September 30, 2003, we determined the discount rate to be 6.25%. Changes in discount rates over the past few years have not materially affected our pension expense. The net effect of changes in this rate, as well as other changes in actuarial assumptions and experience, have been deferred as allowed by SFAS 87. This has had a significant negative effect on our reported net worth. - Other Postretirement Benefits. We provide retiree health benefits to qualified employees under an unfunded plan. We use various actuarial assumptions including the discount rate and the expected trend in health care costs and benefit obligations for our retiree health plan. Consistent with our pension plans, we used a discount rate of 6.25%. In 2003, our assumed healthcare cost trend rate was 9.0% decreasing gradually to 5.0% in 2010 and then remaining at that level thereafter. Changes in these rates could materially affect our future operating results and net worth. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are subject to interest rate risk on our long-term variable interest rate debt. Currently, our only long-term debt obligations with variable interest rates are our obligations under the New Credit Facility. We enter into debt obligations primarily to support general corporate purposes, including capital expenditures and working capital needs. INFLATION Although we cannot accurately anticipate the effect of inflation on our operations, we believe that inflation has not had, and is not likely in the foreseeable future to have, a material impact on our results of operations. 34 BUSINESS OVERVIEW Neenah, together with its active domestic subsidiaries, manufactures and markets a wide range of iron castings and forgings for the heavy municipal market and selected segments of the industrial markets. Neenah began business in 1872 and has built a strong reputation for producing quality iron castings. Neenah is one of the largest manufacturers of heavy municipal iron castings in the United States. Neenah's broad range of heavy municipal iron castings includes manhole covers and frames, storm sewer frames and grates, heavy duty airport castings, specialized trench drain castings, specialty flood control castings and ornamental tree grates. Neenah sells these municipal castings throughout the United States to state and local government entities, utility companies, precast concrete manhole structure producers and contractors for both new construction and infrastructure replacement. In addition, Neenah is also a leading manufacturer of a wide range of complex industrial castings, including castings for the transportation industry, a broad range of castings for the farm equipment industry, and specific components for compressors used in HVAC systems. BACKGROUND On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with NC Merger Company and NFC, Neenah Corporation (the predecessor company) was acquired by NFC, a holding company and a wholly owned subsidiary of ACP. Prior to July 1, 1997, Neenah Foundry Company was one of three wholly owned subsidiaries of Neenah Corporation, a holding company with no significant assets or operations other than its holdings in the common stock of its three wholly owned subsidiaries. The other two wholly owned subsidiaries were Neenah Transport, Inc. and Hartley Controls, an entity that was later sold. On July 1, 1997, Neenah Foundry Company merged with and into Neenah Corporation and the surviving company changed its name to Neenah Foundry Company. On March 30, 1998 Neenah acquired all the capital stock of Deeter Foundry, Inc. for $24.3 million. Since 1945, Deeter Foundry, Inc. has been producing gray iron castings for the heavy municipal market. The municipal casting product line of Deeter Foundry, Inc. includes manhole frames and covers, storm sewer inlet frames, grates and curbs, trench grating and tree grates. Deeter Foundry, Inc. also produces a wide variety of special application construction castings. These products are utilized in waste treatment plants, airports, telephone and electrical construction projects. On April 3, 1998, Neenah acquired all the capital stock of Mercer Forge Corporation for $47.0 million in cash. Founded in 1954, Mercer Forge Corporation produces complex-shaped forged components for use in transportation, railroad, mining and heavy industrial applications. Mercer Forge Corporation is also a producer of microalloy forgings. On September 8, 1998 Neenah acquired all the capital stock of Dalton Corporation for $102.0 million in cash. Dalton Corporation manufactures and sells gray iron castings for refrigeration systems, air conditioners, heavy equipment, engines, gear boxes, stationary transmissions, heavy duty truck transmissions and other automotive parts. On September 8, 1998, the capital stock of Advanced Cast Products, an entity held by ACP prior to the time ACP acquired its interest in NFC, was contributed to Neenah by ACP. Advanced Cast Products is an independent manufacturer of ductile iron castings that are produced through both traditional casting methods and through Advanced Cast Products' Evapcast lost foam casting process. Advanced Cast Products' production capabilities also include a range of finishing operations including austempering and machining. Advanced Cast Products sells its products primarily to companies in the heavy truck, construction equipment, railroad, mining and automotive industries. On December 31, 1998, Neenah purchased Cast Alloys, Inc. a manufacturer of investment-cast titanium and stainless steel golf clubheads, for $40.1 million in cash. Neenah discontinued the operations of Cast Alloys, Inc. in January 2002. 35 On November 30, 1999, Neenah purchased Gregg Industries, Inc., a manufacturer of gray and ductile iron castings, for $22.9 million in cash. We sold all of the issued and outstanding shares of common stock of Hartley Controls Corporation on October 2, 2000. On August 8, 2002, we sold substantially all of the assets of Peerless Corporation. We sold substantially all of the assets of Belcher Corporation on December 27, 2002. BANKRUPTCY PROCEEDINGS Beginning in 2000, several trends converged to create an extremely difficult operating environment for Neenah. First, there were dramatic cyclical declines in some of Neenah's most important markets -- including trucks, railroad, construction and agriculture equipment. Second, there was a major inventory adjustment by manufacturers in the residential segment of the HVAC equipment industry, resulting in fewer orders for Dalton's HVAC castings. Third, domestic foundries have been suffering from underutilized capacity, significantly increased foreign competition, continued price reduction pressure from customers and other competitors, and increased costs associated with heightened safety and environmental regulations. These factors have caused and continue to cause a substantial number of foundries to cease operations or file for bankruptcy protection over the past several years. Beginning in May 2000, we took aggressive steps to offset the impact of the decline in sales and earnings and improve cash flow in the difficult market environment: William Barrett was appointed as the new chief executive officer of NFC; Hartley Controls was sold in September 2000 for $5.0 million in total proceeds; other excess assets were sold for $5.3 million in late 2001; the operations of Cast Alloys, Inc. were discontinued in January 2002; substantially all of the assets of Advanced Cast Product's subsidiary Peerless Corporation were sold for $0.3 million in August 2002; and the assets of Belcher Corporation, a subsidiary of Advanced Cast Products, were sold in December 2002. Furthermore, management also implemented a significant reduction in the number of employees, a significant reduction in capital expenditures and selected price increases. In January 2003, we engaged Houlihan Lokey Howard & Zukin Capital to assist in the formulation and evaluation of various options for a restructuring, reorganization, or other strategic alternatives. Our board of directors considered a broad range of out-of-court and in-court strategic alternatives potentially available to us as well as several strategic alternatives. Despite these steps, the credit rating agencies began to downgrade our outstanding debt obligations in early 2000. Our 11 1/8% Notes became highly illiquid and traded infrequently. According to data obtained from Telerate, the price of the notes fell from a trailing 12 month high of $57.50 in June 2002 to a trailing 12 month low of $30.00 in late December 2002. The trailing six month average price as of June 23, 2003 was approximately $38.60. As of May 2003, Neenah was not in compliance with the March 31, 2003 EBITDA covenant of its old credit facility and lacked sufficient liquidity to make the then-due interest payment on the 11 1/8% Notes and maintain the liquidity covenants under the old credit facility. On May 1, 2003 we launched both an exchange offer for the 11 1/8% Notes and the pre-petition solicitation of acceptances of the plan of reorganization in accordance with section 1126(b) of the Bankruptcy Code. The exchange offer, which was to be completed outside of Bankruptcy Court, did not result in the requisite percentage of 11 1/8% Notes tendered and both the exchange offer and the solicitation of acceptances for the May 1, 2003 plan of reorganization were allowed to expire. On July 1, 2003 we launched a pre-petition solicitation of acceptances with respect to an alternative joint plan of reorganization that was ultimately approved. Having received sufficient votes to approve the plan of reorganization, we together with ACP, NFC and all of our wholly-owned domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, as amended, with the United States Bankruptcy Court for the District of Delaware on August 5, 2003. On that same date we submitted to the Bankruptcy Court our Amended Prepackaged Joint Plan of Reorganization, which we refer to as the Plan of Reorganization, and the Disclosure Statement that we used to solicit votes for that plan. At the time of the Chapter 11 bankruptcy filing, we had approximately $157 million of existing senior debt under our old credit facility and $282 million of principal and accrued and unpaid interest under our 36 11 1/8% Notes. We negotiated the continued use of our own cash collateral with our senior lenders, thereby enabling us to utilize our own cash to conduct business operations during the pendency of the Chapter 11 filing. Pursuant to the Plan of Reorganization, we conducted a rights offering, whereby holders of the 11 1/8% Notes were given the opportunity to provide up to $110 million additional financing through the purchase of up to $119.996 million face amount of Old Notes and warrants to acquire up to 34.2 million shares of common stock of ACP. In case holders of the 11 1/8% Notes failed to subscribe for the full $110.0 million, we also obtained standby commitment agreements from Mackay Shields LLC, Exis Differential Holdings Ltd., Citicorp Mezzanine III, L.P., Trust Company of the West and Metropolitan Life Insurance Company whereby these Standby Purchasers collectively agreed to provide up to $110.0 million of financing for the Plan of Reorganization by participating in the rights offering (to the extent that they were holders of the 11 1/8% Notes) as well as purchasing any and all unsubscribed securities not subscribed for by the other holders of 11 1/8% Notes. Approximately 94% of the holders of the 11 1/8% Notes participated in the rights offering and the Standby Purchasers were, therefore, only required to fund the shortfall of approximately $6.4 million. By order dated September 26, 2003, the Bankruptcy Court confirmed the Plan of Reorganization and the Plan of Reorganization became effective on October 8, 2003. October 8, 2003 is hereinafter referred to as the Effective Date. The Plan of Reorganization allowed us to emerge from bankruptcy with an improved capital structure and, because we had arranged to continue paying our trade debt on a timely basis during the pendency of the Chapter 11 case, at the time of emergence, we had sufficient trade credit to continue operations in the ordinary course of business. The Plan of Reorganization resulted in significant changes to our capital structure. Among other things, the Plan of Reorganization provided for the repayment in full of our old credit facility, the cancellation of $282.0 million in principal amount of 11 1/8% Notes, the cancellation of our PIK Note and the elimination of the interests of the former equity owners of our indirect parent company, ACP. The cash proceeds necessary to consummate the Plan of Reorganization were provided from the consummation of the New Credit Facility and the issuance of the Old Notes. The claims and interests of our various creditors were satisfied as follows: - our old credit facility was repaid in cash; - our PIK Note was cancelled and Citicorp Mezzanine III, L.P., the holder of that note, received Old Notes with a principal amount equal to $13.134 million, warrants to acquire 3.8 million shares of common stock of ACP and cash in the amount of $45,400; - our outstanding 11 1/8% Notes were cancelled and each holder of 11 1/8% Notes received its pro rata share of (i) $30.0 million in cash, (ii) $100.0 million in aggregate principal amount of new 13% Senior Subordinated Notes due 2013 of the Company, (iii) 38 million shares of common stock of ACP and (iv) rights to acquire for $110 million in cash in the aggregate, units for up to $119.996 million face amount of Old Notes and warrants to acquire up to 34.2 million shares of common stock of ACP; - the following debt and equity instruments were cancelled without further consideration: 12% senior subordinated notes issued by ACP, 12% senior subordinated notes issued by NFC and all equity interests of ACP; and - the following claims and equity interests passed through our Chapter 11 bankruptcy proceedings unimpaired: all tax claims, intercompany debt, other secured debt and general unsecured debt and the equity interests of ACP Holding Company in NFC Castings, Inc., equity interests of NFC Castings, Inc. in Neenah and equity interests of Neenah in its direct and indirect subsidiaries. 37 BUSINESS SEGMENTS -- OVERVIEW 1. Castings Segment We are a leading producer of iron castings for use in heavy municipal and industrial applications. This segment sells directly to tier-one suppliers, as well as to other industrial end users. (a) Products, Customers and Markets The castings segment provides a variety of products to both the heavy municipal and industrial markets. Sales to the heavy municipal market are comprised of storm and sanitary sewer castings, manhole covers and frames and storm sewer frames and grates. Sales also include heavy airport castings, specialized trench drain castings, specialty flood control castings and ornamental tree grates. Customers for these products include state and local government entities, utility companies, precast concrete structure producers and contractors. Sales to the industrial market are comprised of differential carriers and casings, transmission, gear and axle housings, yokes, planting and harvesting equipment parts and compressor components. Customers for these products include medium and heavy-duty truck, farm equipment and HVAC manufacturers. (i) Heavy Municipal Our broad heavy municipal product line consists of two general categories of castings, "standard" and "specialty" castings. Standard castings principally consist of storm and sanitary sewer castings that are consistent with pre-existing dimensional and strength specifications established by local authorities. Standard castings are generally higher volume items that are routinely used in new construction and infrastructure replacement. Specialty castings are generally lower volume products which include heavy-duty airport castings, trench drain castings, flood control castings, special manhole and inlet castings and ornamental tree grates. These specialty items are frequently selected and/or specified from our municipal product catalog and tree grate catalog, which together encompass over 4,400 standard and specialty patterns. For many of these specialty products, we believe that we are the only manufacturer with existing patterns to produce such a particular casting, although a competing manufacturer could elect to make the investment in patterns or equipment necessary to produce a similar casting. We hold a number of patents and trademarks related to their heavy municipal product line. We sell our municipal castings to state and local government entities, utility companies, pre-cast concrete manhole structure producers and contractors for both new construction and infrastructure replacement. Our active municipal customers generally make purchase decisions based on a number of criteria, including acceptability of the product per local specification, quality, service, price and the customer's relationship with the foundry. During the 70 years that we have participated in the municipal market, we have emphasized sales and marketing and believe that we have built a strong reputation for customer service. We believe that we are one of the leaders in U.S. heavy municipal casting production and that we have strong name recognition. We have one of the largest sales and marketing force of any foundry serving the heavy municipal market. Our dedicated sales force works out of regional sales offices to market municipal castings to contractors and state and local governmental entities throughout the United States. We operate a number of regional distribution and sales centers throughout the United States. We believe that this regional approach enhances our knowledge of local specifications and our position in the heavy municipal market. (ii) Industrial Industrial castings have increased in complexity and are generally produced in higher numbers than municipal castings. Complexity in the industrial market is determined by the intricacy of a casting's shape, the thinness of its walls and the amount of processing by a customer required before a part is suitable for use. OEMs and their first tier suppliers have been demanding higher complexity parts principally to reduce labor costs in their own production processes by using fewer parts to manufacture the same finished product or assembly and by using parts that require less preparation before being considered a finished product. 38 We primarily sell our industrial castings to a limited number of customers with whom we have established close working relationships. These customers base their purchasing decisions on, among other things, our technical ability, price, service, quality assurance systems, facility capabilities and reputation. Our assistance in product engineering plays an important role in winning bids for industrial castings. For the average industrial casting, 12 to 18 months typically elapse between the design phase and full production. The product life cycle of a typical industrial casting is quite long. Although the patterns for industrial castings are owned by the customer and not the foundry as is the case with the patterns for municipal castings, industrial patterns are not readily transferable to other foundries without, in most cases, significant additional investment. Foundries, including our company, generally do not design industrial castings. Nevertheless, a close working relationship between the foundry and the customer during a product launch is critical to reduce potential production problems and minimize the customer's risk of incurring lost sales or damage to its reputation due to a delayed launch. Involvement by a foundry early in the design process generally increases the likelihood that the customer will design a casting within the manufacturing capabilities of such foundry and also improves the likelihood that such foundry will be awarded the casting for full production. We estimate that we have historically retained approximately 90% of the castings that we have been awarded throughout the product life cycle, which is typical for the industry. We believe industrial customers will continue to seek out a foundry with a strong reputation for performance that is capable of providing a cost-effective combination of manufacturing technology and quality. Our strategy is to augment our relationships with existing customers by participating in the development and production of more complex industrial castings, while seeking out selected new customers who would value our performance reputation, technical ability and high level of quality and service. We employ a dedicated industrial casting sales force at all of our subsidiary locations, with the exception of Deeter. Our sales force supports ongoing customer relationships, as well as working with customers' engineers and procurement representatives and our engineers, manufacturing management and quality assurance representatives throughout all stages of the production process to ensure that the final product consistently meets or exceeds the specifications of our customers. This team approach, consisting of sales, marketing, manufacturing, engineering and quality assurance efforts is an integral part of our marketing strategy. (b) Manufacturing Process Our foundries manufacture gray and ductile iron and cast it into intricate shapes according to customer metallurgical and dimensional specifications. We continually invest in the improvement of process controls and product performance and believe that these investments and our significant experience in the industry have made us one of the most efficient manufacturers of industrial and heavy municipal casting products. The casting process involves using metal, wood or urethane patterns to make an impression of a desired shape in a mold made primarily of sand. Cores, also made primarily of sand, are used to make the internal cavities and openings in a casting. Once the casting impression is made in the mold, the cores are set into the mold and the mold is closed. Molten metal is then poured into the mold, which fills the mold cavity and takes on the shape of the desired casting. Once the iron has solidified and cooled, the mold sand is separated from the casting and the sand is recycled. The selection of the appropriate casting method, pattern, core-making equipment and sand, and other raw materials depends on the final product and its complexity, specifications and function as well as the intended production volumes. Because the casting process involves many critical variables, such as choice of raw materials, design and production of tooling, iron chemistry and metallurgy and core and molding sand properties, it is important to monitor the process parameters closely to ensure dimensional precision and metallurgical consistency. We continually seek out ways to expand the capabilities of existing technology to improve our manufacturing processes. We also achieve productivity gains by improving upon the individual steps of the casting process such as reducing the amount of time required to make a pattern change or to produce a different casting product. Such time reductions enable us to produce castings in medium volume quantities on high volume, 39 cost-effective molding equipment. Additionally, our extensive effort in real time process controls permits us to produce a consistent, dimensionally accurate casting, which saves time and effort in the final processing stages of production. This dimensional accuracy contributes significantly to our manufacturing efficiency. Continual testing and monitoring of the manufacturing process is important to maintain product quality. We, therefore, have adopted sophisticated quality assurance techniques and policies for our manufacturing operations. During and after the casting process, we perform numerous tests, including tensile, proof-load, radiography, ultrasonic, magnetic particle and chemical analysis. We utilize statistical process controls to measure and control significant process variables and casting dimensions. We document the results of this testing in metallurgical certifications that are sometimes included with each shipment to our industrial customers. We strive to maintain systems that provide for continual improvement of operations and personnel, emphasize defect prevention, safety and reduce variation and waste in all areas. (c) Raw Materials The primary raw materials used to manufacture ductile and gray iron castings are steel scrap, pig iron, metallurgical coke and silica sand. While there are multiple suppliers for each of these commodities, we have generally elected to maintain single-source arrangements with our suppliers for most of these major raw materials except pig iron. Due to long standing relationships with each of our suppliers, we believe that we will continue to be able to secure the proper amount and type of raw materials at competitive prices. Although the prices of the raw materials used vary, fluctuations in the price of scrap metal are the most significant to us. We have arrangements with most of our industrial customers that enable us to adjust industrial casting prices to reflect scrap price fluctuations. In periods of rapidly rising or falling scrap prices, these adjustments will lag the current scrap price because they are generally based on average market prices for prior periods. Such prior periods vary by customer, but are generally no longer than six months. Castings are sometimes sold to the heavy municipal market on a bid basis and after a bid is won the price for the municipal casting generally cannot be adjusted for increases in the prices of raw materials. In most cases, however, we believe that we have compensated for rises in scrap prices in prior periods by implementing higher municipal casting unit prices in subsequent bids. Rapidly fluctuating scrap prices may, however, have an adverse or positive effect on our business, financial condition and results of operations. (d) Seasonality We have historically experienced moderate cyclicality in the heavy municipal market as sales of municipal products are influenced by, among other things, public spending. There is generally not a large backlog of business in the municipal market due to the nature of the market. In the industrial market, we experience cyclicality in sales resulting from fluctuations in our markets, including the medium and heavy-duty truck and the farm equipment markets, which are subject to general economic trends. We experience seasonality in our municipal business where sales tend to be higher during the construction season, which occurs during the warmer months, generally the third and fourth quarters of our fiscal year. We attempt to maintain level production throughout the year in anticipation of such seasonality and therefore do not experience significant production volume fluctuations. We build inventory in anticipation of the construction season. This inventory build-up has a negative impact on working capital and increases our liquidity needs during the second quarter. We have not historically experienced significant seasonality in industrial casting sales. (e) Competition The markets for our products are highly competitive. Competition is based mainly on price, but also on quality of product, range of capability, level of service and reliability of delivery. We compete with numerous domestic foundries, as well as with a number of foreign iron foundries. We also compete with several large domestic manufacturers whose products are made with materials other than ductile and gray iron, such as steel or aluminum. Industry consolidation over the past 20 years has resulted in a significant 40 reduction in the number of foundries and a rise in the share of production by larger foundries, some of which have significantly greater financial resources than do we. Competition from foreign foundries has had an ongoing presence in the heavy municipal market and continues to be a factor, primarily in the western and eastern United States, due in part to costs associated with transportation. 2. Forgings Segment Our forgings segment, operated by Mercer Forge Corporation, or Mercer, producers complex-shaped forged components for use in transportation, railroad, mining and heavy industrial applications. Mercer also produces of microalloy forgings. Mercer sells directly to OEMs, as well as to industrial end users. Mercer's subsidiary, A&M, machines forgings and castings for Mercer and other industrial applications. Until the mid-1980's, Mercer produced military tank parts, but successfully converted from a defense contractor to a commercial manufacturer. Mercer produces approximately 500 individually forged components and has developed specialized expertise in forgings of microalloy steel. (a) Products, Customers and Markets Mercer manufactures its products to customer specification with typical production runs of 1,000 or more units. Mercer currently operates mechanical press lines, from 1,300 tons to 4,000 tons. Key markets for Mercer include truck and automotive parts, railroad equipment and general industrial machinery. Mercer's in-house sales organization sells directly to end users and OEMs. A key element of Mercer's sales strategy is its ability to develop strong customer relationships through responsive engineering capability, dependable quality and just-in-time delivery performance. Demand for forged products closely follows the general business cycles of the various market segments and the demand level for capital goods. While there is a more consistent base level of demand for the replacement parts portion of the business, the strongest expansions in the forging industry coincide with the periods of industrial segment economic growth. Mercer's largest industry segment, the heavy truck segment, is extremely weak. Mercer's other market segments are also showing weakness following general economic slowdowns in those industrial areas. Management attributes this to normal industrial cycles in these markets and adjustments to overbuilds in inventory levels as well as high energy costs. (b) Manufacturing Process Forgings and castings (together with a third process, fabrication) are the principal commercial metal working processes. In forging, metal is pressed, pounded or squeezed under great pressure, with or without the use of heat, into parts that retain the metal's original grain flow, imparting high strength, ductility and resistance properties. Forging itself usually entails one of four principal processes: impression die; open die; cold; and seamless rolled ring forging. Impression die forging, commonly referred to as "closed die" forging, is the principal process employed by Mercer, and involves bringing two or more dies containing "impressions" of the part shape together under extreme pressure, causing the forging stock to take the desired shape. Because the metal flow is restricted by the die, this process can yield more complex shapes and closer tolerances than the "open die" forging process. Impression die forging is used to produce products such as military and off-highway track and drive train parts; automotive and truck drive train and suspension parts; railroad engine, coupling and suspension parts; military ordinance parts and other items where close tolerances are required. Once a rough forging is produced, regardless of the forging process, it must generally still be machined. This process, known as "finishing" or "conversion," smooths the component's exterior and mating surfaces and adds any required specification, such as groves, threads and bolt holes. The finishing process can contribute significantly to the value of the end product, in particular in certain custom situations where high value specialized machining is required. Machining can be performed either in-house by the forger, by a machine shop which performs this process exclusively or by the end-user. 41 An internal staff of engineers designs products to meet customer specifications incorporating computer assisted design work stations for tooling design. Because its forged products are inherently less expensive and stronger, Mercer has been successful in replacing certain cast parts previously supplied by third party foundries. Management believes that Mercer is an industry leader in forging techniques using microalloy steel which produces parts which are lighter and stronger than those forged from conventional carbon steel. (c) Raw Materials The principal raw materials used in Mercer's products are carbon and microalloy steel. Mercer purchases substantially all of its carbon steel from four principal sources. While Mercer has never suffered an interruption of materials supply, management believes that, in the event of any disruption from any individual source, adequate alternative sources of supply are available within the immediate vicinity. (d) Seasonality Mercer has experienced moderate cyclicality in sales resulting from fluctuations in the medium and heavy-duty truck market and the heavy industrial market, which are subject to general economic trends. Mercer's current backlog of industrial market business is smaller than there would be in a stronger, more typical market. (e) Competition Mercer competes primarily in a highly fragmented industry which includes several dozen other press forgers and hammer forge shops. Hammer shops cannot typically match press forgers for high volume, single component manufacturing or close tolerance production. Competition in the forging industry has also historically been determined both by product and geography, with a large number of relatively small forgers across the country carving out their own product and customer niches. In addition, most end users manufacture some forgings internally, often maintaining a critical minimum level of production in-house and contracting out the balance. The primary basis of competition in the forging industry is price, but engineering, quality and dependability are also important, particularly with respect to building and maintaining customer relationships. Some of Mercer's competitors have significantly greater resources than Mercer. There can be no assurance that Mercer will be able to maintain or improve its competitive position in the markets in which it competes. INTELLECTUAL PROPERTY We have registered, and are in the process of registering, various trademarks and service marks with the U.S. Patent and Trademark Office. EMPLOYEES As of September 30, 2003 we had approximately 2,776 full time employees, of whom 2,255 were hourly employees and 521 were salaried employees. Nearly all of the hourly employees at Neenah, Dalton, Advanced Cast Products, Inc. and Mercer are members of either the United Steelworkers of America or the Glass, Molders, Pottery, Plastics and Allied Workers International Union. We negotiate a collective bargaining agreement with these employees every three to five years. The current agreements expire as follows: Neenah, December 2006; Dalton-Warsaw, April 2005; Dalton-Kendallville, June 2004; Advanced Cast Products, Inc.-Meadville, October 2005; and Mercer, June 2004. All employees at Deeter and Gregg are non-union. We believe that we have good relationships with our employees. GOVERNMENT REGULATION Our facilities are subject to federal, state and local laws and regulations relating to the protection of the environment and worker health and safety, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste and the cleanup of properties affected by hazardous substances. Such laws include the Federal Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability 42 Act of 1980 and OSHA. We believe that each of our operations are currently in substantial compliance with applicable environmental laws, and that we have no liabilities arising under such environmental laws that would have a material adverse effect on our operations, financial condition or competitive position. Some risk of environmental liability and other cost, however, is inherent in each of our businesses. Any of our businesses might in the future incur significant costs to meet current or more stringent compliance, cleanup or other obligations pursuant to environmental requirements. Such costs may include expenditures related to remediation of historical releases of hazardous substances or clean-up of physical structures prior to decommissioning. Under the Federal Clean Air Act Amendments of 1990, the Environmental Protection Agency is directed to establish MACT standards for certain industrial operations that are major sources of hazardous air pollutants. The iron foundry industry will be required to implement the MACT emission limits, control technologies or work practices by October 1, 2006. Although we are not yet able to accurately estimate the costs to comply with the new MACT standard, the MACT standard, when implemented, and state laws governing the emission of toxic air pollutants may require that certain of our facilities incur significant costs for air emission control equipment, air emission monitoring equipment or process modifications. Compliance Impacts Dalton's Warsaw facility was issued a National Pollutant Discharge Elimination System ("NPDES") permit in 2000 that limits the level of chlorine and the temperature of its non-contact cooling water permitted to be discharged to a waterway by the year 2003. Although the chlorine is already in the water when purchased from the city, Dalton is responsible for eliminating the chlorine. Dalton has several alternatives to meet the chlorine discharge permit requirements by 2003 and is currently implementing a system to lower the chlorine levels of its cooling water. The cost of implementing this system will not be material. Dalton believes the system will be tested and operational before the 2003 deadline. PROPERTIES We maintain the following manufacturing, machining and office facilities. We own all of the facilities except Mercer's machining facility, which we lease.
ENTITY LOCATION PURPOSE - ------ -------- ------- Neenah Foundry Company.............. Neenah, WI 2 manufacturing facilities Office facility Dalton Corporation.................. Warsaw, IN Manufacturing and office facilities Kendallville, IN Manufacturing facility Stryker, OH Machining facility Advanced Cast Products, Inc. ....... Meadville, PA Manufacturing and office facility Mercer Forge Corporation............ Mercer, PA Manufacturing and office facility Sharon, PA Machining facility Deeter Foundry, Inc. ............... Lincoln, NE Manufacturing and office facility Gregg Industries, Inc. ............. El Monte, CA Manufacturing and office facility
In addition to the facilities above, we operate thirteen distribution and sales centers. We own six of those properties and lease seven of them. The principal equipment at the facilities consists of molding machines, presses, machining equipment, welding, grinding and painting equipment. We regard our plant and equipment as well maintained and adequate for our needs. LEGAL PROCEEDINGS We are involved in routine litigation incidental to our business. Such litigation is not, in our opinion, likely to have a material adverse effect on our financial condition or results of operations. 43 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following sets forth certain information as of October 8, 2003, with respect to the persons who are members of the Board of Directors of ACP and our executive officers.
NAME AGE POSITION - ---- --- -------- William M. Barrett................... 56 President, Chief Executive Officer and Director Gary W. LaChey....................... 57 Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Phillip C. Zehner.................... 62 Vice President, Assistant Secretary and Assistant Treasurer of Neenah Foundry Company Joseph L. DeRita..................... 65 Division President, Dalton Corporation Joseph Varkoly....................... 41 Vice President -- Business Development, Advanced Cast Products, Inc. Benjamin C. Duster, IV, Esq. ........ 48 Director Andrew Booke Cohen................... 32 Director Michael J. Farrell................... 53 Director Jeffrey G. Marshall.................. 59 Director
Mr. Barrett has served as our President and Chief Executive Officer since May 2000. Mr. Barrett joined us in 1992 serving as General Sales Manager -- Industrial Castings until May 1, 1997. Mr. Barrett was Vice President and General Manager from May 1, 1997 to September 30, 1998 and President from October 1, 1998 to April 30, 2000. From 1985 to 1992, Mr. Barrett was the Vice President -- Sales for Harvard Industries Cast Products Group. Mr. Barrett has also been one of our directors since May 2000. Mr. LaChey has served as our Corporate Vice President -- Finance since June 2000. Mr. LaChey was appointed a director in January 2003. Mr. LaChey joined us in 1971 and has served in a variety of positions of increasing responsibility in the finance department. Mr. LaChey was most recently Vice President -- Finance, Treasurer and Secretary. Mr. Zehner has served as our Vice President, Assistant Secretary and Assistant Treasurer since June 2000. Mr. Zehner joined the Company in 1974, serving in a variety of positions of increasing responsibility in the finance department. Mr. DeRita has served as Division President of the Dalton Corporation since 1999. He joined Newnam Manufacturing in 1989 and became the Vice President -- Sales when the Dalton Corporation acquired Newnam Manufacturing in 1992. Prior to joining our company, Mr. DeRita was the Manager of Engineering and Maintenance at Erie Malleable, the same position he held previously at Zurn Industries. Mr. Varkoly has served as the Vice President -- Business Development of Advanced Cast Products, Inc. since March 2000. Prior to joining our company in 2000, he served as the Director -- Finance of Betzdearborn, Inc. Previously, he was a Manager for Performance Improvement Management Consulting with Ernst & Young LLP and the Business Development Manager of FMC Corporation. Mr. Duster has served as a director since October 2003. Mr. Duster is currently Chairman of the Board of Algoma Steel, Inc., a Toronto Stock Exchange listed integrated steel manufacturer based in Canada. Mr. Duster is also a principal in Masson & Company, a financial restructuring advisory and turn- around management firm based in New York. Mr. Cohen has served as a director since October 2003. Mr. Cohen is currently an analyst at SAC Capital Advisors, LLC. Previously, Mr. Cohen spent six years in the investment banking division of Morgan Stanley. Mr. Cohen received his BA and MBA degrees from the University of Pennsylvania. Mr. Marshall has served as a director since October 2003. Mr. Marshall is currently the Chairman of Smith Marshall, a subsidiary of the NextMedia Company Limited. Previously, he was the President and 44 Chief Executive Officer of Aluma Enterprises, Inc., a construction technology company, for six years. Prior to joining Aluma Enterprises, Inc., Mr. Marshall successively held the positions of President and Chief Executive Officer at Marshall Steel Limited, Marshall Drummond McCall Inc. and the Ontario Clean Water Agency. Mr. Farrell has served as a director since February 2003. Mr. Farrell is currently the President of Farrell & Co., a merchant banking firm specializing in heavy manufacturing companies, and the Chief Executive Officer of Standard Steel, LLC. Mr. Farrell has also served in executive capacities for MK Rail Corporation, Motor Coils Manufacturing Co. and Season-ALL Industries. Mr. Farrell currently also serves as a director of C-Cor.net Corp. and Federated Investors, Inc. Mr. Farrell is a certified public accountant. BOARD COMPOSITION The Board of Directors of ACP, the ultimate parent company of Neenah Foundry Company consists of five directors. ACP's Amended and Restated Bylaws permits the holders of a majority of the shares of common stock of ACP then entitled to vote at an election of directors, to remove any director or the entire board of directors at any time, with or without cause. Under ACP's Amended and Restated Bylaws, vacancies on the Board of Directors may be filled by the affirmative vote of a majority of the holders of ACP's outstanding stock entitled to vote thereon. DIRECTOR COMPENSATION Subject to certain limitations, each member of the Board of Directors of ACP who is not an officer of ACP shall be entitled to receive annual compensation for their services in the amount $40,000, payable in cash quarterly in four equal installments, and are entitled to receive reimbursement by ACP for all reasonable out-of-pocket expenses, including, without limitation, travel expenses, incurred by such director in connection with the performance of such director's duties. In addition, each member of the Board of Directors that is not an officer of our company shall be paid a fee of $1,000 for in person attendance at annual, regular, special and adjourned meetings of the Board of the Directors of the company or committee meetings of the Board of the Directors of the company. On the Effective Date, we issued 200,000 shares of common stock representing 0.25% of the Company's Common Stock on a fully-diluted basis as of the Effective Date to our outside directors. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The current members of the Compensation Committee of ACP's Board of Directors are Andrew Booke Cohen and Benjamin C. Duster, IV, Esq.. The current members of the Audit Committee of ACP's Board of Directors are Michael J. Farrell and Jeffrey G. Marshall. During fiscal 2003, no executive officer of ACP: - served as a member of the compensation committee or other board committee performing similar functions or, in the absence of any such committee, the board of directors, of another entity, one of whose executive officers served on ACP's Compensation Committee; - served as a director of another entity, one of whose executive officers served on ACP's Compensation Committee; or - served as a member of the compensation committee or other board committee performing similar functions or, in the absence of any such committee, the board of directors, of another entity, one of whose executive officers served as a director of ACP. LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION The Amended and Restated Bylaws of ACP which became effective on October 8, 2003, provide that, to the extent permitted by the Delaware General Corporate Law, or DGCL, it will indemnify its current and former directors and officers against all expenses actually and reasonably incurred by them as a result 45 of their being threatened with or otherwise involved in any action, suit or proceeding by virtue of the fact that they are or were an officer or director of ACP. ACP, however, is not required to indemnify an officer or director for an action, suit or proceeding commenced by that officer or director unless it authorized that director or officer to commence the action, suit or proceeding. The Amended and Restated Bylaws of ACP also provide that ACP shall advance expenses incurred by any person it is obligated to indemnify, upon presentation of appropriate documentation. Furthermore, the Amended and Restated Bylaws of ACP provide that ACP may purchase and maintain insurance on behalf of its directors and officers against any liability, expense or loss, whether or not it would otherwise have the power to indemnify such person under its Amended and Restated Bylaws or the DGCL. Insofar as indemnification for liabilities arising under the Securities Act may be permitted for directors, officers and controlling persons of ACP pursuant to the foregoing provisions, or otherwise, ACP 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. EXECUTIVE COMPENSATION Summary Compensation Table. The following summarizes, for the year indicated, the principal components of compensation for our Chief Executive Officer and our other four highest compensated executive officers (collectively, the "named executive officers"). The compensation set forth below fully reflects compensation for work performed on our behalf.
LONG-TERM ANNUAL COMPENSATION COMPENSATION AWARDS ----------------------------------- ----------------------- OTHER RESTRICTED SECURITIES FISCAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS OPTIONS PAYOUTS COMPENSATION --------------------------- ------ ------- ------- --------------- ---------- ---------- ------- ------------ William M. Barrett........... 2003 342,704 59,617 38,685 -- -- -- -- President and Chief Executive 2002 306,254 -- 35,684 -- -- 35,684 -- Officer and Director 2001 275,000 -- 33,048 -- -- 33,048 -- Gary W. LaChey............... 2003 234,996 45,526 38,143 -- -- -- -- Corporate Vice President -- 2002 219,374 -- 35,110 -- -- 35,110 -- Finance, Treasurer, Secretary, 2001 208,334 -- 33,680 -- -- 33,680 -- Chief Financial Officer and Director Joe Varkoly.................. 2003 177,000 117,600 36,257 -- -- -- -- Vice President -- Business 2002 170,250 -- 25,290 -- -- -- -- Development, Advanced Cast 2001 163,331 31,318 13,349 -- -- -- -- Products, Inc. Phillip C. Zehner............ 2003 133,250 32,998 35,498 -- -- -- -- Vice President, Assistant 2002 129,000 19,124 32,701 -- -- 32,701 -- Secretary and Assistant 2001 125,800 26,312 30,902 -- -- 30,902 -- Treasurer Joseph L. DeRita............. 2003 235,000 -- 29,635 -- -- -- -- Division President, Dalton 2002 224,000 -- 18,015 -- -- 18,015 -- Corporation 2001 224,000 -- 19,182 -- -- 19,182 --
- --------------- (1) The named officers have participated in our voluntary profit sharing contributions or matching 401(k) contributions and excess benefit programs. The aggregate payments made by the Company pursuant to such employee benefits programs are listed on the above table as "Other Annual Compensation." EMPLOYMENT AGREEMENTS We have entered into employment agreements with certain members of our management. The employment agreements delineate the salary and subsequent potential annual increases, health (subject to 46 satisfying insurability requirements), 401(k) and other benefits that the named employees are entitled to receive. Non-competition and non-solicitation agreements will be signed as part of the employment agreements, which will apply during a period of three years for our chief executive officer and two years for the chief financial officer and other members of management of the Company, in each case, after termination. We have executed employment agreements with the following executives: John Andrews, William M. Barrett, Joseph L. DeRita, Frank C. Headington, Timothy Koller, Gary W. LaChey, William Martin, Steve Shaffer and Joseph Varkoly. 2003 MANAGEMENT ANNUAL INCENTIVE PLAN Under the 2003 Management Annual Incentive Plan, members of management and certain other specified employees will receive annual performance awards if the Company achieves certain EBITDA targets set by the board of director of the Company at the beginning of each fiscal year. The bonus paid will equal (i) 50% of the target bonus amount for each individual should the Company reach 85% of the EBITDA target, (ii) 100% of the target bonus on reaching 100% of the target EBITDA and (iii) 200% of the target bonus on reaching 120% of the target EBITDA. Target bonuses range from 2.0% to 35.0% of base salary depending upon job responsibility. The bonus will be payable within ten business days of the approval of the Company's audited financial statements by the board of directors. In addition, a one time aggregate incremental $450,000 emergence bonus was paid to certain members of management upon the Effective Date. For 2004 and beyond, the executives and certain other specified employees will receive annual performance awards upon achieving certain milestones, including EBITDA targets, debt reduction targets and other certain criteria as determined from time to time by the compensation committee of the board of directors of Reorganized Neenah. Target bonus as a percentage of salary for each member of management will be consistent with historical levels. Target levels, timing of payments and other terms and conditions of the annual incentive plan will be determined by the Company's compensation committee. 2003 MANAGEMENT EQUITY INCENTIVE PLAN Under the 2003 Management Equity Incentive Plan which was established on the Effective Date, certain members of management received restricted shares which represented 5% of common stock of ACP on a fully diluted basis as of the Effective Date. The 4,000,000 restricted shares issued pursuant to the 2003 Management Equity Incentive Plan were 25% vested upon grant and the balance will vest on an annual straight-line basis over the ensuing three years subject to acceleration on a Change of Control, as defined in the 2003 Management Equity Incentive Plan, termination (other than for Cause) or an event that triggers tag-along or drag-along rights described below. The 2003 Management Equity Incentive Plan also provides that a pool of options for an additional 5% of common stock of ACP be reserved for future grants as determined by the compensation committee of the new board of directors of ACP. The 2003 Management Equity Incentive Plan provides certain members of management with certain tag-along and drag-along rights with respect to any transaction involving a sale of 50% or more of the equity of the Company on a fully diluted basis, or a sale of substantially all of the assets, or a merger or other transaction having similar effect in a single transaction or a series of transactions to the same party and anti-dilution protection. 2003 SEVERANCE AND CHANGE OF CONTROL PLAN Under our 2003 Severance and Change of Control Plan, the executives with whom we have executed employment agreements, shall be entitled to receive Severance Payments, as defined in the 2003 Severance and Change of Control Plan, if the Company terminates his or her employment without cause or if he or she terminates his or her employment with cause and a Change of Control Payment if a participating executive's employment is terminated or the executive resigns from employment for Good Reason within 180 days of a Change of Control, as such terms are defined in the 2003 Severance and Change of Control Plan. 47 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS RELATIONSHIP WITH ACP HOLDINGS ACP Holdings is the parent company of NFC Castings, Inc., and thus ACP Holdings indirectly owns 100% of the Common Stock of the Company. William M. Barrett, who serves as the President and Chief Executive Officer of the Company, currently serves as President and Chief Executive Officer of ACP Holdings. RELATIONSHIP WITH THE STANDBY PURCHASERS As a result of the standby purchase agreements that we entered into with the Standby Purchasers, we gave certain of the Standby Purchasers the right to name members to our board of directors. Mackay Shields LLC may designate two members of our board of directors and Citicorp Venture Capital, Ltd. and Trust Company of the West may each designate one member of our board of directors. 48 SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS The following table sets forth information known to us with respect to the beneficial ownership of the common stock of ACP as of October 8, 2003: - each person or entity who owns of record or beneficially more than 5% or more of any class of our voting securities; - each of the named executive officers of our Company; - each director of ACP; and - all directors and named executive officers as a group.
SHARES BENEFICIALLY OWNED ------------------------- NAME OF BENEFICIAL OWNER(1)(2)(3) NUMBER PERCENTAGE - --------------------------------- ----------- ----------- Mackay Shields LLC(4)....................................... 19,834,492 24.8% Exis Differential Holdings Ltd.(5).......................... 90,644 * Citicorp Mezzanine III, L.P.(6)............................. 11,890,846 14.9% Trust Company of the West(7)................................ 6,206,107 7.8% Metropolitan Life Insurance Company(8)...................... 217,547 * William M. Barrett(9)....................................... 1,250,000 1.6% Gary W. LaChey(10).......................................... 955,882 1.2% Joseph L. DeRita(11)........................................ 404,412 * Joe Varkoly(12)............................................. 220,587 * Benjamin C. Duster, IV, Esq. ............................... 0 * Andrew Brooke Cohen......................................... 0 * Michael J. Farrell.......................................... 0 * Jeffrey G. Marshall......................................... 0 * All executive officers and directors as a group (13 persons).................................................. 2,830,881 3.6%
- --------------- * Less than 1% (1) Unless otherwise indicated, the business address of each person named in the table above is c/o Neenah Foundry Company, 2121 Brooks Avenue, Neenah, Wisconsin 54957. (2) As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares (1) the power to vote, or direct the voting of, such security or (2) investing power which includes the power to dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within 60 days of October 8, 2003. Except as otherwise noted, the persons and entities listed on this table have sole voting and investment power with respect to all of the shares of common stock owned by them. Calculations are based on a total of 80,000,000 shares of common stock outstanding as of October 8, 2003. (3) Includes the following number of shares issuable upon conversion of warrants exercisable within 60 days of October 8, 2003: (1) 9,879,031 warrants by Mackay Shields LLC; (2) 90,644 warrants by Exis Differential Holdings Ltd.; 7,848,293 warrants by Citicorp Mezzanine III, L.P.; 3,113,554 warrants by Trust Company of the West and (3) 217,547 warrants by Metropolitan Life Insurance Company. (4) The address for Mackay Shields LLC is 9 West 57th Street, 33rd Floor, New York, NY 10019. (5) The address for Exis Differential Holdings Ltd. is 767 Third Avenue, New York, NY 10017. 49 (6) Citicorp Mezzanine III, L.P. received 4,096,665 warrants for being a Standby Purchaser and 3,751,628 warrants in exchange for cancellation of the PIK Note. The address for Citicorp Mezzanine III, L.P. is 399 Park Avenue, 14th Floor, New York, NY 10043. (7) [Includes shares held by TCW Shared Opportunity Fund II, L.P., Shared Opportunity Fund IIB LLC, TCW Shared Opportunity Fund IV, L.P., TCW Shared Opportunity Fund IVB, L.P., AIMCO CDO, Series 2000-A, TCW High Income Partners, Ltd. and TCW High Income Partners II, Ltd. The Trust Company of the West is the ultimate beneficial holder of these shares.] The address for Trust Company of the West is 11100 Santa Monica Boulevard, Suite 2000, Los Angeles, CA 90025. (8) The address for Metropolitan Life Insurance Company is 10 Park Avenue, Morristown, NJ 07962. (9) Includes 937,500 unvested shares of common stock. One-third of the unvested shares shall vest on a cumulative basis on each anniversary of the Effective Date, if as of such date, Mr. Barrett is still in our employ. (10) Includes 716,912 unvested shares of common stock. One-third of the unvested shares shall vest on a cumulative basis on each anniversary of the Effective Date, if as of such date, Mr. LaChey is still in our employ. (11) Includes 303,309 unvested shares of common stock. One-third of the unvested shares shall vest on a cumulative basis on each anniversary of the Effective Date, if as of such date, Mr. DeRita is still in our employ. (12) Includes 165,440 unvested shares of common stock. One-third of the unvested shares shall vest on a cumulative basis on each anniversary of the Effective Date, if as of such date, Mr. Varkoly is still in our employ. 50 DESCRIPTION OF NEW CREDIT FACILITY STRUCTURE The New Credit Facility has a 5-year maturity and provides for a revolving credit line of up to $70 million (with a $5.0 million sublimit available for letters of credit), and a term loan of $22.085 million. Availability under the New Credit Facility is based on various advance rates against a borrowing base consisting of Neenah's accounts receivable, inventory and property, plant and equipment. The New Credit Facility is secured by a first priority, perfected security interest in substantially all of Neenah's tangible and intangible assets. Capitalized terms used in this section and not defined herein are defined in the credit agreement governing the New Credit Facility, that we hereinafter refer to as the Credit Agreement. INTEREST RATES AND FEES Interest on borrowings under the New Credit Facility accrues daily with reference to the base rate , hereinafter referred to as the Base Rate, plus the applicable interest margin; however the Company may elect that all or a portion of the borrowings under the facility bear interest at the Adjusted LIBOR Rate plus the applicable interest margin. The Base Rate is defined as the higher of (i) the prime rate for commercial loans announced or quoted by Fleet National Bank in effect on such day and (ii) the federal funds rate in effect on such date, plus 1/2%. The Adjusted LIBOR Rate is defined as the rate offered for deposits in U.S. dollars for a period of time comparable to the applicable interest period which appears on the Telerate page 3730. The New Credit Facility contains provisions under which commitment fees and interest rates are adjusted in increments based on the ratio, hereinafter referred to as the Fixed Charge Coverage Ratio, of consolidated EBITDA to interest expense and scheduled principal payments on our outstanding debt which are each adjusted in accordance with the Credit Agreement. Outstanding principal balances under the New Credit Facility will accrue interest at the base rate or the LIBOR rate, as applicable as applicable, plus in each case, the margin applicable to such advances shall be determined as set forth in the following table. APPLICABLE MARGIN FOR ADJUSTMENT DATES THROUGH AND INCLUDING SEPTEMBER 30, 2004:
BASE RATE BASE RATE LIBOR LIBOR REVOLVING TERM REVOLVING TERM UNUSED FIXED CHARGE COVERAGE RATIO PORTION PORTION PORTION PORTION LINE FEE - --------------------------- --------- --------- --------- ------- -------- Less than 1.15 to 1.00........................ 1.50% 2.00% 3.00% 3.50% 0.500% Greater than or equal to 1.15 to 1.00 and less than 1.40 to 1.00........................... 1.25% 1.75% 2.75% 3.25% 0.500% Greater than or equal to 1.40 to 1.00 and less than 1.65 to 1.00........................... 1.00% 1.50% 2.50% 3.00% 0.375% Greater than or equal to 1.65 to 1.00......... 0.75% 1.25% 2.25% 2.75% 0.375%
APPLICABLE MARGIN FOR ADJUSTMENT DATES ON AND AFTER DECEMBER 31, 2004:
BASE RATE BASE RATE LIBOR LIBOR REVOLVING TERM REVOLVING TERM UNUSED FIXED CHARGE COVERAGE RATIO PORTION PORTION PORTION PORTION LINE FEE - --------------------------- --------- --------- --------- ------- -------- Less than 1.20 to 1.00........................ 1.50% 2.00% 3.00% 3.50% 0.500% Greater than or equal to 1.20 to 1.00 and less than 1.40 to 1.00........................... 1.25% 1.75% 2.75% 3.25% 0.500% Greater than or equal to 1.40 to 1.00 and less than 1.65 to 1.00........................... 1.00% 1.50% 2.50% 3.00% 0.375% Greater than or equal to 1.65 to 1.00......... 0.75% 1.25% 2.25% 2.75% 0.375%
51 The initial Applicable Margin for the Base Rate Revolving Portion, the Base Rate Term Portion, the LIBOR Revolving Portion, the LIBOR Term Portion and the Unused Line Fee is 1.25%, 1.75%, 2.75%, 3.25% and 5.00% respectively. We have agreed to pay certain fees with respect to the New Credit Facility including (i) fees on the unused commitments of lenders equal to the Applicable Margin for the Unused Line Fee, (ii) letter of credit fees on the aggregate face amount of outstanding letters of credit equal to the then applicable borrowing margin for LIBOR Revolving Portions and a fronting fee of 0.125% per annum on the face amount of outstanding letters of credit and an issuing bank fee for the bank issuing a letter of credit, and (iii) agent, arrangement and other similar fees. SECURITY AND GUARANTEES NFC and the inactive subsidiaries of Neenah jointly and severally guarantee Neenah's obligations under the New Credit Facility. Our obligations under the New Credit Facility are secured by a first priority security interest in all or substantially all of the assets of each borrower and each guarantor. The Notes, and the guarantees in respect thereof, are equal in right of payment to the New Credit Facility, and the guarantees in respect thereof. The liens in respect of the Notes are junior to the liens securing the New Credit Facility and guarantees thereof. COVENANTS The New Credit Facility requires Neenah to observe certain customary conditions, affirmative covenants and negative covenants (including financial covenants). MATURITY AND AMORTIZATION The term loan advanced under the New Credit Facility is repayable in equal consecutive quarterly installments, based on a seven-year straight line amortization rate, and the remaining outstanding principal is repaid at maturity, which is from October 8, 2008. There is no cash flow sweep mechanism that would require additional principal repayments on the term loan. PREPAYMENTS Optional Prepayments. Optional prepayments are permitted under the New Credit Facility, including the right to reduce the commitments under the revolving loan facility, subject to (i) a 1% fee based on the amount of the underlying commitments terminated during the first year following October 8, 2003 and (ii) a 0.50% fee based on the amount of the underlying commitments terminated during the second or third year following the Effective Date. Mandatory Prepayments. Mandatory prepayments are required as follows: (i) 50% of the net proceeds from the issuance of debt or equity to non-affiliates; (ii) 100% of the net proceeds received from the sale or disposition of all or any part of the assets other than: (A) sales in the ordinary course of business, (B) permitted sales to be agreed, subject to the reinvestment of the net proceeds thereof (or the commitment to reinvest) within 180 days, (C) other sales not in the ordinary course of business not to exceed in any fiscal year an amount to be agreed and (D) assets secured by purchase money security interest; (iii) 100% of insurance proceeds not reinvested or not committed to reinvestment within 180 days with such commitment reinvestment to occur within 360 days from when the insurance proceeds are received and (iv) 100% of the proceeds from tax refunds, indemnity payments of pension plan reversions actually received. COSTS AND EXPENSES Neenah paid and shall pay all reasonable costs and expenses of the administrative agent (including all reasonable fees, expenses and disbursements of outside counsel and other professional advisors retained by the administrative agent) in connection with the preparation, execution and delivery of the definitive credit documentation and the funding of all loans in connection therewith. 52 DESCRIPTION OF THE NOTES The New Notes will be issued under an Indenture, dated October 8, 2003 (the "Indenture"), among the Company, the Subsidiary Guarantors and The Bank of New York, as trustee (the "Trustee"). The following summary of certain provisions of the Indenture, the Collateral Documents and the Lien Subordination Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and to all of the provisions of the Indenture, the Collateral Documents and the Lien Subordination Agreement, including the definitions of certain terms therein and those terms made a part of the Indenture by reference to the Trust Indenture Act, as in effect on the date of the Indenture. The definitions of certain capitalized terms used in this description are set forth below under "Certain Definitions." References in this "Description of the Notes" section to the "Company" mean only Neenah Foundry Company and not any of its subsidiaries. GENERAL The Notes will be issued only in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. The Company has appointed the Trustee to serve as registrar and paying agent under the Indenture at its offices in New York, New York. No service charge will be made for any registration of transfer or exchange of the Notes, except for any tax or other governmental charge that may be imposed in connection therewith. MATURITY, INTEREST AND PRINCIPAL OF THE NOTES The Notes being offered hereby are limited to $133,130,000 million aggregate principal amount and will mature on September 30, 2010. Subject to compliance with the covenant described under "-- Certain Covenants -- Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock," the Company may issue Additional Notes from time to time in the future. Any Additional Notes will be part of the same issue as the Notes being issued in this offering and will vote on all matters as one class with the Notes being issued in this offering. For purposes of this "Description of the Notes," except for the covenants described under "-- Certain Covenants -- Limitations on Indebtedness," references to the Notes include Additional Notes, if any. Cash interest on the Notes will accrue at a rate of 11% per annum and will be payable semiannually in arrears on January 1 and July 1, of each year (each, and "Interest Payment Date"), commencing January 1, 2004, to the holders of record of Notes by 10:00 a.m. New York City time on that date. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. RANKING The Notes will be: - general secured obligations of the Company; - secured by second-priority Liens on and security interests in the assets of the Company that secure Obligations under the Credit Agreement and other First Priority Claims other than the exceptions described under the caption "-- Collateral" below; - equal in right of payment with all existing and future senior Indebtedness of the Company; and - senior in right of payment to any existing and future subordinated Indebtedness of the Company. Pursuant to the Collateral Documents and the Lien Subordination Agreement, the Liens securing the Notes under the Collateral Documents are second in priority to any and all Liens at any time granted to secure the Priority Lien Obligations, which include Indebtedness and other Obligations under the Credit Agreement. As of November 30, 2003 we have approximately $47 million of Indebtedness outstanding under the Credit Agreement, with approximately $45 million in additional revolving loan capacity. Such amounts are, or would be, secured by Priority Liens on the Collateral. In addition, under the Indenture, 53 the Company also may incur additional Indebtedness secured by first-priority Liens or second-priority Liens as described below under "-- Certain Covenants -- Limitation on Additional Indebtedness" and "-- Certain Covenants -- Limitation on Liens." The Collateral securing the Notes is subject to control by creditors with first-priority Liens. If there is an Event of Default, the value of the Collateral may not be sufficient to repay both the first-priority creditors and the Holders of the Notes, as described below under "-- Collateral." GUARANTEES OF THE NOTES The Indenture provides that each of the Subsidiary Guarantors will unconditionally guarantee on a joint and several basis all of the Company's Obligations under the New Notes, including its obligations to pay principal, premium, if any, and interest with respect to the New Notes. Each Guarantee will be: - a general secured obligation of the Guarantor; - secured by a Note Lien on and security interest in the assets of the Guarantor that secure Obligations under the Credit Agreement and other first Priority Lien Obligations other than the exceptions described under the caption "-- Collateral" below; - equal in right of payment with all existing and future senior Indebtedness of the Subsidiary Guarantors; and - senior in right of payment to existing and future subordinated Indebtedness of the Subsidiary Guarantors. The obligations of each Subsidiary Guarantor will not be discharged except by complete performance of the Obligations contained in the Notes and Indenture. Each Guarantor that makes a payment or distribution under a Subsidiary Guarantee shall be entitled to seek contribution from each non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of Holders under the Subsidiary Guarantees. The Company shall cause each Restricted Subsidiary issuing a Subsidiary Guarantee after the date of the Indenture to execute and deliver to the Trustee a supplemental indenture and the applicable documents and certificates required by the Indenture, pursuant to which such Restricted Subsidiary shall become a party to the Indenture and thereby (1) unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms set forth therein and (2) grant a security interest in the Collateral owned by such Restricted Subsidiary on the terms set forth in the Collateral Documents. Thereafter, such Restricted Subsidiary shall (unless released in accordance with the terms of the Indenture) be a Subsidiary Guarantor for all purposes of the Indenture. The Indenture provides that if the Notes thereunder are defeased in accordance with the terms of the Indenture, all of the assets of a Subsidiary Guarantee sold or disposed of in a transaction that complies with the Indenture or the Company designates a Subsidiary Guarantor to be an Unrestricted Subsidiary in a transaction that complies with the Indenture, then such Subsidiary Guarantor (in the event of a sale or other disposition of all of the Equity Interests of such Subsidiary Guarantor) or the corporation acquiring such assets (in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) shall be released and discharged of its Subsidiary Guarantee obligations under the Indenture and the Notes. COLLATERAL The Notes and Guarantees will be secured by Note Liens, granted by the Company and the Subsidiary Guarantors on the Collateral of the Company and each Subsidiary Guarantor (whether now owned or hereafter arising or acquired) to the extent such assets secure the Priority Lien Obligations and to the extent that a Note Lien is able to be granted or perfected therein. 54 From and after the Issue Date, if the Company any Subsidiary Guarantor or Restricted Domestic Subsidiary creates any additional security interest in any property or asset to secure any Priority Lien Obligations or any other Obligations that are secured equally and ratably with the Notes by a Note Lien upon the Collateral, it must concurrently grant a Note Lien (subject to Priority Liens and Permitted Liens) upon such property or asset as security for the Notes. The Company, the Subsidiary Guarantors and the Trustee, on its own behalf and as Trustee, entered into Collateral Documents defining the terms of the Liens securing the Note Obligations. These security interests will secure the payment and performance when due of all of the Obligations of the Company and the Subsidiary Guarantors under the Notes, the Indenture, the Subsidiary Guarantees and the Collateral Documents, as provided in the Collateral Documents. The Collateral was pledged to the Trustee, as Collateral Agent for its benefit and the benefit of the Trustee and the Holders. The Note Liens are subject and subordinate to the Priority Liens, and no payment or other distributions from (or with respect to) any realization upon the Collateral may be made on account of the Note Liens until the Priority Lien Obligations are discharged. The Priority Liens are also subject to Permitted Liens, including those granted to third parties on or prior to the Issue Date. The Persons holding such Liens may have rights and remedies with respect to the property subject to such Lien that, if exercised, could adversely affect the value of the Collateral or the ability of the Trustee to realize or foreclose on the Collateral. The Note Liens are second in priority to any and all Liens at any time granted to secure Priority Lien Obligations. Priority Lien Obligations include the Obligations under the Credit Agreement. In addition, other Indebtedness of the Company and the Restricted Subsidiaries that is secured by a Lien permitted pursuant to the covenant described under the caption "-- Certain Covenants -- Limitation on Liens" and, that is designated by the Company upon incurrence may be secured equally and ratably with the Notes by the second-priority security interests in the Collateral. The Trustee, the Credit Agent, the Company and the Subsidiary Guarantors entered into the Loan Subordination Agreement. Pursuant to the terms of the Loan Subordination Agreement, prior to the discharge of Priority Liens, the holders of Priority Liens will determine the time and method by which the Liens on the Collateral will be enforced by the Trustee. If the Notes become due and payable prior to the final stated maturity thereof for any reason or are not paid in full at the final stated maturity thereof and after any applicable grace period has expired, pursuant to the provisions of the Loan Subordination Agreement, the Trustee, on behalf of the holders of Priority Liens thereunder, will have the exclusive right to foreclose (or decline to foreclose) upon (or otherwise exercise (or decline to exercise) remedies in respect of) the Collateral. Following the discharge of the Priority Liens, the Trustee will have the right to foreclose upon the Collateral in accordance with instructions from the holders of a majority in aggregate principal amount of Note Obligations and other second-lien Obligations, if any, or, in the absence of such instructions, in such manner as the Trustee deems appropriate in its absolute discretion. The Trustee will not be permitted to enforce the Liens even if an Event of Default has occurred and the Notes have been accelerated except (a) in any insolvency or liquidation proceeding, as necessary to file a claim or statement of interest with respect to the Notes or (b) as necessary to take any action not adverse to the Priority Liens in order to preserve or protect its rights in the Note Liens. As a result, while any Priority Liens are outstanding, neither the Trustee nor the Holders will be able to force a sale of the Collateral or otherwise exercise remedies normally available to secured creditors without the concurrence of the holders of the Priority Liens or Agent under the Credit Agreement. The Lien Subordination Agreement does not require the holders of Priority Lien Obligations to marshal assets or to satisfy any obligations owed to them first from collateral pledged to them which constitutes Excluded Collateral even if the other collateral available to them would have satisfied their claims and left Collateral available to benefit the Holders. In addition, the Collateral Documents will generally provide that, so long as the Credit Agreement is in effect the lenders thereunder may change, waive, modify or vary the Collateral Documents without the consent of the Trustee or the Holders of the Notes, unless such change, waiver or modification materially adversely affects the rights of the Holders and not the other secured creditors in a like or similar manner or would result in the impairment of any second-priority Lien other than in 55 accordance with the Indenture. After the discharge of the Priority Liens, the Trustee will distribute all cash proceeds (after payment of the costs of enforcement and collateral administration) from any realization upon the Collateral received by it under the Collateral Documents for the ratable benefit of the Holders and other second-lien Obligations. Future holders of Priority Liens and of other second-lien Obligations, or their respective agents, will be required to become a party to the Lien Subordination Agreement. Whether prior to or after the discharge of the Priority Lien Obligations, the Company and the Subsidiary Guarantors will be entitled to releases of assets included in the Collateral from the Note Liens under any one or more of the following circumstances: (1) to enable us to consummate asset dispositions permitted or not prohibited under the covenant described below under the caption "-- Certain Covenants -- Limitation on Asset Sales"; (2) if all of the Equity Interests of any of our Subsidiary Guarantors that are pledged to the Trustee, as Collateral Agent, are released or if any Subsidiary Guarantor is released from its Subsidiary Guarantee, that Subsidiary Guarantor's assets will also be released; or (3) as described under "Modification and Waiver" below. The Note Lien on all Collateral also will be released upon (1) payment in full of the principal of, accrued and unpaid interest, if any, on the Notes and all other Obligations under the Indenture, the Subsidiary Guarantees and the Collateral Documents that are due and payable at or prior to the time such principal and accrued and unpaid interest, if any, are paid, (2) a satisfaction and discharge of the Indenture as described below under the caption "-- Satisfaction and Discharge" and (3) a Legal Defeasance or Covenant Defeasance as described below under the caption "-- Legal Defeasance and Covenant Defeasance." If the Company incurs obligations under the Credit Agreement or other Priority Lien Obligations which are secured by assets of the Company or its Restricted Subsidiaries of the type constituting Collateral, then the Notes will be secured at such time by a Note Lien on the collateral securing such Priority Lien Obligations, to the same extent provided by the Collateral Documents. At any time that the holders of Note Liens are entitled to direct the disposition or other actions with respect to the Collateral, the holders of a majority in aggregate principal amount of such Note Obligations shall be entitled to direct such disposition or action. The holders of the Priority Liens will receive all proceeds from any realization on the Collateral until the Priority Lien Obligations are fully discharged. Proceeds realized by the Trustee, as Collateral Agent from the Collateral will be applied: - first, to amounts owing to the holders of the Priority Liens in accordance with the terms of the Priority Lien Security Documents; - second, to amounts owing to the Trustee, as Collateral Agent, in accordance with the terms of the Collateral Documents; - third, to amounts owing to the Trustee in its capacity as such in accordance with the terms of the Indenture and to any Trustee acting on behalf of holders of second-lien Obligations in accordance with the terms of the documentation governing such Other Second Lien Obligations; - fourth, to amounts owing to the Holders in accordance with the terms of the Indenture and holders of Other Second Lien Obligations, pro rata based on the aggregate principal amount of each such holder's Obligations; and - fifth, to the Company and/or other persons entitled thereto. Subject to the terms of the Collateral Documents, the Company and each Subsidiary Guarantor will have the right to remain in possession and retain exclusive control of the Collateral securing the Notes (other than any securities constituting part of the Collateral and deposited with the Trustee in accordance 56 with the provisions of the Collateral Documents and other than as set forth in the Collateral Documents), to freely operate the Collateral and to collect, invest and dispose of any income therefrom. To the extent that third parties enjoy Liens permitted by the Collateral Documents and the Indenture, such third parties will have rights and remedies with respect to the Collateral subject to such Liens that, if exercised could adversely affect the value of the Collateral or the ability of the Trustee to realize or foreclose on the Collateral on behalf of holders of Note Obligations. Further, no appraisals of any of the Collateral have been prepared by or on behalf of the Company in connection with the issuance of the Notes. There can be no assurance that the proceeds from the sale of the Collateral remaining after the satisfaction of all Obligations owed to the holders of the Priority Lien Obligations or the holders of other Liens which have priority over or rank pari passu with the Note Liens would be sufficient to satisfy the Obligations owed to the Holders. By its nature, some or all of the Collateral will be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral can be sold in a short period of time, if salable. OPTIONAL REDEMPTION The Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after September 30, 2007, at the Redemption Prices (expressed as a percentage of principal amount) set forth below, with respect to the indicated Redemption Date plus accrued and unpaid interest thereon, if any, to, but excluding the Redemption Date, if redeemed during the 12-month period beginning on September 30, of the years indicated below:
REDEMPTION YEAR PRICE - ---- ---------- 2007........................................................ 105.500% 2008........................................................ 104.125% 2009 and thereafter......................................... 102.750%
The Company may acquire Notes by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws, so long as such acquisition does not otherwise violate the terms of the Indenture. In the event that less than all of the Notes are to be redeemed at any time pursuant to an optional redemption, selection of such Notes for redemption will be made by the Trustee in compliance with the requirements of any applicable depository, legal and national securities exchange or automated quotation system, if any, on which the Notes are listed or, if the Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part. Notice of redemption shall be mailed by first class mail at least 30 but not more than 60 days before a Redemption Date to the Trustee and each Holder of Notes to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the paying agent for the Notes funds in satisfaction of the applicable redemption price pursuant to the Indenture. OFFER TO PURCHASE UPON CHANGE OF CONTROL In the event that a Change of Control occurs, each Holder shall have the right, at such Holder's option, subject to the terms and conditions of the Indenture, to require the Company to repurchase all or any part of such Holder's Notes (provided, that the principal amount of such Notes must be $1,000 or an integral multiple thereof) on a date to be established by the Company (the "Change of Control Payment Date") after the occurrence of such Change of Control, at a cash price (the "Change of Control 57 Repurchase Price") equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon to, but excluding, the Change of Control Payment Date. If a Change of Control were to occur, it would constitute an event of default under the terms of the current Credit Agreement, which, if not waived, would result in an Event of Default under the Indenture. In the event that, pursuant to the terms of the Indenture, the Company shall be required to commence an offer to purchase Notes (the "Change of Control Offer"), the Company will comply with the terms of the Indenture and all applicable tender offer laws and regulations and any violation of the provisions of the Indenture relating to such Change of Control Offer occurring as a result of such compliance shall not be deemed an Event of Default or an event that, with the passing of time or giving of notice, or both, would constitute an Event of Default. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. CERTAIN COVENANTS Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, "incur" and, correlatively, "incurred" and "incurrence") any Indebtedness (including, without limitation, Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any preferred stock; provided, however, that the Company and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) if after giving effect to the incurrence of such Indebtedness and the application of the proceeds thereof, the Consolidated Coverage Ratio of the Company and its Restricted Subsidiaries (on a consolidated basis) would not exceed 2.00 to 1.00. The foregoing limitations shall not apply to: (i) Indebtedness incurred by the Company and its Restricted Subsidiaries under the Credit Agreement in an aggregate principal amount at the time incurred equal to the greater of (i) $102 million and (ii) the Borrowing Base Amount; (ii) Indebtedness represented by the Senior Subordinated Notes; (iii) additional Indebtedness incurred by the Company in respect of Capital Lease Obligations or Purchase Money Obligations in an aggregate principal amount not to exceed $10,000,000 at any time outstanding; (iv) Indebtedness represented by the Notes and the Indenture; (v) Hedging Obligations incurred by the Company pursuant to agreements or other arrangements designed to protect the Company against fluctuations in interest rates and/or currency exchange rates resulting from its borrowings under the Credit Agreement; (vi) additional unsecured Indebtedness which is subordinate in right of payment to the Notes, not to exceed $5,000,000 at any time outstanding; (vii) Indebtedness of the Company to any of its Wholly Owned Subsidiaries that is a Restricted Subsidiary, and Indebtedness of any Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary to the Company or any of its Wholly Owned Subsidiaries that is a Restricted Subsidiary (the Indebtedness incurred pursuant to this clause (vii) being hereinafter referred to as "Intercompany Indebtedness"); provided that in the case of Intercompany Indebtedness of the Company (other than Intercompany Indebtedness pursuant to the Credit Agreement) such obligations shall be unsecured and subordinated in all respects to the Company's obligations pursuant to the Notes; provided, further, that an incurrence of Indebtedness shall be deemed to have occurred upon (a) any sale or other disposition of Intercompany Indebtedness to a Person other than the Company 58 or any of its Restricted Subsidiaries, (b) any sale or other disposition of Equity Interests of any Restricted Subsidiary of the Company which holds Intercompany Indebtedness such that such Restricted Subsidiary ceases to be a Restricted Subsidiary after such sale or other disposition or (c) designation of a Restricted Subsidiary as an Unrestricted Subsidiary; (viii) the incurrence by the Company of Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the Consolidated Coverage Ratio test set forth in the first paragraph of this covenant or pursuant to clauses (i), (ii) or (iv) of this covenant in whole or in part (the "Refinancing Indebtedness"); provided, however, that (A) (i) the aggregate principal amount of any Refinancing Indebtedness (other than a Credit Agreement Refinancing Indebtedness) shall not exceed the aggregate principal amount of Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded, and (ii) the aggregate principal amount of any Credit Agreement Refinancing Indebtedness may exceed the aggregate principal amount of the Indebtedness incurred under the Credit Agreement so extended, refinanced, renewed, replaced, defeased or refunded only to the extent permitted under Clause (i) of this caption "-- Certain Covenants -- Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock"; (B) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (C) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is pari passu with or subordinated in right of payment to the Notes, the Refinancing Indebtedness shall be pari passu with or subordinated, as the case may be, in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded (any such extension, refinancing, renewal, replacement, defeasance or refunding being referred to as a "Permitted Refinancing"); (ix) Indebtedness of the Company or any Restricted Subsidiary consisting of guarantees, indemnities, or obligations in respect of purchase price adjustments, in connection with the acquisition or disposition of any business, assets or Subsidiary of the Company permitted under the Indenture; (x) Indebtedness of the Company or a Restricted Subsidiary owed to any Person in connection with liability insurance provided by such Person to the Company or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business; (xi) Guarantees of Indebtedness permitted to be incurred under the Indenture; (xii) Indebtedness in respect of performance bonds; and (xiii) Indebtedness not included in paragraphs (i) through (xii) above which does not exceed at any time, in the aggregate, $2,000,000. Limitation on Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (a) (i) declare or pay any dividend or make any distribution on account of Equity Interests, other than (A) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company; or (B) dividends or distributions payable to the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary; (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company (other than any such Equity Interests owned by the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary); 59 (iii) purchase, redeem, repay, defease or otherwise acquire or retire for value any Indebtedness that is subordinated in right of payment to the Notes except (i) for regularly scheduled payments of interest when due or payment of principal at maturity thereof, (ii) as permitted under "-- Certain Covenants -- Asset Sales" below, and (iii) as permitted or required under the Senior Subordinated Notes Indenture; (iv) make any Investment (other than a Permitted Investment); (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"); unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Coverage Ratio test set forth under "-- Certain Covenants -- Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock"; and (C) such Restricted Payment (the amount of any such payment, if other than cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a resolution in an Officers' Certificate delivered to the Trustee), together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (including Restricted Payments permitted by the next succeeding paragraph, except as set forth therein), shall not exceed the sum of (w) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) commencing on the first day of the Company's first fiscal quarter beginning after the initial issuance of the Notes and ending on the last day of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, 100% of such deficit as a negative number), plus (x) 100% of the aggregate net cash proceeds received by the Company from the issuance or sale since the date of initial issuance of the Notes of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (y) the aggregate cash received by the Company as capital contributions to the Company after the date of initial issuance of the Notes (other than from a Subsidiary), plus (z) any cash received by the Company after the date of initial issuance of the Notes as a dividend or distribution from any of its Unrestricted Subsidiaries or from the sale of any of its Unrestricted Subsidiaries less the cost of disposition and taxes, if any (but in each case excluding any such amounts included in Consolidated Net Income). (b) The foregoing provisions shall not prohibit: (i) the payment of any dividend 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; (ii) the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company, or the defeasance, redemption or repurchase of subordinated Indebtedness in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of Equity Interests of the Company (other than any Disqualified Stock) or out of the net proceeds of a substantially concurrent cash capital contribution received by the Company; provided that the amount of any such proceeds that are utilized for any such redemption, repurchase, 60 retirement, defeasance or other acquisition shall be excluded from Clause (C)(x) above this section "-- Certain Covenants -- Limitation on Restricted Payments"; (iii) the repayment, defeasance, redemption or repurchase of subordinated Indebtedness with the net proceeds from an incurrence of Refinancing Indebtedness in a Permitted Refinancing; (iv) the repayment, defeasance, redemption or repurchase of Senior Subordinated Notes for an aggregate purchase price of $15,000,000 or less; (v) any Investment made with the proceeds of a substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of Capital Stock of the Company (other than Disqualified Stock); provided, however, the proceeds of such sale shall not be (and have not been) included in Clause (C) above this section "-- Certain Covenants -- Limitation on Restricted Payments"; (vi) other restricted payments of up to $5,000,000 in the aggregate; or (vii) the payment of a dividend or distribution by the Company and its Subsidiaries, directly or indirectly, to ACP Holding in an amount sufficient to permit ACP Holding to pay its consolidated, combined or unitary United States federal, state and local tax liabilities relating to the business of the Company and its Subsidiaries, provided that ACP Holding applies the amount of such dividend or distribution for such purpose at such time; (viii) upon the occurrence of a Change of Control within 60 days of the completion of the offer to repurchase the Notes pursuant to "-- Offer to Purchase upon Change to Control, any purchase, retirement, redemption or other acquisition of subordinated Obligations permitted to be incurred pursuant to the Indenture (including the Senior Subordinated Notes) and only to the extent necessary to comply with the covenants and other provisions of such subordinated Obligations; (ix) payments by the Company to NFC Castings or ACP Holding not to exceed an amount necessary to permit NFC Castings or ACP Holding to (A) make payments in respect to its indemnification obligations owing to directors, officers, or other Persons under NFC Castings' or ACP Holding's charter or by-laws or pursuant to written agreements with any such Person, (B) make payments in respect of its other operational expenses (other than taxes) incurred in the ordinary course of business, or (C) make payments in respect of indemnification obligations and costs and expenses incurred by ACP Holding in connection with any offering of common stock of ACP Holding; or (x) distributions by the Company and the Restricted Subsidiaries in amounts necessary to permit such Person to repurchase securities of such Person from employees of such Person upon the termination of their employment, so long as the aggregate cash amount of all such Distributions by all such Persons, measured at the time when made, does not exceed $250,000 in any fiscal year of the Company. provided, further, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (i), (ii), (iii), (vi), (viii) and (x) above no Default or Event of Default shall have occurred and be continuing; provided, further, that the Restricted Payments described in clauses (vii) and (ix), shall not be counted in computing the aggregate amount of all Restricted Payments made pursuant to the Indenture. For purposes of the foregoing calculations, the amount of any Investment that constitutes a Restricted Payment shall be equal to the greater of (i) the net book value of such Investment and (ii) the fair market value of such Investment (in each case as certified by a resolution of the independent directors of the Company if the book value or fair market value of such investment exceeds $1,000,000). Limitation on Liens. The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Liens on any asset now owned or acquired after the date of the Indenture or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens; provided, that, in the case of Permitted 61 Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes or a Subsidiary Guarantee, the Notes or such Subsidiary Guarantee is secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens, and further provided, that in the case of Permitted Liens securing Indebtedness under the Credit Agreement a Note Lien is created in favor of the Holders of the Notes. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (a) on its Capital Stock or (b) with respect to any other interest or participation in, or measured by, its profits; (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (iii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iv) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except for such encumbrances or restrictions existing under or by reason of (a) the agreements evidencing the Senior Indebtedness and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that they are not materially more restrictive than the similar restrictions contained in those agreements on the date of the Indenture, (b) the Indenture, the Notes, the Senior Subordinated Notes Indenture, the Senior Subordinated Notes and the Collateral Documents, (c) applicable law, (d) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, (e) customary nonassignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (f) Purchase Money Obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iv) above on the property so acquired, (g) Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Refinancing Indebtedness are no more restrictive with respect to the provisions set forth in clauses (i), (ii), (iii) and (iv) above than those contained in the agreements governing the Indebtedness being refinanced; (h) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; or (i) restrictions on cash or other deposits or net worth imposed by customers or suppliers under contracts entered into in the ordinary course of business. Limitation on Transactions with Affiliates. The Company shall not, and shall not permit, cause, or suffer any Restricted Subsidiary of the Company to, directly or indirectly, sell, lease, license, 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 arms' length 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 involving aggregate payments in excess of $500,000, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and such Affiliate Transaction is approved by a majority of the disinterested members, if any, of the Board of Directors and (b) with respect to any Affiliate Transaction involving aggregate payments in excess of 62 $20,000,000, an opinion as to the fairness to the Company or such Restricted Subsidiary from a financial point of view issued by a nationally recognized independent financial advisor; provided, however, that the foregoing limitations shall not apply to (i) any reasonable fees, advances and compensation (including incentive compensation) provided to, and indemnity provided on behalf of, officers, directors and employees of NFC Castings, ACP Holding, the Company and its Restricted Subsidiaries as determined in good faith by the Board of Directors of the Company, (ii) transactions between or among the Company and its Wholly Owned Subsidiaries that are Restricted Subsidiaries, (iii) Restricted Payments permitted under "Limitation on Restricted Payments", (iv) payment of principal of, and interest on, the Notes or the Senior Subordinated Notes held by Affiliates, (v) payment of the Commitment Fee, (vi) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors; (vii) transactions pursuant to agreements entered into or in effect on the date of the Indenture, including amendments thereto entered into after the date of the Indenture, provided that (A) the terms of any such amendment are not, in the aggregate, less favorable to the Company or such Restricted Subsidiary than the terms of such agreement prior to such amendment and (B) the transactions contemplated by such amendment are otherwise permitted by the Indenture (viii) Intercompany Indebtedness permitted to be incurred under "-- Certain Covenants -- Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock" or (ix) non-exclusive licenses of intellectual property among the Company and the Restricted Subsidiaries or among the Restricted Subsidiaries. Limitation on Lines of Business. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Related Business. Sale and Leaseback Transactions. The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any sale and leaseback transaction; provided, however, that the Company or any Restricted Subsidiary may enter into a sale and leaseback transaction if: (a) the Company or that Restricted Subsidiary, as applicable, could have (i) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Consolidated Coverage Ratio test set forth in "-- Certain Covenants -- Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock" and (ii) created a Lien on such property securing Attributable Debt pursuant to the provisions set forth in "Limitation on Liens"; (b) the net cash proceeds of such sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee, of the property that is the subject of that sale and leaseback transaction; provided that no Officers' Certificate need be provided if the fair market value of such sale and leaseback transaction, is determined in good faith by the Board of Directors to be less than $1,000,000; and (c) the transfer of assets in such sale and leaseback transaction is permitted by, and the Company or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, the provisions of "-- Certain Covenants -- Asset Sales". Future Guarantors. The Company shall cause each Person that (a) becomes a Domestic Restricted Subsidiary following the date of the Indenture and (b) guarantees any Indebtedness of the Company or any Subsidiary thereof to execute and deliver to the Trustee a Subsidiary Guarantee at the time such Person becomes obligated under any such Guarantee. Payments for Consent. Neither the Company, nor any of the Company's Subsidiaries, shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or agreed to be 63 paid to all holders of the Notes which so consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Asset Sales. Neither the Company nor any of its Restricted Subsidiaries shall engage in any Asset Sale, unless: (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise disposed of; and (ii) at least 20% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of Cash or Cash Equivalents; provided, however, that if the Fair Market Value of the assets sold or otherwise disposed of exceeds $10,000,000, at least 75% of the consideration therefor received by the Company or such Restricted Subsidiaries is in the form of Cash or Cash Equivalents; provided, further, however, that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated in right of payment to the Notes) that are assumed by the transferee of any such assets and (b) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted within 60 days by the Company or such Restricted Subsidiary into cash (to the extent of the cash so received), shall be deemed to be cash for purposes of clause (ii) above. Within 180 days after the receipt of the Net Proceeds from an Asset Sale, the Company shall apply the Net Proceeds from such Asset Sale first, to repay or reduce the Term Loan, and to the extent such Indebtedness is paid in full, to repay the Revolver (but shall not permanently reduce the commitment thereunder). Pending the final application of any such Net Proceeds, the Company may invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from the Asset Sale that are not applied as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate cumulative amount of Excess Proceeds exceeds $5,000,000, the Company shall make an offer to all Holders of Notes to purchase the maximum principal amount of Notes that may be purchased with the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the date of purchase, in accordance with the procedures set forth in this section "-- Certain Covenants -- Asset Sales" (an "Asset Sale Offer"). To the extent that the aggregate principal amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use such deficiency (i) for general corporate purposes in any manner not prohibited by the Indenture (including the repayment, redemption or repurchase of Senior Subordinated Notes to the extent permitted under Clause b(iv) of "-- Certain Covenants -- Limitation on Restricted Payments" or (ii) within 60 days of the completion of an Asset Sale Offer, to purchase, retire, redeem or otherwise acquire subordinated Obligations permitted to be incurred pursuant to the Indenture (including the Senior Subordinated Notes) and only to the extent necessary to comply with the covenants and other provisions of such subordinated Obligations. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. In the event that the Company shall be required to commence an Asset Sale Offer to all Holders to purchase Notes pursuant to this section "-- Certain Covenants -- Asset Sales", it shall follow the procedures specified below. The Asset Sale Offer shall be commenced within 30 days following the first date on which the Company has cumulative Excess Proceeds of at least $5,000,000 and remain open for a period of at least 64 30 and not more than 40 days, except to the extent that a longer period is required by applicable law (the "Repurchase Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Repurchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to this section "-- Certain Covenants -- Asset Sales" hereof (the "Repurchase Price") or, if Notes having an aggregate principal amount less than the amount of Excess Proceeds subject to such Asset Sale Offer have been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Repurchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee or to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this section "-- Certain Covenants -- Asset Sales" and the length of time the Asset Sale Offer shall remain open; (b) the Asset Sale Offer, the Repurchase Price and the Repurchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Repurchase Date; (e) that Holders electing to have a Note purchased pursuant to a Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note 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 before the Asset Sale Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Repurchase Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Repurchase Price, the Trustee shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Trustee so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Repurchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written order from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount 65 equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Repurchase Date. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws, rules and regulations thereunder to the extent such laws, rules and regulations are applicable in connection with the repurchase of Notes pursuant to Asset Sale Offer. Calculation of Original Issue Discount. The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Notes as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Code from time to time. EVENTS OF DEFAULT Under the Indenture, an "Event of Default," means any one of the following events (whatever the reason for such Event of Default and whether it shall be caused voluntarily or involuntarily or effected, without limitation, by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) failure to pay any installment of interest on any of the Notes as and when the same becomes due and payable, and the continuance of such failure for a period of 30 days, whether or not such payment is prohibited by the Indenture; (b) failure to pay all or any part of the principal of the Notes when and as the same become due and payable at maturity, redemption, repurchase or otherwise, whether or not such payment is prohibited by the Indenture; (c) failure by the Company to comply with the provisions set forth in "-- Certain Covenants -- Asset Sales" or "Limitation on Merger, Consolidation or Sale of Assets"; (d) failure by the Company or any Restricted Subsidiary to observe or perform any covenant or agreement contained in the Notes, the Indenture (other than a default in the performance of any covenant or agreement which is specifically dealt with elsewhere in this section "Events of Default") or the Collateral Documents, and continuance of such failure for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by Holders of at least 25% in aggregate principal amount of the then outstanding Notes, a written notice specifying such failure, requesting it to be remedied and stating that such notice is a "Notice of Default"; (e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of such Indebtedness when due and prior to the expiration of the grace period provided in such Indebtedness (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case described in clauses (a) and (b) of this subsection (e), the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5,000,000 or more; (f) failure of the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5,000,000, which judgments have not been paid, stayed, bonded or discharged for a period (during which execution shall not be effectively stayed) of 60 days (or, in the 66 case of any such final judgment which provides for payment over time, which shall so remain unstayed, unbonded or undischarged beyond any applicable payment date provided therein); (g) a decree, judgment, or order by a court of competent jurisdiction shall have been entered adjudging the Company or any of its Restricted Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company or any of its Restricted Subsidiaries under any bankruptcy or similar law, and such decree, judgment, or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of competent jurisdiction over the appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the Company, any of its Restricted Subsidiaries, or of the property of any such Person, or for the winding up or liquidation of the affairs of any such Person, shall have been entered, and such decree, judgment, or order shall have remained in force undischarged and unstayed for a period of 60 days; or (h) the Company or any of its Restricted Subsidiaries shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a Custodian, receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of it or any of its assets or property, or shall make a general assignment for the benefit of creditors; or take any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing; (i) any Subsidiary Guaranty relating to the Notes ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty), or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty relating to the Notes; or (j) the security interest under the Collateral Documents shall, at any time, cease to be in full force and effect for any reason other than the satisfaction in full of all Obligations under the Indenture and discharge of the Indenture or any security interest created under the Indenture or under the Collateral Documents shall be declared invalid or unenforceable or the Company or any Restricted Subsidiary shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable. Notwithstanding the 30-day period and notice requirement contained in Section 6.1(d) above, with respect to a default under "Offer to Purchase Upon Change of Control", the 30-day period referred to above shall be deemed to have begun as of the date the Change of Control notice is required to be sent in the event that the Company has not complied with the provisions of "Offer to Purchase Upon Change of Control" and the Trustee or Holders of at least 25% in principal amount of the outstanding Notes thereafter give the Notice of Default referred to above to the Company and, if applicable, the Trustee; provided, however, that if the breach or default is a result of a default in the payment when due of the Repurchase Price on the Repurchase Date, such Event of Default shall be deemed, for purposes of this section "Events of Default" to arise no later than on the last Repurchase Date. The occurrence of any of the following is as an "Event of Default" under the Indenture: (a) failure to pay principal of (or premium, if any, on) any Note when due at stated maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise; (b) failure to pay any interest on any Note when due, continued for 30 days or more; (c) failure to perform or comply with any of the provisions described under "-- Certain Covenants -- Certain Covenants -- Asset Sales" and "Offer to Purchase upon Change of Control" above; (d) failure to perform any other covenant, warranty or agreement of the Company under the Indenture, the Collateral Documents or the Notes or of the Subsidiary Guarantors under the Indenture, the Collateral Documents or the Guarantees continued for 30 days or more after written 67 notice to the Company by the Trustee or Holders of at least 25% in aggregate principal amount of the outstanding Notes; (e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of such Indebtedness when due and prior to the expiration of the grace period provided in such Indebtedness (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case described in clauses (a) and (b) of this subsection (e), the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5,000,000 or more; (f) failure of the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5,000,000, which judgments have not been paid, stayed, bonded or discharged for a period (during which execution shall not be effectively stayed) of 60 days (or, in the case of any such final judgment which provides for payment over time, which shall so remain unstayed, unbonded or undischarged beyond any applicable payment date provided therein); (g) a decree, judgment, or order by a court of competent jurisdiction shall have been entered adjudging the Company or any of its Restricted Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company or any of its Restricted Subsidiaries under any bankruptcy or similar law, and such decree, judgment, or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of competent jurisdiction over the appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the Company, any of its Restricted Subsidiaries, or of the property of any such Person, or for the winding up or liquidation of the affairs of any such Person, shall have been entered, and such decree, judgment, or order shall have remained in force undischarged and unstayed for a period of 60 days; or (h) the Company or any of its Restricted Subsidiaries shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a Custodian, receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of it or any of its assets or property, or shall make a general assignment for the benefit of creditors; or take any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing; (i) any Subsidiary Guaranty relating to the Notes ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty), or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty relating to the Notes; or (j) the security interest under the Collateral Documents shall, at any time, cease to be in full force and effect for any reason other than the satisfaction in full of all Obligations under the Indenture and discharge of the Indenture or any security interest created hereunder or under the Collateral Documents shall be declared invalid or unenforceable or the Company or any Restricted Subsidiary shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable. Notwithstanding the 30-day period and notice requirement above, with respect to a default under "Offer to Purchase Upon Change of Control", the 30-day period shall be deemed to have begun as of the date the Change of Control notice is required to be sent in the event that the Company has not complied with the provisions of "Offer to Purchase Upon Change of Control" and the Trustee or Holders of at least 25% in principal amount of the outstanding Notes thereafter give the Notice of Default to the Company 68 and, if applicable, the Trustee; provided, however, that if the breach or default is a result of a default in the payment when due of the Repurchase Price on the Repurchase Date, such Event of Default shall be deemed, to arise no later than on the last Repurchase Date. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATOR AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company or any of its Affiliates, as such, shall have any liability for any obligations of the Company or any of its Affiliates under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect, except as to surviving rights of registration of transfer or exchange of the Notes, as to all Notes issued when: (a) either: (i) the Company delivers to the Trustee all outstanding Notes for cancellation; or (ii) all outstanding Notes have become due and payable, whether at maturity or on a specified redemption date as a result of the mailing of a notice of redemption pursuant to the section "-- Optional Redemption," (b) the Company irrevocably deposits with the Trustee money sufficient to pay at maturity or upon redemption all outstanding Notes, including interest and premium thereon to maturity or such redemption date, and if in either case the Company pays all other sums payable under the Indenture by the Company, and (c) if the Notes have been called for redemption and the redemption date has not occurred, the Company delivers to the Trustee 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 actions and will be subject to federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such actions had not occurred, then this Indenture shall cease to be of further effect except for, (i) the Company's claim to deposits unclaimed after two years, certain reporting obligations, and amounts owed to the Trustee, and (ii) if the Notes have been called for redemption and the redemption date has not occurred, the Company's obligation to pay the redemption price on such redemption date. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, provided that no Default or Event of Default has occurred and is continuing or would arise therefrom (or, with respect to a Default or Event of Default from bankruptcy or insolvency events, occurs at any time on or prior to the 91st calendar day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 91st day)) under the Indenture, terminate its and the Subsidiary Guarantors' substantive obligations in respect of the Notes (except for its obligations to pay the principal of (and premium, if any, on) and the interest on the Notes and the Subsidiary Guarantors' Guarantee thereof) ("Covenant Defeasance") by: (1) depositing with the Trustee, under the terms of an irrevocable trust agreement, cash in United States dollars, non-callable government securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent certified public accountants, to pay all remaining principal of (and premium, if any, on) and interest on such Notes; 69 (2) delivering to the Trustee either an Opinion of Counsel from nationally recognized tax counsel reasonably acceptable to the Trustee confirming that the Holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and termination of obligations; and (3) complying with certain other requirements set forth in the Indenture. In addition, the Company may, provided that no Default or Event of Default has occurred and is continuing or would arise therefrom (or, with respect to a Default or Event of Default from bankruptcy or insolvency events, occurs at any time on or prior to the 91st calendar day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 91st day)) under the Indenture, terminate all of its and the Subsidiary Guarantors' substantive obligations in respect of the Notes (including its obligations to pay the principal of (and premium, if any, on) and interest on the Notes and the Subsidiary Guarantors' Guarantee thereof) ("Legal Defeasance") by: (1) depositing with the Trustee, under the terms of an irrevocable trust agreement, cash in United States dollars, non-callable government securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent certified public accountants, to pay all remaining principal of (and premium, if any, on) and interest on such Notes; (2) delivering to the Trustee either an Opinion of Counsel from nationally recognized tax counsel reasonably acceptable to the Trustee confirming that the Holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and termination of obligations; and (3) complying with certain other requirements set forth in the Indenture.] GOVERNING LAW The Indenture, the Collateral Documents (other than certain Collateral Documents relating to Foreign Restricted Subsidiaries), the Notes and the Guarantees will be governed by the laws of the State of New York without regard to principles of conflicts of laws. MODIFICATION AND WAIVER Supplements and amendments of the Indenture and the Notes (and, subject to the terms of the Intercreditor Agreement, the Collateral Documents) may be made by the Company, the Subsidiary Guarantors, and the Trustee with the consent of the Holders of 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); provided, however, that: (1) no such modification or amendment to the Indenture, the Collateral Documents or the Notes may, without the consent of the Holder of each Note affected thereby: (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter the optional or mandatory redemption provisions (other than provisions relating to the covenants described in "-- Certain Covenants -- Asset Sales" and "Offer to Purchase Upon Change of Control" above) or reduce the prices at which the Company shall offer to purchase such Notes pursuant to such sections; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or interest on, or redemption payment with respect to, any Note (other than a Default in the payment of an 70 amount due as a result of an acceleration if the Holders of Notes rescind such acceleration pursuant to Section 6.2); (e) make any Note payable in money other than that stated in the Note; (f) make any change in the provisions of the Indenture relating to waiver of past defaults or to the rights of Holders to receive payments of principal of, or interest on the Notes or to this clause (f); (g) waive a redemption payment with respect to any Note; (h) release all or substantially all of the Collateral from the Lien of the Indenture or the Collateral Documents (except in accordance with the provisions hereof or thereof); or (i) make any change in the foregoing amendment and waiver provisions. Without the consent of any Holder, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture, the Collateral Documents and the Notes to: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; (3) to provide for the assumption of the Company's or a Subsidiary Guarantor's Obligations to Holders in the case of a merger or consolidation; (4) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights of any Holder of the Notes; (5) to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA; (6) to make, complete or confirm any grant of Collateral permitted or required by the Indenture or any release of Collateral that becomes effective as set forth in the Indenture; (7) to enter into additional or supplemental Collateral Documents; (8) to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture as of October 8, 2003; or (9) to allow any Subsidiary Guarantor to execute a supplemental indenture and/or a Subsidiary Guarantee with respect to the Notes. The Holders of a majority in aggregate principal amount of the outstanding Notes, on behalf of all Holders of Notes, may waive compliance by the Company and the Subsidiary Guarantors with certain restrictive provisions of the Indenture and, subject to the terms of the Intercreditor Agreement and the Collateral Documents. Subject to certain rights of the Trustee, as provided in the Indenture, the Holders of a majority in aggregate principal amount of the Notes, on behalf of all Holders, may waive any past default under the Indenture (including any such waiver obtained in connection with a tender offer or exchange offer for the Notes), except a default in the payment of principal, premium or interest or a default arising from failure to purchase any Notes tendered pursuant to a Change of Control Offer, or a default in respect of a provision that under the Indenture cannot be modified or amended without the consent of the Holder of each Note that is affected. THE TRUSTEE Except during the continuance of a Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of a Default, the Trustee will exercise such rights and powers vested in it under the Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. The Indenture and provisions of the Trust Indenture Act incorporated by reference therein contain limitations on the rights of the Trustee, should it become a creditor of the Company, any Guarantor or any other obligor upon the Notes, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claim as security or otherwise. The Trustee is permitted to engage in other transactions with the Company or an Affiliate of the Company; provided, however, that if it acquires any conflicting interest (as defined in the Indenture or in the Trust Indenture Act), it must eliminate such conflict or resign. 71 CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full definition of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "ACP Holding" means ACP Holding Company, a Delaware corporation. "Acquired Debt" means, with respect to any specified Person: (i) Indebtedness of any other Person existing at the time such other Person merged with or into or became a Restricted Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Notes" means any Notes (other than Initial Notes and Exchange Notes and Notes issued under certain sections of the Indenture) issued under the Indenture in accordance with the terms of the Indenture, as part of the same series as the Initial Notes or as an additional series. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities (or the equivalents) of a Person shall be deemed to be control. "Applicable Procedures" means, with respect to any transfer, redemption or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer, redemption or exchange. "Asset Sale" means any sale, transfer or other disposition (including, without limitation, by merger, consolidation or sale-and-leaseback transaction) of (i) shares of Capital Stock of a Subsidiary of the Company (other than directors' qualifying shares), including any issuance of such Capital Stock, or (ii) property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that an Asset Sale shall not include (a) any sale, transfer or other disposition of shares of Capital Stock, property or assets by a Restricted Subsidiary of the Company to the Company or to any Restricted Subsidiary that is a Wholly Owned Subsidiary of the Company, (b) any sale, transfer or other disposition of defaulted receivables for collection, (c) any sales, transfers or other dispositions that do not involve aggregate consideration in excess of $2,500,000 in any fiscal year, (d) the grant in the ordinary course of business of any license of patents, trademarks, registrations therefor and other similar intellectual property, (e) any Lien (or foreclosure thereon) securing Indebtedness to the extent that such Lien is granted in compliance with the Indenture, (f) any Restricted Payment or Permitted Investment permitted by the Indenture, (g) any disposition of assets or property to the extent such assets are obsolete, worn-out or no longer useful in the Company's or any Restricted Subsidiary's business, (h) the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company as permitted by Article V of the Indenture, (i) any disposition that constitutes a Change of Control, (j) any transaction or series of transactions pertaining to sales, transfers or other dispositions of properties or assets of the Company or any Restricted Subsidiary in connection with closures of plants for a purchase price not exceeding 10% of the total consolidated assets of the Company as reflected on its consolidated balance sheet as of the Company's fiscal year end immediately preceding the first sale of such property or assets, (k) the disposition of any Investment in Cash Equivalents, (l) sales, leases and other dispositions of the Non-Core Fixed Assets; or (m) so long as no Event of Default exists, sales, leases and other dispositions of fixed assets that are worn, scrap, excess, damaged or obsolete, the net proceeds of which are used to prepay the outstanding principal amount of the Term Loan 72 or the Revolver (regardless of whether the corresponding revolving commitment thereunder is reduced in connection therewith). "Asset Sale Offer" means an offer made by the Company when the aggregate cumulative amount of Excess Proceeds exceeds $5.0 million to all Holders of Notes to purchase the maximum principal amount of Notes that may be purchased with the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the date of purchase in accordance with the terms of the Indenture. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. "Bankruptcy Law" means title 11, U.S. Code, or any similar federal, state or foreign law for the relief of debtors. "Board of Directors" means, with respect to any Person, the board of directors of such Person or any committee of the board of directors of such Person authorized, with respect to any particular matter, to exercise the power of the board of directors of such Person. "Borrowing Base Amount" means, as to the Company and its Restricted Subsidiaries, the sum of (x) 65% of the gross value of Inventory plus (y) 85% of the gross value of Receivables, in each case, determined on a consolidated basis in accordance with GAAP, as reflected in the most recent quarterly consolidated financial statements delivered pursuant to Section 4.7 of the Indenture. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. "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 (i) any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (ii) in the case of a partnership, partnership interests (whether general or limited) and (iii) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than twelve months from the date of acquisition, (iii) certificates of deposit and Eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers' acceptances with maturities not exceeding twelve months and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500,000,000, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within nine months after the date of acquisition and (vi) shares of any money market mutual fund, or similar fund, in each case having assets in excess of $500,000,000, which invests solely in investments of the types described in clauses (i) through (v) above. 73 "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of ACP Holding, NFC Castings or the Company and the Restricted Subsidiaries, taken as a whole, to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act); (2) the adoption of a plan relating to the liquidation or dissolution of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company; (3) the consummation of any transaction, as a result of which any "person" (as referenced in clause (2) above), other than the Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of, in the aggregate, more than 50% of the total voting power of the Voting Stock of the Company, NFC Castings or ACP Holding, whether as a result of issuance of securities of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company, any merger, consolidation, liquidation or dissolution of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company or otherwise, provided, however, that the Permitted Holders Beneficially Own, directly or indirectly, less than such "person"; or (4) the first day on which a majority of the members of the Board of Directors of any of the Company, NFC Castings or ACP Holding are not Continuing Directors; provided, however, for purposes of clause (3), the Permitted Holders shall be deemed to Beneficially Own any Voting Stock of a Person held by any other Person (the "parent entity") so long as the Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent entity. "Change of Control Offer" shall have the meaning specified above in "-- Offer to Purchase upon Change of Control." "Change of Control Payment Date" shall have the meaning specified above in "-- Offer to Purchase upon Change of Control." "Change of Control Put Date" shall have the meaning specified above in "-- Offer to Purchase upon Change of Control." "Change of Control Repurchase Price" shall have the meaning specified above in "-- Offer to Purchase upon Change of Control." "Clearstream" means Clearstream Banking S.A. and any successor thereto. "Code" means the Internal Revenue Code of 1986, as amended. "Collateral" means all of the property in which the Company or any Restricted Subsidiary now or hereafter has rights or the power to pledge or transfer a security interest to secure all Obligations under the Notes, pursuant to the Collateral Documents, including all of the assets that are subject to Priority Liens. "Collateral Documents" means each security agreement among the Trustee (on behalf of the Noteholders), and each of the Company, the Restricted Subsidiaries and each stock pledge, deed of trust and mortgage executed by the Company or any Restricted Subsidiary creating a lien that secures the Notes and the Subsidiary Guarantees and each collateral assignment of any other documents creating a Lien that, after giving effect to such collateral assignment, secures the Notes or any Subsidiary Guarantee each, as may be amended, supplemented or otherwise modified from time to time. "Commitment Fee" means the Commitment Fee payable to the Permitted Holders pursuant to the Standby Funding Commitment Letters, dated June 30, 2003, between the Company and each of the Permitted Holders. 74 "Commodity Agreement" means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any of its Restricted Subsidiaries designed to protect the Company or any of its Restricted Subsidiaries against fluctuations in the price of commodities actually used in the ordinary course of business of the Company and its Restricted Subsidiaries each, as may be amended, supplemented or otherwise modified from time to time. "Common Stock" means, with respect to any Person, Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Company" means Neenah Foundry Company until a successor replaces it pursuant to the Indenture, and thereafter means such successor. "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (1) if the Company or any Restricted Subsidiary has incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an incurrence of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness and the application of the proceeds thereof as if such Indebtedness had been incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period (except that in the case of Indebtedness to finance seasonal fluctuations in working capital needs incurred under a revolving credit or similar arrangement, the amount thereof shall be deemed to be the average daily balance of such Indebtedness during such four quarter period); (2) if since the beginning of such period the Company or any Restricted Subsidiary shall have disposed of any assets constituting all or substantially all of the assets of an operating unit of a business (a "Disposal"), (x) the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Disposal for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period and (y) Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Disposal for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made under the Indenture, which constitutes all or substantially all of the assets of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the incurrence of any Indebtedness in connection therewith) as if such Investment or acquisition occurred on the first day of such period; and (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning 75 of such period) shall have made any Disposal or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Disposal, Investment or acquisition of assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term as at the date of determination in excess of 12 months). If any Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a fixed or floating rate of interest and is being given pro forma effect, then (i) if any interest had accrued on such Indebtedness prior to the date of determination, the interest expense on such Indebtedness shall be computed by applying a fixed or floating rate of interest as selected by the Company or such Restricted Subsidiary for the interest period immediately preceding such determination or (ii) if no interest accrued on such Indebtedness prior to the date of determination, the interest expense on such Indebtedness shall be computed by applying, at the option of the Company or such Restricted Subsidiary, either a fixed or floating rate. If any Indebtedness which is being given pro forma effect was incurred under a revolving credit facility that was in effect throughout the applicable period, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. "Consolidated Interest Expense" means, with respect to any Person for any period, the aggregate consolidated interest, whether expensed or capitalized, paid, accrued or scheduled to be paid or accrued, of such Person and its Restricted Subsidiaries for such period (including (i) amortization of original issue discount and deferred financing costs and non-cash interest payments and accruals, (ii) the interest portion of all deferred payment obligations, calculated in accordance with the effective interest method, and (iii) the interest component of any payments associated with Capital Lease Obligations and net payments (if any) pursuant to Hedging Obligations, in each case, to the extent attributable to such period, but excluding (x) commissions, discounts and other fees and charges incurred with respect to letters of credit and bankers' acceptances financing and (y) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or secured by a Lien on assets of such Person) determined in accordance with GAAP. Consolidated Interest Expense of the Company shall not include any prepayment premiums or amortization of original issue discount or deferred financing costs, to the extent such amounts are incurred as a result of the prepayment on the date of the Indenture of any Indebtedness of the Company with the proceeds of the Notes. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP, adjusted to exclude (only to the extent included and without duplication): (i) all gains which are extraordinary or are non-recurring (including any gain from the sale or other disposition of assets outside the ordinary course of business or from the issuance or sale of Capital Stock); (ii) all gains resulting from currency or hedging transactions; (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition; (iv) depreciation, amortization or other expenses recorded as a result of the application of purchase accounting in accordance with Statements of Financial Accounting Standards Nos. 141 and 142; and (v) the cumulative effect of a change in accounting principles; provided that (a) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of cash dividends or cash distributions actually paid to the referent Person or a Wholly Owned Subsidiary thereof that is a Restricted Subsidiary and (b) the Net 76 Income of any Person that is an Unrestricted Subsidiary shall be included only to the extent of the amount of cash dividends or cash distributions paid to the referent Person or a Restricted Subsidiary thereof. "Covenant Defeasance" shall have the meaning specified above in "Legal Defeasance and Covenant Defeasance". "Credit Agreement" means the Credit Agreement, dated October 8, 2003, among the Company, certain of the Subsidiary Guarantors party thereto, the lenders from time to time party to such agreement, Fleet Capital Corporation, as Agent and Fleet Securities, Inc., as Arranger, including any related notes, collateral documents, letters of credit and documentation and guarantees and any appendices, exhibits or schedules to any of the foregoing, as well as any and all of such agreements (and any other agreements that refinance any and all such agreements in accordance with the provisions of clause (viii) under "Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock", as may be amended, restated, modified or supplemented from time to time, or renewed, refunded, refinanced, restructured, replaced, repaid or extended from time to time (including increases in principal amount) in accordance with the provisions of whether with the original agents and lenders or with other agents or lenders. "Credit Agreement Refinancing Indebtedness" means Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the Credit Agreement. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any of its Restricted Subsidiaries in the ordinary course of business against fluctuation in the values of the currencies of the countries (other than the United States) in which the Company or its Restricted Subsidiaries conduct business each, as may be amended, supplemented or otherwise modified from time to time. "Default" means any event or condition that is, or with the passage of time or the giving of notice, or both, would be, an Event of Default. "Disqualified Stock" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable or is convertible or exchangeable for Indebtedness at the option of the holder thereof, in whole or in part, on or prior to 90 days after the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the Stated Maturity of the Notes shall not constitute Disqualified Stock if (i) the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions in favor of Holders of Notes set forth under "-- Certain Covenants -- Asset Sales" and "Offer to Purchase Upon Change of Control", as the case may be, (ii) such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company's repurchase of such Notes as are required to be repurchased pursuant to "-- Certain Covenants -- Asset Sales" and "Offer to Purchase Upon Change of Control" and (iii) such Capital Stock is redeemable within 90 days of the "asset sale" or "change of control" events applicable to such Capital Stock. "Domestic Restricted Subsidiary" means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of a Foreign Restricted Subsidiary. 77 "EBITDA" means, for any period, an amount equal to, for the Company and its consolidated Restricted Subsidiaries: (a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: (1) the provision for taxes based on income or profits or utilized in computing net loss, (2) Consolidated Interest Expense, (3) depreciation, (4) amortization of intangibles, and (5) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of, or reserve for, cash expenditures in any future period), minus (b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). Notwithstanding the foregoing clause (a), the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its shareholders. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Event of Default" shall have the meaning specified above in "-- Events of Default." "Excess Proceeds" shall have the meaning specified above in "-- Certain Covenants -- Asset Sales." "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder. "Exchange Notes" means Notes registered under the Securities Act to be exchanged for Notes not so registered, pursuant to and as set forth in the Registration Rights Agreement. "Fair Market Value" means, with respect to any asset, the price (after taking into account any liabilities relating to such assets) which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction; provided, that, the Fair Market Value of any such asset or assets shall be determined by the Board of Directors of the Company, acting in good faith and by unanimous resolution, and which determination shall be evidenced by an Officers' Certificate delivered to the Trustee. "Foreign Restricted Subsidiary" means any Restricted Subsidiary which is not organized under the laws of the United States of America or any State thereof or the District of Columbia. "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 have been approved by a significant segment of the accounting profession, which are in effect in the United States on the date of the Indenture. "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 78 of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness as may be amended, supplemented or otherwise modified from time to time. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) Interest Rate Agreements, (ii) Currency Agreements and (iii) Commodity Agreements. "Holder" or "Noteholder" means the person in whose name a Note is registered on the Registrar's books. "Indebtedness" means, with respect to any Person, without duplication, 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 reimbursement agreements in respect thereof) or bankers' acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee of any Indebtedness of such Person or any other Person. "Indenture" means the Indenture governing the Company's 11% Senior Secured Notes due 2010, as amended or supplemented from time to time in accordance with its terms. "Intercompany Indebtedness" shall have the meaning specified above in "-- Certain Covenants -- Limitations on the Incurrence of Indebtedness and Issuance of Disqualified Stock. "Interest Payment Date" means the stated due date of an installment of interest on the Notes. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement entered into by the Company or any of its Restricted Subsidiaries designed to protect the Company or any of its Restricted Subsidiaries in the ordinary course of business against fluctuations in interest rates each, as may be amended, supplemented or otherwise modified from time to time. "Inventory" means, with respect to the Company and its Restricted Subsidiaries, the consolidated inventory of the Company, determined at the lower of cost or market in accordance with GAAP. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Issue Date" means October 8, 2003. "Legal Defeasance" shall have the meaning specified above in "Legal Defeasance and Covenant Defeasance." "Lenders" means, at any time, the parties to the Credit Agreement then holding (or committed to provide) loans, letters of credit or other extensions of credit that constitute (or when provided will constitute) Indebtedness secured by a Priority Lien outstanding under the Credit Agreement. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.) 79 "Lien Subordination Agreement" means that certain Lien Subordination Agreement, dated October 8, 2003, by and among the Company, the Restricted Subsidiaries, the Trustee (on behalf of the Noteholders) and the Agent under the Credit Agreement, as amended (including any amendments and restatements thereof), supplemented or otherwise modified from time to time. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any sale of assets (including, without limitation, dispositions pursuant to sale/leaseback transactions) or (b) the disposition of any securities or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries, and (ii) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate amount of consideration received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale in the form of cash or Cash Equivalents (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets (including Equity Interests) the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets. "NFC Castings" means NFC Castings, Inc., a Delaware corporation. "Non-Core Fixed Assets" shall have the meaning specified in the Credit Agreement as in effect on October 8, 2003. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as guarantor or otherwise), or (c) constitutes the lender; (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Note Lien" means a Lien granted pursuant to the Collateral Documents as security for the Note Obligations and subordinated and subject to the rights and remedies of the holders of the Priority Liens in accordance with the terms of the Collateral Documents and the Lien Subordination Agreement. "Note Obligations" means the Obligations under the Notes (including, without limitation, any Additional Notes), the Subsidiary Guarantees and all other Obligations of the Company or any Restricted Subsidiary under the Indenture, the Notes (including without limitation, any Additional Notes), the Subsidiary Guarantees and the Collateral Documents. "Notice of Default" shall have the meaning specified above in "-- Events of Default." "Obligations" means with respect to any Indebtedness, the principal of, and interest on (such interest on such Indebtedness, wherever referred to in the Indenture, is deemed to include interest accruing after the filing of a petition initiating any proceeding pursuant to any bankruptcy law in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in any document evidencing such Indebtedness, whether or not the claim for such interest is allowed as a claim after such filing in any proceeding under such bankruptcy law) and other amounts, including, but 80 not limited to, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officers' Certificate" means, with respect to any Person, a certificate signed by (i) the Chief Executive Officer or President and (ii) the Chief Financial Officer or chief accounting officer of such Person. "Opinion of Counsel" means a written opinion from legal counsel which complies with the requirements of the Indenture. "Original Issue Date" of any Note (or portion thereof) means the earlier of (a) the date of such Note or (b) the date of any Note (or portion thereof) for which such Note was issued (directly or indirectly) on registration of transfer, exchange or substitution. "Payment Default" shall have the meaning specified above in "-- Events of Default." "Permitted Holders" means each of MacKay Shields LLC, Citicorp Mezzanine III, L.P., Metropolitan Life Insurance Company, Exis Differential Holdings, Ltd., TCW Shared Opportunity Fund II, L.P., Shared Opportunity Fund IIB LLC, TCW Shared Opportunity Fund IV, L.P., TCW Shared Opportunity Fund IVB, L.P., AIMCO CDO, Series 2000-A, TCW High Income Partners, Ltd. and TCW High Income Partners II, Ltd. and its Related Persons and Affiliates. "Permitted Investments" means (i) any Investment in the Company or in a Restricted Subsidiary; (ii) any Investment in Cash Equivalents; (iii) Investments by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (a) such Person becomes a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary; (iv) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made in compliance with Section 4.20; (v) any Investment solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (vi) any Investments received in compromise of obligations of such persons incurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; and (vii) Investments existing on October 8, 2003. "Permitted Liens" means (i) Liens in favor of the Company or a Restricted Subsidiary; (ii) Liens securing Senior Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred pursuant to the Indenture (i) at the time incurred; (iii) Liens on property of a Person existing at the time such Person is merged into, consolidated with or otherwise acquired by the Company or any Restricted Subsidiary of the Company, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person merged into or consolidated with Company or such Restricted Subsidiary; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company; provided that such Liens were not created in contemplation of such acquisition and do not extend to any other assets of the Company or any Restricted Subsidiary of the Company; (v) Liens on the property of the Company or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property and which do not in the aggregate impair in any material respect the use of property in the operation of the business of the Company and the Restricted Subsidiaries taken as a whole; (vi) Liens existing on the date of the Indenture; (vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have 81 been made therefor; (viii) Liens in good faith in the ordinary course of business with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, shall be required by GAAP shall have been made therefor; (ix) zoning restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property or minor irregularities of title incident thereto that do not, in the aggregate, materially detract from the value of the property or the assets of the Company or of any Restricted Subsidiary or impair the use of such property in the operation of the Company's or any Restricted Subsidiary's business; (x) judgment Liens to the extent that such judgments do not cause or constitute an Event of Default; (xi) Liens to secure the payment of all or a part of the purchase price of property or assets acquired or constructed in the ordinary course of business on or after the date of the Indenture, provided that (a) such property or assets are used in the same or a similar line of business as the Company or the applicable Restricted Subsidiary was engaged in on the date of the Indenture, (b) at the time of incurrence of any such Lien, the aggregate principal amount of the obligations secured by such Lien shall not exceed the cost of the assets or property (or portions thereof) so acquired or constructed, (c) each such Lien shall encumber only the assets or property (or portions thereof) so acquired or constructed and shall attach to such property within 120 days of the purchase or construction thereof and (d) any Indebtedness secured by such Lien shall have been permitted to be incurred under Section 4.11; (xii) precautionary filings of any financial statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction made in connection with Capital Lease Obligations permitted to be incurred under the terms of the Indenture; and (xiii) Note Liens; (xiv) Liens permitted by the Collateral Documents, including, without limitation, Priority Liens; (xv) Liens incurred in the ordinary course of business securing assets having a fair market value not in excess of $500,000 in the aggregate; (xvi) Liens to secure permitted Refinancing Indebtedness incurred to refinance existing Indebtedness or permitted Refinancing Indebtedness which is secured by Liens permitted by this clause (xvi); provided, that such Liens do not extend to any categories of assets other than the categories of assets securing existing Indebtedness as of the date of the Indenture; (xvii) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (xviii) Liens incurred in the ordinary course of business in connection with (a) worker's compensation, social security, unemployment insurance and other like laws or (b) sales contracts, leases, statutory obligations, work in progress advances and other similar obligations not incurred in connection with the borrowing of money or the payment of the deferred purchase price of property; (xix) Liens in favor of customs and revenues authorities which secure payment of customs duties in connection with the importation of inventory; (xx) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto; (xxi) Liens consisting of rights of set-off of a customary nature or banker's liens on amounts on deposit in accounts, whether arising by contract or operation of law, incurred in the ordinary course of business; and (xxii) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries. "Permitted Refinancing" shall have the meaning specified above in "-- Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock." "Person" or "person" means an individual, limited or general partnership, corporation, limited liability company, association, unincorporated organization, trust, joint stock company or joint venture, or a government or any agency or political subdivision thereof. "Priority Lien Documents" means the Credit Agreement, the Priority Lien Collateral Documents and, in connection with or pursuant to any of the foregoing, all other agreements, certificates or documents executed by the Company or any Restricted Subsidiary and delivered to the trustee, agent or representative acting for the lenders party to the Credit Agreement each, as may be amended, supplemented or otherwise modified from time to time. "Priority Lien Obligations" means the Indebtedness evidenced by the Credit Agreement and all other Obligations of the Company or any Restricted Subsidiary thereunder or under the Priority Lien Documents in respect of the Credit Agreement. 82 "Priority Lien Collateral Documents" means one or more security agreements, pledge agreements, collateral assignments, mortgages, deed of trust or other grants or transfers for security executed and delivered by the Company or any Restricted Subsidiary creating a Lien upon property owned or to be acquired by the Company or such Restricted Subsidiary in favor of any lenders party to the Credit Agreement, or any trustee, agent or representative acting for any such holders, as security for any Priority Lien Obligations each, as may be amended, supplemented or otherwise modified from time to time. "Priority Liens" means the first priority Liens granted with respect to the Collateral by the Company and the Restricted Subsidiaries pursuant to the Credit Agreement securing the Priority Lien Obligations of the Company and the Restricted Subsidiaries under such Credit Agreement. "principal" of any Indebtedness means the principal of such Indebtedness plus, without duplication, any applicable premium, if any, on such Indebtedness. "property" means any right or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Purchase Money Obligations" of any Person means any obligations of such Person or any of its Restricted Subsidiaries to any seller or any other Person incurred or assumed in connection with the purchase of real or personal property or in the Capital Stock of a Person owning such real or personal property to be used in the business of such Person or any of its subsidiaries within 180 days of such incurrence or assumption. "Qualified Stock" means any Capital Stock of the Company that is not Disqualified Stock. "Receivables" means the consolidated trade receivables of the Company, net of allowance for doubtful accounts, as determined in accordance with GAAP. "Record Date" means a Record Date specified in the Notes whether or not such Record Date is a Business Day. "Redemption Date" means, when used with respect to any Note to be redeemed, the date fixed for such redemption pursuant to the terms of the Indenture and the Note. "Redemption Price" means, when used with respect to any Note to be redeemed, the redemption price for such redemption pursuant to the terms of the Note, which shall include, without duplication, in each case, accrued and unpaid interest, if any, to and including the Redemption Date. "Refinancing Indebtedness" shall have the meaning specified above in "-- Certain Covenants -- Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock." "Registration Rights Agreement" means that certain Registration Rights Agreement, dated as of the date of the Indenture, between the Company and the other parties thereto, as such agreement may be amended, modified or supplemented from time to time in accordance with the terms thereof. "Related Business" means any business which is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on October 8, 2003. "Related Person" of any Person means any other Person directly or indirectly owning (a) 5% or more of the outstanding Common Stock of such Person (or, in the case of a Person that is not a corporation, 5% or more of the equity interests in such Person) or (b) 5% or more of the combined voting power of the Voting Stock of such Person. "Representative" means any trustee, agent to representative (if any) for Senior Indebtedness. "Repurchase Date" shall have the meaning specified above in "-- Certain Covenants--Asset Sales." "Repurchase Offer Period" shall have the meaning specified above in "-- Certain Covenants -- Asset Sales." "Repurchase Price" shall have the meaning specified above in "-- Certain Covenants -- Asset Sales." 83 "Restricted Investment" means an Investment other than a Permitted Investment. With respect to Unrestricted Subsidiaries or Restricted Subsidiaries, the amount of Restricted Investments shall be calculated as the greater of (i) the book value of assets contributed by the Company or a Restricted Subsidiary or (ii) the Fair Market Value of the assets contributed by the Company or a Restricted Subsidiary (as certified by a resolution of independent directors of the Company. "Restricted Payment" shall have the meaning specified above in "Certain Covenants -- Limitation on Restricted Payments." "Restricted Subsidiary" means (i) any Subsidiary of the Company (other than a Subsidiary that is also a Subsidiary of an Unrestricted Subsidiary) organized or acquired after the date of the Indenture, unless such Subsidiary shall have been designated as an Unrestricted Subsidiary by resolution of the Board of Directors as provided in and in compliance with the definition of "Unrestricted Subsidiary" and (ii) any Unrestricted Subsidiary which is designated as a Restricted Subsidiary by the Board of Directors of the Company; provided that immediately after giving effect to the designation referred to in clause (ii), no Default or Event of Default shall have occurred and be continuing and the Company could incur at least $1.00 of additional Indebtedness under the terms of the Indenture. The Company shall evidence any such designation to the Trustee by promptly filing with the Trustee an Officers' Certificate certifying that such designation has been made and stating that such designation complies with the requirements of the immediately preceding sentence. "Revolver" means the revolving credit facility extended to the Company as part of the New Credit Facility under the Credit Agreement. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Senior Indebtedness" means, with respect to the Company and Restricted Subsidiaries, the Obligations of the Company and the Restricted Subsidiaries under the Credit Agreement. "Senior Subordinated Notes" means the Company's 13% Senior Subordinated Notes due 2013, issued pursuant to the Senior Subordinated Notes Indenture, and any securities issued in exchange or in substitution therefor. "Senior Subordinated Notes Indenture" means an Indenture, dated October 8, 2003, among the Company, the Subsidiary Guarantors party thereto and The Bank of New York, as trustee, relating to the Senior Subordinated Notes, as may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof. "Stated Maturity," when used with respect to any Note, means September 30, 2010. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of 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 such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Persons or one or more Subsidiaries of such Person or any combination thereof. "Subsidiary Guarantee" means a guarantee on the terms set forth in the Indenture by a Subsidiary Guarantor of the Company's obligations with respect to the Notes. "Subsidiary Guarantor" means each Domestic Restricted Subsidiary and any other Person that becomes a Subsidiary Guarantor pursuant to the provisions of the Indenture or who otherwise exercises and delivers supplemental indenture to the Trustee providing for a Subsidiary Guarantee. "Term Loan" means the term loan made to the Company and certain of the Restricted Subsidiaries as part of the New Credit Facility under the Credit Agreement. 84 "TIA" means the Trust Indenture Act of 1939, as amended and in effect on the date of the execution of the Indenture unless otherwise specified herein. "Trustee" means the party named as such in the Indenture until a successor replaces it in accordance with the provisions of the Indenture and thereafter means such successor. At the Issue Date, the Trustee was The Bank of New York, a New York corporation. "Unrestricted Subsidiary" means, until such time as any of the following shall be designated as a Restricted Subsidiary of the Company by the Board of Directors of the Company as provided in and in compliance with the definition of "Restricted Subsidiary," (i) any Subsidiary of the Company or of a Restricted Subsidiary of the Company organized or acquired after the date of the Indenture that is designated concurrently with its organization or acquisition as an Unrestricted Subsidiary by resolution of the Board of Directors of the Company, (ii) any Subsidiary of any Unrestricted Subsidiary and (iii) any Restricted Subsidiary of the Company that is designated as an Unrestricted Subsidiary by resolution of the Board of Directors of the Company, provided that (a) immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing, (b) any such designation shall be deemed, at the election of the Company at the time of such designation, to be either (but not both) (x) the making of a Restricted Payment at the time of such designation in an amount equal to the Investment in such Subsidiary subject to the restrictions contained in the Indenture or (y) the making of an Asset Sale at the time of such designation in an amount equal to the Investment in such Subsidiary subject to the restrictions contained in the Indenture, and (c) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of, or own or hold any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated. A Person may be designated as an Unrestricted Subsidiary only if and for so long as such Person (i) has no Indebtedness other than Non-Recourse Debt; (ii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to make any payment to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (iii) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. The Company shall evidence any designation pursuant to clause (i) or (iii) of the first sentence hereof to the Trustee by filing with the Trustee within 45 days of such designation an Officers' Certificate certifying that such designation has been made and, in the case of clause (iii) of the first sentence hereof, the related election of the Company in respect thereof. "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers, general partners or trustees of any Person (irrespective of whether or not, at the time, Capital Stock of any other class or classes shall have, or might have, voting power by reasons of the happening of any contingency) or, with respect to a partnership (whether general or limited), any general partner interest in such partnership. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, 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 payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall be at the time be beneficially owned by such Person either directly or indirectly through Wholly Owned Subsidiaries. 85 BOOK-ENTRY; DELIVERY AND FORM THE GLOBAL NOTES The certificates representing the new notes will be issued in fully registered form. Except as described below, the new notes will be initially represented by one or more global notes in fully registered form without interest coupons. The global notes will be deposited with, or on behalf of DTC and registered in the name of Cede & Co., as nominee of DTC, or will remain in the custody of the trustee pursuant to the FAST Balance Certificate Agreement between DTC and the trustee. Ownership of beneficial interests in each global note will be limited to persons who have accounts with DTC, which we refer to as DTC participants, or persons who hold interests through DTC participants. We expect that under procedures established by DTC, ownership of beneficial interests in each global note will be shown on, and transfer of ownership of those interests will be effected only through, records maintained by DTC, with respect to interests of DTC participants, and the records of DTC participants, with respect to other owners of beneficial interests in the global note. BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES The descriptions of the operations and procedures of DTC set forth below are controlled by that settlement system and may be changed at any time. We undertake no obligation to update you regarding changes in these operations and procedures and urge investors to contact DTC or its participants directly to discuss these matters. DTC has advised us that it is: - a limited purpose trust company organized under the laws of the State of New York; - a banking organization within the meaning of the New York State Banking Law; - a member of the Federal Reserve System; - a clearing corporation within the meaning of the Uniform Commercial Code; and - a clearing agency registered under Section 17A of the Exchange Act. DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's participants include securities brokers and dealers, including the initial purchasers; banks and trust companies; clearing corporations and other organizations. Indirect access to DTC's system is also available to others such as banks, brokers, dealers and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own (securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC We expect that pursuant to procedures established by DTC: - Upon issuance of the global notes, DTC we will credit the respective principal amounts of the new notes represented by the global notes to the accounts of persons who have accounts with DTC. Ownership of beneficial interest in the global notes will be limited to persons who have accounts with DTC, who are referred to as participants, or persons who hold interests through participants. - Ownership of the beneficial interests in the new notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC, with respect to the interests of participants, and the records of participants and the indirect participants, with respect to the interests of persons other than participants. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of those securities in definitive form. Accordingly, the ability to transfer interests in the new notes 86 represented by a global note to these persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests though participants, the ability of a person having an interest in new notes represented by a global note to pledge or transfer that interest to persons or entities that do not participate in DTC's system, or to otherwise take actions in respect of that interest, may be affected by the lack of a physical definitive security in respect of that interest. So long as DTC's nominee is the registered owner of a global note, that nominee will be considered the sole owner or holder of the new notes represented by that global note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a global note: - will not be entitled to have notes represented by the global note registered in their names; - will not receive or be entitled to receive physical, certificated new notes and - will not be considered the owners or holders of the new notes under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee under the indenture. As a result, each investor who owns a beneficial interest in a global note must rely on the procedures of DTC to exercise any rights of a holder of new notes under the indenture, and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest. We understand that under existing industry practice, in the event that we request any action of holders of new notes, or a holder of the notes that is an owner of a beneficial interest in a global note desires to take any action that DTC, as the holder of the global note, is entitled to take, DTC would authorize the participants to take action and the participants would authorize holders of the notes owning through the participants to take action or would otherwise act upon the instruction of those holders of the new notes. Neither we nor the trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those new notes. Payments of principal, premium and interest with respect to the notes represented by a global note will be made by the trustee to DTC's nominee as the registered holder of the global note. Neither we nor the trustee will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global note, for any aspect of the records relating to or payments made on account of those interests by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those interests. Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC. Transfers between participants in DTC will be effected under DTC's procedures and will be settled in same-day funds. Transfers between participants in Euroclear or Clearstream will be effected in the ordinary way under the rules and operating procedures of those systems. CERTIFICATED NEW NOTES New notes in physical, certificated form will be issued and delivered to each person that DTC identifies as a beneficial owner of the related new notes only if: - DTC notifies us at any time that it is unwilling or unable to continue as depositary for the global notes and a successor depositary is not appointed within 90 days, - DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days, 87 - we, at our option, notify the trustee that we elect to cause the issuance of certificated new notes; or - certain other events provided in the indenture should occur. Neither we nor the trustee will be liable for any delay by DTC or any participant or indirect participant in identifying the beneficial owners of the related new notes and each such person may conclusively rely on, and will be protected in relying on, instructions from DTC for all purposes, inducting with respect to the registration and delivery, and the respective principal amounts, of the new notes to be issued. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS The following discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended, applicable Treasury regulations, judicial authority and administrative rulings and practice as of the date hereof. The Internal Revenue Service may take a contrary view, and no ruling from the Service has been or will be sought. Legislative, judicial or administrative changes or interpretations may be forthcoming that could alter or modify the following statements and conditions. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences to holders, whose tax consequences could be different from the following statements and conditions. Some holders, including insurance companies, tax-exempt organizations, financial institutions, broker-dealers, foreign corporations and persons who are not citizens or residents of the United States, may be subject to special rules not discussed below. We recommend that each holder consult his own tax advisor as to the particular tax consequences of exchanging such holder's Old Notes for New Notes, including the applicability and effect of any state, local or non-U.S. tax law. The exchange of the Old Notes for New Notes pursuant to the exchange offer should not be treated as an "exchange" for federal income tax purposes because the New Notes should not be considered to differ materially in kind or extent from the Old Notes. Rather, the New Notes received by a holder should be treated as a continuation of the Old Notes in the hands of such holder. As a result, there should be no federal income tax consequences to holders exchanging Old Notes for New Notes pursuant to the exchange offer. PLAN OF DISTRIBUTION Each broker-dealer that receives new securities for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of these new securities. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new securities received in exchange for securities where those securities were acquired as a result of market-making activities or other trading activities. We and the subsidiary guarantors have agreed that, starting on the expiration date and ending on the close of business 180 days after the expiration date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 2004, all dealers effecting transactions in the new securities may be required to deliver a prospectus. We will not receive any proceeds from any sale of new securities by broker-dealers. New securities received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such new securities. Any broker-dealer that resells new securities that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such new securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit of any such resale of new securities and any commissions or concessions 88 received by any such persons may be deemed to be underwriting compensation under the Securities Act. By acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the expiration date, we and the Subsidiary Guarantors will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the securities) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain matters relating to Wisconsin law will be passed upon for us by Foley & Lardner, Milwaukee, Wisconsin. Certain matters relating to New York law will be passed upon for us by Kirkland & Ellis LLP, New York, New York. EXPERTS Ernst & Young LLP, independent auditors, have audited the consolidated financial statements and schedule of our Predecessor Company, Neenah Foundry Company, at September 30, 2002 and 2003, and for each of the three years in the period ended September 30, 2003, as set forth in their reports. We have included our financial statements and schedule in this prospectus and elsewhere in this registration statement in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing. AVAILABLE INFORMATION Under the terms of the indenture, we agree that, whether or not required by the rules and regulations of the Commission, so long as any Notes are outstanding, we will furnish to the trustee and the holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K, if we were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes our financial condition and results of operations and our consolidated subsidiaries and, with respect to the annual information only, a report thereon by our certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if we were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, we will file a copy of all such information and reports with the Commission for public availability (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. Information filed with the Commission may be read and copied by the public at the Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission. In addition, we have agreed that, for so long as any Notes remain outstanding, we will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Under the indenture governing the Notes we are required to file with the trustee annual, quarterly and other reports after we file these reports with the Securities and Exchange Commission. Annual reports delivered to the trustee and the holders of New Notes will contain financial information that has been examined and reported upon, with an opinion expressed by an independent public accountant. We will also furnish such other reports as may be required by law. 89 Information contained in this prospectus contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or other similar terminology, or by discussions of strategy. Our actual results could differ materially from those anticipated by such forward-looking statements as a result of factors described in the "Risk Factors" beginning on page 9 and elsewhere in this prospectus. The market and industry data presented in this prospectus are based upon third-party data. While we believe that such estimates are reasonable and reliable, estimates cannot always be verified by information available from independent sources. Accordingly, readers are cautioned not to place undue reliance on such market share data. 90 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Auditors........... F-2 Consolidated Balance Sheets as of September 30, 2003 and 2002...................................................... F-3 Consolidated Statements of Operations for the years ended September 30, 2003, 2002 and 2001......................... F-5 Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the years ended September 30, 2003, 2002 and 2001...................................................... F-6 Consolidated Statements of Cash Flows for the years ended September 30, 2003, 2002 and 2001......................... F-7 Notes to Consolidated Financial Statements.................. F-9
F-1 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS Board of Directors Neenah Foundry Company We have audited the accompanying consolidated balance sheets of Neenah Foundry Company (the Company) as of September 30, 2003 and 2002, and the related consolidated statements of operations, changes in stockholder's equity (deficit) and cash flows for each of the three years in the period ended September 30, 2003. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at September 30, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2003, in conformity with accounting principles generally accepted in the United States. As discussed in Note 1 to the consolidated financial statements, effective October 8, 2003, the Company was reorganized under a plan of reorganization confirmed by the United States Bankruptcy Court, District of Delaware. In connection with its reorganization, the Company will apply fresh start accounting in the first quarter of fiscal 2004. As discussed in Note 7 to the consolidated financial statements, effective October 1, 2001, the Company changed its method of accounting for goodwill. ERNST & YOUNG LLP Milwaukee, Wisconsin November 10, 2003 F-2 NEENAH FOUNDRY COMPANY CONSOLIDATED BALANCE SHEETS
PRO FORMA UNAUDITED REORGANIZED COMPANY SEPTEMBER 30 SEPTEMBER 30, ------------------- 2003(A) 2003 2002 ------------- -------- -------- (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) ASSETS Current assets: Cash and cash equivalents................................ $ -- $ 24,356 $ 26,164 Accounts receivable, less allowance for doubtful accounts of $2,375 in 2003 and $1,062 in 2002.................. 56,333 56,333 56,453 Inventories.............................................. 59,459 56,555 51,267 Refundable income taxes.................................. -- -- 14,850 Deferred income taxes.................................... 2,497 4,059 2,659 Other current assets..................................... 8,113 8,113 5,769 Current assets of discontinued operations................ 423 423 4,423 -------- -------- -------- Total current assets....................................... 126,825 149,839 161,585 Property, plant and equipment: Land..................................................... 6,271 6,036 6,076 Buildings and improvements............................... 15,286 27,854 27,530 Machinery and equipment.................................. 52,025 222,778 210,457 Patterns................................................. 9,978 29,928 28,881 Construction in progress................................. 2,394 3,200 5,811 -------- -------- -------- 85,954 289,796 278,755 Less accumulated depreciation............................ -- 126,827 105,190 -------- -------- -------- 85,954 162,969 173,565 Deferred financing costs, net of accumulated amortization of $4,761 in 2003 and $8,340 in 2002..................... 2,980 1,393 6,656 Identifiable intangible assets, net of accumulated amortization of $21,935 in 2003 and $18,116 in 2002...... 83,436 33,354 37,173 Goodwill, net.............................................. 78,573 180,214 180,214 Other assets............................................... 6,532 9,065 6,365 Non-current assets of discontinued operations.............. -- -- 3,830 -------- -------- -------- 171,521 224,026 234,238 -------- -------- -------- $384,300 $536,834 $569,388 ======== ======== ========
F-3
PRO FORMA UNAUDITED REORGANIZED COMPANY SEPTEMBER 30 SEPTEMBER 30, ------------------- 2003(A) 2003 2002 ------------- -------- -------- (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities not subject to compromise: Accounts payable......................................... $ 31,585 $ 26,285 $ 22,591 Accrued wages and employee benefits...................... 11,307 11,307 12,658 Accrued interest......................................... -- -- 13,733 Other accrued liabilities................................ 5,918 5,918 2,880 Current portion of long-term debt........................ -- -- 40,917 Current portion of capital lease obligations............. 2,646 2,646 2,353 Current liabilities of discontinued operations........... -- -- 1,403 -------- -------- -------- Total current liabilities not subject to compromise........ 51,456 46,156 96,535 Long-term liabilities subject to compromise................ -- 465,540 -- Long-term debt............................................. 268,550 -- 410,515 Capital lease obligations.................................. 1,583 1,583 4,816 Deferred income taxes...................................... 25,275 33,804 43,886 Postretirement benefit obligations......................... 10,319 7,271 6,696 Other liabilities.......................................... 21,588 21,496 18,654 Non-current liabilities of discontinued operations......... -- -- 432 -------- -------- -------- Total liabilities.......................................... 378,771 575,850 581,534 Commitments and contingencies Stockholder's equity (deficit): Preferred stock, par value $100 per share; 3,000 shares authorized; no shares issued or outstanding........... -- -- -- Common stock, Class A (voting), par value $100 per share; 1,000 shares authorized, issued and outstanding....... 100 100 100 Common stock, Class B (nonvoting), par value $100 per share; 10,000 shares authorized; no shares issued or outstanding........................................... -- -- -- Additional paid-in capital -- warrants................... 602 -- -- Capital in excess of par value........................... 4,827 51,317 51,317 Accumulated deficit...................................... -- (81,124) (55,563) Accumulated other comprehensive loss..................... -- (9,309) (8,000) -------- -------- -------- Total stockholder's equity (deficit)....................... 5,529 (39,016) (12,146) -------- -------- -------- $384,300 $536,834 $569,388 ======== ======== ========
- --------------- (a) As discussed in Note 3, the Company emerged from bankruptcy on October 8, 2003 and will be required to adopt the fresh start accounting provisions of SOP 90-7 in the first quarter of fiscal 2004. The pro forma balances reflect what the September 30, 2003 balances would have been had the Company applied fresh start accounting as of September 30, 2003. See accompanying notes. F-4 NEENAH FOUNDRY COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30 ------------------------------ 2003 2002 2001 -------- -------- -------- (IN THOUSANDS) Net sales................................................... $375,063 $387,707 $398,782 Cost of sales............................................... 321,834 323,740 335,264 -------- -------- -------- Gross profit................................................ 53,229 63,967 63,518 Selling, general and administrative expenses................ 26,132 28,743 27,587 Amortization expense........................................ 3,819 3,829 10,489 Provision for impairment of assets.......................... -- 74 -- (Gain) loss on disposal of property, plant and equipment.... 195 544 (434) -------- -------- -------- Operating income............................................ 23,083 30,777 25,876 Other income (expense): Interest expense (contractual interest expense was $52,460 in 2003)............................................... (47,445) (43,466) (43,454) Interest income........................................... 825 819 445 Reorganization expense.................................... (7,874) -- -- -------- -------- -------- Loss from continuing operations before income taxes......... (31,411) (11,870) (17,133) Credit for income taxes..................................... (8,541) (5,917) (4,004) -------- -------- -------- Loss from continuing operations............................. (22,870) (5,953) (13,129) Discontinued operations: Loss from discontinued operations, net of income taxes of $(590) in 2003, $(22,947) in 2002 and $(2,463) in 2001................................................... (1,095) (41,750) (4,325) Gain (loss) on sale of discontinued operations, net of income taxes of $(860) in 2003 and $1,603 in 2001...... (1,596) -- 2,404 -------- -------- -------- Net loss.................................................... $(25,561) $(47,703) $(15,050) ======== ======== ========
See accompanying notes. F-5 NEENAH FOUNDRY COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
RETAINED ACCUMULATED COMMON STOCK CAPITAL IN EARNINGS OTHER PREFERRED ----------------- EXCESS OF (ACCUMULATED COMPREHENSIVE STOCK CLASS A CLASS B PAR VALUE DEFICIT) LOSS TOTAL --------- ------- ------- ---------- ------------ ------------- -------- (IN THOUSANDS) Balance at September 30, 2000.................... $ -- $100 $ -- $51,317 $ 7,190 $ (89) $ 58,518 Components of comprehensive loss: Net loss.............. -- -- -- -- (15,050) -- (15,050) Pension liability adjustment, net of tax effect of $1,018.............. -- -- -- -- -- (1,529) (1,529) -------- Total comprehensive loss.................. (16,579) ----- ---- ----- ------- -------- ------- -------- Balance at September 30, 2001.................... -- 100 -- 51,317 (7,860) (1,618) 41,939 Components of comprehensive loss: Net loss.............. -- -- -- -- (47,703) -- (47,703) Pension liability adjustment, net of tax effect of $4,255.............. -- -- -- -- -- (6,382) (6,382) -------- Total comprehensive loss.................. (54,085) ----- ---- ----- ------- -------- ------- -------- Balance at September 30, 2002.................... -- 100 -- 51,317 (55,563) (8,000) (12,146) Components of comprehensive loss: Net loss.............. -- -- -- -- (25,561) -- (25,561) Pension liability adjustment, net of tax effect of $952................ -- -- -- -- -- (1,309) (1,309) -------- Total comprehensive loss.................. (26,870) ----- ---- ----- ------- -------- ------- -------- Balance at September 30, 2003.................... $ -- $100 $ -- $51,317 $(81,124) $(9,309) $(39,016) ===== ==== ===== ======= ======== ======= ========
See accompanying notes. F-6 NEENAH FOUNDRY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED SEPTEMBER 30 ------------------------------ 2003 2002 2001 -------- -------- -------- (IN THOUSANDS) OPERATING ACTIVITIES Net loss.................................................... $(25,561) $(47,703) $(15,050) Adjustments to reconcile net loss to net cash provided by operating activities: Noncash reorganization expenses........................ 1,464 -- -- Provision for obsolete inventories..................... 424 240 248 Lower of cost or market inventory adjustment........... 1,228 -- -- Provision for impairment of assets..................... -- 36,533 -- Depreciation........................................... 22,530 25,532 29,636 Amortization of identifiable intangible assets and goodwill............................................. 3,819 3,947 11,638 Amortization of deferred financing costs and premium on notes................................................ 2,242 1,392 1,222 (Gain) loss on sale of discontinued operations......... 2,456 -- (4,007) (Gain) loss on disposal of property, plant and equipment............................................ 195 559 (337) Deferred income taxes.................................. (10,337) (10,650) (1,630) Changes in operating assets and liabilities: Accounts receivable.................................. 966 10,275 2,145 Inventories.......................................... (6,995) 19,559 (7,405) Other current assets................................. (3,047) 1,043 45 Accounts payable..................................... 3,184 (7,118) (474) Accrued liabilities.................................. 11,856 (2,983) (3,911) Income taxes......................................... 18,122 (14,104) (2,152) Postretirement benefit obligations................... 575 351 379 Other liabilities.................................... (119) (437) (1,060) -------- -------- -------- Net cash provided by operating activities................... 23,002 16,436 9,287 INVESTING ACTIVITIES Proceeds from disposition of business, net of fees.......... 648 -- 5,190 Purchase of property, plant and equipment................... (11,900) (9,055) (16,882) Proceeds from sale of property, plant and equipment......... 40 323 2,859 Other....................................................... (105) (621) 2,373 -------- -------- -------- Net cash used in investing activities....................... (11,317) (9,353) (6,460) FINANCING ACTIVITIES Proceeds from long-term debt................................ $ 815 $ 33,400 $ 5,000 Payments on long-term debt and capital lease obligations.... (13,017) (17,807) (22,053) Debt issuance costs......................................... (1,291) (858) (906) -------- -------- -------- Net cash provided by (used in) financing activities......... (13,493) 14,735 (17,959) -------- -------- -------- Increase (decrease) in cash and cash equivalents............ (1,808) 21,818 (15,132) Cash and cash equivalents at beginning of year.............. 26,164 4,346 19,478 -------- -------- -------- Cash and cash equivalents at end of year.................... $ 24,356 $ 26,164 $ 4,346 ======== ======== ======== Supplemental disclosures of cash flows information: Interest paid............................................. $ 34,995 $ 44,340 $ 47,428 Income taxes refunded..................................... (18,032) (4,080) (1,253)
F-7 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (In Thousands) 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Neenah Foundry Company (Neenah), together with its subsidiaries (the Company), manufactures gray and ductile iron castings and forged components for sale to industrial and municipal customers. Industrial castings are custom-engineered and are produced for customers in several industries, including the medium and heavy-duty truck components, farm equipment, heating, ventilation and air-conditioning industries. Municipal castings include manhole covers and frames, storm sewer frames and grates, tree grates and specialty castings for a variety of applications and are sold principally to state and local government entities, utilities and contractors. The Company's sales generally are unsecured. The Company is a wholly owned subsidiary of NFC Castings, Inc., which is a wholly owned subsidiary of ACP Holding Company. Neenah has the following subsidiaries, all of which are wholly owned: Deeter Foundry, Inc. (Deeter); Mercer Forge Corporation and subsidiaries (Mercer); Dalton Corporation and subsidiaries (Dalton); Advanced Cast Products, Inc. and subsidiaries (ACP); Gregg Industries, Inc. (Gregg); Neenah Transport, Inc. (Transport) and Cast Alloys, Inc. (Cast Alloys), which is inactive. Deeter manufactures gray iron castings for the municipal market and special application construction castings. Mercer manufactures forged components for use in transportation, railroad, mining and heavy industrial applications and microalloy forgings for use by original equipment manufacturers and industrial end users. Dalton manufactures gray iron castings for refrigeration systems, air conditioners, heavy equipment, engines, gear boxes, stationary transmissions, heavy-duty truck transmissions and other automotive parts. ACP manufactures ductile and malleable iron castings for use in various industrial segments, including heavy truck, construction equipment, railroad, mining and automotive. Gregg manufactures gray and ductile iron castings for industrial and commercial use. Transport is a common and contract carrier licensed to operate in the continental United States. The majority of Transport's revenues are derived from transport services provided to the Company. As further discussed in Note 2, on August 5, 2003 (the Petition Date), the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) with the United States Bankruptcy Court, District of Delaware (the Bankruptcy Court). Accordingly, the accompanying consolidated financial statements have been prepared 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) and on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. In accordance with SOP 90-7, the financial statements for the periods presented distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the Company. On October 8, 2003 (the Effective Date), the Company emerged from the Bankruptcy Court proceedings pursuant to the terms of its plan of reorganization (the Plan of Reorganization). As discussed in Note 3, the Company will implement fresh start accounting under the provisions of SOP 90-7 in the first quarter of fiscal 2004. Under the fresh start accounting provisions of SOP 90-7, the fair value of the reorganized Company will be allocated to its assets and liabilities, and its accumulated deficit will be eliminated. As discussed in the Pro Forma column on the accompanying balance sheet and in Note 3, the implementation of fresh start accounting will result in a substantial reduction in the carrying value of the Company's long-lived assets, including property, plant and equipment and intangible assets, and long-term liabilities. As a result, the historical financial statements will not be comparable to financial statements of the Company published for periods following the implementation of fresh start accounting. F-8 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2. REORGANIZATION THE CHAPTER 11 PETITION AND PLAN OF REORGANIZATION On August 5, 2003, the Company filed for protection under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On September 26, 2003, the Bankruptcy Court confirmed the Company's Plan of Reorganization, and, on October 8, 2003, the Company consummated the Plan of Reorganization and emerged from its Chapter 11 reorganization proceedings with a significantly restructured balance sheet. During the period immediately preceding and after the filing of the Company's Chapter 11 petition, the Company met with a committee of lenders under the secured credit facility (the Pre-Petition Credit Facility), an informal committee of unsecured creditors that represented holders of the senior subordinated notes and potential investors to discuss potential restructuring transactions that could be implemented to reorganize the Company's capital structure. These discussions led to an agreement with the lenders under the Pre-Petition Credit Facility regarding the terms of a Plan of Reorganization. The Plan of Reorganization was filed on August 5, 2003, encompassing information that had been previously distributed to and approved by creditors of the Company eligible to vote in the reorganization. The consummation of the Plan of Reorganization resulted in the $147,441 of loans under the Pre-Petition Credit Facility being terminated through payment in full with cash using proceeds from the Second Secured Notes and the New Credit Facility. The Plan of Reorganization also resulted in the cancellation of all of the Company's Pre-Petition Senior Subordinated Notes in exchange for the following: - $30,000 in cash; - $100,000 in aggregate principal amount of New Senior Subordinated Notes; - Shares representing 47.5% of the issued and outstanding shares of New Common Stock in ACP Holding Company on a fully diluted basis as of October 8, 2003, other than shares of restricted stock granted pursuant to the Management Equity Incentive Plan of ACP Holding Company; and - Rights to acquire, for $110,000 in cash in the aggregate, units for up to $119,996 face amount of Second Secured Notes and warrants to acquire up to 42.81% of the new ACP Holding Company Common Stock on a fully diluted basis as of October 8, 2003. The warrants have an exercise price of $0.01 per share and will expire 10 years from the date of issuance. In addition, under the Plan of Reorganization, the PIK Note was cancelled and the holder received Second Secured Notes with a principal amount equal to $13,134 and warrants to acquire up to 4.69% of the new ACP Holding Company Common Stock on a fully diluted basis as of October 8, 2003 and cash of $45. ACCOUNTING IMPACT OF CHAPTER 11 FILING In accordance with SOP 90-7, liabilities subject to compromise reflected in the accompanying consolidated balance sheet were recorded at the amount allowed on pre-petition claims in the Chapter 11 proceedings. Other obligations that are not subject to compromise have retained their historical balance sheet classifications and amounts. F-9 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Liabilities subject to compromise consist of the following as of September 30, 2003: Senior Subordinated Notes................................... $282,000 Credit Facility............................................. 147,441 PIK Note.................................................... 9,900 Accrued interest............................................ 26,183 Other debt.................................................. 16 -------- $465,540 ========
In order to record its debt instruments at the amount allowed by the Bankruptcy Court in accordance with SOP 90-7, as of the Petition Date, the Company wrote off all of its debt issuance costs and premiums related to the Pre-Petition Senior Subordinated Notes (collectively the Deferred Financing Fees) as a component of reorganization expense in the accompanying consolidated statement of operations. Reorganization expense also includes professional fees incurred in connection with the Chapter 11 proceedings. Reorganization expenses for the year ended September 30, 2003 consist of the following: Deferred Financing Fees..................................... $1,464 Professional fees........................................... 6,410 ------ Total reorganization expense................................ $7,874 ======
Under SOP 90-7, the Company was required to accrue interest expense during the Chapter 11 proceedings only to the extent that such interest was expected to be paid pursuant to the proceedings. Under the Plan of Reorganization, there were no cash payments of interest on the outstanding Senior Subordinated Notes. Therefore, the Company ceased accruing interest on the Senior Subordinated Notes as of the Petition Date. The contractual interest amount parenthetically disclosed on the accompanying consolidated statement of operations represents the interest expense that would have been accrued under the Senior Subordinated Notes had the Company not ceased accruing interest as described above. 3. FRESH START ACCOUNTING The Company will adopt the fresh start accounting provisions (fresh start) of SOP 90-7 during the first quarter of fiscal 2004. Under SOP 90-7, the implementation of fresh start reporting is triggered, in part, by the emergence of the Company from its Chapter 11 proceedings. Although the effective date of the Plan of Reorganization was October 8, 2003, the Company plans to account for the consummation of the Plan of Reorganization as if it had occurred on October 1, 2003 and implement fresh start reporting as of that date. Fresh start requires that the Company adjust the historical cost of its assets and liabilities to their fair value. The fair value of the reorganized Company, or the reorganization value, of approximately $290,000 was determined by an independent party based on multiples of earnings before interest, income taxes, depreciation and amortization (EBITDA) and discounted future cash flows under the Company's financial projections. F-10 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Fresh start requires that the reorganization value be allocated to the entity's net assets in conformity with procedures specified by Statement of Financial Accounting Standards No. 141, "Business Combinations" (SFAS No. 141). The Company engaged an independent appraiser to assist in the allocation of the reorganization value to the reorganized Company's assets and liabilities by determining the fair market value of its property, plant and equipment and intangible assets. This valuation is preliminary and adjustments may be required once the final valuation is complete. A reconciliation of the adjustments to be recorded in connection with the debt restructuring and the adoption of fresh start accounting are as follows:
PREDECESSOR REORGANIZED NEENAH NEENAH FOUNDRY FOUNDRY COMPANY COMPANY SEPTEMBER 30, DEBT FRESH START SEPTEMBER 30, 2003 RESTRUCTURING ADJUSTMENTS(D) 2003 ------------- ------------- -------------- ------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents.............. $ 24,356 $ (24,356) $ $ -- Accounts receivable, net............... 56,333 -- -- 56,333 Inventories............................ 56,555 -- 2,904 59,459 Deferred income taxes.................. 4,059 -- (1,562) 2,497 Other current assets................... 8,113 -- -- 8,113 Current assets of discontinued operations.......................... 423 -- -- 423 -------- --------- --------- -------- Total current assets..................... 149,839 (24,356) 1,342 126,825 Property, plant and equipment: Land................................... 6,036 -- 235 6,271 Buildings and improvements............. 27,854 -- (12,568) 15,286 Machinery and equipment................ 222,778 -- (170,753) 52,025 Patterns............................... 29,928 -- (19,950) 9,978 Construction in progress............... 3,200 -- (806) 2,394 -------- --------- --------- -------- 289,796 -- (203,842) 85,954 Less accumulated depreciation.......... 126,827 -- (126,827) -- -------- --------- --------- -------- 162,969 -- (77,015) 85,954 Deferred financing costs, net............ 1,393 1,587 -- 2,980 Identifiable intangible assets, net...... 33,354 -- 50,082 83,436 Goodwill, net............................ 180,214 (101,641) 78,573 Other assets............................. 9,065 -- (2,533) 6,532 -------- --------- --------- -------- 224,026 1,587 (54,092) 171,521 -------- --------- --------- -------- $536,834 $ (22,769) $(129,765) $384,300 ======== ========= ========= ========
F-11 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PREDECESSOR REORGANIZED NEENAH NEENAH FOUNDRY FOUNDRY COMPANY COMPANY SEPTEMBER 30, DEBT FRESH START SEPTEMBER 30, 2003 RESTRUCTURING ADJUSTMENTS(D) 2003 ------------- ------------- -------------- ------------- (UNAUDITED) LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities not subject to compromise: Accounts payable.................... $ 26,285 $ 5,300 $ -- $ 31,585 Accrued wages and employee benefits.......................... 11,307 -- -- 11,307 Other accrued liabilities........... 5,918 -- -- 5,918 Current portion of capital lease obligations....................... 2,646 -- -- 2,646 -------- --------- --------- -------- Total current liabilities not subject to compromise............................. 46,156 5,300 -- 51,456 Long-term liabilities subject to compromise............................. 465,540 (465,540)(a) -- -- Long-term debt........................... -- 268,550(b) -- 268,550 Capital lease obligations................ 1,583 -- -- 1,583 Deferred income taxes.................... 33,804 -- (8,529) 25,275 Postretirement benefit obligations....... 7,271 -- 3,048 10,319 Other liabilities........................ 21,496 -- 92 21,588 -------- --------- --------- -------- Total liabilities........................ 575,850 (191,690) (5,389) 378,771 Commitments and contingencies Stockholder's equity (deficit): Preferred stock........................ -- -- -- -- Predecessor Neenah common stock........ 100 (100)(a) -- -- Reorganized Neenah common stock........ -- 100(c) -- 100 Additional paid-in capital -- warrants............................ -- 602(c) -- 602 Capital in excess of par value......... 51,317 -- (46,490) 4,827 Accumulated deficit.................... (81,124) -- 81,124 -- Accumulated other comprehensive loss... (9,309) -- 9,309 -- -------- --------- --------- -------- Total stockholder's equity (deficit)..... (39,016) 602 43,943 5,529 -------- --------- --------- -------- $536,834 $(191,088) $ 38,554 $384,300 ======== ========= ========= ========
- --------------- a. To record the discharge of pre-petition indebtedness, including $26,183 of accrued interest and the elimination of Predecessor Neenah's common stock. b. Record borrowings of $47,112 on the New Credit Facility, the issuance of $100,000 New Senior Subordinated Notes and the issuance of $121,438 (net of discount of $11,692) of Second Secured Notes. c. To record the issuance of common stock in Reorganized Neenah and detachable warrants issued with the Second Secured Notes. d. To adjust the carrying value of assets, liabilities and stockholder's equity to fair value, in accordance with fresh start accounting. F-12 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Neenah and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying value, which approximates fair value, of cash equivalents, which consist entirely of repurchase agreements, totaled $21,850 and $25,500 at September 30, 2003 and 2002, respectively. ACCOUNTS RECEIVABLE The Company evaluates the collectibility of its accounts and notes receivable based on a number of factors. For larger accounts, an allowance for doubtful accounts is recorded based on the applicable parties' ability and likelihood to pay based on management's review of the facts. For all other accounts, the Company recognizes an allowance based on length of time the receivable is past due based on historical experience. INVENTORIES Inventories are stated at the lower of cost or market. The cost of inventories for Neenah and Dalton is determined on the last-in, first-out (LIFO) method for substantially all inventories except supplies, for which cost is determined on the first-in, first-out (FIFO) method. The cost of inventories for Deeter, Mercer, ACP and Gregg is determined on the FIFO method. LIFO inventories comprise 49% and 47% of total inventories at September 30, 2003 and 2002, respectively. If the FIFO method of inventory valuation had been used by all companies, inventories would have been approximately $2,623 and $1,458 higher than reported at September 30, 2003 and 2002, respectively. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation for financial reporting purposes is provided over the estimated useful lives (7 to 40 years) of the respective assets using the straight-line method. DEFERRED FINANCING COSTS Costs incurred to obtain long-term financing are amortized using the effective interest method over the term of the related debt. IDENTIFIABLE INTANGIBLE ASSETS Identifiable intangible assets are amortized on a straight-line basis over the estimated useful lives of 10 to 40 years. F-13 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) GOODWILL Effective October 1, 2001, goodwill is no longer amortized but is subject to an annual test for impairment. Prior to October 1, 2001, goodwill was amortized on a straight-line basis over 15 to 40 years. IMPAIRMENT OF LONG-LIVED ASSETS Property, plant and equipment and identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. Such analyses necessarily involve significant judgment. REVENUE RECOGNITION Revenues are recognized upon shipment of product, which generally corresponds with the transfer of title. SHIPPING AND HANDLING COSTS Shipping and handling costs are included in cost of sales. ADVERTISING COSTS Advertising costs are expensed as incurred. Advertising costs for continuing operations amounted to $445, $587 and $615 for the years ended September 30, 2003, 2002 and 2001, respectively. INCOME TAXES Deferred income taxes are provided for temporary differences between the financial reporting and income tax basis of the Company's assets and liabilities and are measured using currently enacted tax rates and laws. FINANCIAL INSTRUMENTS The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, notes receivable and investment in preferred stock (see Note 5), accounts payable and capital lease obligations approximate fair value. At September 30, 2003, long-term debt is included in the accompanying consolidated balance sheet as a liability subject to compromise. At September 30, 2002, the fair value of the Company's $451,432 of long-term debt was $285,052. The fair value of the Senior Subordinated Notes at September 30, 2002 with a face value of $282,000 was based on quoted market prices. RECLASSIFICATIONS Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. NEW ACCOUNTING PRONOUNCEMENTS In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," which expands upon and strengthens existing accounting guidance concerning when a company should include in its financial statements the assets, liabilities and activities of another entity. A Variable Interest Entity F-14 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ("VIE") does not share economic risk and reward through typical equity ownership arrangements. Instead, contractual or other relationships re-distribute economic risks and rewards among equity holders and other parties. Once an entity is determined to be a VIE, the party with the controlling financial interest, the primary beneficiary, is required to consolidate it. FIN 46 also requires disclosures about VIEs that a company is not required to consolidate but in which it has a significant variable interest. The adoption of applicable provisions of FIN 46 in 2003 did not have a material impact on the Company's results of operations or financial position. The Company does not expect the adoption of the remaining provisions related to FIN 46 to have a material impact on the Company's results of operations or financial position. 5. DISCONTINUED OPERATIONS In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The Company adopted SFAS No. 144 as of October 1, 2001. During the year ended September 30, 2002, the Company identified indicators of impairment at its Belcher Corporation (Belcher) foundry, which was held for use at that date. Belcher is a wholly-owned subsidiary of Advanced Cast Products, Inc. In accordance with SFAS No. 144, because the net book value of the foundry's long-lived assets exceeded the sum of the undiscounted cash flows expected to be realized from the respective assets, the Company recognized an impairment charge of $5,379 to adjust the carrying value of the foundry's long-lived assets to fair value. On December 27, 2002, the Company sold substantially all of the assets of Belcher for cash of $648 (net of fees and escrow deposits), a $1,500 note receivable and $1,000 of preferred stock of the buyer. The cost method is used to account for the Company's investment in preferred stock as the Company does not have the ability to exercise significant influence over the investee's operations and financial policies. At September 30, 2003, the cost of the preferred stock approximates fair value. The disposition of Belcher resulted in a loss of $1,596, net of taxes of $860. Included in the loss on disposal is a curtailment loss on Belcher's defined benefit pension plan of $367, net of taxes of $198, which was retained by the Company. In accordance with the provisions of SFAS No. 144, the results of operations of Belcher have been reported as discontinued operations in the consolidated statements of operations for all periods presented. Revenues for Belcher, which was previously included in the Castings segment, for the years ended September 30, 2003, 2002 and 2001 were $3,186, $17,511 and $18,125, respectively. Interest allocated to Belcher of $139, $485 and $533 for the years ended September 30, 2003, 2002 and 2001, respectively, was based on the purchase price of Belcher in relation to the purchase price of all other acquisitions funded by additional Company borrowings. Customer actions and the significant deterioration of the U.S. economy during the quarter ended December 31, 2001, had a dramatic effect on the operations of Cast Alloys. This resulted in a significant reduction in sales, operating profits and cash flows of Cast Alloys for the three months ended December 31, 2001. Based on these factors, a goodwill impairment charge of $10,668 was recognized during the three months ended December 31, 2001, related to the decline in fair value of the Cast Alloys reporting unit, which was included in the Castings segment. These events also had a significant impact on the value of Cast Alloys' property, plant and equipment and long-lived assets with finite lives. Due to the existing impairment indicators, management assessed the recoverability of these fixed assets and long-lived assets. As the expected undiscounted cash flows were less than the carrying value of the related assets, an impairment charge of $20,412 was recognized for the difference between the fair value and carrying value of such assets during the year ended September 30, 2002. In January 2002, management initiated a plan for discontinuing the operations of Cast Alloys by closing its manufacturing facilities. Severance costs of approximately $2,200 associated with this plan were F-15 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) recognized during the three months ended March 31, 2002. All employees of Cast Alloys were terminated by April 2002. In accordance with the provisions of SFAS No. 144, the results of operations of Cast Alloys have been reported as discontinued operations in the consolidated statements of operations for all periods presented. Previously, Cast Alloys was included in the Castings segment. Revenues for Cast Alloys for the years ended September 30, 2002 and 2001 were $8,641 and $53,130, respectively. Interest expense allocated to Cast Alloys of $1,954 and $4,309 for the years ended September 30, 2002 and 2001, respectively, was based on the purchase price of Cast Alloys in relation to the purchase price of all other acquisitions funded by additional Company borrowings. On October 2, 2000, the Company sold all of the issued and outstanding shares of common stock of Hartley Controls Corporation (Hartley) for cash of $5,190, net of fees of $129. The disposition of Hartley resulted in a gain of $2,404, net of income taxes of $1,603. Proceeds from the sale were used to reduce outstanding debt. Hartley designed and manufactured customized sand control systems. In accordance with the provisions of APB Opinion No. 30, "Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," which has been amended by SFAS No. 144, the results of operations of Hartley have been reported as discontinued operations in the consolidated statements of operations. 6. INVENTORIES Inventories consist of the following as of September 30:
2003 2002 ------- ------- Raw materials............................................... $ 3,709 $ 3,961 Work in process and finished goods.......................... 38,731 35,034 Supplies.................................................... 14,115 12,272 ------- ------- $56,555 $51,267 ======= =======
7. INTANGIBLE ASSETS The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," as of October 1, 2001. Under SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests in accordance with the statement. Other intangible assets continue to be amortized over their estimated useful lives. Upon adoption of SFAS No. 141, the Company reclassified the identifiable intangible assets related to the assembled workforce and facilities in place with an unamortized balance of $4,660 and $3,469, respectively, net of related deferred income taxes of $1,864 and $1,388, respectively, to goodwill. The Company performed the transitional impairment test of goodwill as of October 1, 2001, and concluded that no impairment existed at the time of adoption of SFAS No. 142. As discussed in Note 5, subsequent to the adoption of SFAS No. 142, a goodwill impairment charge of $10,668 related to Cast Alloys, a discontinued operation, was recognized. The Company performed the annual impairment test of goodwill as of July 1, 2002, and concluded that no additional goodwill impairment existed. The impairment tests were performed based on the expected present value of future cash flows for each of the Company's reporting units. As further discussed in Notes 2 and 3, on August 5, 2003, the Company filed for protection under Chapter 11 of the Bankruptcy Code and on October 8, 2003 emerged from the Chapter 11 reorganization proceedings with a significantly restructured balance sheet, including a substantial reduction in the carrying value of the Company's intangible assets. F-16 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Identifiable intangible assets consist of the following as of September 30:
SEPTEMBER 30, 2003 SEPTEMBER 30, 2002 ----------------------- ----------------------- GROSS GROSS CARRYING ACCUMULATED CARRYING ACCUMULATED AMOUNT AMORTIZATION AMOUNT AMORTIZATION -------- ------------ -------- ------------ Amortizable intangible assets: Customer lists.......................... $31,441 $17,945 $31,441 $14,814 Tradenames.............................. 22,553 3,217 22,553 2,649 Other................................... 1,295 773 1,295 653 ------- ------- ------- ------- $55,289 $21,935 $55,289 $18,116 ======= ======= ======= =======
The Company does not have any intangible assets deemed to have indefinite lives. Amortization expense expected to be recognized during fiscal years subsequent to September 30, 2003, is as follows: 2004........................................................ $3,832 2005........................................................ 3,832 2006........................................................ 3,832 2007........................................................ 3,195 2008........................................................ 2,002
Changes in the carrying amount of goodwill during the year ended September 30, 2002, consist of the following:
CASTINGS FORGINGS SEGMENT SEGMENT TOTAL -------- -------- -------- Balance as of September 30, 2001...................... $168,709 $17,296 $186,005 Reclassification of assembled workforce and facilities in place net of deferred income tax liability of $3,064, $188 and $3,252, respectively............... 4,595 282 4,877 Impairment charge related to discontinued operations -- See Note 5............................ (10,668) -- (10,668) -------- ------- -------- Balance as of September 30, 2002...................... $162,636 $17,578 $180,214 ======== ======= ========
As required by SFAS No. 142, the results of operations of the Company for periods prior to its adoption have not been restated. The following table reconciles reported net loss to pro forma net loss that would have resulted for the year ending September 30, 2001 if SFAS No. 142 had been adopted effective October 1, 2000: Reported net loss........................................... $(15,050) Amortization of goodwill.................................... 5,552 Amortization of assembled workforce, net of tax............. 1,025 Amortization of facilities in place, net of tax............. 45 -------- Pro forma net loss.......................................... $ (8,428) ========
F-17 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 8. LONG-TERM DEBT Long-term debt consists of the following as of September 30:
2003 2002 -------- -------- 11 1/8% Series B Senior Subordinated Notes.................. $150,000 $150,000 11 1/8% Series D Senior Subordinated Notes, including unamortized premium of $1,206 in 2002..................... 45,000 46,206 11 1/8% Series F Senior Subordinated Notes, including unamortized premium of $1,642 in 2002..................... 87,000 88,642 Term Loan Facilities........................................ 112,792 117,292 Acquisition Loan Facility................................... 5,335 10,794 Revolving Credit Facility................................... 29,314 28,500 PIK Note.................................................... 9,900 9,900 Other....................................................... 16 98 -------- -------- $439,357 $451,432 ======== ========
The Company had a Credit Facility, as amended, with a group of banks, which provided Term Loan Facilities, an Acquisition Loan Facility and a Revolving Credit Facility. Borrowings under this Pre-Petition Credit Facility were secured by substantially all assets of the Company. Covenants in the Pre-Petition Credit Facility restricted the payment of dividends, capital expenditures and certain other transactions and required the Company to maintain leverage, net worth and interest coverage ratios. The Pre-Petition Credit Facility bore interest at LIBOR (1.125% at September 30, 2003) plus 4.5% or LIBOR plus 4.75%. Effective December 31, 2001, the Credit Agreement was amended to provide relief from the above financial ratio covenants through December 31, 2003, reduce the amount of the Revolving Credit Facility to $29,565 and establish minimum EBITDA and liquidity covenants. At March 31, 2003, the Company was in default of the minimum EBITDA covenant on the Pre-Petition Credit Facility. In addition, the Company did not make the scheduled May 1, 2003 interest payment on the Pre-Petition Senior Subordinated Notes which was an event of default under the Indenture Agreement covering the Pre-Petition Senior Subordinated Notes. As of September 30, 2003, as a result of the Chapter 11 filing, the carrying value of the Company's debt is classified as long-term liabilities subject to compromise. As discussed in Note 2, in order to record the debt instruments at the amount allowed by the Bankruptcy Court, in accordance with SOP 90-7, unamortized premiums of $2,226 related to the Pre-Petition Senior Subordinated Notes were written off as a component of reorganization expense in 2003. As further discussed in Note 2, upon the Company's consummation of the Plan of Reorganization, all of the Company's Pre-Petition Senior Subordinated Notes and Pre-Petition Credit Facility and PIK Note were cancelled or repaid. The New Credit Facility has a 5-year maturity, provides for a revolving credit line of up to $70,000 (with a $5,000 sublimit available for letters of credit), a term loan in the aggregate amount of up to $22,085, contains various financial and non-financial covenants and is secured by substantially all of the Company's tangible and intangible assets. The interest rate on the New Credit Facility is based on LIBOR plus an applicable margin, based upon the Company meeting certain financial statistics. The Company, including its wholly-owned subsidiaries, jointly and severally guarantee the Company's obligation under the New Credit Facility. The Second Secured Notes are due in 2010 and bear interest at 11%. The New Senior Subordinated Notes bear interest at 13% and are due in 2013. F-18 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 9. COMMITMENTS AND CONTINGENCIES The Company leases certain plants, warehouse space, machinery and equipment, office equipment and vehicles under operating leases. Rent expense for continuing operations under these operating leases for the years ended September 30, 2003, 2002 and 2001 totaled $2,885, $3,147 and $2,777, respectively. The Company did not enter into any capital leases during the years ended September 30, 2003 or 2002. Property, plant and equipment under leases accounted for as capital leases as of September 30 are as follows:
2003 2002 ------- ------- Machinery and equipment..................................... $20,867 $21,471 Less accumulated depreciation............................... (4,978) (3,983) ------- ------- $15,889 $17,488 ======= =======
Minimum rental payments due under operating and capital leases for fiscal years subsequent to September 30, 2003, are as follows:
OPERATING CAPITAL LEASES LEASES --------- ------- 2004........................................................ $1,813 $2,951 2005........................................................ 1,344 1,656 2006........................................................ 743 -- 2007........................................................ 293 -- 2008........................................................ 244 -- Thereafter.................................................. 347 -- ------ ------ Total minimum lease payments................................ $4,784 4,607 ====== Less amount representing interest........................... 378 ------ Present value of minimum lease payments..................... 4,229 Less current portion........................................ 2,646 ------ Capital lease obligations................................... $1,583 ======
The Company is partially self-insured for workers' compensation claims. An accrued liability is recorded for claims incurred but not yet paid or reported and is based on current and historical claim information. The accrued liability may ultimately be settled for an amount different than the recorded amount. Adjustments of the accrued liability are recorded in the period in which they become known. Approximately 63% of the Company's work force is covered by collective bargaining agreements. The collective bargaining agreements for Mercer and the Kendallville location of Dalton are scheduled to expire during fiscal 2004. F-19 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. INCOME TAXES The credit for income taxes consists of the following:
YEAR ENDED SEPTEMBER 30 ----------------------------- 2003 2002 2001 -------- -------- ------- Current: Federal............................................. $ -- $(18,522) $(2,902) State............................................... 346 308 (1,218) Foreign............................................. -- -- 886 -------- -------- ------- 346 (18,214) (3,234) Deferred.............................................. (10,337) (10,650) (1,630) -------- -------- ------- $ (9,991) $(28,864) $(4,864) ======== ======== =======
The credit for income taxes is included in the consolidated statements of operations as follows:
YEAR ENDED SEPTEMBER 30 ---------------------------- 2003 2002 2001 ------- -------- ------- Continuing operations.................................. $(8,541) $ (5,917) $(4,004) Discontinued operations................................ (1,450) (22,947) (860) ------- -------- ------- $(9,991) $(28,864) $(4,864) ======= ======== =======
The credit for income taxes differs from the amount computed by applying the federal statutory rate of 35% to loss before income taxes as follows:
YEAR ENDED SEPTEMBER 30 ----------------------------- 2003 2002 2001 -------- -------- ------- Credit at statutory rate.............................. $(12,443) $(26,798) $(6,970) State income taxes (benefit), net of federal taxes.... 225 74 (535) Amortization of goodwill.............................. -- -- 1,943 Additional provision recorded in connection with tax examinations........................................ -- 932 417 Reorganization expenses............................... 2,244 -- -- Permanent difference related to the discontinuance of Cast Alloys......................................... -- (2,734) -- Other................................................. (17) (338) 281 -------- -------- ------- Credit for income taxes............................... $ (9,991) $(28,864) $(4,864) ======== ======== =======
F-20 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred income tax assets and liabilities consist of the following as of September 30:
2003 2002 -------- -------- Deferred income tax liabilities: Inventories............................................... $ (2,244) $ (3,023) Property, plant and equipment............................. (35,939) (37,277) Identifiable intangible assets............................ (13,362) (14,890) Other..................................................... (2,093) (1,781) -------- -------- (53,638) (56,971) Deferred income tax assets: Employee benefit plans.................................... 11,604 10,062 Accrued vacation.......................................... 2,101 2,185 Other accrued liabilities................................. 3,136 1,743 Net operating loss carryforwards.......................... 5,986 1,754 Other..................................................... 1,066 -- -------- -------- 23,893 15,744 -------- -------- Net deferred income tax liability........................... $(29,745) $(41,227) ======== ======== Included in the consolidated balance sheets as: Current deferred income tax asset......................... $ 4,059 $ 2,659 Noncurrent deferred income tax liability.................. (33,804) (43,886) -------- -------- $(29,745) $(41,227) ======== ========
As of September 30, 2003, the Company has federal and state net operating loss carryforwards for income tax purposes of approximately $13,000 and $24,000, respectively, which expire through 2023. 11. EMPLOYEE BENEFIT PLANS DEFINED-BENEFIT PENSION PLANS AND POSTRETIREMENT BENEFITS The Company sponsors five defined-benefit pension plans covering the majority of its hourly employees. Retirement benefits under the pension plans are based on years of service and defined-benefit rates. The Company funds the pension plans based on actuarially determined cost methods allowable under Internal Revenue Service regulations. Plan assets consist primarily of mutual funds. The measurement date for three of the defined-benefit pension plans is September 30. The remaining two plans use a measurement date of June 30. The Company also sponsors unfunded defined-benefit postretirement health care plans covering substantially all salaried and hourly employees at Neenah and their dependents. For salaried employees at Neenah, benefits are provided from the date of retirement for the duration of the employee's life, while benefits for hourly employees at Neenah are provided from retirement to age 65. Retirees' contributions to the plans are based on years of service and age at retirement. The Company funds benefits as incurred. These plans use a measurement date of September 30. F-21 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes the funded status of the pension plans and postretirement benefit plans and the amounts recognized in the consolidated balance sheets at September 30, 2003 and 2002:
PENSION BENEFITS POSTRETIREMENT BENEFITS ------------------- ------------------------ 2003 2002 2003 2002 -------- -------- ----------- ---------- Change in benefit obligation: Benefit obligation, October 1............. $ 51,911 $ 44,166 $ 8,373 $ 7,024 Service cost........................... 1,798 1,512 319 198 Interest cost.......................... 3,433 3,269 592 476 Plan amendments........................ 496 -- -- -- Curtailment............................ 565 -- -- -- Actuarial losses....................... 3,940 5,077 1,462 1,037 Benefits paid.......................... (2,094) (2,113) (427) (362) -------- -------- -------- ------- Benefit obligation, September 30.......... $ 60,049 $ 51,911 $ 10,319 $ 8,373 ======== ======== ======== ======= Change in plan assets: Fair value of plan assets, October 1...... $ 38,200 $ 40,020 $ -- $ -- Actual return (loss) on plan assets.... 4,375 (1,769) -- -- Company contributions.................. 8,008 2,062 427 362 Benefits paid.......................... (2,094) (2,113) (427) (362) -------- -------- -------- ------- Fair value of plan assets, September 30... $ 43,489 $ 38,200 $ -- $ -- ======== ======== ======== ======= Funded status of the plans: Benefit obligation in excess of plan assets................................. $(16,560) $(13,711) $(10,319) $(8,373) Unrecognized prior service cost........... 2,532 2,184 536 581 Unrecognized net losses................... 15,592 13,279 2,512 1,096 -------- -------- -------- ------- $ 1,564 $ 1,752 $ (7,271) $(6,696) ======== ======== ======== ======= Amounts recognized in the consolidated balance sheets at September 30: Accrued pension liability.............. $(16,562) $(13,765) $ (7,271) $(6,696) Intangible asset....................... 2,532 2,184 -- -- Deferred income tax asset.............. 6,285 5,333 -- -- Accumulated other comprehensive loss... 9,309 8,000 -- -- -------- -------- -------- ------- $ 1,564 $ 1,752 $ (7,271) $(6,696) ======== ======== ======== =======
Amounts applicable to the Company's pension plans with accumulated benefit obligations and projected benefit obligations in excess of plan assets:
2003 2002 ------- ------- Projected benefit obligation................................ $60,049 $51,911 Accumulated benefit obligation.............................. 60,049 51,911 Fair value of plan assets................................... 43,489 38,200
F-22 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Components of net periodic benefit cost for the years ended September 30, 2003, 2002 and 2001, respectively, are as follows:
PENSION BENEFITS POSTRETIREMENT BENEFITS --------------------------------------- ------------------------- 2003 2002 2001 2003 2002 2001 -------------- --------- ---------- ------- ----- ------- Service cost.................. $ 1,798 $ 1,512 $ 1,543 $ 319 $198 $ 204 Interest cost................. 3,433 3,269 3,036 592 476 493 Expected return on plan assets...................... (3,265) (3,486) (3,580) -- -- -- Amortization of prior service cost........................ 146 146 123 45 45 45 Recognized net actuarial (gain) loss................. 515 26 2 47 (5) 2 -------------- --------- ---------- ------ ---- ------ Net periodic benefit cost..... $ 2,627 $ 1,467 $ 1,124 $1,003 $714 $ 744 ============== ========= ========== ====== ==== ====== Net periodic benefit cost included in the consolidated statements of operations as: Continuing operations.... $ 2,432 $ 1,373 $ 1,029 $1,003 $714 $ 744 Discontinued operations............. 195 94 95 -- -- -- -------------- --------- ---------- ------ ---- ------ $ 2,627 $ 1,467 $ 1,124 $1,003 $714 $ 744 ============== ========= ========== ====== ==== ====== Assumptions as of September 30: Discount rate............... 6.25% to 6.75% 7.25% to 6.25% 6.75% 7.625% 6.75% 7.625% Expected long-term rate of return................... 7.50% to 6.75% to 7.50% to -- -- -- 8.50% 9.00% 9.00%
For measurement purposes, the healthcare cost trend rate was assumed to be 9.0% decreasing gradually to 5.0% in 2010 and then remaining at that level thereafter. The healthcare cost trend rate assumption has a significant effect on the amounts reported. A one percentage point change in the healthcare cost trend rate would have the following effect:
1% INCREASE 1% DECREASE ----------- ----------- Effect on total of service cost and interest cost........... $ 189 $ (147) Effect on postretirement benefit obligation................. 1,858 (1,470)
DEFINED-CONTRIBUTION RETIREMENT PLANS The Company sponsors various defined-contribution retirement plans (the Plans) covering substantially all salaried and certain hourly employees. The Plans allow participants to make 401(k) contributions in amounts ranging from 1% to 15% of their compensation. The Company matches between 35% and 50% of the participants' contributions up to a maximum of 6% of the employee's compensation, as defined. The Company may make additional voluntary contributions to the Plans as determined annually by the Board of Directors. Total Company contributions for continuing operations amounted to $1,694, $1,456 and $1,840 for the years ended September 30, 2003, 2002 and 2001, respectively. OTHER EMPLOYEE BENEFITS The Company provides unfunded supplemental retirement benefits to certain active and retired employees at Dalton. At September 30, 2003, the present value of the current and long-term portion of F-23 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) these supplemental retirement obligations totaled $201 and $2,846, respectively. At September 30, 2002, the present value of the current and long-term portion of these supplemental retirement obligations totaled $334 and $2,955, respectively. Certain of Dalton's hourly employees are covered by a multi-employer, defined-benefit pension plan pursuant to a collective bargaining agreement. The Company's expense for the years ended September 30, 2003, 2002 and 2001, was $417, $397 and $470, respectively. Substantially all of Mercer's union employees are covered by a multiemployer, defined-benefit pension plan pursuant to a collective bargaining agreement. The Company's expense for the years ended September 30, 2003, 2002 and 2001, was $102, $119 and $135, respectively. 12. PROVISION FOR IMPAIRMENT OF ASSETS In accordance with SFAS No. 144, the Company recognized an impairment charge of $74 during the year ended September 30, 2002, related to a building held for sale to adjust the carrying value of the building to fair value less costs to sell. 13. SEGMENT INFORMATION The Company has two reportable segments, Castings and Forgings. The Castings segment manufactures and sells gray and ductile iron castings for the industrial and municipal markets, while the Forgings segment manufactures forged components for the industrial market. The Other segment includes machining operations and freight hauling. The Company evaluates performance and allocates resources based on the operating income before depreciation and amortization charges of each segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are recorded at cost plus a share of operating profit. The following segment information is presented for continuing operations:
YEAR ENDED SEPTEMBER 30 --------------------------------- 2003 2002 2001 --------- --------- --------- Revenues from external customers: Castings........................................ $ 349,410 $ 361,914 $ 363,833 Forgings........................................ 20,681 21,893 28,109 Other........................................... 19,185 20,498 19,460 Elimination of intersegment revenues............ (14,213) (16,598) (12,620) --------- --------- --------- $ 375,063 $ 387,707 $ 398,782 ========= ========= ========= Loss from continuing operations: Castings........................................ $ (22,870) $ (5,953) $ (13,129) Forgings........................................ (6,819) (4,135) (5,112) Other........................................... (150) (764) (711) Elimination of intersegment loss................ 6,969 4,899 5,823 --------- --------- --------- $ (22,870) $ (5,953) $ (13,129) ========= ========= =========
F-24 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEAR ENDED SEPTEMBER 30 --------------------------------- 2003 2002 2001 --------- --------- --------- Total assets: Castings........................................ $ 641,870 $ 668,669 $ 770,044 Forgings........................................ 38,454 41,584 51,148 Other........................................... 10,971 16,494 16,149 Elimination of intersegment assets.............. (154,461) (157,359) (210,898) --------- --------- --------- $ 536,834 $ 569,388 $ 626,443 ========= ========= =========
CASTINGS FORGINGS OTHER TOTAL -------- -------- ------ ------- Year ended September 30, 2003: Interest expense.............................. $41,907 $ 4,803 $ 735 $47,445 Interest income............................... 825 -- -- 825 Provision (credit) for income taxes........... (8,331) (622) 412 (8,541) Depreciation and amortization expense......... 22,522 2,277 1,296 26,095 Expenditures for long-lived assets............ 11,112 217 571 11,900 Year ended September 30, 2002: Interest expense.............................. $38,196 $ 4,439 $ 831 $43,466 Interest income............................... 819 -- -- 819 Credit for income taxes....................... (3,005) (2,790) (122) (5,917) Depreciation and amortization expense......... 23,251 2,627 1,669 27,547 Expenditures for long-lived assets............ 8,558 415 82 9,055 Year ended September 30, 2001: Interest expense.............................. $37,518 $ 4,953 $ 983 $43,454 Interest income............................... 445 -- -- 445 Provision (credit) for income taxes........... (813) (3,273) 82 (4,004) Depreciation and amortization expense......... 29,878 3,884 1,505 35,267 Expenditures for long-lived assets............ 16,219 228 435 16,882
F-25 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) GEOGRAPHIC INFORMATION
LONG-LIVED NET SALES ASSETS(1) --------- ---------- Year ended September 30, 2003: United States............................................. $364,318 $162,969 Foreign countries......................................... 10,745 -- -------- -------- $375,063 $162,969 ======== ======== Year ended September 30, 2002: United States............................................. $378,968 $173,565 Foreign countries......................................... 8,739 -- -------- -------- $387,707 $173,565 ======== ======== Year ended September 30, 2001: United States............................................. $390,656 $189,726 Foreign countries......................................... 8,126 -- -------- -------- $398,782 $189,726 ======== ========
- --------------- (1) Represents tangible long-lived assets only. F-26 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 14. GUARANTOR SUBSIDIARIES The following tables present condensed consolidating financial information for fiscal 2003, 2002 and 2001 for: (a) the Company, and (b) on a combined basis, the guarantors of the Senior Subordinated Notes, which include all of the wholly owned subsidiaries of the Company (Subsidiary Guarantors). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantors are jointly, severally and unconditionally liable under the guarantees, and the Company believes separate financial statements and other disclosures regarding the Subsidiary Guarantors are not material to investors. CONDENSED CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2003
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents..................... $ 24,432 $ (76) $ -- $ 24,356 Accounts receivable, net...................... 30,069 26,264 -- 56,333 Inventories................................... 21,029 35,526 -- 56,555 Deferred income taxes......................... (400) 4,459 -- 4,059 Other current assets.......................... 4,924 3,612 -- 8,536 -------- -------- --------- -------- Total current assets............................ 80,054 69,785 -- 149,839 Investments in and advances to subsidiaries..... 196,184 -- (196,184) -- Property, plant and equipment, net.............. 79,514 83,455 -- 162,969 Deferred financing costs, identifiable intangible assets and goodwill, net........... 122,592 92,369 -- 214,961 Other assets.................................... 3,970 5,095 -- 9,065 -------- -------- --------- -------- $482,314 $250,704 $(196,184) $536,834 ======== ======== ========= ======== LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities not subject to compromise: Accounts payable.............................. $ 9,439 $ 16,846 $ -- $ 26,285 Accrued wages and employee benefits........... 4,481 6,826 -- 11,307 Other accrued liabilities..................... 3,933 1,985 -- 5,918 Current portion of capital lease obligations................................ -- 2,646 -- 2,646 -------- -------- --------- -------- Total current liabilities....................... 17,853 28,303 -- 46,156 Long-term liabilities subject to compromise..... 465,540 -- -- 465,540 Capital lease obligations....................... -- 1,583 -- 1,583 Deferred income taxes........................... 18,076 15,728 -- 33,804 Postretirement benefit obligations.............. 7,271 -- -- 7,271 Other liabilities............................... 12,590 8,906 -- 21,496 Stockholder's equity (deficit).................. (39,016) 196,184 (196,184) (39,016) -------- -------- --------- -------- $482,314 $250,704 $(196,184) $536,834 ======== ======== ========= ========
F-27 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2002
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents..................... $ 29,290 $ (3,126) $ -- $ 26,164 Accounts receivable, net...................... 30,829 25,624 -- 56,453 Inventories................................... 20,535 30,732 -- 51,267 Refundable income taxes....................... 14,850 -- -- 14,850 Deferred income taxes......................... (1,773) 4,432 -- 2,659 Other current assets.......................... 3,372 6,820 -- 10,192 -------- -------- --------- -------- Total current assets............................ 97,103 64,482 -- 161,585 Investments in and advances to subsidiaries..... 198,460 (23,829) (174,631) -- Property, plant and equipment, net.............. 83,523 90,042 -- 173,565 Deferred financing costs, identifiable intangible assets and goodwill, net........... 129,687 94,356 -- 224,043 Other assets.................................... 4,191 6,004 -- 10,195 -------- -------- --------- -------- $512,964 $231,055 $(174,631) $569,388 ======== ======== ========= ======== LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities: Accounts payable.............................. $ 7,740 $ 14,851 $ -- $ 22,591 Accrued wages and employee benefits........... 6,151 6,507 -- 12,658 Accrued interest.............................. 13,733 -- -- 13,733 Other current liabilities..................... 1,151 3,132 -- 4,283 Current portion of long-term debt............. 40,917 -- -- 40,917 Current portion of capital lease obligations................................ -- 2,353 -- 2,353 -------- -------- --------- -------- Total current liabilities....................... 69,692 26,843 -- 96,535 Long-term debt.................................. 410,515 -- -- 410,515 Capital lease obligations....................... -- 4,816 -- 4,816 Deferred income taxes........................... 26,110 17,776 -- 43,886 Postretirement benefit obligations.............. 6,696 -- -- 6,696 Other liabilities............................... 12,097 6,989 -- 19,086 Stockholder's equity (deficit).................. (12,146) 174,631 (174,631) (12,146) -------- -------- --------- -------- $512,964 $231,055 $(174,631) $569,388 ======== ======== ========= ========
F-28 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2003
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ Net sales....................................... $160,529 $220,102 $(5,568) $375,063 Cost of sales................................... 117,301 210,101 (5,568) 321,834 -------- -------- ------- -------- Gross profit.................................... 43,228 10,001 -- 53,229 Selling, general and administrative expenses.... 11,766 14,366 -- 26,132 Amortization expense............................ 1,832 1,987 -- 3,819 Loss on disposal of equipment................... 214 (19) -- 195 -------- -------- ------- -------- Operating income................................ 29,416 (6,333) -- 23,083 Other income (expense): Interest expense.............................. (25,589) (21,856) -- (47,445) Interest income............................... 822 3 -- 825 Reorganization expense........................ (7,874) -- -- (7,874) -------- -------- ------- -------- (32,641) (21,853) -- (54,494) -------- -------- ------- -------- Loss from continuing operations before income taxes and equity in earnings of subsidiaries.................................. (3,225) (28,186) -- (31,411) Provision (credit) for income taxes............. (8,846) 305 -- (8,541) -------- -------- ------- -------- 5,621 (28,491) -- (22,870) Equity in losses of subsidiaries................ (31,182) -- 31,182 -- -------- -------- ------- -------- Loss from continuing operations................. (25,561) (28,491) 31,182 (22,870) Loss from discontinued operations, net of income taxes......................................... -- (1,095) -- (1,095) Loss on sale of discontinued operations, net of income tax.................................... -- (1,596) -- (1,596) -------- -------- ------- -------- Net loss........................................ $(25,561) $(31,182) $31,182 $(25,561) ======== ======== ======= ========
F-29 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2002
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ Net sales....................................... $168,519 $227,300 $(8,112) $387,707 Cost of sales................................... 119,442 212,410 (8,112) 323,740 -------- -------- ------- -------- Gross profit.................................... 49,077 14,890 -- 63,967 Selling, general and administrative expenses.... 13,357 15,386 -- 28,743 Amortization expense............................ 1,833 1,996 -- 3,829 Provision for impairment of assets.............. -- 74 -- 74 Loss on disposal of equipment................... 98 446 -- 544 -------- -------- ------- -------- Operating income................................ 33,789 (3,012) -- 30,777 Other income (expense): Interest expense.............................. (22,568) (20,898) -- (43,466) Interest income............................... 805 14 -- 819 -------- -------- ------- -------- (21,763) (20,884) -- (42,647) -------- -------- ------- -------- Income (loss) from continuing operations before income taxes and equity in earnings of subsidiaries.................................. 12,026 (23,896) -- (11,870) Provision (credit) for income taxes............. 1,293 (7,210) -- (5,917) -------- -------- ------- -------- 10,733 (16,686) -- (5,953) Equity in losses of subsidiaries................ (58,436) -- 58,436 -- -------- -------- ------- -------- Loss from continuing operations................. (47,703) (16,686) 58,436 (5,953) Loss from discontinued operations, net of income taxes......................................... -- (41,750) -- (41,750) -------- -------- ------- -------- Net loss........................................ $(47,703) $(58,436) $58,436 $(47,703) ======== ======== ======= ========
F-30 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2001
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ Net sales....................................... $160,735 $244,175 $(6,128) $398,782 Cost of sales................................... 113,550 227,842 (6,128) 335,264 -------- -------- ------- -------- Gross profit.................................... 47,185 16,333 -- 63,518 Selling, general and administrative expenses.... 11,857 15,730 -- 27,587 Amortization expense............................ 4,919 5,570 -- 10,489 Gain on disposal of equipment................... (11) (423) -- (434) -------- -------- ------- -------- Operating income................................ 30,420 (4,544) -- 25,876 Other income (expense): Interest expense.............................. (19,828) (23,626) -- (43,454) Interest income............................... 411 34 -- 445 -------- -------- ------- -------- (19,417) (23,592) -- (43,009) -------- -------- ------- -------- Income (loss) from continuing operations before income taxes and equity in earnings of subsidiaries.................................. 11,003 (28,136) -- (17,133) Provision (credit) for income taxes............. 6,361 (10,365) -- (4,004) -------- -------- ------- -------- 4,642 (17,771) -- (13,129) Equity in losses of subsidiaries................ (22,096) -- 22,096 -- -------- -------- ------- -------- Loss from continuing operations................. (17,454) (17,771) 22,096 (13,129) Loss from discontinued operations, net of income taxes......................................... -- (4,325) -- (4,325) Gain on sale of discontinued operations, net of income taxes.................................. 2,404 -- -- 2,404 -------- -------- ------- -------- Net loss........................................ $(15,050) $(22,096) $22,096 $(15,050) ======== ======== ======= ========
F-31 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2003
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ OPERATING ACTIVITIES Net loss........................................ $(25,561) $(31,182) $ 31,182 $(25,561) Noncash adjustments............................. 5,548 18,473 -- 24,021 Changes in operating assets and liabilities..... 29,427 (4,885) -- 24,542 -------- -------- -------- -------- Net cash provided by (used in) operating activities.................................... 9,414 (17,594) 31,182 23,002 INVESTING ACTIVITIES Investments in and advances to subsidiaries..... 1,086 30,096 (31,182) -- Purchase of property, plant and equipment....... (4,930) (6,970) -- (11,900) Other........................................... 89 494 -- 583 -------- -------- -------- -------- Net cash provided by (used in) investing activities.................................... (3,755) 23,620 (31,182) (11,317) FINANCING ACTIVITIES Proceeds from long-term debt.................... 815 -- -- 815 Payments on long-term debt and capital lease obligations................................... (10,041) (2,976) -- (13,017) Debt issuance costs............................. (1,291) -- -- (1,291) -------- -------- -------- -------- Net cash used in financing activities........... (10,517) (2,976) -- (13,493) -------- -------- -------- -------- Increase (decrease) in cash and cash equivalents................................... (4,858) 3,050 -- (1,808) Cash (overdraft) and cash equivalents at beginning of year............................. 29,290 (3,126) -- 26,164 -------- -------- -------- -------- Cash (overdraft) and cash equivalents at end of year.......................................... $ 24,432 $ (76) $ -- $ 24,356 ======== ======== ======== ========
F-32 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2002
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ OPERATING ACTIVITIES Net loss........................................ $(47,703) $(58,436) $ 58,436 $(47,703) Noncash adjustments............................. 10,773 46,780 -- 57,553 Changes in operating assets and liabilities..... (13,173) 19,759 -- 6,586 -------- -------- -------- -------- Net cash provided by (used in) operating activities.................................... (50,103) 8,103 58,436 16,436 INVESTING ACTIVITIES Investments in and advances to subsidiaries..... 62,066 (3,630) (58,436) -- Purchase of property, plant and equipment....... (4,510) (4,545) -- (9,055) Other........................................... 37 (335) -- (298) -------- -------- -------- -------- Net cash provided by (used in) investing activities.................................... 57,593 (8,510) (58,436) (9,353) FINANCING ACTIVITIES Proceeds from long-term debt.................... 33,400 -- -- 33,400 Payments on long-term debt and capital lease obligations................................... (15,424) (2,383) -- (17,807) Debt issuance costs............................. (858) -- -- (858) -------- -------- -------- -------- Net cash provided by (used in) financing activities.................................... 17,118 (2,383) -- 14,735 -------- -------- -------- -------- Increase (decrease) in cash and cash equivalents................................... 24,608 (2,790) -- 21,818 Cash (overdraft) and cash equivalents at beginning of year............................. 4,682 (336) -- 4,346 -------- -------- -------- -------- Cash (overdraft) and cash equivalents at end of year.......................................... $ 29,290 $ (3,126) $ -- $ 26,164 ======== ======== ======== ========
F-33 NEENAH FOUNDRY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2001
SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ OPERATING ACTIVITIES Net loss........................................ $(15,050) $(22,096) $ 22,096 $(15,050) Noncash adjustments............................. 7,614 29,156 -- 36,770 Changes in operating assets and liabilities..... (4,849) (7,584) -- (12,433) -------- -------- -------- -------- Net cash provided by (used in) operating activities.................................... (12,285) (524) 22,096 9,287 INVESTING ACTIVITIES Investments in and advances to subsidiaries..... 14,650 7,446 (22,096) -- Proceeds from disposition of business, net of fees.......................................... 5,190 -- -- 5,190 Purchase of property, plant and equipment....... (4,371) (12,511) -- (16,882) Other........................................... 99 5,133 -- 5,232 -------- -------- -------- -------- Net cash provided by (used in) investing activities.................................... 15,568 68 (22,096) (6,460) FINANCING ACTIVITIES Proceeds from long-term debt.................... 5,000 -- -- 5,000 Payments on long-term debt and capital lease obligations................................... (19,677) (2,376) -- (22,053) Debt issuance costs............................. (906) -- -- (906) -------- -------- -------- -------- Net cash used in financing activities........... (15,583) (2,376) -- (17,959) -------- -------- -------- -------- Decrease in cash and cash equivalents........... (12,300) (2,832) -- (15,132) Cash and cash equivalents at beginning of year.......................................... 16,982 2,496 -- 19,478 -------- -------- -------- -------- Cash (overdraft) and cash equivalents at end of year.......................................... $ 4,682 $ (336) $ -- $ 4,346 ======== ======== ======== ========
15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 2003 ----------------------------------------------------- 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ----------- ----------- ----------- ----------- Net sales............................... $84,334 $86,959 $102,835 $100,935 Gross profit............................ 12,165 9,218 17,689 14,157 Net loss................................ (4,619) (8,105) (3,851) (8,986)
YEAR ENDED SEPTEMBER 30, 2002 ----------------------------------------------------- 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ----------- ----------- ----------- ----------- Net sales............................... $ 84,105 $88,461 $110,949 $104,192 Gross profit............................ 10,414 10,898 21,837 20,818 Net income (loss)....................... (41,074) (9,167) (2,209) 4,747
F-34 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- $133,130,000 NEENAH FOUNDRY COMPANY 11% SENIOR SECURED NOTES DUE 2010 ------------------------- PROSPECTUS ------------------------- EACH BROKER-DEALER THAT RECEIVES NEW SECURITIES FOR ITS OWN ACCOUNT PURSUANT TO THE EXCHANGE OFFER MUST ACKNOWLEDGE THAT IT WILL DELIVER A PROSPECTUS IN CONNECTION WITH ANY RESALE OF THESE NEW SECURITIES. 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 SECURITIES RECEIVED IN EXCHANGE FOR SECURITIES WHERE THOSE SECURITIES WERE ACQUIRED BY THIS BROKER-DEALER AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. WE HAVE AGREED THAT, STARTING ON THE EXPIRATION DATE AND ENDING ON THE CLOSE OF BUSINESS 180 DAYS AFTER THE EXPIRATION DATE, WE WILL MAKE THIS PROSPECTUS AVAILABLE TO ANY BROKER-DEALER FOR USE IN CONNECTION WITH ANY SUCH RESALE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) Advanced Cast Products, Inc is a corporation organized under the laws of the State of Delaware. Article Seven of the Certificate of Incorporation of Advanced Cast Products, Inc. provides that: To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, a Director of this corporations shall not be liable to the corporation or its stockholder for monetary damages for breach of fiduciary duty as a Director. Article Thirteen of the By-Laws of Advanced Cast Products, Inc. provides that: The corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the corporation or serves or served any other enterprise at the request of the corporation, against any and all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred by him in connection with such action, suit or proceeding, in any circumstances, and to the full extent, permitted by Section 145 of the Delaware Corporation Law, any amendment thereto, or any law of similar import. (b) Mercer Forge Corporation is a corporation organized under the laws of the State of Delaware. Article Four of the By-Laws of Mercer Forge Corporation provides that: Every person now or hereafter serving as a director or officer of the corporation and every such director or officer serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the corporation in accordance with and to the fullest extent permitted by law for the defense of, or in connection with, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative. Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of such director of officer to repay such amount unless it shall be ultimately determined that he is entitled to be indemnified by the corporation as authorized in Article Four of the By-Laws. The right of indemnification provided shall not be deemed exclusive of any other rights to which any such director or officer may now or hereafter be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person. The Certificate of Incorporation of Mercer Forge Corporations contains no provision relating to indemnification. (c) Neenah Foundry Company is a corporation organized under the laws of the State of Wisconsin. Article Six of the Amended and Restated Certificate of Incorporation of Neenah Foundry provides that: To the fullest extent permitted by the Business Corporation Law of the State of Wisconsin as the same exists or may hereafter be amended, a director of this Corporation shall not be liable II-1 to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Any repeal or modification of this provision shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. Under Section 180.0851(1) of the Wisconsin Business Corporation Law (the "WBCL"), a corporation shall indemnify a director or officer, to the extent that he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the corporation, and that, to the extent a director or officer has not been successful on the merits or otherwise in the defense of a proceeding, the corporation shall indemnify the director or officer unless liability was incurred because the director or officer breached or failed to perform a duty that he or she owes to the corporation and the breach or failure to perform constitutes any of the following (1) a willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director or officer has a material conflict of interest; (2) a violation of the criminal law, unless the director or officer had reasonable cause to believe that his or her conduct was unlawful; (3) a transaction from which the director or officer derived an improper personal profit; or (4) willful misconduct. Section 180.0858(1) of the WBCL provides that, subject to certain limitations, the mandatory indemnification provisions do not preclude any additional right to indemnification or allowance of expenses that a director or officer may have under a Wisconsin corporation's articles of incorporation, bylaws, any written agreement or a resolution of the board of directors or shareholders. Section 180.0859 of the WBCL provides that it is the public policy of the State of Wisconsin to require or permit indemnification, allowance of expenses and insurance to the extent required or permitted under Sections 180.0850 to 180.0858 of the WBCL, for any liability incurred in connection with a proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities. Section 180.0828 of the WBCL provides that, with certain exceptions, a director is not liable to a corporation, its shareholders, or any person asserting rights on behalf of the corporation or its shareholders, for damages, settlements, fees, fines, penalties or other monetary liabilities arising from a breach of, or failure to perform, any duty resulting solely from his or her status as a director, unless the person asserting liability proves that the breach or failure to perform constitutes any of the four exceptions to mandatory indemnification under Section 180.0851(2) referred to above. Under Section 180.0833 of the WBCL, directors of a Wisconsin corporation against whom claims are asserted with respect to the declaration of improper dividends or distributions to shareholders or certain other improper acts which they approved are entitled to contribution from other directors who approved such actions and from shareholders who knowingly accepted an improper dividend or distribution, as provided therein. Article Eight of the By-Laws of Neenah Foundry Company provides that for indemnification of the corporation's officers and directors in accordance with the WBCL. (d) Neenah Transport, Inc. is a corporation organized under the laws of the State of Wisconsin. Under Section 180.0851(1) of the Wisconsin Business Corporation Law (the "WBCL"), a corporation shall indemnify a director or officer, to the extent that he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the corporation, and that, to the extent a director or officer has not been successful on the merits or otherwise in the defense of a proceeding, the corporation shall indemnify the director or officer unless liability was incurred because the director or officer breached or failed to perform a duty that he or she owes to the corporation and the breach or failure to perform constitutes any of the following (1) a II-2 willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director or officer has a material conflict of interest; (2) a violation of the criminal law, unless the director or officer had reasonable cause to believe that his or her conduct was unlawful; (3) a transaction from which the director or officer derived an improper personal profit; or (4) willful misconduct. Section 180.0858(1) of the WBCL provides that, subject to certain limitations, the mandatory indemnification provisions do not preclude any additional right to indemnification or allowance of expenses that a director or officer may have under a Wisconsin corporation's articles of incorporation, bylaws, any written agreement or a resolution of the board of directors or shareholders. Section 180.0859 of the WBCL provides that it is the public policy of the State of Wisconsin to require or permit indemnification, allowance of expenses and insurance to the extent required or permitted under Sections 180.0850 to 180.0858 of the WBCL, for any liability incurred in connection with a proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities. Section 180.0828 of the WBCL provides that, with certain exceptions, a director is not liable to a corporation, its shareholders, or any person asserting rights on behalf of the corporation or its shareholders, for damages, settlements, fees, fines, penalties or other monetary liabilities arising from a breach of, or failure to perform, any duty resulting solely from his or her status as a director, unless the person asserting liability proves that the breach or failure to perform constitutes any of the four exceptions to mandatory indemnification under Section 180.0851(2) referred to above. Under Section 180.0833 of the WBCL, directors of a Wisconsin corporation against whom claims are asserted with respect to the declaration of improper dividends or distributions to shareholders or certain other improper acts which they approved are entitled to contribution from other directors who approved such actions and from shareholders who knowingly accepted an improper dividend or distribution, as provided therein. Neither the Amended nor the Restated Certificate of Incorporation or the By-Laws of Neenah Transport, Inc. contain provisions relating to indemnification. (e) Cast Alloys, Inc. is a corporation organized under the laws of the State of California. Articles Five of the Restated Articles of Incorporation of Cast Alloys, Inc. provides that: To the fullest extent permitted by the General Corporation Law of the State of California as the same exists or may hereafter be amended, a director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Any repeal or modification of this provision shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. Section 317 of the California General Corporation Law empowers California corporations to indemnify any person who was or is a director, officer, employee or other agent of the corporation, or who is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or who was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation, (other than an action by or in right of the corporation), against expenses (including attorneys' fees), judgments, fines, settlements and other amounts actually and reasonably incurred by such person in connection with any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative. To be indemnified, such person must have acted (i) in good faith and (ii) in a manner that he or she reasonably believed to be in the best interests of the corporation; and, in the case of a criminal proceeding, such person must have acted without reasonable cause to believe that his or her conduct was unlawful. In respect of any action by or in right of the corporation, a corporation II-3 may indemnify any person who was or is an agent of the corporation against expenses actually and reasonably incurred by such person in connection with the defense or settlement of the action if he or she acted (i) in good faith and (ii) in a manner he or she believed to be in the best interests of the corporation and its shareholders. The By-Laws of Cast Alloys, Inc. contain no provision relating to indemnification. (f) Gregg Industries, Inc. is a corporation organized under the laws of the State of California. Section 317 of the California General Corporation Law empowers California corporations to indemnify any person who was or is a director, officer, employee or other agent of the corporation, or who is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or who was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation, (other than an action by or in right of the corporation), against expenses (including attorneys' fees), judgments, fines, settlements and other amounts actually and reasonably incurred by such person in connection with any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative. To be indemnified, such person must have acted (i) in good faith and (ii) in a manner that he or she reasonably believed to be in the best interests of the corporation; and, in the case of a criminal proceeding, such person must have acted without reasonable cause to believe that his or her conduct was unlawful. In respect of any action by or in right of the corporation, a corporation may indemnify any person who was or is an agent of the corporation against expenses actually and reasonably incurred by such person in connection with the defense or settlement of the action if he or she acted (i) in good faith and (ii) in a manner he or she believed to be in the best interests of the corporation and its shareholders. The Amended and Restated Articles of Incorporation of Gregg Industries, Inc. contain no provision relating to indemnification. Section Six of the By-Laws of Gregg Industries, Inc. provides for indemnification (including expenses) consistent with Section 317 of the California General Corporation Law. (g) A & M Specialties, Inc. is a corporation organized under the laws of the State of Pennsylvania. Article Three of the Articles of Incorporation of A & M Specialties, Inc. provides that the corporation is incorporated under the Business Corporation Law of the State of Pennsylvania. Under the Pennsylvania Business Corporation Law of 1988, as amended (the "PBCL"), Pennsylvania corporations have the power to indemnify any person acting as a representative of the corporation against liabilities incurred in such capacity provided certain standards are met, including good faith and the belief that the particular action or failure to take action is in the best interests of the corporation. In general, this power to indemnify does not exist in the case of actions against any person by or in the right of the corporation if the person otherwise entitled to indemnification shall have been adjudged to be liable to the corporation unless a court determines that despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for expenses that the court deems proper. A corporation is required to indemnify representatives of the corporation against expenses they may incur in defending actions against them in such capacities if they are successful on the merits or otherwise in the defense of such actions. In all other cases, if a representative of the corporation acted, or failed to act, in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, indemnification is discretionary, except as may be otherwise provided by a corporation's bylaws, agreement, vote of shareholders or disinterested directors or otherwise. Indemnification so otherwise provided may not, however, be made if the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. Expenses (including attorneys' fees) incurred in defending any such action may be paid by the corporation in advance of the final disposition of the action upon receipt of an undertaking II-4 by or on behalf of the representative to repay the amount if it is ultimately determined that he or she is not entitled to be indemnified by the corporation. In addition, a director of a Pennsylvania Corporation does not have personal liability for monetary damages to the Corporation and its stockholders for breaches of fiduciary duty as a director, except in circumstances involving a breach of a director's duty of loyalty to the Corporation or its stockholders, acts or omissions not in good faith or which involve intentional misconduct or knowing violations of the law, the unlawful payment of dividends or repurchase of stock or self-dealing. Article IV of the By-Laws of A & M Specialties, Inc. provides that: A director shall not be personally liable, as such, for monetary damages for any action taken, or any failure to take any action, unless: (a) the director has breached or failed to perform the duties of his or her office under this section; and (b) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. The preceding provisions shall not apply to the responsibility or liability of a director pursuant to any criminal statute or the liability of a director for the payment of taxes pursuant to local, State or Federal law. (h) Peerless Corporation is a corporation organized under the laws of the State of Ohio. Article Three of the Articles of Incorporation of Peerless Corporation, provides that the corporation is incorporated under the General Corporation Laws of the State of Ohio. Under Ohio law, Ohio corporations are authorized to indemnify directors, officers, employees and agents within prescribed limits and must indemnify them under certain circumstances. Ohio law does not provide statutory authorization for a corporation to indemnify directors, officers, employees and agents for settlements, fines or judgments in the context of derivative suits. However, it provides that directors (but not officers, employees or agents) are entitled to mandatory advancement of expenses, including attorneys' fees, incurred in defending any action, including derivative actions, brought against the director, provided that the director agrees to cooperate with the corporation concerning the matter and to repay the amount advanced if it is proved by clear and convincing evidence that the director's act or failure to act was done with deliberate intent to cause injury to the corporation or with reckless disregard for the corporation's best interests. Ohio law does not authorize payment of judgments to a director, officer, employee or agent after a finding of negligence or misconduct in a derivative suit absent a court order. Indemnification is permitted, however, to the extent such person succeeds on the merits. In all other cases, if a director, officer, employee or agent acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, indemnification is discretionary except as otherwise provided by a corporation's articles, code of regulations or by contract except with respect to the advancement of expenses of directors. Under Ohio law, a director is not liable for monetary damages unless it is proved by clear and convincing evidence that his action or failure to act was undertaken with deliberate intent to cause injury to the corporation or with reckless disregard for the best interests of the corporation. There is, however, no comparable provision limiting the liability of officers, employees or agents of a corporation. The statutory right to indemnification is not exclusive in Ohio and Ohio corporations may, among other things, procure insurance for such persons. Article IV of the Code of Regulations of Peerless Corporation provides that: The Corporation shall indemnify any Director or officer to the fullest extent provided by, or permissible under, Section 17.01.13(E), Ohio Revised Code; and the Corporation is hereby specifically authorized to take any and all further action to effectuate any indemnification of any Director or officer which any Ohio corporation may have power to take, by any vote of the Shareholders, vote of disinterested Directors, by any Agreement, or otherwise. This Section of the Code of Regulations of the Corporation shall be interpreted in all respects to expand such power to indemnify to the maximum extent permissible to any Ohio Corporation with regard to the II-5 particular facts of each case, and not in any way to limit any statutory or other power to indemnify, or right of any individual indemnification. The Corporation may purchase and maintain insurance for protection of the Corporation and for protection of any Director, officer, employee and/or any other person for whose protection, and to the fullest extent, such insurance may be purchased and maintained under Section 1701.13(E)(7), Ohio Revised Code or otherwise. Such policy or policies of insurance may provide such coverage and be upon such terms and conditions as shall be authorized or approved from time to time by the Board of Directors or the Shareholders of the Corporation. (i) Dalton Corporation, Ashland Manufacturing Facility and Dalton Corporation, Stryker Manufacturing Facility are corporations organized under the laws of the State of Ohio. Article Three of the Articles of Incorporation of Dalton Corporation, Ashland Manufacturing Facility and Dalton Corporation, Stryker Manufacturing Facility provides that the corporation is incorporated under the General Corporation Laws of the State of Ohio. Under Ohio law, Ohio corporations are authorized to indemnify directors, officers, employees and agents within prescribed limits and must indemnify them under certain circumstances. Ohio law does not provide statutory authorization for a corporation to indemnify directors, officers, employees and agents for settlements, fines or judgments in the context of derivative suits. However, it provides that directors (but not officers, employees or agents) are entitled to mandatory advancement of expenses, including attorneys' fees, incurred in defending any action, including derivative actions, brought against the director, provided that the director agrees to cooperate with the corporation concerning the matter and to repay the amount advanced if it is proved by clear and convincing evidence that the director's act or failure to act was done with deliberate intent to cause injury to the corporation or with reckless disregard for the corporation's best interests. Ohio law does not authorize payment of judgments to a director, officer, employee or agent after a finding of negligence or misconduct in a derivative suit absent a court order. Indemnification is permitted, however, to the extent such person succeeds on the merits. In all other cases, if a director, officer, employee or agent acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, indemnification is discretionary except as otherwise provided by a corporation's articles, code of regulations or by contract except with respect to the advancement of expenses of directors. Under Ohio law, a director is not liable for monetary damages unless it is proved by clear and convincing evidence that his action or failure to act was undertaken with deliberate intent to cause injury to the corporation or with reckless disregard for the best interests of the corporation. There is, however, no comparable provision limiting the liability of officers, employees or agents of a corporation. The statutory right to indemnification is not exclusive in Ohio and Ohio corporations may, among other things, procure insurance for such persons. Article Seven of the Articles of Incorporation of Dalton Corporation, Ashland Manufacturing Facility and Dalton Corporation, Stryker Manufacturing Facility provides that: The Corporation shall indemnify the officers, directors, employees and agents of the Corporation (including expenses) asserted or incurred in the defense of any proceeding to which the individual was made a party or a witness because of his status with the Corporation and in which the individual was (a) wholly successful on the merits or otherwise or (b) in which the Corporation and in (acting in accordance with this provision) determines that the individual's conduct and beliefs met the standard of conduct prescribed by the Code, although the individual is entitled to indemnification. However, in a proceeding brought by or in the right of the Corporation, if an individual was adjudged liable to the Corporation, indemnification shall be made only upon order of a court acting upon the individual's application for court-ordered indemnification. II-6 (j) Deeter Foundry, Inc. is a corporation organized under the laws of the State of Nebraska. Sections 21-20, 103 through 21-20, 111 of the Nebraska Business Corporation Act ("NBCA") provide, in part, that the directors and officers of a corporation may, under certain circumstances, be indemnified by the corporation against all liability expenses incurred by or imposed upon them as a result of actions, suits or proceedings brought against them as such directors and officers, or as directors or officers of any other organization at the request of the corporation, if they act in good faith and in a manner they reasonably believe to be in, or not opposed to, the best interests of the corporation, and with respect to any criminal action or proceeding, have no reasonable cause to believe their conduct was unlawful, except that no indemnification shall be made against expenses in respect of any claim, issue or matter as to which they shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, they are fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. With certain limitations, Sections 721 through 726 of the NCBL permit a corporation to indemnify a director or officer made a party to an action (a) by a corporation or in its right in order to procure a judgment in its favor unless he or she shall have breached his or her duties, or (b) other than an action by or in the right of the corporation in order to procure a judgment in its favor, if such director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to such corporation's interest, and, in criminal actions, had no reasonable cause to believe his or her conduct was unlawful. Article VII of the By-Laws of Deeter Foundry, Inc. provides that for compliance with the terms of the NBCA described above. (k) Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility and Dalton Corporation, Kendallville Manufacturing Facility are corporations organized under the laws of the State of Indiana. Subdivision E of the Articles of Acceptance of Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility and Dalton Corporation, Kendallville Manufacturing Facility provides that: The corporation accepts all of the terms and provisions of The Indiana General Corporation Act. The Indiana Business Corporation Law ("IBCL") empowers an Indiana corporation to indemnify present and former directors, officers, employers or agents or any person who may have served at the request of the corporation as a director, officer, employee, or agent of another corporation ("Eligible Persons") against liability incurred in any proceeding, civil or criminal, in which the Eligible Person is made a party by reason of being or having been in any such capacity, or arising out of his status as such, if the individual acted in good faith and reasonably believed that (a) the individual was acting in the best interests of the corporation, or (b) if the challenged action was taken other than in the individual's official capacity as an officer, director, employee or agent, the individual's conduct was at least not opposed to the corporation's best interests, or (c) if in a criminal proceeding, either the individual had reasonable cause to believe his conduct was lawful or no reasonable cause to believe his conduct was unlawful. The IBCL further empowers a corporation to payor reimburse the reasonable expenses incurred by an Eligible Person in connection with the defense of any such claim, including counsel fees; and, unless limited by its articles of incorporation, the corporation is required to indemnify an Eligible Person against reasonable expenses if he is wholly successful in any such proceeding, on the merits or otherwise. Directors and officers qualify as Eligible Persons under the IBCL. Under certain circumstances, a corporation may pay or reimburse an Eligible Person for reasonable expenses prior to final disposition of the matter. Unless a corporation's articles of incorporation otherwise provide, an Eligible Person may apply for indemnification to a court which may order indemnification upon a determination that the Eligible Person is entitled to II-7 mandatory indemnification for reasonable expenses or that the Eligible Person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances without regard to whether his actions satisfied the appropriate standard of conduct. Before a corporation may indemnify any Eligible Person against liability or reasonable expenses under the IBCL, a quorum consisting of directors who are not parties to the proceeding must: (a) determine that indemnification is permissible in the specific circumstances because the Eligible Person met the requisite standard of conduct; (b) authorize the corporation to indemnify the Eligible Person; and (c) if appropriate, evaluate the reasonableness of expenses for which indemnification is sought. If it is not possible to obtain a quorum of uninvolved directors, the foregoing action may be taken by a committee of two or more directors who are not parties to the proceeding, special legal counsel selected by the Board or such a committee, or by the stockholders of the corporation. In addition to the foregoing, the IBCL states that the indemnification it provides shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any provisions of the articles of incorporation or bylaws, resolution of the board of directors or stockholders, or any other authorization adopted after notice by a majority vote of all the voting shares then issued and outstanding. The IBCL also empowers an Indiana corporation to purchase and maintain insurance on behalf of any Eligible Person against any liability asserted against or incurred by him in any capacity as such, or arising out of his status as such, whether or not the corporation would have had the power to indemnify him against such liability. Article VII of the Code of By-Laws of Dalton Corporation provides that: The Corporation shall, to the fullest extent permitted by law, indemnify and hold harmless each person who shall serve at any time as a director, officer or employee of the Corporation against any judgments, fines, amounts paid in settlement and reasonable expenses, including attorney's fees, actually and necessarily incurred as a result of any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative or investigative, arising out of the fact that such person is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, including pending or completed claims, actions, suits or proceedings arising out of any actual or alleged act or failure to act on the part of such person in connection with the administration (including establishment, operation and termination) of any pension plan, profit-sharing plan or other employee benefit plan or plans maintained by the Corporation, provided that such person acted in good faith and for a purpose which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any such civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such person did not act in good faith or for a purpose which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Code of By-Laws of Dalton Corporation, Warsaw Manufacturing Facility and Dalton Corporation, Kendallville Manufacturing Facility contain no provision relating to indemnification. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. Exhibits. See Exhibit Index. (b) Financial Statement Schedule. II-8 SCHEDULE II NEENAH FOUNDRY COMPANY VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED SEPTEMBER 30, 2001, 2002, AND 2003
BALANCE AT ADDITIONS BALANCE AT BEGINNING CHARGED TO END OF DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD - ----------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) Allowance for doubtful accounts receivable: 2001........................................... $1,001 $ 761 $ 325(A) $1,437 ====== ====== ====== ====== 2002........................................... $1,437 $ 533 $ 908(A) $1,062 ====== ====== ====== ====== 2003........................................... $1,062 $1,760 $ 447(A) $2,375 ====== ====== ====== ====== Reserve for obsolete inventory: 2001........................................... $3,023 $ 248 $2,749(B) $ 522 ====== ====== ====== ====== 2002........................................... 522 $ 240 $ 9(B) $ 753 ====== ====== ====== ====== 2003........................................... $ 753 $ 468 $ 27(B) $1,194 ====== ====== ====== ======
- --------------- (A) Uncollectible accounts written off, net of recoveries. (B) Reduction for disposition of inventory. II-9 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We have audited the consolidated financial statements of Neenah Foundry Company as of September 30, 2003 and 2002, and for each of the three years in the period ended September 30, 2003, and have issued our report thereon dated November 10, 2003 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Milwaukee, Wisconsin November 10, 2003 II-10 All other schedules have been omitted because they are not applicable or because the required information is shown in the financial statements or notes thereto. ITEM 22. UNDERTAKINGS. The undersigned registrants hereby undertake: To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; To include any prospectus required by Section 10 (a)(3) of the Securities Act of 1933; To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which individually or in the aggregate, represent a fundamental change in the information in the registration statement; To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (b) That, for the purpose of determining by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (i) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20 or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (d) The undersigned registrants hereby undertake: (i) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 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) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-11 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. NEENAH FOUNDRY COMPANY By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-12 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. ADVANCED CAST PRODUCTS, INC. By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-13 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. DALTON CORPORATION By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-14 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-15 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-16 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-17 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-18 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. DEETER FOUNDRY, INC. By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-19 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. GREGG INDUSTRIES, INC. By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett - -------------------------------------- President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. - -------------------------------------- Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-20 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. MERCER FORGE CORPORATION By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M Barrett - -------------------------------------- President, Chief Executive Officer and Director William M Barrett (Principal Executive Officer) * Gary W. LaChey - -------------------------------------- Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq - -------------------------------------- Director Benjamin C. Duster, IV, Esq * Andrew Booke Cohen - -------------------------------------- Director Andrew Booke Cohen * Michael J. Farrell - -------------------------------------- Director Michael J. Farrell * Jeffrey G. Marshall - -------------------------------------- Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-21 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. A & M SPECIALTIES, INC. By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett ------------------------------------------------ President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey ------------------------------------------------ Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. ------------------------------------------------ Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen ------------------------------------------------ Director Andrew Booke Cohen * Michael J. Farrell ------------------------------------------------ Director Michael J. Farrell * Jeffrey G. Marshall ------------------------------------------------ Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-22 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. NEENAH TRANSPORT, INC. By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett ------------------------------------------------ President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey ------------------------------------------------ Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. ------------------------------------------------ Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen ------------------------------------------------ Director Andrew Booke Cohen * Michael J. Farrell ------------------------------------------------ Director Michael J. Farrell * Jeffrey G. Marshall ------------------------------------------------ Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-23 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. CAST ALLOYS, INC. By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett ------------------------------------------------ President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey ------------------------------------------------ Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. ------------------------------------------------ Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen ------------------------------------------------ Director Andrew Booke Cohen * Michael J. Farrell ------------------------------------------------ Director Michael J. Farrell * Jeffrey G. Marshall ------------------------------------------------ Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-24 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. BELCHER CORPORATION By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett ------------------------------------------------ President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey ------------------------------------------------ Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. ------------------------------------------------ Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen ------------------------------------------------ Director Andrew Booke Cohen * Michael J. Farrell ------------------------------------------------ Director Michael J. Farrell * Jeffrey G. Marshall ------------------------------------------------ Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-25 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, in the State of New York on December 8, 2003. PEERLESS CORPORATION By: /s/ GARY W. LACHEY ------------------------------------ Name: Gary W. LaChey Title: Corporate Vice President -- Finance, Treasurer, Secretary, Chief Financial Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities indicated on December 8, 2003.
SIGNATURE CAPACITY --------- -------- * William M. Barrett ------------------------------------------------ President, Chief Executive Officer and Director William M. Barrett (Principal Executive Officer) * Gary W. LaChey ------------------------------------------------ Corporate Vice President -- Finance, Treasurer, Gary W. LaChey Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer) * Benjamin C. Duster, IV, Esq. ------------------------------------------------ Director Benjamin C. Duster, IV, Esq. * Andrew Booke Cohen ------------------------------------------------ Director Andrew Booke Cohen * Michael J. Farrell ------------------------------------------------ Director Michael J. Farrell * Jeffrey G. Marshall ------------------------------------------------ Director Jeffrey G. Marshall
- --------------- * Gary W. LaChey, by signing his name hereto, does hereby sign this Registration Statement on behalf of the directors and officers of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and officers and filed with the Securities and Exchange Commission. II-26 EXHIBIT INDEX 2.1 Disclosure Statement for Pre-Petition Solicitation of Votes with respect to the Prepackaged Joint Plan of Reorganization of ACP Holding Company, NFC Castings, Inc. and Neenah Foundry Company (incorporated by reference to Exhibit T3E-1 to application for qualification of indenture on Form T-3 (File No. 022-28687)). 2.2 Prepackaged Joint Plan of Reorganization of ACP Holding Company, NFC Castings, Inc., Neenah Foundry Company and Certain of its Subsidiaries under Chapter 11 of the United States Bankruptcy Code(incorporated by reference to Exhibit T3E-2 to application for qualification of indenture on Form T-3 (File No. 022-28687)). 3.1 Amended and Restated Certificate of Incorporation of Neenah Foundry Company.+ 3.2 Third Amended and Restated Certificate of Incorporation of ACP Holding Company.+ 3.3 Amended and Restated Certificate of Incorporation of NFC Castings, Inc.+ 3.4 Amended and Restated Certificate of Incorporation of Advanced Cast Products, Inc.+ 3.5 Amended and Restated Articles of Incorporation of Dalton Corporation.+ 3.6 Articles of Incorporation of Dalton Corporation, Warsaw Manufacturing Facility.+ 3.7 Articles of Incorporation of Dalton Corporation, Stryker Manufacturing Facility.+ 3.8 Articles of Incorporation of Dalton Corporation, Ashland Manufacturing Facility.+ 3.9 Amended and Restated Incorporation of Incorporation of Dalton Corporation, Kendallville Manufacturing Facility.+ 3.10 Amended and Restated Certificate of Incorporation of Deeter Foundry, Inc.+ 3.11 Amended Articles of Incorporation of Gregg Industries, Inc.+ 3.12 Articles of Incorporation of A&M Specialties, Inc.+ 3.13 Restated Articles of Incorporation of Neenah Transport, Inc.+ 3.14 Restated Articles of Incorporation of Cast Alloys, Inc.+ 3.15 Certificate of Incorporation of Belcher Corporation.+ 3.16 Articles of Incorporation of Peerless Corporation.+ 3.17 Amended Bylaws of Neenah Foundry Company.+ 3.18 Amended Bylaws of ACP Holding Company+ 3.19 Amended Bylaws of NFC Castings, Inc.+ 3.20 Bylaws of Advanced Cast Products, Inc.+ 3.21 Amended Code of Regulations of Dalton Corporation.+ 3.22 Amended Code of Regulations of Dalton Corporation, Warsaw Manufacturing Facility.+ 3.23 Code Regulations of Dalton Corporation, Stryker Manufacturing Facility.+ 3.24 Amended and Restated Code of Regulations Dalton Corporation, Ashland Manufacturing Facility.+ 3.25 Amended and Restated Code of Regulations of Dalton Corporation, Kendallville Manufacturing Facility.+ 3.26 Bylaws of Deeter Foundry, Inc.+ 3.27 Bylaws of Gregg Industries, Inc.+ 3.28 Amended and Restated Bylaws of A&M Specialties, Inc.+ 3.29 Amended and Restated Bylaws of Neenah Transport, Inc.+ 3.30 Bylaws of Cast Alloys, Inc.+ 3.31 Amended and Restated Bylaws of Belcher Corporation.+ 3.32 Code of Regulations of Peerless Corporation.+ 4.1 Indenture by and among Neenah Foundry Company, the guarantors named therein and The Bank of New York, as Trustee, dated October 8, 2003, for the 11% Senior Secured Notes due 2010.* 4.2 Form of Note (included in Exhibit 4.1).*
4.3 Lien Subordination Agreement, dated October 8, 2003, by and among Fleet Capital Corporation, Neenah Foundry Company, the subsidiaries named therein, NFC Castings, Inc. and The Bank of New York as Trustee on behalf of the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.4 Registration Rights Agreement, dated October 8, 2003, by and among Neenah Foundry Company, the guarantors named therein and The Bank of New York as Trustee for the 11% Senior Secured Notes due 2010.* 4.5 Subordinated Security Agreement, dated October 8, 2003, by Neenah Foundry Company and the guarantors named therein in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.6 Subordinated Pledge Agreement, dated October 8, 2003, by Dalton Corporation in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.7 Subordinated Pledge Agreement, dated October 8, 2003, by Mercer Forge Corporation in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.8 Subordinated Copyright, Patent, Trademark and License Mortgage, dated October 8, 2003, by Neenah Foundry Company in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.9 Subordinated Copyright, Patent, Trademark and License Mortgage, dated October 8, 2003, by Advanced Cast Products, Inc. in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.10 Subordinated Copyright, Patent, Trademark and License Mortgage, dated October 8, 2003, by Peerless Corporation in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.11 Subordinated Pledge Agreement, dated October 8, 2003, by Neenah Foundry Company in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 4.12 Subordinated Pledge Agreement, dated October 8, 2003, by Advanced Cast Products, Inc. in favor of The Bank of New York as Trustee for the Noteholders under the Indenture governing the 11% Senior Secured Notes due 2010.* 5.1 Opinion of Foley & Lardner.* 5.2 Opinion of Kirkland & Ellis LLP.* 10.1 Credit Agreement by and among Neenah Foundry Company, the subsidiaries named therein, the various lenders party thereto and Fleet Capital Corporation, as agent, dated October 8, 2003.+ 10.2 Subscription Agreement, dated as of October 7, 2003, by and among ACP Holding Company, Neenah Foundry Company, the subsidiary guarantors named therein and the Standby Purchasers as defined therein.* 10.3 Warrant Agreement, dated October 8, 2003, by and between ACP Holding Company and The Bank of New York as warrant agent.* 10.4 Warrant Registration Rights Agreement, dated October 8, 2003, by and between ACP Holding Company and the initial holders of the warrants.+ 10.5 Stockholders' Agreement, dated October 8, 2003, by and among ACP Holding Company, the Standby Purchasers, the Executives and the Directors (as such terms are defined therein).* 10.6 Indenture by and among Neenah Foundry Company, the guarantors named therein, and The Bank of New York, as Trustee, dated October 8, 2003, for the 13% Senior Subordinated Notes due 2013.* 10.7 Form of Note (included in Exhibit 10.7)* 10.8 Registration Rights Agreement, dated October 8, 2003, by and among ACP Holding Company and the parties named therein re warrants and common stock of ACP Holding Company. 10.9 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and John Andrews.+
10.9 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and William M. Barrett.+ 10.11 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and Joseph L. DeRita.+ 10.12 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and Frank C. Headington.+ 10.13 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and Timothy Koller.+ 10.14 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and Gary W. LaChey.+ 10.15 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and William Martin.+ 10.16 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and Steve Shaffer.+ 10.17 Form of Employment Agreement by and among Neenah Foundry Company, ACP Holding Company and Joseph Varkoly.+ 10.18 Neenah Foundry Company 2003 Management Annual Incentive Plan.* 10.19 Neenah Foundry Company 2003 Severance and Change of Control Plan.* 12.1 Statement re computation of ratio of earnings to fixed charges.+ 21.1 Subsidiaries of the registrant.* 23.1 Consent of Ernst & Young LLP.* 23.2 Consent of Foley & Lardner (included in Exhibit 5.1 ).* 23.3 Consent of Kirkland & Ellis LLP (included in Exhibit 5.2 ).* 24.1 Power of Attorney executed by William M. Barrett.* 24.2 Power of Attorney executed by Gary W. LaChey.* 24.3 Power of Attorney executed by Andrew Booke Cohen.* 24.4 Power of Attorney executed by Benjamin C. Duster, IV, Esq.* 24.5 Power of Attorney executed by Michael J. Farrell.* 24.6 Power of Attorney executed by Jeffrey G. Marshall.* 25.1 Statement re Eligibility of Trustee.* 99.1 Letter of Election and Instructions to Broker or Bank.*
- --------------- * Filed herewith. + To be filed by amendment. EX-4.1 3 y92210exv4w1.txt INDENTURE EXECUTION VERSION ================================================================================ NEENAH FOUNDRY COMPANY, AS ISSUER, ADVANCED CAST PRODUCTS, INC., DALTON CORPORATION, DALTON CORPORATION, WARSAW MANUFACTURING FACILITY, DALTON CORPORATION, STRYKER MACHINING FACILITY CO., DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY, DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY, DEETER FOUNDRY, INC., GREGG INDUSTRIES, INC., MERCER FORGE CORPORATION, A&M SPECIALTIES, INC., NEENAH TRANSPORT, INC., CAST ALLOYS, INC., BELCHER CORPORATION, PEERLESS CORPORATION, AS SUBSIDIARY GUARANTORS AND ------------------------ THE BANK OF NEW YORK, AS TRUSTEE ------------------------ INDENTURE DATED AS OF OCTOBER 8, 2003 ------------------------ UP TO $133,130,000 11% SENIOR SECURED NOTES DUE 2010 ================================================================================ TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.................................. 1 Section 1.1. Definitions........................................................ 1 Section 1.2. Incorporation by Reference of TIA.................................. 24 Section 1.3. Rules of Construction.............................................. 25 ARTICLE II THE NOTES................................................................... 25 Section 2.1. Form and Dating.................................................... 25 Section 2.2. Execution and Authentication....................................... 27 Section 2.3. Registrar and Paying Agent......................................... 27 Section 2.4. Paying Agent to Hold Assets in Trust............................... 28 Section 2.5. Noteholder Lists................................................... 28 Section 2.6. Transfer and Exchange.............................................. 29 Section 2.7. Replacement Notes.................................................. 43 Section 2.8. Outstanding Notes.................................................. 43 Section 2.9. Treasury Notes..................................................... 44 Section 2.10. Temporary Notes.................................................... 44 Section 2.11. Cancellation....................................................... 44 Section 2.12. Defaulted Interest................................................. 45 Section 2.13. Persons Deemed Owners.............................................. 46 Section 2.14. Issuance of Additional Notes....................................... 46 Section 2.15. CUSIP Numbers...................................................... 46 ARTICLE III REDEMPTION.................................................................. 47 Section 3.1. Right of Redemption................................................ 47 Section 3.2. Notices to Trustee................................................. 47 Section 3.3. Selection of Notes to Be Redeemed.................................. 47 Section 3.4. Notice of Redemption............................................... 48 Section 3.5. Effect of Notice of Redemption..................................... 49 Section 3.6. Deposit of Redemption Price........................................ 49 Section 3.7. Notes Redeemed in Part............................................. 50 Section 3.8. Optional Redemption................................................ 50
i TABLE OF CONTENTS (CONTINUED)
PAGE Section 3.9. Mandatory Redemption................................................ 50 ARTICLE IV COVENANTS.................................................................... 50 Section 4.1. Payment of Notes.................................................... 50 Section 4.2. Maintenance of Office or Agency..................................... 51 Section 4.3. Corporate Existence................................................. 51 Section 4.4. Payment of Taxes and Other Claims................................... 51 Section 4.5. Maintenance of Properties and Insurance............................. 52 Section 4.6. Compliance Certificate; Notice of Default........................... 52 Section 4.7. Reports............................................................. 53 Section 4.8. Limitation on Status as Investment Company.......................... 53 Section 4.9. Waiver of Stay, Extension or Usury Laws............................. 53 Section 4.10. Rule 144A Information Requirement................................... 54 Section 4.11. Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock.................................................. 54 Section 4.12. Limitation on Restricted Payments................................... 56 Section 4.13. Limitation on Liens................................................. 59 Section 4.14. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries........................................................ 60 Section 4.15. Limitation on Transactions with Affiliates.......................... 61 Section 4.16. Limitation on Lines of Business..................................... 62 Section 4.17. Sale and Leaseback Transactions..................................... 62 Section 4.18. Future Guarantors................................................... 62 Section 4.19. Payments for Consent................................................ 62 Section 4.20. Asset Sales......................................................... 63 Section 4.21. Change of Control................................................... 66 Section 4.22. Calculation of Original Issue Discount.............................. 68 ARTICLE V SUCCESSORS................................................................... 69 Section 5.1. Limitation on Merger, Consolidation or Sale of Assets............... 69 Section 5.2. Successor Corporation Substituted................................... 70 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES............................................... 70
ii TABLE OF CONTENTS (CONTINUED)
PAGE Section 6.1. Events of Default................................................... 70 Section 6.2. Acceleration of Maturity Date; Rescission and Annulment............. 72 Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee..... 74 Section 6.4. Trustee May File Proofs of Claim.................................... 74 Section 6.5. Trustee May Enforce Claims Without Possession of Notes.............. 75 Section 6.6. Priorities.......................................................... 75 Section 6.7. Limitation on Suits................................................. 76 Section 6.8. Unconditional Right of Holders to Receive Principal and Interest.... 77 Section 6.9. Rights and Remedies Cumulative...................................... 77 Section 6.10. Delay or Omission Not Waiver........................................ 77 Section 6.11. Control by Holders.................................................. 77 Section 6.12. Waiver of Past Default.............................................. 78 Section 6.13. Undertaking for Costs............................................... 78 Section 6.14. Restoration of Rights and Remedies.................................. 79 ARTICLE VII TRUSTEE...................................................................... 79 Section 7.1. Duties of Trustee................................................... 79 Section 7.2. Rights of Trustee................................................... 80 Section 7.3. Individual Rights of Trustee........................................ 82 Section 7.4. Trustee's Disclaimer................................................ 82 Section 7.5. Notice of Default................................................... 82 Section 7.6. Reports by Trustee to Holders....................................... 82 Section 7.7. Compensation and Indemnity.......................................... 82 Section 7.8. Replacement of Trustee.............................................. 84 Section 7.9. Successor Trustee by Merger, Etc.................................... 85 Section 7.10. Eligibility; Disqualification....................................... 85 Section 7.11. Preferential Collection of Claims Against Company................... 86
iii TABLE OF CONTENTS (CONTINUED)
PAGE Section 7.12. "Trustee" to Include Paying Agent..................................... 86 ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE....................................... 86 Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.............. 86 Section 8.2. Legal Defeasance and Discharge........................................ 86 Section 8.3. Covenant Defeasance................................................... 87 Section 8.4. Conditions to Legal or Covenant Defeasance............................ 87 Section 8.5. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.............................................. 89 Section 8.6. Repayment to Company.................................................. 89 Section 8.7. Reinstatement......................................................... 90 Section 8.8. Discharge of Liability on Securities; Defeasance...................... 90 ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS............................................ 90 Section 9.1. Without Consent of Holders............................................ 90 Section 9.2. With Consent of Holders............................................... 91 Section 9.3. Compliance with TIA................................................... 93 Section 9.4. Revocation and Effect of Consents..................................... 93 Section 9.5. Notation on or Exchange of Notes...................................... 93 Section 9.6. Trustee to Sign Amendments, Etc....................................... 94 ARTICLE X GUARANTEE OF NOTES............................................................. 94 Section 10.1. Subsidiary Guarantee.................................................. 94 Section 10.2. Execution and Delivery of Subsidiary Guarantee........................ 95 Section 10.3. Subsidiary Guarantors May Consolidate, etc., on Certain Terms......... 96 Section 10.4. Releases Following Sale of Assets..................................... 97 Section 10.5. Releases Following Designation as an Unrestricted Subsidiary.......... 98 Section 10.6. Limitation on Subsidiary Guarantor Liability.......................... 98 ARTICLE XI COLLATERAL AND COLLATERAL DOCUMENTS............................................ 98 Section 11.1. Collateral and Collateral Documents................................... 98
iv TABLE OF CONTENTS (CONTINUED)
PAGE Section 11.2. Application of Proceeds of Collateral............................... 99 Section 11.3. Possession, Use and Release of Collateral........................... 99 Section 11.4. Opinion of Counsel.................................................. 100 Section 11.5. Further Assurances.................................................. 101 Section 11.6. Trust Indenture Act Requirements.................................... 101 Section 11.7. Suits to Protect the Collateral..................................... 101 Section 11.8. Purchaser Protected................................................. 102 Section 11.9. Powers Exercisable by Receiver or Trustee........................... 102 Section 11.10. Release Upon Termination of Company's Obligations................... 102 ARTICLE XII MISCELLANEOUS................................................................ 103 Section 12.1. TIA Controls........................................................ 103 Section 12.2. Notices............................................................. 103 Section 12.3. Communications by Holders with Other Holders........................ 104 Section 12.4. Certificate and Opinion as to Conditions Precedent.................. 104 Section 12.5. Statements Required in Certificate or Opinion....................... 104 Section 12.6. Rules by Trustee, Paying Agent, Registrar........................... 105 Section 12.7. Business Day........................................................ 105 Section 12.8. Governing Law....................................................... 106 Section 12.9. No Adverse Interpretation of Other Agreements....................... 106 Section 12.10. No Recourse Against Others.......................................... 106 Section 12.11. Successors.......................................................... 106 Section 12.12. Duplicate Originals................................................. 106 Section 12.13. Severability........................................................ 106 Section 12.14. Table of Contents, Headings, Etc.................................... 107 Section 12.15. Qualification of Indenture.......................................... 107 Section 12.16. Registration Rights................................................. 107 EXHIBIT A - FORM OF NOTE............................................................ A-1 EXHIBIT B - FORM OF CERTIFICATE OF TRANSFER......................................... B-1
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PAGE EXHIBIT C - FORM OF CERTIFICATE OF EXCHANGE.......................................... C-1 EXHIBIT D - FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR..... D-1 EXHIBIT E - GUARANTEE................................................................ E-1
vi CROSS-REFERENCE TABLE
TIA INDENTURE SECTION SECTION 310 (a)(1)........................................................................ Section 7.10 (a)(2)........................................................................ Section 7.10 (a)(3)........................................................................ N.A. (a)(4)........................................................................ N.A. (a)(5)........................................................................ Section 7.8, Section 7.10 (b)........................................................................... Section 7.10 (b)(1)........................................................................ Section 7.10 (c)........................................................................... N.A. 311 (a)........................................................................... Section 7.11 (b)........................................................................... Section 7.11 (c)........................................................................... N.A. 312 (a)........................................................................... Section 2.5 (b)........................................................................... Section 12.3 (c)........................................................................... Section 12.3 313 (a)........................................................................... Section 7.6 (b)........................................................................... Section 7.6 (b)(1)........................................................................ N.A. (b)(2)........................................................................ N.A. (c)........................................................................... Section 7.6 (d)........................................................................... N.A. 314 (a)........................................................................... N.A. (a)(4)........................................................................ Section 4.6 (b)........................................................................... N.A. (c)(1)........................................................................ N.A. (c)(2)........................................................................ N.A. (c)(3)........................................................................ N.A. (d)........................................................................... N.A. (e)........................................................................... N.A. (f)........................................................................... N.A. 315 (a)........................................................................... N.A. (b)........................................................................... N.A. (c)........................................................................... N.A. (d)........................................................................... N.A. (e)........................................................................... N.A. 316 (a)........................................................................... N.A. (a)(1)(A)..................................................................... N.A. (a)(1)(B)..................................................................... N.A. (a)(2)........................................................................ N.A.
i CROSS-REFERENCE TABLE
TIA INDENTURE SECTION SECTION (b)........................................................................... N.A. 317 (a)(1)........................................................................ N.A. (a)(2)........................................................................ N.A. (b)........................................................................... N.A. 318 (a)........................................................................... N.A.
N.A. means Not Applicable. Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. ii INDENTURE, dated as of October 8, 2003, between Neenah Foundry Company, a Wisconsin corporation (the "Company"), each Subsidiary Guarantor listed on the signature pages hereto or which becomes a party hereto pursuant to a supplemental indenture and The Bank of New York, a New York banking corporation, as Trustee. The Company, the Subsidiary Guarantors and the Trustee agree as follows for the equal and rateable benefit of the Holders of the 11% Senior Secured Notes due 2010 (the "Notes"): ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. DEFINITIONS. "144A Global Note" means a Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold for initial resale in reliance on Rule 144A. "Acceleration Notice" shall have the meaning specified in Section 6.2. "ACP Holding" means ACP Holding Company, a Delaware corporation. "Acquired Debt" means, with respect to any specified Person: (i) Indebtedness of any other Person existing at the time such other Person merged with or into or became a Restricted Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Notes" means any Notes (other than Initial Notes and Exchange Notes and Notes issued under Sections 2.6, 2.7, 2.10 and 3.1 hereof) issued under this Indenture in accordance with Sections 2.2, 2.14 and 4.11 hereof, as part of the same series as the Initial Notes or as an additional series. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities (or the equivalents) of a Person shall be deemed to be control. "Affiliate Transaction" shall have the meaning specified in Section 4.15. "Agent" means any Registrar, Paying Agent or co-Registrar. "Applicable Procedures" means, with respect to any transfer, redemption or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer, redemption or exchange. "Asset Sale" means any sale, transfer or other disposition (including, without limitation, by merger, consolidation or sale-and-leaseback transaction) of (i) shares of Capital Stock of a Subsidiary of the Company (other than directors' qualifying shares), including any issuance of such Capital Stock, or (ii) property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that an Asset Sale shall not include (a) any sale, transfer or other disposition of shares of Capital Stock, property or assets by a Restricted Subsidiary of the Company to the Company or to any Restricted Subsidiary that is a Wholly Owned Subsidiary of the Company, (b) any sale, transfer or other disposition of defaulted receivables for collection, (c) any sales, transfers or other dispositions that do not involve aggregate consideration in excess of $2,500,000 in any fiscal year, (d) the grant in the ordinary course of business of any license of patents, trademarks, registrations therefor and other similar intellectual property, (e) any Lien (or foreclosure thereon) securing Indebtedness to the extent that such Lien is granted in compliance with Section 4.13, (f) any Restricted Payment or Permitted Investment permitted by Section 4.12, (g) any disposition of assets or property to the extent such assets are obsolete, worn-out or no longer useful in the Company's or any Restricted Subsidiary's business, (h) the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company as permitted by Article V, (i) any disposition that constitutes a Change of Control, (j) any transaction or series of transactions pertaining to sales, transfers or other dispositions of properties or assets of the Company or any Restricted Subsidiary in connection with closures of plants for a purchase price not exceeding 10% of the total consolidated assets of the Company as reflected on its consolidated balance sheet as of the Company's fiscal year end immediately preceding the first sale of such property or assets, (k) the disposition of any Investment in Cash Equivalents, (l) sales, leases and other dispositions of the Non-Core Fixed Assets; or (m) so long as no Event of Default exists, sales, leases and other dispositions of fixed assets that are worn, scrap, excess, damaged or obsolete, the net proceeds of which are used to prepay the outstanding principal amount of the Term Loan or the Revolver (regardless of whether the corresponding revolving commitment thereunder is reduced in connection therewith). "Asset Sale Offer" shall have the meaning specified in Section 4.20. 2 "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. "Bankruptcy Law" means title 11, U.S. Code, or any similar federal, state or foreign law for the relief of debtors. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "Board of Directors" means, with respect to any Person, the Board of Directors of such Person or any committee of the Board of Directors of such Person authorized, with respect to any particular matter, to exercise the power of the Board of Directors of such Person. "Board Resolution" means, with respect to any Person, a duly adopted resolution of the Board of Directors of such Person. "Borrowing Base Amount" means, as to the Company and its Restricted Subsidiaries, the sum of (x) 65% of the gross value of Inventory plus (y) 85% of the gross value of Receivables, in each case, determined on a consolidated basis in accordance with GAAP, as reflected in the most recent quarterly consolidated financial statements delivered pursuant to Section 4.7. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. "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 (i) any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (ii) in the case of a partnership, partnership interests (whether general or limited) and (iii) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. 3 "Cash" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than twelve months from the date of acquisition, (iii) certificates of deposit and Eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers' acceptances with maturities not exceeding twelve months and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500,000,000, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within nine months after the date of acquisition and (vi) shares of any money market mutual fund, or similar fund, in each case having assets in excess of $500,000,000, which invests solely in investments of the types described in clauses (i) through (v) above. "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of ACP Holding, NFC Castings or the Company and the Restricted Subsidiaries, taken as a whole, to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act); (2) the adoption of a plan relating to the liquidation or dissolution of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company; (3) the consummation of any transaction, as a result of which any "person" (as referenced in clause (2) above), other than the Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of, in the aggregate, more than 50% of the total voting power of the Voting Stock of the Company, NFC Castings or ACP Holding, whether as a result of issuance of securities of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company, any merger, consolidation, liquidation or dissolution of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company or otherwise, provided, however, that the Permitted Holders Beneficially Own, directly or indirectly, less than such "person"; or (4) the first day on which a majority of the members of the Board of Directors of any of the Company, NFC Castings or ACP Holding are not Continuing Directors; provided, however, for purposes of clause (3), the Permitted Holders shall be deemed to Beneficially Own any Voting Stock of a Person held by any other Person (the "parent 4 entity") so long as the Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent entity. "Change of Control Offer" shall have the meaning specified in Section 4.21. "Change of Control Payment Date" shall have the meaning specified in Section 4.21. "Change of Control Put Date" shall have the meaning specified in Section 4.21. "Change of Control Repurchase Price" shall have the meaning specified in Section 4.21. "Clearstream" means Clearstream Banking S.A. and any successor thereto. "Code" means the Internal Revenue Code of 1986, as amended. "Collateral" means all of the property in which the Company or any Restricted Subsidiary now or hereafter has rights or the power to pledge or transfer a security interest to secure all Obligations under the Notes, pursuant to the Collateral Documents, including all of the assets that are subject to Priority Liens. "Collateral Documents" means each security agreement among the Trustee (on behalf of the Noteholders), and each of the Company, the Restricted Subsidiaries and each stock pledge, deed of trust and mortgage executed by the Company or any Restricted Subsidiary creating a lien that secures the Notes and the Subsidiary Guarantees and each collateral assignment of any other documents creating a Lien that, after giving effect to such collateral assignment, secures the Notes or any Subsidiary Guarantee each, as may be amended, supplemented or otherwise modified from time to time. "Commission" means the Securities and Exchange Commission. "Commitment Fee" means the Commitment Fee payable to the Permitted Holders pursuant to the Standby Funding Commitment Letters, dated June 30, 2003, between the Company and each of the Permitted Holders. "Commodity Agreement" means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any of its Restricted Subsidiaries designed to protect the Company or any of its Restricted Subsidiaries against fluctuations in the price of commodities actually used in the ordinary course of business of the Company and its Restricted Subsidiaries each, as may be amended, supplemented or otherwise modified from time to time. 5 "Common Stock" means, with respect to any Person, Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to this Indenture, and thereafter means such successor. "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (1) if the Company or any Restricted Subsidiary has incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an incurrence of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness and the application of the proceeds thereof as if such Indebtedness had been incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period (except that in the case of Indebtedness to finance seasonal fluctuations in working capital needs incurred under a revolving credit or similar arrangement, the amount thereof shall be deemed to be the average daily balance of such Indebtedness during such four quarter period); (2) if since the beginning of such period the Company or any Restricted Subsidiary shall have disposed of any assets constituting all or substantially all of the assets of an operating unit of a business (a "Disposal"), (x) the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Disposal for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period and (y) Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Disposal for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any 6 Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of the assets of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the incurrence of any Indebtedness in connection therewith) as if such Investment or acquisition occurred on the first day of such period; and (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Disposal or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Disposal, Investment or acquisition of assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term as at the date of determination in excess of 12 months). If any Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a fixed or floating rate of interest and is being given pro forma effect, then (i) if any interest had accrued on such Indebtedness prior to the date of determination, the interest expense on such Indebtedness shall be computed by applying a fixed or floating rate of interest as selected by the Company or such Restricted Subsidiary for the interest period immediately preceding such determination or (ii) if no interest accrued on such Indebtedness prior to the date of determination, the interest expense on such Indebtedness shall be computed by applying, at the option of the Company or such Restricted Subsidiary, either a fixed or floating rate. If any Indebtedness which is being given pro forma effect was incurred under a revolving credit facility that was in effect throughout the applicable period, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. "Consolidated Interest Expense" means, with respect to any Person for any period, the aggregate consolidated interest, whether expensed or capitalized, paid, accrued or scheduled to be paid or accrued, of such Person and its Restricted Subsidiaries for such period (including (i) amortization of original issue discount and deferred financing costs and non-cash interest payments and accruals, (ii) the interest portion of all deferred payment obligations, calculated in accordance with the effective interest method, 7 and (iii) the interest component of any payments associated with Capital Lease Obligations and net payments (if any) pursuant to Hedging Obligations, in each case, to the extent attributable to such period, but excluding (x) commissions, discounts and other fees and charges incurred with respect to letters of credit and bankers' acceptances financing and (y) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or secured by a Lien on assets of such Person) determined in accordance with GAAP. Consolidated Interest Expense of the Company shall not include any prepayment premiums or amortization of original issue discount or deferred financing costs, to the extent such amounts are incurred as a result of the prepayment on the date of this Indenture of any Indebtedness of the Company with the proceeds of the Notes. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP, adjusted to exclude (only to the extent included and without duplication): (i) all gains which are extraordinary or are non-recurring (including any gain from the sale or other disposition of assets outside the ordinary course of business or from the issuance or sale of Capital Stock); (ii) all gains resulting from currency or hedging transactions; (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition; (iv) depreciation, amortization or other expenses recorded as a result of the application of purchase accounting in accordance with Statements of Financial Accounting Standards Nos. 141 and 142; and (v) the cumulative effect of a change in accounting principles; provided that (a) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of cash dividends or cash distributions actually paid to the referent Person or a Wholly Owned Subsidiary thereof that is a Restricted Subsidiary and (b) the Net Income of any Person that is an Unrestricted Subsidiary shall be included only to the extent of the amount of cash dividends or cash distributions paid to the referent Person or a Restricted Subsidiary thereof. "Continuing Director" means, as of any date of determination, any member of the Board of Directors of the Company, NFC Castings or ACP Holding who (i) was a member of such Board of Directors on the date of this Indenture, (ii) was nominated for election or elected to such Board of Directors with the affirmative vote of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election, or (iii) was selected by MacKay Shields LLC, Citicorp Mezzanine III, L.P. or the Trust Company of the West. "Covenant Defeasance" shall have the meaning specified in Section 8.3. "Credit Agreement" means the Credit Agreement, dated the date hereof, among the Company, certain of the Subsidiary Guarantors party thereto, the lenders from time to time party to such agreement, Fleet Capital Corporation, as Agent and Fleet Securities, Inc., as Arranger, including any related notes, collateral documents, letters of credit and documentation and guarantees and any appendices, exhibits or schedules to 8 any of the foregoing, as well as any and all of such agreements (and any other agreements that refinance any and all such agreements in accordance with the provisions of Section 4.11(viii)), as may be amended, restated, modified or supplemented from time to time, or renewed, refunded, refinanced, restructured, replaced, repaid or extended from time to time (including increases in principal amount) in accordance with the provisions of Section 4.11(viii), whether with the original agents and lenders or with other agents or lenders. "Credit Agreement Refinancing Indebtedness" means Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the Credit Agreement. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any of its Restricted Subsidiaries in the ordinary course of business against fluctuation in the values of the currencies of the countries (other than the United States) in which the Company or its Restricted Subsidiaries conduct business each, as may be amended, supplemented or otherwise modified from time to time. "Default" means any event or condition that is, or with the passage of time or the giving of notice, or both, would be, an Event of Default. "Defaulted Interest" shall have the meaning specified in Section 2.12. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.6 or 2.10 hereof, in substantially the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the person specified in Section 2.3 as the Depositary with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depositary" shall mean or include such successor. "Disqualified Stock" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable or is convertible or exchangeable for Indebtedness at the option of the holder thereof, in whole or in part, on or prior to 90 days after the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the 9 right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the Stated Maturity of the Notes shall not constitute Disqualified Stock if (i) the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions in favor of Holders of Notes set forth under Section 4.20 and Section 4.21, as the case may be, (ii) such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company's repurchase of such Notes as are required to be repurchased pursuant to Section 4.20 and Section 4.21 and (iii) such Capital Stock is redeemable within 90 days of the "asset sale" or "change of control" events applicable to such Capital Stock. "Distribution Compliance Period" means the 40-day distribution compliance period as defined in Regulation S. "Domestic Restricted Subsidiary" means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of a Foreign Restricted Subsidiary. "DTC" shall have the meaning specified in Section 2.3. "EBITDA" means, for any period, an amount equal to, for the Company and its consolidated Restricted Subsidiaries: (a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: (1) the provision for taxes based on income or profits or utilized in computing net loss, (2) Consolidated Interest Expense, (3) depreciation, (4) amortization of intangibles, and (5) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of, or reserve for, cash expenditures in any future period), minus (b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). Notwithstanding the foregoing clause (a), the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same 10 proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its shareholders. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Euroclear" means Euroclear Bank, S.A./N.V., as operator of the Euroclear systems, and any successor thereto. "Event of Default" shall have the meaning specified in Section 6.1. "Excess Proceeds" shall have the meaning specified in Section 4.20. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder. "Exchange Notes" means Notes registered under the Securities Act to be exchanged for Notes not so registered, pursuant to and as set forth in the Registration Rights Agreement. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Fair Market Value" means, with respect to any asset, the price (after taking into account any liabilities relating to such assets) which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction; provided, that, the Fair Market Value of any such asset or assets shall be determined by the Board of Directors of the Company, acting in good faith and by unanimous resolution, and which determination shall be evidenced by an Officers' Certificate delivered to the Trustee. "Foreign Restricted Subsidiary" means any Restricted Subsidiary which is not organized under the laws of the United States of America or any State thereof or the District of Columbia. "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 11 Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect in the United States on the date of this Indenture. "Global Note Legend" means the legend set forth in Section 2.6(g)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture. "Global Notes" means the global Notes in the form of Exhibit A hereto that contain the Global Note Legend, issued in accordance with Article 2 hereof. "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 as may be amended, supplemented or otherwise modified from time to time. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) Interest Rate Agreements, (ii) Currency Agreements and (iii) Commodity Agreements. "Holder" or "Noteholder" means the person in whose name a Note is registered on the Registrar's books. "IAI Global Note" means a Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors, if any, to the extent required by Applicable Procedures. "Inactive Subsidiaries" means Cast Alloys, Inc., Belcher Corporation, Peerless Corporation and Dalton Corporation, Ashland Manufacturing Facility. "Indebtedness" means, with respect to any Person, without duplication, 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 reimbursement agreements in respect thereof) or bankers' acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee of any Indebtedness of such Person or any other Person. 12 "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Notes" means $133,130,000 aggregate principal amount of Notes issued under this Indenture on the date hereof. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Intercompany Indebtedness" shall have the meaning specified in Section 4.11. "Interest Payment Date" means the stated due date of an installment of interest on the Notes. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement entered into by the Company or any of its Restricted Subsidiaries designed to protect the Company or any of its Restricted Subsidiaries in the ordinary course of business against fluctuations in interest rates each, as may be amended, supplemented or otherwise modified from time to time. "Inventory" means, with respect to the Company and its Restricted Subsidiaries, the consolidated inventory of the Company, determined at the lower of cost or market in accordance with GAAP. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Issue Date" means the date of first issuance of the Notes under this Indenture. "Legal Defeasance" shall have the meaning specified in Section 8.2. "Lenders" means, at any time, the parties to the Credit Agreement then holding (or committed to provide) loans, letters of credit or other extensions of credit that constitute (or when provided will constitute) Indebtedness secured by a Priority Lien outstanding under the Credit Agreement. 13 "Letter of Transmittal" means the letter of transmittal, or its electronic equivalent in accordance with the Applicable Procedures, to be prepared by the Company and sent to all Holders of the Initial Notes or any Additional Notes for use by such Holders in connection with an Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.) "Lien Subordination Agreement" means that certain Lien Subordination Agreement, dated as of the date hereof, by and among the Company, the Restricted Subsidiaries, the Trustee (on behalf of the Noteholders) and the Agent under the Credit Agreement, as amended (including any amendments and restatements thereof), supplemented or otherwise modified from time to time. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any sale of assets (including, without limitation, dispositions pursuant to sale/leaseback transactions) or (b) the disposition of any securities or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries, and (ii) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate amount of consideration received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale in the form of cash or Cash Equivalents (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets (including Equity Interests) the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets. "New Credit Facility" means the credit facilities provided under the Credit Agreement. "NFC Castings" means NFC Castings, Inc., a Delaware corporation. 14 "Non-Core Fixed Assets" shall have the meaning specified in the Credit Agreement as in effect on the date hereof. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as guarantor or otherwise), or (c) constitutes the lender; (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Note Lien" means a Lien granted pursuant to the Collateral Documents as security for the Note Obligations and subordinated and subject to the rights and remedies of the holders of the Priority Liens in accordance with the terms of the Collateral Documents and the Lien Subordination Agreement. "Note Obligations" means the Obligations under the Notes (including, without limitation, any Additional Notes), the Subsidiary Guarantees and all other Obligations of the Company or any Restricted Subsidiary under this Indenture, the Notes (including without limitation, any Additional Notes), the Subsidiary Guarantees and the Collateral Documents. "Notes" shall have the meaning specified in the second paragraph of this Indenture. "Notice of Default" shall have the meaning specified in Section 6.1(d). "Obligations" means with respect to any Indebtedness, the principal of, and interest on (such interest on such Indebtedness, wherever referred to in this Indenture, is deemed to include interest accruing after the filing of a petition initiating any proceeding pursuant to any bankruptcy law in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in any document evidencing such Indebtedness, whether or not the claim for such interest is allowed as a claim after such filing in any proceeding under such bankruptcy law) and other amounts, including, but not limited to, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. 15 "Officer" means, with respect to the Company, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Controller or the Secretary of the Company. "Officers' Certificate" means, with respect to any Person, a certificate signed by (i) the Chief Executive Officer or President and (ii) the Chief Financial Officer or chief accounting officer of such Person. "Opinion of Counsel" means a written opinion from legal counsel which complies with the requirements of Sections 14.4 and 14.5. "Original Issue Date" of any Note (or portion thereof) means the earlier of (a) the date of such Note or (b) the date of any Note (or portion thereof) for which such Note was issued (directly or indirectly) on registration of transfer, exchange or substitution. "Participant" means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively, and, with respect to DTC, shall include Euroclear and Clearstream. "Paying Agent" shall have the meaning specified in Section 2.3. "Payment Default" shall have the meaning specified in Section 6.1(e). "Permitted Holders" means each of MacKay Shields LLC, Citicorp Mezzanine III, L.P., Metropolitan Life Insurance Company, Exis Differential Holdings, Ltd., TCW Shared Opportunity Fund II, L.P., Shared Opportunity Fund IIB LLC, TCW Shared Opportunity Fund IV, L.P., TCW Shared Opportunity Fund IVB, L.P., AIMCO CDO, Series 2000-A, TCW High Income Partners, Ltd. and TCW High Income Partners II, Ltd. and its Related Persons and Affiliates. "Permitted Investments" means (i) any Investment in the Company or in a Restricted Subsidiary; (ii) any Investment in Cash Equivalents; (iii) Investments by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (a) such Person becomes a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary; (iv) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made in compliance with Section 4.20; (v) any Investment solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (vi) any Investments received in compromise of obligations of such persons incurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; and (vii) Investments existing on the date hereof. 16 "Permitted Liens" means (i) Liens in favor of the Company or a Restricted Subsidiary; (ii) Liens securing Senior Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred pursuant to Section 4.11(i) at the time incurred; (iii) Liens on property of a Person existing at the time such Person is merged into, consolidated with or otherwise acquired by the Company or any Restricted Subsidiary of the Company, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person merged into or consolidated with Company or such Restricted Subsidiary; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company; provided that such Liens were not created in contemplation of such acquisition and do not extend to any other assets of the Company or any Restricted Subsidiary of the Company; (v) Liens on the property of the Company or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property and which do not in the aggregate impair in any material respect the use of property in the operation of the business of the Company and the Restricted Subsidiaries taken as a whole; (vi) Liens existing on the date of this Indenture; (vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (viii) Liens in good faith in the ordinary course of business with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, shall be required by GAAP shall have been made therefor; (ix) zoning restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property or minor irregularities of title incident thereto that do not, in the aggregate, materially detract from the value of the property or the assets of the Company or of any Restricted Subsidiary or impair the use of such property in the operation of the Company's or any Restricted Subsidiary's business; (x) judgment Liens to the extent that such judgments do not cause or constitute an Event of Default; (xi) Liens to secure the payment of all or a part of the purchase price of property or assets acquired or constructed in the ordinary course of business on or after the date of this Indenture, provided that (a) such property or assets are used in the same or a similar line of business as the Company or the applicable Restricted Subsidiary was engaged in on the date of this Indenture, (b) at the time of incurrence of any such Lien, the aggregate principal amount of the obligations secured by such Lien shall not exceed the cost of the assets or property (or portions thereof) so acquired or constructed, (c) each such Lien shall encumber only the assets or property (or portions thereof) so acquired or constructed and shall attach to such property within 120 days of the purchase or construction thereof and (d) any Indebtedness secured by such Lien shall have been permitted to be incurred under Section 4.11; (xii) precautionary filings of any financial statement under the Uniform Commercial Code (or equivalent 17 statutes) of any jurisdiction made in connection with Capital Lease Obligations permitted to be incurred under Section 4.11; and (xiii) Note Liens; (xiv) Liens permitted by the Collateral Documents, including, without limitation, Priority Liens; (xv) Liens incurred in the ordinary course of business securing assets having a fair market value not in excess of $500,000 in the aggregate; (xvi) Liens to secure permitted Refinancing Indebtedness incurred to refinance existing Indebtedness or permitted Refinancing Indebtedness which is secured by Liens permitted by this clause (xvi); provided, that such Liens do not extend to any categories of assets other than the categories of assets securing existing Indebtedness as of the date of this Indenture; (xvii) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (xviii) Liens incurred in the ordinary course of business in connection with (a) worker's compensation, social security, unemployment insurance and other like laws or (b) sales contracts, leases, statutory obligations, work in progress advances and other similar obligations not incurred in connection with the borrowing of money or the payment of the deferred purchase price of property; (xix) Liens in favor of customs and revenues authorities which secure payment of customs duties in connection with the importation of inventory; (xx) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto; (xxi) Liens consisting of rights of set-off of a customary nature or banker's liens on amounts on deposit in accounts, whether arising by contract or operation of law, incurred in the ordinary course of business; and (xxii) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries. "Permitted Refinancing" shall have the meaning specified in Section 4.11. "Person" or "person" means an individual, limited or general partnership, corporation, limited liability company, association, unincorporated organization, trust, joint stock company or joint venture, or a government or any agency or political subdivision thereof. "Priority Lien Documents" means the Credit Agreement, the Priority Lien Security Documents and, in connection with or pursuant to any of the foregoing, all other agreements, certificates or documents executed by the Company or any Restricted Subsidiary and delivered to the trustee, agent or representative acting for the lenders party to the Credit Agreement each, as may be amended, supplemented or otherwise modified from time to time. "Priority Lien Obligations" means the Indebtedness evidenced by the Credit Agreement and all other Obligations of the Company or any Restricted Subsidiary thereunder or under the Priority Lien Documents in respect of the Credit Agreement. "Priority Lien Security Documents" means one or more security agreements, pledge agreements, collateral assignments, mortgages, deed of trust or other grants or transfers for security executed and delivered by the Company or any Restricted Subsidiary creating a Lien upon property owned or to be acquired by the Company or 18 such Restricted Subsidiary in favor of any lenders party to the Credit Agreement, or any trustee, agent or representative acting for any such holders, as security for any Priority Lien Obligations each, as may be amended, supplemented or otherwise modified from time to time. "Priority Liens" means the first priority Liens granted with respect to the Collateral by the Company and the Restricted Subsidiaries pursuant to the Credit Agreement securing the Priority Lien Obligations of the Company and the Restricted Subsidiaries under such Credit Agreement. "principal" of any Indebtedness means the principal of such Indebtedness plus, without duplication, any applicable premium, if any, on such Indebtedness. "Private Placement Legend" means the legend set forth in Section 2.6(g)(i) hereof to be placed on all Notes issued under this Indenture except as otherwise permitted by the provisions of this Indenture. "property" means any right or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Purchase Money Obligations" of any Person means any obligations of such Person or any of its Restricted Subsidiaries to any seller or any other Person incurred or assumed in connection with the purchase of real or personal property or in the Capital Stock of a Person owning such real or personal property to be used in the business of such Person or any of its subsidiaries within 180 days of such incurrence or assumption. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Qualified Stock" means any Capital Stock of the Company that is not Disqualified Stock. "Receivables" means the consolidated trade receivables of the Company, net of allowance for doubtful accounts, as determined in accordance with GAAP. "Record Date" means a Record Date specified in the Notes whether or not such Record Date is a Business Day. "Redemption Date" means, when used with respect to any Note to be redeemed, the date fixed for such redemption pursuant to Article III of this Indenture and Paragraph 5 in the form of Note. "Redemption Price" means, when used with respect to any Note to be redeemed, the redemption price for such redemption pursuant to Paragraph 5 in the form of Note, which shall include, without duplication, in each case, accrued and unpaid interest, if any, to and including the Redemption Date. 19 "Refinancing Indebtedness" shall have the meaning specified in Section 4.11. "Registered Exchange Offer" shall have the meaning given such term in the Registration Rights Agreement. "Registrar" shall have the meaning specified in Section 2.3. "Registration Rights Agreement" means that certain Registration Rights Agreement, dated as of the date of this Indenture, between the Company and the other parties thereto, as such agreement may be amended, modified or supplemented from time to time in accordance with the terms thereof. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold for initial resale in reliance on Rule 904. "Related Business" means any business which is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the date hereof. "Related Person" of any Person means any other Person directly or indirectly owning (a) 5% or more of the outstanding Common Stock of such Person (or, in the case of a Person that is not a corporation, 5% or more of the equity interests in such Person) or (b) 5% or more of the combined voting power of the Voting Stock of such Person. "Representative" means any trustee, agent to representative (if any) for Senior Indebtedness. "Repurchase Date" shall have the meaning specified in Section 4.20. "Repurchase Offer Period" shall have the meaning specified in Section 4.20. "Repurchase Price" shall have the meaning specified in Section 4.20. "Restricted Definitive Note" means one or more Definitive Notes bearing the Private Placement Legend. "Restricted Global Notes" means 144A Global Notes, IAI Global Notes and Regulation S Global Notes. 20 "Restricted Investment" means an Investment other than a Permitted Investment. With respect to Unrestricted Subsidiaries or Restricted Subsidiaries, the amount of Restricted Investments shall be calculated as the greater of (i) the book value of assets contributed by the Company or a Restricted Subsidiary or (ii) the Fair Market Value of the assets contributed by the Company or a Restricted Subsidiary (as certified by a resolution of independent directors of the Company. "Restricted Payment" shall have the meaning specified in Section 4.12. "Restricted Subsidiary" means (i) any Subsidiary of the Company (other than a Subsidiary that is also a Subsidiary of an Unrestricted Subsidiary) organized or acquired after the date of this Indenture, unless such Subsidiary shall have been designated as an Unrestricted Subsidiary by resolution of the Board of Directors as provided in and in compliance with the definition of "Unrestricted Subsidiary" and (ii) any Unrestricted Subsidiary which is designated as a Restricted Subsidiary by the Board of Directors of the Company; provided that immediately after giving effect to the designation referred to in clause (ii), no Default or Event of Default shall have occurred and be continuing and the Company could incur at least $1.00 of additional Indebtedness under Section 4.11. The Company shall evidence any such designation to the Trustee by promptly filing with the Trustee an Officers' Certificate certifying that such designation has been made and stating that such designation complies with the requirements of the immediately preceding sentence. "Revolver" means the revolving credit facility extended to the Company as part of the New Credit Facility under the Credit Agreement. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Senior Indebtedness" means, with respect to the Company and Restricted Subsidiaries, the Obligations of the Company and the Restricted Subsidiaries under the Credit Agreement. "Senior Subordinated Notes" means the Company's 13% Senior Subordinated Notes due 2013, issued pursuant to the Senior Subordinated Notes Indenture, and any securities issued in exchange or in substitution therefor. "Senior Subordinated Notes Indenture" means an Indenture, dated the date hereof, among the Company, the Subsidiary Guarantors party thereto and The Bank of 21 New York, as trustee, relating to the Senior Subordinated Notes, as may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof. "Shelf Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Special Record Date" for payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.12. "Stated Maturity," when used with respect to any Note, means September 30, 2010. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of 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 such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Persons or one or more Subsidiaries of such Person or any combination thereof. "Subsidiary Guarantee" means a guarantee on the terms set forth in this Indenture by a Subsidiary Guarantor of the Company's obligations with respect to the Notes. "Subsidiary Guarantor" means each Domestic Restricted Subsidiary and any other Person that becomes a Subsidiary Guarantor pursuant to the provisions of Section 4.18 hereof or who otherwise exercises and delivers supplemental indenture to the Trustee providing for a Subsidiary Guarantee. "Term Loan" means the term loan made to the Company and certain of the Restricted Subsidiaries as part of the New Credit Facility under the Credit Agreement. "TIA" means the Trust Indenture Act of 1939, as amended and in effect on the date of the execution of this Indenture unless otherwise specified herein. "Transfer Restricted Notes" means the Notes that bear or are required to bear the Private Placement Legend. "Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "Trust Officer" means any officer within the corporate trust division (or any successor group) of the Trustee or any other officer of the Trustee customarily 22 performing functions similar to those performed by the Persons who at that time shall be such officers, and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such trust matter is referred because of his knowledge of and familiarity with the particular subject. "Unrestricted Definitive Notes" means one or more Definitive Notes that do not and are not required to bear the Private Placement Legend. "Unrestricted Global Notes" means one or more Global Notes that do not and are not required to bear the Private Placement Legend and are deposited with and registered in the name of the Depositary or its nominee. "Unrestricted Subsidiary" means, until such time as any of the following shall be designated as a Restricted Subsidiary of the Company by the Board of Directors of the Company as provided in and in compliance with the definition of "Restricted Subsidiary," (i) any Subsidiary of the Company or of a Restricted Subsidiary of the Company organized or acquired after the date of this Indenture that is designated concurrently with its organization or acquisition as an Unrestricted Subsidiary by resolution of the Board of Directors of the Company, (ii) any Subsidiary of any Unrestricted Subsidiary and (iii) any Restricted Subsidiary of the Company that is designated as an Unrestricted Subsidiary by resolution of the Board of Directors of the Company, provided that (a) immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing, (b) any such designation shall be deemed, at the election of the Company at the time of such designation, to be either (but not both) (x) the making of a Restricted Payment at the time of such designation in an amount equal to the Investment in such Subsidiary subject to the restrictions contained in Section 4.12 or (y) the making of an Asset Sale at the time of such designation in an amount equal to the Investment in such Subsidiary subject to the restrictions contained in Section 4.20, and (c) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of, or own or hold any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated. A Person may be designated as an Unrestricted Subsidiary only if and for so long as such Person (i) has no Indebtedness other than Non-Recourse Debt; (ii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to make any payment to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (iii) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. The Company shall evidence any designation pursuant to clause (i) or (iii) of the first sentence hereof to the Trustee by filing with the Trustee within 45 days of such designation an Officers' Certificate certifying that such designation has been made and, in the case of clause (iii) of the first sentence hereof, the related election of the Company in respect thereof. 23 "U.S. Government Obligations" means direct non-callable obligations of, or noncallable obligations guaranteed by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers, general partners or trustees of any Person (irrespective of whether or not, at the time, Capital Stock of any other class or classes shall have, or might have, voting power by reasons of the happening of any contingency) or, with respect to a partnership (whether general or limited), any general partner interest in such partnership. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, 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 payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall be at the time be beneficially owned by such Person either directly or indirectly through Wholly Owned Subsidiaries. SECTION 1.2. INCORPORATION BY REFERENCE OF TIA. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: (1) "indenture securities" means the Notes. (2) "indenture security holder" means a Holder or a Noteholder. (3) "indenture to be qualified" means this Indenture. (4) "indenture trustee" or "institutional trustee" means the Trustee. (5) "obligor" on the indenture securities means the Company and any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them thereby. 24 SECTION 1.3. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) provisions apply to successive events and transactions; (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (7) references to Sections or Articles means reference to such Section or Article in this Indenture, unless stated otherwise; and (8) terms defined in this Article include the plural as well as the singular. ARTICLE II THE NOTES SECTION 2.1. FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage in addition to those set forth in Exhibit A hereto. The Company shall approve the form of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. To the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (a) Global Notes. Subject to the right of the Holders to take Definitive Notes, the Notes issued hereunder shall be evidenced by one or more Global Notes, 25 deposited with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the 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. Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and transfers of interests therein in accordance with the terms of this Indenture. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the principal amount of outstanding Notes represented thereby shall be made by the Trustee or Note Custodian, at the election of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.6 hereof. Except as set forth in Section 2.6 hereof, the Global Notes may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee. (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to Global Notes deposited with the Trustee, as custodian for the Depositary. Participants and Indirect Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall 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 impair, as between the Depositary and its Participants or Indirect Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note. (c) Euroclear and Clearstream Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream" and "Customer Handbook" of Clearstream shall be applicable to transfers of beneficial interests in Global Notes that are held by Participants through Euroclear or Clearstream. (d) Definitive Notes. Notes issued in certificated form shall be substantially in the form of Exhibit A attached hereto registered in the name of the Holder thereof, substantially in the form of Exhibit A hereto except that such Notes shall 26 not bear the Global Note Legend and shall not have the Schedule of Exchanges of Interests in the Global Note attached thereto. SECTION 2.2. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be impressed, affixed, imprinted or reproduced on the Notes and may be in facsimile form. 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. The signature shall be conclusive evidence that the Note has been authenticated pursuant to the terms of this Indenture. The Trustee shall, upon written order of the Company signed by two Officers, authenticate Notes for original issue in the aggregate principal amount of up to $133,130,000 in one or more series. The aggregate principal amount of Notes outstanding at any time may not exceed $133,130,000 except as provided in Section 2.8. As of the date of this Indenture, there shall be issued, authenticated and outstanding not more than $133,130,000 aggregate principal amount of Notes. The written order shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company, any Affiliate of the Company, or any of their respective Subsidiaries. SECTION 2.3. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency, where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes (including principal and interest thereon) and of their transfer and exchange. The Company may have one or more co-Registrars and one or more additional Paying Agents. The term "Registrar" includes any co-Registrars and the term "Paying Agent" includes any additional Paying Agent. The Company or any of its Restricted Subsidiaries may act as Paying Agent or Registrar. The Company shall enter into an appropriate written agency agreement with any Agent not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall promptly 27 notify the Trustee in writing of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be duly compensated therefor in accordance with the Trustee's customary fees for providing such service. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company hereby initially appoints the Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees so to act. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to any Global Notes. The Company initially appoints the Trustee to act as Note Custodian with respect to any Global Notes. SECTION 2.4. PAYING AGENT TO HOLD ASSETS IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of Holders and the Trustee all assets held by the Paying Agent for the payment of principal and interest with respect to the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and shall notify the Trustee in writing of any Default in making any such payment. If either of the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate such assets and hold them as a separate trust fund for the benefit of the Holders and the Trustee. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed, and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the Paying Agent, the Paying Agent (if other than the Company or an Affiliate of the Company) shall have no further liability for such assets. SECTION 2.5. NOTEHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders 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 seven 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 reasonably may require of the names and addresses of Holders (which list may be conclusively relied upon by the Trustee) and the Company shall otherwise comply with Section 312(a) of the TIA. 28 SECTION 2.6. TRANSFER AND EXCHANGE. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. The Company shall exchange Global Notes for Definitive Notes if: (1) the Company delivers to the Trustee a notice from the Depositary that the Depositary is unwilling or unable to continue to act as Depositary for the Global Notes or that it has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary; (2) the Company at its option determines that the Global Notes shall be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; or (3) a Default or Event of Default shall have occurred and be continuing. Upon the occurrence of any of the preceding events in clauses (1), (2) or (3) above, Definitive Notes shall be issued in denominations of $1,000 or integral multiples thereof and in such names as the Depositary shall instruct the Trustee in writing. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.10 hereof. Except as provided above, every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.6(a), and beneficial interests in a Global Note may not be transferred and exchanged other than as provided in Section 2.6(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in Global Notes also shall require compliance with either clause (i) or (ii) below, as applicable, as well as one or more of the other following clauses, as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures; provided, however, that prior to the expiration of the Distribution Compliance Period, transfers of beneficial interests in any Regulation S Global Note may not be made to or for the account or benefit of a "U.S. Person" (as defined in Rule 902(k) of Regulation S) (other than a "distributor" (as defined in Rule 902(d) of Regulation S)). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. Except as may be required by any Applicable Procedures, no written orders or instructions 29 shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.6(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.6(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) if permitted under Section 2.6(a) hereof, (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (B)(1) above. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.6(f) hereof, the requirements of this Section 2.6(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.6(h) hereof. (iii) Transfer of Beneficial Interests in a Restricted Global Note to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.6(b)(ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof or, if permitted by Applicable Procedures, item (3) thereof; and (B) if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and 30 (C) if the transferee is required by Applicable Procedures to take delivery in the form of a beneficial interest in an IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the exchange or transfer complies with the requirements of Section 2.6(b)(ii) above and: (A) such exchange or transfer is effected pursuant to an Exchange Offer in accordance with a Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, makes any and all certifications in the applicable Letter of Transmittal (or is deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement; (B) such transfer is effected pursuant to a Shelf Registration Statement in accordance with a Registration Rights Agreement; (C) such transfer is effected by a broker-dealer pursuant to an Exchange Offer Registration Statement in accordance with a Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this clause (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such 31 exchange or transfer shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to clause (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to clause (B) or (D) above. (v) Transfer or Exchange of Beneficial Interests in Unrestricted Global Notes for Beneficial Interests in Restricted Global Notes Prohibited. Beneficial interests in an Unrestricted Global Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, beneficial interests in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. Subject to Section 2.6(a) hereof, if any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a "non U.S. Person" (as defined in Rule 902(k) of Regulation S) in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; 32 (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in clauses (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3)(d) thereof, as applicable; or (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof, the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to Section 2.6(h) hereof the aggregate principal amount of the applicable Restricted Global Note, and the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate and deliver a Restricted Definitive Note in the appropriate principal amount to the Person designated by the holder of such beneficial interest in instructions delivered to the Registrar by the Depositary and the applicable Participant or Indirect Participant on behalf of such holder. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c)(i) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall designate in such instructions. The Trustee shall deliver such Restricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. Subject to Section 2.6(a) hereof, a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to an Exchange Offer in accordance with a Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, makes any and all certifications in the applicable Letter of Transmittal (or is deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement; (B) such transfer is effected pursuant to a Shelf Registration Statement in accordance with a Registration Rights Agreement; 33 (C) such transfer is effected by a broker-dealer pursuant to an Exchange Offer Registration Statement in accordance with a Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this clause (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the clauses of this Section 2.6(c)(ii) the Company shall execute, and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate and deliver an Unrestricted Definitive Note in the appropriate principal amount to the Person designated by the holder of such beneficial interest in instructions delivered to the Registrar by the Depositary and the applicable Participant or Indirect Participant on behalf of such holder, and the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to Section 2.6(h) hereof the aggregate principal amount of the applicable Restricted Global Note. (iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. Subject to Section 2.6(a) hereof, if any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note, then, upon satisfaction of the applicable conditions set forth in Section 2.6(b)(ii) hereof, the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to Section 2.6(h) hereof the aggregate principal amount of the applicable Unrestricted Global Note, and the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate and deliver an Unrestricted Definitive Note in 34 the appropriate principal amount to the Person designated by the holder of such beneficial interest in instructions delivered to the Registrar by the Depositary and the applicable Participant or Indirect Participant on behalf of such holder. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall designate in such instructions. The Trustee shall deliver such Unrestricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iii) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a "non U.S. Person" (as defined in Rule 902(k) of Regulation S) in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in clauses (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3)(d) thereof, if applicable; or 35 (F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof, the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased in a corresponding amount pursuant to Section 2.6(h) hereof the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, a 144A Global Note, in the case of clause (C) above, a Regulation S Global Note, and in all other cases, an IAI Global Note. (ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to a Exchange Offer in accordance with a Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, makes such certifications in the applicable Letter of Transmittal (or is deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement; (B) such transfer is effected pursuant to a Shelf Registration Statement in accordance with a Registration Rights Agreement; (C) such transfer is effected by a broker-dealer pursuant to an Exchange Offer Registration Statement in accordance with a Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this clause (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel 36 in form reasonably acceptable to the Registrar to the effect that such exchange or transfer shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the clauses in this Section 2.6(d)(ii), the Trustee shall cancel such Restricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.6(h) hereof the aggregate principal amount of the Unrestricted Global Note. (iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.6(h) hereof the aggregate principal amount of one of the Unrestricted Global Notes. (iv) Transfer or Exchange of Unrestricted Definitive Notes to Beneficial Interests in Restricted Global Notes Prohibited. An Unrestricted Definitive Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, beneficial interests in a Restricted Global Note. (v) Issuance of Unrestricted Global Notes. If any such exchange or transfer of a Definitive Note for a beneficial interest in an Unrestricted Global Note is effected pursuant to clause (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a holder of Definitive Notes and such holder's compliance with the provisions of this Section 2.6(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such holder. In addition, the requesting holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.6(e). (i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of 37 Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A, a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to an Exchange Offer in accordance with a Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, makes such certifications in the applicable Letter of Transmittal (or is deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement; (B) any such transfer is effected pursuant to a Shelf Registration Statement in accordance with a Registration Rights Agreement; (C) any such transfer is effected by a broker-dealer pursuant to an Exchange Offer Registration Statement in accordance with a Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from 38 such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this clause (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the clauses of Section 2.6(e)(ii) the Trustee shall cancel the prior Restricted Definitive Note and the Company shall execute, and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate and deliver an Unrestricted Definitive Note in the appropriate principal amount to the Person designated by the holder of such prior Restricted Definitive Note in instructions delivered to the Registrar by such holder. (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holders thereof. (f) Exchange Offer. Upon the occurrence of an Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the applicable Restricted Global Notes (A) tendered for acceptance by Persons that make any and all certifications in the applicable Letters of Transmittal (or are deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement, and (B) accepted for exchange in the Exchange Offer and (ii) Unrestricted Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes tendered for acceptance by Persons who made the foregoing certification and accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall reduce or cause to be reduced in a corresponding amount the aggregate principal amount of the applicable Restricted Global Notes, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the holders of Restricted Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. 39 (i) Private Placement Legend. (A) Except as permitted by clause (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF SUCH SECURITY ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) AS PERMITTED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (F) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF US $250,000, FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF THE SECURITIES IN VIOLATION OF THE SECURITIES ACT OR (G) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION PURSUANT TO CLAUSES (D), (E), (F) OR (G) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM." 40 (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to clauses (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.6 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE 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." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to 41 a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.7, 4.20, 4.21 and 9.5 hereof). (ii) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same Indebtedness, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. (iii) Neither the Registrar nor the Company shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.3 hereof and ending at the close of business on the date of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date (including a Regular Record Date) and the next succeeding Interest Payment Date. (iv) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes, in each case regardless of any notice to the contrary. (v) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile. 42 (vi) The Trustee is hereby authorized and directed to enter into a letter of representation with the Depositary in the form provided by the Company and to act in accordance with such letter. SECTION 2.7. REPLACEMENT NOTES. If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims and submits an affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the effect that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Company and the Trustee, to protect the Company, the Trustee or any agent from any loss which any of them may suffer if a Note is replaced. The Company may charge such Holder for its reasonable, out-of-pocket expenses in replacing a Note. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion, may, instead of issuing a new Note, pay such Note, upon satisfaction of the conditions set forth in the preceding paragraph. Every new Note issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and such new Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section 2.7 are exclusive and shall preclude (to the extent lawful) all other rights and remedies of any Holder with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.8. OUTSTANDING NOTES. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee (including any Note represented by a Global Note) except those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee hereunder and those described in this Section 2.8 as not outstanding. A Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note, except as provided in Section 2.9. If a Note is replaced pursuant to Section 2.7 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.7. 43 If on a Redemption Date the Paying Agent (other than the Company or an Affiliate of the Company) holds Cash or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date in accordance with Section 3.6 hereof and payment of the Notes called for redemption is not otherwise prohibited pursuant to this Indenture, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. SECTION 2.9. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, amendment, supplement, waiver or consent, Notes owned by the Company or an Affiliate of the Company shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, amendment, supplement, waiver or consent, only Notes that a Trust Officer of the Trustee actually knows are so owned shall be disregarded. The Trustee may require an Officer's Certificate listing Notes owned by the Company, a subsidiary of the Company or an Affiliate of the Company. SECTION 2.10. TEMPORARY NOTES. Until Definitive Notes are ready for delivery, the Company may prepare and, upon written order of the Company specifying the amount of temporary Notes and date on which the temporary Notes are to be authenticated, the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company reasonably and in good faith considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Global Notes or Definitive Notes in exchange for temporary Notes. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as permanent Notes authenticated and delivered hereunder. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent (other than the Company or an Affiliate of the Company), and no one else, shall cancel and, at the written direction of the Company, shall dispose of all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.7 and the Registered Exchange Offer, the Company may not issue new Notes to replace Notes that have been paid or delivered to the Trustee for cancellation. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.11, except as expressly permitted in the form of Notes and as permitted by this Indenture. 44 SECTION 2.12. DEFAULTED INTEREST. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Note (or one or more predecessor Notes) is registered at the close of business on the Record Date for such interest. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date plus, to the extent lawful, interest payable on the defaulted interest at the same rate per annum borne by the Notes (collectively, herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Record Date, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of Cash equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such Cash when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as provided in this clause (1). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Note register not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the Notes (or their respective predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, 45 and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 2.12, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. SECTION 2.13. PERSONS DEEMED OWNERS. The Company, the Trustee, any Paying Agent and any authenticating agent may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payments of principal of, or interest on, such Note and for all other purposes. None of the Company, the Trustee, any Paying Agent or any authenticating agent shall be affected by any notice to the contrary. SECTION 2.14. ISSUANCE OF ADDITIONAL NOTES The Company shall be entitled, subject to its compliance with Section 4.11 hereof, to issue Additional Notes under this Indenture which shall have identical terms as the Initial Notes issued on the date hereof, other than with respect to the date of issuance, issue price and rights under the Registration Rights Agreement, if any. The Initial Notes issued on the date hereof, any Additional Notes and all Exchange Notes issued in exchange therefor shall be treated as a single class for all purposes under this Indenture, including without limitation, directions, waivers, consents, redemptions and Offers to Purchase. With respect to any Additional Notes, the Company shall set forth in a Board Resolution and an Officers' Certificate, a copy of each of which shall be delivered to the Trustee, the following information: (a) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture; (b) the issue price, the issue date and the CUSIP and/or ISIN number of such Additional Notes; and (c) whether such Additional Notes shall be subject to the restrictions on transfer set forth in Section 2.6 hereof relating to Restricted Global Notes and Restricted Definitive Notes. SECTION 2.15. CUSIP NUMBERS. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no 46 representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the "CUSIP" numbers. ARTICLE III REDEMPTION SECTION 3.1. RIGHT OF REDEMPTION. Redemption of Notes, as permitted by any provision of this Indenture, shall be made in accordance with Paragraph 5 of the Notes and this Article III. SECTION 3.2. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.8 hereof and Paragraph 5 of the Notes, it shall notify the Trustee in an Officer's Certificate of the Redemption Date, the Redemption Price, the principal amount of Notes to be redeemed and stating that the redemption will comply with the conditions contained herein and whether it wants the Trustee to give notice of redemption to the Holders. If the Company elects to reduce the principal amount of Notes to be redeemed pursuant to Section 3.8 hereof and Paragraph 5 of the Notes by crediting against any such redemption Notes it has not previously delivered to the Trustee for cancellation, it shall so notify the Trustee of the amount of the reduction and deliver such Notes with such notice. The Company shall give each notice to the Trustee provided for in this Section 3.2 at least 45 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee). Any such notice may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3.3. SELECTION OF NOTES TO BE REDEEMED. If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed in such manner as complies with any applicable depositary, legal and national securities exchange or automated quotation system if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall determine to be fair and appropriate, provided that no Notes of $1,000 principal amount or less shall be redeemed in part. 47 The Trustee shall make the selection from the Notes outstanding and not previously called for redemption and shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Notes that have denominations larger than $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.4. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a Redemption Date, the Company shall send a notice of redemption, by first class mail, to the Trustee and to each Holder whose Notes are to be redeemed. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Each notice for redemption shall identify the Notes to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price, including the amount of accrued and unpaid interest, if any, to be paid upon such redemption; (3) the name, address and telephone number of the Paying Agent; (4) that Notes called for redemption must be surrendered to the Paying Agent at the address specified in such notice to collect the Redemption Price; (5) that, unless (a) the Company defaults in its obligation to deposit Cash with the Paying Agent in accordance with Section 3.6 hereof or (b) such redemption payment is prohibited pursuant to this Indenture or otherwise, Notes called for redemption cease to accrue interest on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price, including accrued and unpaid interest thereon to, but excluding, the Redemption Date, upon surrender to the Paying Agent of the Notes called for redemption and to be redeemed; (6) if any Note is being redeemed in part, the portion of the principal amount, equal to $1,000 or any integral multiple thereof, of such Note to be redeemed and that, after the Redemption Date, and upon surrender of such Note, a new Note or Notes in aggregate principal amount equal to the unredeemed portion thereof will be issued; (7) if less than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be 48 redeemed, as well as the aggregate principal amount of such Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption; (8) the CUSIP number of the Notes to be redeemed; and (9) that the notice is being sent pursuant to this Section 3.4 and pursuant to the redemption provisions of Paragraph 5 of the Notes. SECTION 3.5. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.4, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price, including accrued and unpaid interest, if any, to the Redemption Date. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price, including accrued and unpaid interest, if any, to, but excluding, the Redemption Date; provided that if the Redemption Date is after a regular Record Date and on or prior to the corresponding Interest Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant Record Date; and provided, further, that if a Redemption Date is not a Business Day, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day. SECTION 3.6. DEPOSIT OF REDEMPTION PRICE. On or prior to the Redemption Date, the Company shall deposit with the Paying Agent (other than the Company or an Affiliate of the Company) Cash sufficient to pay the Redemption Price of, including accrued and unpaid interest on all Notes to be redeemed on such Redemption Date (other than Notes or portions thereof called for redemption on that date that have been delivered by the Company to the Trustee for cancellation). The Paying Agent shall promptly return to the Company any Cash so deposited which is not required for that purpose upon the written request of the Company. If the Company complies with the preceding paragraph and the other provisions of this Article III and payment of the Notes called for redemption is not prohibited under this Indenture or otherwise, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. Notwithstanding anything herein to the contrary, if any Note surrendered for redemption in the manner provided in the Notes shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall continue to accrue and be paid from the Redemption Date until such payment is made on the unpaid principal, and, to the extent lawful, on any 49 interest not paid on such unpaid principal, in each case at the rate and in the manner provided in Section 4.1 hereof and the Note. SECTION 3.7. NOTES REDEEMED IN PART. Upon surrender of a Note that is to be redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder, without service charge to the Holder, a new Note or Notes equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.8. OPTIONAL REDEMPTION. The Notes may not be redeemed prior to September 30, 2007. On or after September 30, 2007, the Notes may be redeemed in whole or from time to time in part at any time, at the option of the Company, at the Redemption Prices (expressed as a percentage of principal amount) set forth below with respect to the indicated Redemption Date, in each case, plus any accrued but unpaid interest to, but excluding, the Redemption Date.
If redeemed during the 12-month period beginning September 30, Redemption Price - ----------------------- ---------------- 2007................................ 105.500% 2008................................ 104.125% 2009................................ 102.750%
SECTION 3.9. MANDATORY REDEMPTION. Except as set forth under Sections 4.20 and 4.21 hereof, the Company shall not be required to make mandatory redemption payments with respect to the Notes. ARTICLE IV COVENANTS SECTION 4.1. PAYMENT OF NOTES. The Company shall pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes. An installment of principal of, or interest on, the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds for the benefit of the Holders, on or before 10:00 a.m. New York City time on that date, Cash deposited and designated for and sufficient to pay the installment. 50 The Company shall pay interest on overdue principal and on overdue installments of interest at the rate specified in the Notes compounded semi-annually, to the extent lawful. SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.2. 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; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby initially designates the corporate trust office of the Trustee as such office. SECTION 4.3. CORPORATE EXISTENCE. Subject to Article V, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate or other existence of each of its Subsidiaries in accordance with the respective organizational documents of each of them and the rights (charter and statutory) and corporate franchises of the Company and each of its Subsidiaries; provided, however, that the Company shall not be required to preserve, with respect to itself, any right or franchise, and with respect to any of its Subsidiaries, any such existence, right or franchise, if (a) the Company shall, in good faith, reasonably determine that the preservation thereof is no longer desirable in the conduct of the business of such entity and (b) the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 4.4. PAYMENT OF TAXES AND OTHER CLAIMS. Except with respect to immaterial items, the Company shall, and shall cause each of its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company or any of its Subsidiaries or any of their respective 51 properties and assets and (ii) all lawful claims, whether for labor, materials, supplies, services or anything else, which have become due and payable and which by law have or may become a Lien upon the property and assets of the Company or any of its Subsidiaries; provided, however, that neither the Company nor any Subsidiary shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which disputed amounts adequate reserves have been established in accordance with GAAP. SECTION 4.5. MAINTENANCE OF PROPERTIES AND INSURANCE. The Company shall cause all material properties used or useful to the conduct of its business and the business of each of its Subsidiaries to be maintained and kept in good condition, repair and working order (reasonable wear and tear excepted) and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in its reasonable good faith judgment may be necessary, so that the business carried on in connection therewith may be properly conducted at all times; provided, however, that nothing in this Section 4.5 shall prevent the Company or any Subsidiary from discontinuing any operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is (a) in the judgment of the Company, desirable in the conduct of the business of such entity and (b) not disadvantageous in any material respect to the Holders. The Company shall provide, or cause to be provided, for itself and each of its Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the reasonable, good faith judgment of the Company is adequate and appropriate for the conduct of the business of the Company and such Subsidiaries in a prudent manner, with (except for self-insurance) reputable insurers or with the government of the United States of America or an agency or instrumentality thereof, in such amounts, with such deductibles, and by such methods as shall be customary, in the reasonable, good faith judgment of the Company and adequate and appropriate for the conduct of the business of the Company and such Subsidiaries in a prudent manner for entities similarly situated in their industry, unless failure to provide such insurance (together with all other such failures) would not have a material adverse effect on the financial condition or results of operations of the Company or such Subsidiary. SECTION 4.6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. (a) The Company shall deliver to the Trustee within 120 days after the end of its fiscal year an Officers' Certificate complying with Section 314(a)(4) of the TIA and stating that a review of its activities and the activities of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and the Collateral Documents and further stating, as to each such Officer signing such certificate, whether or not the signer knows of any failure 52 by the Company or any Subsidiary of the Company to comply with any conditions or covenants in this Indenture and the Collateral Documents and, if such signor does know of such a failure to comply, the certificate shall describe such failure with particularity. The Officers' Certificate shall also notify the Trustee should the relevant fiscal year end on any date other than the current fiscal year end date. (b) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, promptly upon becoming aware of any Default, Event of Default or fact which would prohibit the making of any payment to or by the Trustee in respect of the Notes, an Officers' Certificate specifying such Default, Event of Default or fact and what action the Company is taking or proposes to take with respect thereto. The Trustee shall not be deemed to have knowledge of any Default, any Event of Default or any such fact unless one of its Trust Officers receives notice thereof from the Company or any of the Holders. SECTION 4.7. REPORTS. Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the Trustee and to each Holder and to prospective purchasers of Notes identified to the Company, within 15 days after it is or would have been required to file such with the Commission, annual and quarterly consolidated financial statements substantially equivalent to financial statements that would have been included in reports filed with the Commission if the Company was subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by the Company's certified independent public accountants as such would be required in such reports to the Commission and, in each case, together with a management's discussion and analysis of financial condition and results of operations which would be so required. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 4.8. LIMITATION ON STATUS AS INVESTMENT COMPANY. Neither the Company nor any of its Subsidiaries shall become an "investment company" (as that term is defined in the Investment Company Act of 1940, as amended), or otherwise become subject to regulation under the Investment Company Act. SECTION 4.9. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which 53 would prohibit or forgive the Company from paying all or any portion of the principal of, and interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 4.10. RULE 144A INFORMATION REQUIREMENT. If at any time there are Transfer Restricted Notes outstanding and the Company shall cease to have a class of equity securities registered under Section 12(g) of the Exchange Act or shall cease to be subject to Section 15(d) of the Exchange Act, the Company shall furnish to the Holders or beneficial holders of the Notes and prospective purchasers of Notes designated by the Holders of Transfer Restricted Notes, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act until such time as the Shelf Registration Statement has become effective under the Securities Act. The Company shall also furnish such information during the pendency of any suspension of effectiveness of the Shelf Registration Statement. SECTION 4.11. LIMITATION ON THE INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, "incur" and, correlatively, "incurred" and "incurrence") any Indebtedness (including, without limitation, Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any preferred stock; provided, however, that the Company and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) if after giving effect to the incurrence of such Indebtedness and the application of the proceeds thereof, the Consolidated Coverage Ratio of the Company and its Restricted Subsidiaries (on a consolidated basis) would not exceed 2.00 to 1.00. The foregoing limitations shall not apply to: (i) Indebtedness incurred by the Company and its Restricted Subsidiaries under the Credit Agreement in an aggregate principal amount at the time incurred equal to the greater of (i) $102 million and (ii) the Borrowing Base Amount; (ii) Indebtedness represented by the Senior Subordinated Notes; 54 (iii) additional Indebtedness incurred by the Company in respect of Capital Lease Obligations or Purchase Money Obligations in an aggregate principal amount not to exceed $10,000,000 at any time outstanding; (iv) Indebtedness represented by the Notes and this Indenture; (v) Hedging Obligations incurred by the Company pursuant to agreements or other arrangements designed to protect the Company against fluctuations in interest rates and/or currency exchange rates resulting from its borrowings under the Credit Agreement; (vi) additional unsecured Indebtedness which is subordinate in right of payment to the Notes, not to exceed $5,000,000 at any time outstanding; (vii) Indebtedness of the Company to any of its Wholly Owned Subsidiaries that is a Restricted Subsidiary, and Indebtedness of any Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary to the Company or any of its Wholly Owned Subsidiaries that is a Restricted Subsidiary (the Indebtedness incurred pursuant to this clause (vii) being hereinafter referred to as "Intercompany Indebtedness"); provided that in the case of Intercompany Indebtedness of the Company (other than Intercompany Indebtedness pursuant to the Credit Agreement) such obligations shall be unsecured and subordinated in all respects to the Company's obligations pursuant to the Notes; provided, further, that an incurrence of Indebtedness shall be deemed to have occurred upon (a) any sale or other disposition of Intercompany Indebtedness to a Person other than the Company or any of its Restricted Subsidiaries, (b) any sale or other disposition of Equity Interests of any Restricted Subsidiary of the Company which holds Intercompany Indebtedness such that such Restricted Subsidiary ceases to be a Restricted Subsidiary after such sale or other disposition or (c) designation of a Restricted Subsidiary as an Unrestricted Subsidiary; (viii) the incurrence by the Company of Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the Consolidated Coverage Ratio test set forth in the first paragraph of this covenant or pursuant to clauses (i), (ii) or (iv) of this covenant in whole or in part (the "Refinancing Indebtedness"); provided, however, that (A) (i) the aggregate principal amount of any Refinancing Indebtedness (other than a Credit Agreement Refinancing Indebtedness) shall not exceed the aggregate principal amount of Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded, and (ii) the aggregate principal amount of any Credit Agreement Refinancing Indebtedness may exceed the aggregate principal amount of the Indebtedness incurred under the Credit Agreement so extended, refinanced, renewed, replaced, defeased or refunded only to the extent permitted under Section 4.11(i) hereof; (B) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being 55 extended, refinanced, renewed, replaced, defeased or refunded; (C) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is pari passu with or subordinated in right of payment to the Notes, the Refinancing Indebtedness shall be pari passu with or subordinated, as the case may be, in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded (any such extension, refinancing, renewal, replacement, defeasance or refunding being referred to as a "Permitted Refinancing"); (ix) Indebtedness of the Company or any Restricted Subsidiary consisting of guarantees, indemnities, or obligations in respect of purchase price adjustments, in connection with the acquisition or disposition of any business, assets or Subsidiary of the Company permitted under this Indenture; (x) Indebtedness of the Company or a Restricted Subsidiary owed to any Person in connection with liability insurance provided by such Person to the Company or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business; (xi) Guarantees of Indebtedness permitted to be incurred under this Indenture; (xii) Indebtedness in respect of performance bonds; and (xiii) Indebtedness not included in paragraphs (i) through (xii) above which does not exceed at any time, in the aggregate, $2,000,000. SECTION 4.12. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of Equity Interests, other than (A) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company; or (B) dividends or distributions payable to the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary; (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company (other than any such Equity Interests owned by 56 the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary); (iii) purchase, redeem, repay, defease or otherwise acquire or retire for value any Indebtedness that is subordinated in right of payment to the Notes except (i) for regularly scheduled payments of interest when due or payment of principal at maturity thereof, (ii) as permitted under Section 4.20 hereof, and (iii) as permitted or required under Section 4.21 of the Senior Subordinated Notes Indebtedness; (iv) make any Investment (other than a Permitted Investment); (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"); unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Coverage Ratio test set forth in Section 4.11; and (C) such Restricted Payment (the amount of any such payment, if other than cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a resolution in an Officers' Certificate delivered to the Trustee), together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (including Restricted Payments permitted by the next succeeding paragraph, except as set forth therein), shall not exceed the sum of (w) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) commencing on the first day of the Company's first fiscal quarter beginning after the initial issuance of the Notes and ending on the last day of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, 100% of such deficit as a negative number), plus (x) 100% of the aggregate net cash proceeds received by the Company from the issuance or sale since the date of initial issuance of the Notes of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (y) the aggregate cash received by the 57 Company as capital contributions to the Company after the date of initial issuance of the Notes (other than from a Subsidiary), plus (z) any cash received by the Company after the date of initial issuance of the Notes as a dividend or distribution from any of its Unrestricted Subsidiaries or from the sale of any of its Unrestricted Subsidiaries less the cost of disposition and taxes, if any (but in each case excluding any such amounts included in Consolidated Net Income). (b) The foregoing provisions shall not prohibit: (i) the payment of any dividend 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; (ii) the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company, or the defeasance, redemption or repurchase of subordinated Indebtedness in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of Equity Interests of the Company (other than any Disqualified Stock) or out of the net proceeds of a substantially concurrent cash capital contribution received by the Company; provided that the amount of any such proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from Section 4.2(C)(x); (iii) the repayment, defeasance, redemption or repurchase of subordinated Indebtedness with the net proceeds from an incurrence of Refinancing Indebtedness in a Permitted Refinancing; (iv) the repayment, defeasance, redemption or repurchase of Senior Subordinated Notes for an aggregate purchase price of $15,000,000 or less; (v) any Investment made with the proceeds of a substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of Capital Stock of the Company (other than Disqualified Stock); provided, however, the proceeds of such sale shall not be (and have not been) included in Section 4.12(a)(C) hereof; (vi) other restricted payments of up to $5,000,000 in the aggregate; or (vii) the payment of a dividend or distribution by the Company and its Subsidiaries, directly or indirectly, to ACP Holding in an amount sufficient to permit ACP Holding to pay its consolidated, combined or unitary United States federal, state and local tax liabilities relating to the business of the Company and its Subsidiaries, provided that ACP Holding applies the amount of such dividend or distribution for such purpose at such time; 58 (viii) upon the occurrence of a Change of Control within 60 days of the completion of the offer to repurchase the Notes pursuant to Section 4.21, any purchase, retirement, redemption or other acquisition of subordinated Obligations permitted to be incurred pursuant to this Indenture (including the Senior Subordinated Notes) and only to the extent necessary to comply with the covenants and other provisions of such subordinated Obligations; (ix) payments by the Company to NFC Castings or ACP Holding not to exceed an amount necessary to permit NFC Castings or ACP Holding to (A) make payments in respect to its indemnification obligations owing to directors, officers, or other Persons under NFC Castings' or ACP Holding's charter or by-laws or pursuant to written agreements with any such Person, (B) make payments in respect of its other operational expenses (other than taxes) incurred in the ordinary course of business, or (c) make payments in respect of indemnification obligations and costs and expenses incurred by ACP Holding in connection with any offering of common stock of ACP Holding; or (x) distributions by the Company and the Restricted Subsidiaries in amounts necessary to permit such Person to repurchase securities of such Person from employees of such Person upon the termination of their employment, so long as the aggregate cash amount of all such Distributions by all such Persons, measured at the time when made, does not exceed $250,000 in any fiscal year of the Company. provided, further, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (i), (ii), (iii), (vi), (viii) and (x) no Default or Event of Default shall have occurred and be continuing; provided, further, that the Restricted Payments described in clauses (vii) and (ix), shall not be counted in computing the aggregate amount of all Restricted Payments made pursuant to this Indenture. For purposes of the foregoing calculations, the amount of any Investment that constitutes a Restricted Payment shall be equal to the greater of (i) the net book value of such Investment and (ii) the fair market value of such Investment (in each case as certified by a resolution of the independent directors of the Company if the book value or fair market value of such investment exceeds $1,000,000). 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 this Section 4.12 were computed, which calculations may be based upon the Company's latest available financial statements. SECTION 4.13. LIMITATION ON LIENS. The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Liens on 59 any asset now owned or acquired after the date of this Indenture or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens; provided, that, in the case of Permitted Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes or a Subsidiary Guarantee, the Notes or such Subsidiary Guarantee is secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens, and further provided, that Section 11.1(c) shall be complied with in the case of Permitted Liens securing Indebtedness under the Credit Agreement. SECTION 4.14. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (a) on its Capital Stock or (b) with respect to any other interest or participation in, or measured by, its profits; (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (iii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iv) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except for such encumbrances or restrictions existing under or by reason of (a) the agreements evidencing the Senior Indebtedness and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that they are not materially more restrictive than the similar restrictions contained in those agreements on the date of this Indenture, (b) this Indenture, the Notes, the Senior Subordinated Notes Indenture, the Senior Subordinated Notes and the Collateral Documents, (c) applicable law, (d) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, (e) customary nonassignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (f) Purchase Money Obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iv) above on the property so acquired, (g) 60 Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Refinancing Indebtedness are no more restrictive with respect to the provisions set forth in clauses (i), (ii), (iii) and (iv) above than those contained in the agreements governing the Indebtedness being refinanced; (h) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; or (i) restrictions on cash or other deposits or net worth imposed by customers or suppliers under contracts entered into in the ordinary course of business. SECTION 4.15. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit, cause, or suffer any Restricted Subsidiary of the Company to, directly or indirectly, sell, lease, license, 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 arms' length 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 involving aggregate payments in excess of $500,000, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and such Affiliate Transaction is approved by a majority of the disinterested members, if any, of the Board of Directors and (b) with respect to any Affiliate Transaction involving aggregate payments in excess of $20,000,000, an opinion as to the fairness to the Company or such Restricted Subsidiary from a financial point of view issued by a nationally recognized independent financial advisor; provided, however, that the foregoing limitations shall not apply to (i) any reasonable fees, advances and compensation (including incentive compensation) provided to, and indemnity provided on behalf of, officers, directors and employees of NFC Castings, ACP Holding, the Company and its Restricted Subsidiaries as determined in good faith by the Board of Directors of the Company, (ii) transactions between or among the Company and its Wholly Owned Subsidiaries that are Restricted Subsidiaries, (iii) Restricted Payments permitted by Section 4.12, (iv) payment of principal of, and interest on, the Notes or the Senior Subordinated Notes held by Affiliates, (v) payment of the Commitment Fee, (vi) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors; (vii) transactions pursuant to agreements entered into or in effect on the date of this Indenture, including amendments thereto entered into after the date of this Indenture, provided that 61 (A) the terms of any such amendment are not, in the aggregate, less favorable to the Company or such Restricted Subsidiary than the terms of such agreement prior to such amendment and (B) the transactions contemplated by such amendment are otherwise permitted by this Indenture (viii) Intercompany Indebtedness permitted to be incurred under Section 4.11 hereof or (ix) non-exclusive licenses of intellectual property among the Company and the Restricted Subsidiaries or among the Restricted Subsidiaries. SECTION 4.16. LIMITATION ON LINES OF BUSINESS. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Related Business. SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any sale and leaseback transaction; provided, however, that the Company or any Restricted Subsidiary may enter into a sale and leaseback transaction if: (a) the Company or that Restricted Subsidiary, as applicable, could have (i) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Consolidated Coverage Ratio test set forth in Section 4.11 hereof and (ii) created a Lien on such property securing Attributable Debt pursuant to the provisions of Section 4.13 hereof; (b) the net cash proceeds of such sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee, of the property that is the subject of that sale and leaseback transaction; provided that no Officers' Certificate need be provided if the fair market value of such sale and leaseback transaction, is determined in good faith by the Board of Directors to be less than $1,000,000; and (c) the transfer of assets in such sale and leaseback transaction is permitted by, and the Company or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, the provisions of Section 4.20 hereof. SECTION 4.18. FUTURE GUARANTORS. The Company shall cause each Person that (a) becomes a Domestic Restricted Subsidiary following the date of this Indenture and (b) guarantees any Indebtedness of the Company or any Subsidiary thereof to execute and deliver to the Trustee a Subsidiary Guarantee at the time such Person becomes obligated under any such Guarantee. SECTION 4.19. PAYMENTS FOR CONSENT. Neither the Company, nor any of the Company's Subsidiaries, shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of 62 interest, fee or otherwise, to any holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions hereof or the Notes unless such consideration is offered to be paid or agreed to be paid to all holders of the Notes which so consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.20. ASSET SALES. Neither the Company nor any of its Restricted Subsidiaries shall engage in any Asset Sale, unless: (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise disposed of; and (ii) at least 20% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of Cash or Cash Equivalents; provided, however, that if the Fair Market Value of the assets sold or otherwise disposed of exceeds $10,000,000, at least 75% of the consideration therefor received by the Company or such Restricted Subsidiaries is in the form of Cash or Cash Equivalents; provided, further, however, that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated in right of payment to the Notes) that are assumed by the transferee of any such assets and (b) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted within 60 days by the Company or such Restricted Subsidiary into cash (to the extent of the cash so received), shall be deemed to be cash for purposes of clause (ii) above. Within 180 days after the receipt of the Net Proceeds from an Asset Sale, the Company shall apply the Net Proceeds from such Asset Sale first, to repay or reduce the Term Loan, and to the extent such Indebtedness is paid in full, to repay the Revolver (but shall not permanently reduce the commitment thereunder). Pending the final application of any such Net Proceeds, the Company may invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from the Asset Sale that are not applied as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate cumulative amount of Excess Proceeds exceeds $5,000,000, the Company shall make an offer to all Holders of Notes to purchase the maximum principal amount of Notes that may be purchased with the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus 63 accrued and unpaid interest thereon to the date of purchase, in accordance with the procedures set forth in this Section 4.20 (an "Asset Sale Offer"). To the extent that the aggregate principal amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use such deficiency (i) for general corporate purposes in any manner not prohibited by this Indenture (including the repayment, redemption or repurchase of Senior Subordinated Notes to the extent permitted under Section 4.12(b)(iv) hereof) or (ii) within 60 days of the completion of an Asset Sale Offer, to purchase, retire, redeem or otherwise acquire subordinated Obligations permitted to be incurred pursuant to this Indenture (including the Senior Subordinated Notes) and only to the extent necessary to comply with the covenants and other provisions of such subordinated Obligations. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. In the event that the Company shall be required to commence an Asset Sale Offer to all Holders to purchase Notes pursuant to this Section 4.20, it shall follow the procedures specified below. The Asset Sale Offer shall be commenced within 30 days following the first date on which the Company has cumulative Excess Proceeds of at least $5,000,000 and remain open for a period of at least 30 and not more than 40 days, except to the extent that a longer period is required by applicable law (the "Repurchase Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Repurchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to this Section 4.20 hereof (the "Repurchase Price") or, if Notes having an aggregate principal amount less than the amount of Excess Proceeds subject to such Asset Sale Offer have been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Repurchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee or to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: 64 (a) that the Asset Sale Offer is being made pursuant to this Section 4.20 and the length of time the Asset Sale Offer shall remain open; (b) the Asset Sale Offer, the Repurchase Price and the Repurchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Repurchase Date; (e) that Holders electing to have a Note purchased pursuant to a Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note 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 before the Asset Sale Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Repurchase Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Repurchase Price, the Trustee shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Trustee so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Repurchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written order from the Company 65 shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Repurchase Date. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws, rules and regulations thereunder to the extent such laws, rules and regulations are applicable in connection with the repurchase of Notes pursuant to Asset Sale Offer. SECTION 4.21. CHANGE OF CONTROL. (a) In the event that a Change of Control occurs, each Holder shall have the right, at such Holder's option, subject to the terms and conditions of this Indenture, to require the Company to repurchase all or any part of such Holder's Notes (provided, that the principal amount of such Notes must be $1,000 or an integral multiple thereof) on a date to be established by the Company (the "Change of Control Payment Date") after the occurrence of such Change of Control, at a cash price (the "Change of Control Repurchase Price") equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon to, but excluding, the Change of Control Payment Date. (b) In the event that, pursuant to this Section 4.21, the Company shall be required to commence an offer to purchase Notes (the "Change of Control Offer"), the Company shall follow the procedures set forth in this Section 4.21 as follows: (1) the Company shall prepare and mail, with a copy to the Trustee, or at the option of the Company and at the expense of the Company, mail by the Trustee, the Change of Control Offer within 30 days following a Change of Control to each Holder of Notes; (2) the Change of Control Offer shall remain open for at least 30 and not more than 40 days (unless otherwise required by applicable law) following its commencement, except to the extent that a longer period is required by applicable law; (3) upon the expiration of a Change of Control Offer, the Company shall purchase all Notes tendered in response to the Change of Control Offer; (4) if the Change of Control Payment Date is on or after an interest payment record date and on or before the related Interest Payment Date, any accrued interest will be paid to the Person in whose name a Note is registered at the close of business on such record 66 date, and no additional interest will be payable to Noteholders who tender Notes pursuant to the Change of Control Offer; (5) the Company shall provide the Trustee with notice of the Change of Control Offer at least five Business Days before the commencement of any Change of Control Offer; and (6) on or before the commencement of any Change of Control Offer, the Company or the Trustee (upon the request and at the expense of the Company) shall send, by first-class mail, a notice to each of the Noteholders, which (to the extent consistent with this Indenture) shall govern the terms of the Change of Control Offer and shall state: (i) that the Change of Control Offer is being made pursuant to such notice and this Section 4.21 and that all Notes, or portions thereof, tendered will be accepted for payment; (ii) the Change of Control Repurchase Price (including the amount of accrued and unpaid interest), the Change of Control Payment Date and the Change of Control Put Date; (iii) that any Note, or portion thereof, not tendered or accepted for payment will continue to accrue interest; (iv) that, unless the Company defaults in depositing Cash with the Paying Agent in accordance with the last paragraph of this clause (b) or such payment is prevented pursuant to this Indenture, any Note, or portion thereof, accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (v) that Holders electing to have a Note, or portion thereof, purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent (which may not for purposes of this Section 4.21, notwithstanding anything in this Indenture to the contrary, be the Company or any Affiliate of the Company) at the address specified in the notice prior to the close of business on the earlier of (a) the third Business Day prior to the Change of Control Payment Date and (b) the third Business Day following the expiration of the Change of Control Offer (such earlier date being the "Change of Control Put Date"); 67 (vi) that Holders will be entitled to withdraw their election, in whole or in part, if the Paying Agent (which may not for purposes of this Section 4.21, notwithstanding anything in this Indenture to the contrary, be the Company or any Affiliate of the Company) receives, up to the close of business on the Change of Control Put Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder is withdrawing and a statement that such Holder is withdrawing his election to have such principal amount of Notes purchased; and (vii) a brief description of the events resulting in such Change of Control. On or before the Change of Control Date, the Company shall (i) accept for payment Notes or portions thereof properly tendered pursuant to the Change of Control Offer on or before the Change of Control Payment Date, (ii) deposit with the Paying Agent Cash sufficient to pay the Change of Control Repurchase Price of all Notes or portions thereof so tendered and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate listing the Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to Holders of Notes so accepted payment in an amount equal to the Change of Control Repurchase Price (together with accrued and unpaid interest), and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Note or Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Any Notes not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws, rules and regulations thereunder to the extent such laws, rules and regulations are applicable in connection with the repurchase of Notes pursuant to Change of Control Offer. SECTION 4.22. CALCULATION OF ORIGINAL ISSUE DISCOUNT. The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Notes as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Code from time to time. 68 ARTICLE V SUCCESSORS SECTION 5.1. LIMITATION ON MERGER, CONSOLIDATION OR SALE OF ASSETS. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person or entity unless: (i) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and this Indenture and the Collateral Documents pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately before or immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing; and (iv) the Company or any Person formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Coverage Ratio test set forth in Section 4.11. The preceding clause (iv) shall not prohibit (A) a merger between the Company or a Subsidiary Guarantor and a Restricted Subsidiary or (B) a merger between the Company and an Affiliate with no substantial assets or liabilities for the sole purpose of incorporating or reincorporating or organizing or reorganizing the Company in another state of the United States, or the District of Columbia. 69 SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.1 hereof. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES SECTION 6.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be caused voluntarily or involuntarily or effected, without limitation, by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) failure to pay any installment of interest on any of the Notes as and when the same becomes due and payable, and the continuance of such failure for a period of 30 days, whether or not such payment is prohibited by this Indenture; (b) failure to pay all or any part of the principal of the Notes when and as the same become due and payable at maturity, redemption, repurchase or otherwise, whether or not such payment is prohibited by this Indenture; (c) failure by the Company to comply with the provisions of Section 4.20, Section 4.21 or Article V; (d) failure by the Company or any Restricted Subsidiary to observe or perform any covenant or agreement contained in the Notes, this Indenture (other than a default in the performance of any covenant or agreement which is specifically dealt with elsewhere in this Section 6.1) or the Collateral Documents, and continuance of such failure for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by Holders of at least 25% in aggregate principal amount of the then outstanding Notes, a written notice 70 specifying such failure, requesting it to be remedied and stating that such notice is a "Notice of Default" hereunder; (e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, which default (a) is caused by a failure to pay principal of such Indebtedness when due and prior to the expiration of the grace period provided in such Indebtedness (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case described in clauses (a) and (b) of this subsection (e), the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5,000,000 or more; (f) failure of the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5,000,000, which judgments have not been paid, stayed, bonded or discharged for a period (during which execution shall not be effectively stayed) of 60 days (or, in the case of any such final judgment which provides for payment over time, which shall so remain unstayed, unbonded or undischarged beyond any applicable payment date provided therein); (g) a decree, judgment, or order by a court of competent jurisdiction shall have been entered adjudging the Company or any of its Restricted Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company or any of its Restricted Subsidiaries under any bankruptcy or similar law, and such decree, judgment, or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of competent jurisdiction over the appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the Company, any of its Restricted Subsidiaries, or of the property of any such Person, or for the winding up or liquidation of the affairs of any such Person, shall have been entered, and such decree, judgment, or order shall have remained in force undischarged and unstayed for a period of 60 days; or (h) the Company or any of its Restricted Subsidiaries shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a Custodian, receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of it or any of its assets or property, or shall make a general assignment for the benefit of creditors; or take any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing; 71 (i) any Subsidiary Guaranty relating to the Notes ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty), or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty relating to the Notes; or (j) the security interest under the Collateral Documents shall, at any time, cease to be in full force and effect for any reason other than the satisfaction in full of all Obligations under this Indenture and discharge of this Indenture or any security interest created hereunder or under the Collateral Documents shall be declared invalid or unenforceable or the Company or any Restricted Subsidiary shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable. Notwithstanding the 30-day period and notice requirement contained in Section 6.1(d) above, with respect to a default under Section 4.21, the 30-day period referred to in Section 6.1(d) shall be deemed to have begun as of the date the Change of Control notice is required to be sent in the event that the Company has not complied with the provisions of Section 4.21 and the Trustee or Holders of at least 25% in principal amount of the outstanding Notes thereafter give the Notice of Default referred to in Section 6.1(d) to the Company and, if applicable, the Trustee; provided, however, that if the breach or default is a result of a default in the payment when due of the Repurchase Price on the Repurchase Date, such Event of Default shall be deemed, for purposes of this Section 6.1, to arise no later than on the last Repurchase Date. SECTION 6.2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT. (a) If an Event of Default (other than an Event of Default specified in Section 6.1(g) or 6.1(h) relating to the Company) occurs and is continuing, then, and in every such case, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of then outstanding Notes, by a notice in writing to the Company (and to the Trustee if given by such Holders) (an "Acceleration Notice"), may declare all of the principal of the Notes (or the Repurchase Price if the Event of Default includes failure to pay the Repurchase Price, determined as set forth below), including in each case accrued and unpaid interest thereon and all other Obligations thereunder, to be due and payable immediately. If an Event of Default specified in Section 6.1(g) or 6.1(h) relating to the Company occurs, all principal, accrued and unpaid interest thereon and all other Obligations thereunder will become immediately due and payable on all outstanding Notes without any other act, declaration or notice on the part of Trustee or the Holders. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article VI, the Holders of no less than a majority in aggregate principal amount of then outstanding Notes, by written notice to the Trustee, may rescind and annul, on behalf of all Holders, any such declaration of acceleration if: 72 (1) Company has paid or deposited with the Trustee Cash sufficient to pay (A) all overdue interest on all Notes, (B) the principal of any Notes which would then be due otherwise than by such declaration of acceleration, and interest thereon at the rate borne by the Notes, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes, and (D) all sums paid or advanced by the Trustee hereunder and the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; (2) all Events of Default, other than the non-payment of the principal of, and interest on, Notes that have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.12, including, if applicable, any Event of Default relating to the covenants contained in Section 4.21. Notwithstanding the previous sentence of this Section 6.2, no waiver shall be effective against any Holder for any Event of Default or event which with notice or lapse of time or both would be an Event of Default with respect to any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Note affected thereby, unless all such affected Holders agree, in writing, to waive such Event of Default or other event. No such waiver shall cure or waive any subsequent Default or Event of Default or impair any right consequent thereon. (b) In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of this Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to September 30, 2007, 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 such date, then, premium shall be paid by the Company upon acceleration of the Notes, and in an amount, for each of the years beginning on September 30 of the years set forth below:
YEAR PERCENTAGE - ---- ---------- 2003................................................ 111.000% 2004................................................ 109.625% 2005................................................ 108.250% 2006................................................ 106.875%
73 SECTION 6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if an Event of Default in payment of principal, premium or interest specified in clause (a) or (b) of Section 6.1 occurs and is continuing, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal, premium, interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate borne by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the reasonable costs and expenses of collection, including compensation to, and reasonable expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust in favor of the Holders, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 6.4. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise to take any and all actions under the TIA, including (1) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, 74 expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same in accordance with Section 6.6; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment, or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust in favor of the Holders, and any recovery of judgment shall, after provision for the payment of compensation to, and expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. SECTION 6.6. PRIORITIES. Any money collected by the Trustee pursuant to this Article VI shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the Trustee in payment of all amounts due pursuant to Section 7.7; SECOND: To the holders of Senior Indebtedness of the Company; 75 THIRD: To the Holders in payment of the amounts then due and unpaid for principal of, and interest on, the Notes in respect or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal, premium and interest, respectively; and FOURTH: The remainder, if any, shall be repaid to the Company. SECTION 6.7. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute or order or direct the Trustee to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (A) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (B) the Holders of not less than 25% in principal amount of then outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (C) such Holder or Holders have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred or reasonably probable to be incurred in compliance with such request; (D) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (E) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of then outstanding Notes; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. 76 SECTION 6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision of this Indenture but subject to the provisions of Section 6.6, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of, and interest on, such Note when due (including, in the case of redemption, the Redemption Price on the applicable Redemption Date, and in the case of the Repurchase Price, on the applicable Repurchase Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 6.9. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 6.10. DELAY OR OMISSION NOT WAIVER. No delay or omission by the Trustee or by any Holder of any Note to exercise any right or remedy arising upon any Event of Default shall impair the exercise of any such right or remedy or constitute a waiver of any such Event of Default. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 6.11. CONTROL BY HOLDERS. The Holder or Holders of no less than a majority in aggregate principal amount of then outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee, provided, that (1) the Trustee may refuse to follow any direction that conflicts with any rule of law or with this Indenture, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or that may involve the Trustee in personal liability, and 77 (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. In the event the Trustee takes any action or follows any direction pursuant to this Indenture, the Trustee shall be entitled to indemnification reasonably satisfactory to it against any loss, expense or liability caused by taking such action or following such direction. SECTION 6.12. WAIVER OF PAST DEFAULT. The Holder or Holders of not less than a majority in aggregate principal amount of then outstanding Notes may, on behalf of all Holders, prior to the declaration of acceleration of the maturity of the Notes, waive any past default hereunder and its consequences, except a default (A) in the payment of the principal of, or interest on, any Note not yet cured, or (B) in respect of a covenant or provision hereof which, under Article IX, cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair the exercise of any right arising therefrom. In the event of a waiver, the Company shall deliver to the Trustee an Officer's Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents. When a Default or Event of Default is waived, it is cured and ceases. SECTION 6.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted to be taken by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 6.13 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of then outstanding Notes, or to any suit instituted by any Holder for enforcement of the payment of principal of, or 78 interest on any Note on or after the respective Stated Maturity of such Note (including, in the case of redemption, on or after the Redemption Date). SECTION 6.14. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. ARTICLE VII TRUSTEE The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and agrees to perform the same, as herein expressed. SECTION 7.1. DUTIES OF TRUSTEE. (a) If a Default or an Event of Default actually known to the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of a Default or an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no others, and no covenants or obligations shall be implied in or read into this Indenture as against the Trustee. (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, with respect to certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. 79 (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.1. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.11 and the Trustee shall be entitled from time to time to request and receive such direction. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or at the request, order or direction of the Holders or in the exercise of any of its rights or powers unless it receives reasonable indemnity satisfactory to it against any loss, liability or expense. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section 7.1. (f) The Trustee shall not be liable for interest on any assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. SECTION 7.2. RIGHTS OF TRUSTEE. Subject to Section 7.1: (a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in any such document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Sections 14.4 and 14.5. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or advice of counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. 80 (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture. (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby. (g) Unless otherwise specifically provided for in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (h) The Trustee shall have no duty to inquire as to the performance of the Company's covenants in Article IV hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 6.1(a) or 6.1(b), or (ii) any Default or Event of Default of which a Trust Officer of the Trustee shall have received written notification or obtained actual knowledge. (i) Subject to Section 9.2 hereof, the Trustee may (but shall not be obligated to), without the consent of the Holders, give any consent, waiver or approval required by the terms hereof. The Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any consent, waiver, approval, amendment or modification shall be deemed to have a material adverse effect on the interest or rights of any Holder. (j) In no event shall the Trustee be responsible or liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. (k) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder. 81 SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any of its Subsidiaries, or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights; however, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.4. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture, the Collateral Documents or the Notes and it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement in the Notes, other than the Trustee's certificate of authentication, or the use or application of any funds received by a Paying Agent other than the Trustee. SECTION 7.5. NOTICE OF DEFAULT. Except in the case of a Default or an Event of Default in payment of principal of, or interest on any Note (including the payment of the Repurchase Price on the Repurchase Date and the payment of the Redemption Price on the Redemption Date), the Trustee may withhold the notice if and so long as a Trust Officer in good faith determines that withholding the notice is in the interest of the Noteholders. SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall, if required by TIA Section 313(a), mail to each Noteholder a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b) and 313(c). The Company shall promptly notify the Trustee in writing if the Notes become listed on any stock exchange or automatic quotation system or delisted therefrom. A copy of each report at the time of its mailing to Noteholders shall be mailed to the Company and filed with the Commission, if required by law, and each stock exchange, if any, on which the Notes are listed. SECTION 7.7. COMPENSATION AND INDEMNITY. The Company agrees to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company shall also reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses shall include the 82 reasonable compensation, disbursements and expenses of the Trustee's agents, accountants, experts and counsel. The Trustee shall not be under any obligation to institute any suit, or take any remedial action under this Indenture, or to enter any appearance or in any way defend any suit in which it may be a defendant, or to take any steps in the execution of the trusts created hereby or thereby or in the enforcement of any rights and powers under this Indenture, until it shall be indemnified to its reasonable satisfaction against any and all expenses, disbursements, advances and other liabilities incurred or made by the Trustee in accordance with any provisions of this Indenture, including compensation for services, costs, expenses, outlays, counsel fees and other disbursements, and against all liability not due to its own negligence or willful misconduct. The Company agrees to indemnify the Trustee (in its capacities as Trustee, Paying Agent, Registrar and Note Custodian) and each of its officers, directors, attorneys-in-fact and agents for, and hold it and each of them harmless against, any claim, demand, expense (including but not limited to reasonable compensation, disbursements and expenses of the Trustee's agents and counsel), loss, damage or liability incurred by it, arising out of or in connection with the administration of this trust and its rights or duties hereunder including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee of which a Trust Officer receives written notice for which it may seek indemnity; however, unless the position of the Company is prejudiced by such failure, the failure of the Trustee to promptly notify the Company shall not limit its right to indemnification. The Company shall defend each such claim. The Trustee may retain separate counsel if the Trustee shall have been reasonably advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Company shall reimburse the Trustee for the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its own negligence, bad faith or willful misconduct. To secure the Company's payment obligations in this Section 7.7, the Company and the Holders agree that the Trustee shall have a lien prior to the Notes on all assets held or collected by the Trustee, in its capacity as Trustee, except assets held in trust to pay principal of, or interest on particular Notes pursuant to Article III. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(f) or (g) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. 83 The Company's obligations under this Section 7.7 and any lien arising hereunder shall survive the resignation or removal of the Trustee, the discharge of the Company's obligations pursuant to Article VIII of this Indenture and any rejection or termination of this Indenture under any Bankruptcy Law. SECTION 7.8. REPLACEMENT OF TRUSTEE. The Trustee may resign by so notifying the Company in writing. The Holder or Holders of a majority in principal amount of then outstanding Notes may remove the Trustee by so notifying the Company and the Trustee in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10; (b) the Trustee is adjudged bankrupt or insolvent; (c) a receiver, Custodian, or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of this Section 7.8. If the instrument of acceptance by a successor Trustee required by this Section 7.8 shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the removed Trustee may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee. 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. At any time within one year after a successor Trustee appointed by the Company takes office, the Holder or Holders of a majority in principal amount of then outstanding Notes may, with the Company's consent, appoint a successor Trustee to replace such successor Trustee as so appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that and provided that all sums owing to the retiring Trustee provided for in Section 7.7 have been paid, the retiring Trustee shall transfer all property held by it as trustee to the successor Trustee, subject to the lien provided in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. 84 If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the Company or any Holder or Holders of at least 10% in principal amount of 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 or Holders of at least 10% in principal amount of then outstanding Notes may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Any successor Trustee shall comply with TIA Section 310(a)(5). Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall continue for the benefit of the retiring Trustee. SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee, provided such corporation shall be otherwise eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and delivery the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus of at least $50,000,000 (or being a member or subsidiary of a bank holding system with aggregate combined capital and surplus of at least $50,000,000) as set forth in its most recent published annual report of condition if such corporation or system publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation or system shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company, as obligor of the Notes. 85 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. SECTION 7.12. "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article VII and in Article X hereof shall in each case (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 VII and in Article X hereof in place of the Trustee. ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII. SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.2, the Company and each of the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.4 hereof, and as more fully set forth in such Section, payments in respect of the principal, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes 86 under Article II and Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article VIII. Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 hereof. SECTION 8.3. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3, the Company and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be released from its obligations under the covenants contained in Sections 4.4, 4.5, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17, 4.18, 4.19, 4.20 and 4.21 hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance") and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Subsidiary Guarantees, the Company and the Subsidiary Guarantors, respectively, may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant or Subsidiary Guarantee, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein, in a Subsidiary Guarantee or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1 hereof, but, except as specified above, the remainder of this Indenture, such Notes and Subsidiary Guarantees shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3 hereof, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(c) through 6.1(g) hereof shall not constitute Events of Default. SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.2 or 8.3 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent certified public accountants, to pay the principal of, and interest on the outstanding Notes on the Stated Maturity thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; 87 (b) in the case of an election under Section 8.2 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel from nationally recognized tax counsel reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.3 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel from nationally recognized tax counsel 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 and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; (f) 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 over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; (g) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and (h) the deposit shall not result in the Company, the Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940, as amended. 88 SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.6 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article VII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.6. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest on any Note and remaining unclaimed for two years after such principal, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon 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. 89 SECTION 8.7. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Note; shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. SECTION 8.8. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE. When (a)(i) the Company delivers to the Trustee all outstanding Notes for cancellation or (ii) all outstanding Notes have become due and payable, whether at maturity or on a specified redemption date as a result of the mailing of a notice of redemption pursuant to Article III hereof, (b) the Company irrevocably deposits with the Trustee money sufficient to pay at maturity or upon redemption all outstanding Notes, including interest and premium thereon to maturity or such redemption date, and if in either case the Company pays all other sums payable hereunder by the Company, and (c) if the Notes have been called for redemption and the redemption date has not occurred, the Company delivers to the Trustee 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 actions and will be subject to federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such actions had not occurred, then this Indenture shall cease to be of further effect except for (i) the provisions set forth in Article II, Section 4.7, 7.7 and 8.6 hereof and (ii) if the Notes have been called for redemption and the redemption date has not occurred, the Company's obligation to pay the redemption price on such redemption date. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Company. ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.1. WITHOUT CONSENT OF HOLDERS. The Company, the Subsidiary Guarantors and the Trustee may amend or supplement this Indenture, the Collateral Documents or the Notes without the consent of any Holder of Notes: 90 (i) to cure any ambiguity, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to provide for the assumption of the Company's or a Subsidiary Guarantor's Obligations to Holders in the case of a merger or consolidation; (iv) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Notes; (v) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (vi) to make, complete or confirm any grant of Collateral permitted or required by this Indenture or any release of Collateral that becomes effective as set forth in this Indenture; (vii) to enter into additional or supplemental Collateral Documents. (viii) to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture as of the date hereof; or (ix) to allow any Subsidiary Guarantor to execute a supplemental indenture and/or a Subsidiary Guarantee with respect to the Notes. Upon the request of the Company, accompanied by a resolution of the Board of Directors of the Company, authorizing the execution of any such supplemental indenture or amendment, and upon receipt by the Trustee of the documents described in Section 9.6 hereof required or requested by the Trustee, the Trustee shall join with the Company and the Subsidiary Guarantors in the execution of any supplemental indenture or amendment authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into such supplemental indenture or amendment which affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.2. WITH CONSENT OF HOLDERS. Except as otherwise provided herein, the Company and the Trustee may amend or supplement this Indenture, the Collateral Documents, the Notes or the Subsidiary Guarantees with the written 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). 91 Upon the request of the Company, accompanied by a resolution of the Board of Directors of the Company authorizing the execution of any such supplemental indenture or amendment, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Company and the Subsidiary Guarantors in the execution of such supplemental indenture or amendment unless such supplemental indenture or amendment affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed supplemental indenture or amendment, but it shall be sufficient if such consent approves the substance thereof. After a supplemental indenture or amendment under this Section 9.2 becomes effective, the Company shall mail to the Holders of each Note affected thereby a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture, amendment or waiver. Subject to Sections 6.8 and 6.12 hereof, the Holders of a majority in principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder of Notes affected, an amendment or waiver under this Section may not (with respect to any Notes held by a non-consenting Holder of Notes): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter the optional or mandatory redemption provisions (other than provisions relating to the covenants described in Section 4.20 or 4.21) or reduce the prices at which the Company shall offer to purchase such Notes pursuant to Sections 4.20 or 4.21 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or interest on, or redemption payment with respect to, any Note (other than a Default in the payment of an amount due as a result of an acceleration if the Holders of Notes rescind such acceleration pursuant to Section 6.2); (e) make any Note payable in money other than that stated in the Note; 92 (f) make any change in the provisions of this Indenture relating to waiver of past defaults or to the rights of Holders to receive payments of principal of, or interest on the Notes or in this sentence of this Section 9.2; (g) waive a redemption payment with respect to any Note; (h) release all or substantially all of the Collateral from the Lien of this Indenture or the Collateral Documents (except in accordance with the provisions hereof or thereof) (i) make any change in the foregoing amendment and waiver provisions. SECTION 9.3. COMPLIANCE WITH TIA. If at the time of an amendment to this Indenture or the Notes, this Indenture shall be qualified under the TIA, every amendment to this Indenture or the Notes shall be set forth in a supplemental indenture that complies with the TIA as then in effect. SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS. Until a supplemental indenture, an amendment 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 debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subsequent Holder may revoke the consent as to such Holder's Note or portion of such Note by notice to the Trustee or the Company received before the date specified in any solicitation or waiver. Subject to Section 9.2 hereof, a supplemental indenture, amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder of Notes. The Company may fix a record date for determining which Holders must consent to such supplemental indenture, amendment or waiver or action permitted by Section 9.2. If the Company fixes a record date, the record date shall be fixed at the later of (i) 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.5, or (ii) such other date as the Company shall designate. SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about a supplemental indenture, amendment 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 or waiver. 93 Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment or waiver. SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article IX if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be provided with, if requested, an indemnity reasonably satisfactory to it and, subject to Section 7.1, shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith or therewith, and that it will be valid and binding upon the Company in accordance with its terms. The Company may not sign an amendment or supplemental indenture until the Board of Directors of the Company approves it in writing. ARTICLE X GUARANTEE OF NOTES SECTION 10.1. SUBSIDIARY GUARANTEE. Subject to Section 10.6 hereof, each of the Subsidiary Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes, the Collateral Documents and the Obligations of the Company hereunder and thereunder, that: (a) the principal of, and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal, premium, (to the extent permitted by law) interest on the Notes, and all other payment Obligations of the Company to the Holders or to the Trustee hereunder or thereunder will be promptly paid in full and performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. An Event of Default under this Indenture or the Notes shall constitute an event of default under the Subsidiary Guarantees, and shall entitle the Holders to accelerate, the Obligations of the Subsidiary Guarantors hereunder in the same manner and to the same extent as the Obligations of the Company. The Subsidiary 94 Guarantors hereby agree that their Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary 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 this Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors, or any Note Custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by the Company or any Subsidiary Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor agrees that it shall not be entitled to, and hereby waives, any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (a) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of its Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (b) in the event of any declaration of acceleration of such Obligations as provided in Article VI hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purpose of its Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees. SECTION 10.2. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE. To evidence its Subsidiary Guarantee set forth in Section 10.1 hereof, each Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form of Exhibit E to the Indenture shall be endorsed by manual or facsimile signature by an Officer of such Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Subsidiary Guarantor, by manual or facsimile signature, by an Officer of such Subsidiary Guarantor. After the date of this Indenture, if the Company or any or its Restricted Subsidiaries shall acquire or create a Domestic Restricted Subsidiary, or redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary, then the Company shall cause such Restricted Subsidiary to execute a Subsidiary Guarantee substantially in the form of 95 Exhibit B. Such Subsidiary Guarantee shall be accompanied by an appropriate supplemental Indenture, along with such other opinions, certificates and documents required under this Indenture; provided, however, that any Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with this Indenture need not execute a Subsidiary Guarantee for so long as it continues to constitute an Unrestricted Subsidiary. Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. If an Officer whose signature is on this Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Senior Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors. SECTION 10.3. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. (a) Notwithstanding Articles 4 and 5 hereof, nothing contained in this Indenture shall prohibit (i) a merger between a Subsidiary Guarantor and another Subsidiary Guarantor, (ii) a merger between a Subsidiary Guarantor and the Company, (iii) a liquidation, dissolution or winding up of any Inactive Subsidiary resulting in the transfer or distribution of all the assets and properties of such Inactive Subsidiary to the Company or to any Subsidiary Guarantor, or (iv) a sale, lease, transfer or other disposition of a Non-Core Fixed Asset. (b) No Subsidiary Guarantor shall consolidate or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets (other than the Non-Core Fixed Assets) in one or more related transactions to another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless, other than with respect to a merger between a Subsidiary Guarantor and another Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the Company or a liquidation, dissolution or winding up of an Inactive Subsidiary as permitted under Section 10.3(a)(iii) hereof, (i) the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made, is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) subject to the provisions of Section 10.4 hereof, the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or the Person to which such sale, assignment, transfer, lease, 96 conveyance or other disposition shall have been made, assumes all the obligations of such Subsidiary Guarantor under the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately before or immediately after giving effect to such transaction, no Default or Event of Default exists; (iv) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Coverage Ratio test set forth in the first paragraph of Section 4.11 hereof. (c) In the case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Subsidiary Guarantor, such successor Person shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor; provided that, solely for purposes of computing pro forma EBITDA and the Consolidated Coverage Ratio for purposes of Section 4.11 hereof, the pro forma EBITDA of any Person other than the Company and its Restricted Subsidiaries shall only be included for periods subsequent to the effective time of such merger, consolidation, combination or transfer of assets. Such successor Person thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All of the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. SECTION 10.4. RELEASES FOLLOWING SALE OF ASSETS. In the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Subsidiary Guarantor) shall be released and relieved of any obligations under its Subsidiary Guarantee; provided that (i) in the event of an Asset Sale, the Net Proceeds from such sale or other dispositions are treated in accordance with the provisions of Section 4.20 hereof and (ii) the Company is in compliance with all other provisions of this Indenture applicable to such disposition. Upon delivery by the Company to the Trustee of an Officers' Certificate to the effect of the foregoing, the Trustee shall execute any documents reasonably required in order to evidence the release of any Subsidiary Guarantor from its Obligation under its Subsidiary Guarantee. Any Subsidiary Guarantor not released from its Obligations under its Subsidiary Guarantee shall, subject to Section 10.6, remain liable for the full amount of principal of, and 97 interest on the Notes and for the other Obligations of such Subsidiary Guarantor under this Indenture as provided in this Article X. SECTION 10.5. RELEASES FOLLOWING DESIGNATION AS AN UNRESTRICTED SUBSIDIARY. In the event that the Company designates a Subsidiary Guarantor to be an Unrestricted Subsidiary, then such Subsidiary Guarantor shall be released and relieved of any obligations under its Subsidiary Guarantee; provided that such designation is conducted in accordance with this Indenture. SECTION 10.6. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY. For purposes hereof, each Subsidiary Guarantor's liability shall be limited to the lesser of (a) the aggregate amount of the Obligations of the Company under the Notes and this Indenture and (b) the amount, if any, which would not have (i) rendered such Subsidiary Guarantor insolvent (as such term is defined in the Bankruptcy Law) or (ii) left such Subsidiary Guarantor with unreasonably small capital at the time its Subsidiary Guarantee of the Notes was entered into; provided that, it will be a presumption in any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in clause (a) above unless any creditor, or representative of creditors of such Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of the Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Subsidiary Guarantor is the amount set forth in clause (b) above. In making any determination as to solvency or sufficiency of capital of a Subsidiary Guarantor in accordance with the previous sentence, the right of such Subsidiary Guarantor to contribution from other Subsidiary Guarantors, and any other rights such Subsidiary Guarantor may have, contractual or otherwise, shall be taken into account. ARTICLE XI COLLATERAL AND COLLATERAL DOCUMENTS SECTION 11.1. COLLATERAL AND COLLATERAL DOCUMENTS. (a) In order to secure the due and punctual payment of the Notes, the Company and the Subsidiary Guarantors have entered into the Collateral Documents to create the Note Liens on the Collateral in accordance with the terms thereof. Pursuant to the provisions of the Lien Subordination Agreement, the Collateral Documents and this Indenture, the rights and remedies of the Trustee and the Holders of the Notes in the Collateral shall be subordinate and subject to the rights and remedies of the holders of the Priority Liens in accordance with the terms of the Lien Subordination Agreement and the Collateral Documents. In the event of a conflict among the terms of this Indenture, the Collateral Documents and the Lien Subordination Agreement, the Lien Subordination Agreement shall control. 98 (b) Each Holder of a Note, by accepting such Note, agrees to all of the terms and provisions of the Collateral Documents and the Lien Subordination Agreement and hereby authorizes and directs the Trustee to enter into such Collateral Documents and Lien Subordination Agreement. (c) Neither the Company nor any Subsidiary Guarantors shall, or shall cause or permit any of its Domestic Restricted Subsidiaries to, grant a Lien on any of its Collateral to the Agent under the Credit Agreement for the benefit of the lenders under the Credit Agreement unless a Note Lien is created in favor of the Trustee (for the benefit of the Noteholders) with respect to such property or assets. SECTION 11.2. APPLICATION OF PROCEEDS OF COLLATERAL. Upon any realization upon the Collateral, the proceeds thereof shall be applied in accordance with the terms of the Lien Subordination Agreement and the terms hereof. SECTION 11.3. POSSESSION, USE AND RELEASE OF COLLATERAL. (a) Subject to the terms of the Lien Subordination Agreement and the Collateral Documents, the Company and the Subsidiary Guarantors will have the right to remain in possession of the Collateral securing the Notes and any Subsidiary Guarantees (other than any Collateral deposited with the agent in accordance with the provisions of the Credit Agreement and other than as set forth in the Lien Subordination Agreement and the Collateral Documents), to freely operate the Collateral and to collect, invest and dispose of any income thereon. (b) Each Holder of a Note, by accepting such Note, acknowledges that (i) the Lien Subordination Agreement and the Collateral Documents shall provide that so long as any Priority Lien Obligations are outstanding, the holders thereof shall have the exclusive right and authority to determine the release, sale, or other disposition with respect to the Collateral and (ii) the holders of the Priority Lien Obligations may (x) direct the Trustee to take actions with respect to the Collateral (including the release of the Collateral and the manner of realization) without the consent of the Holders and (y) agree to modify the Priority Lien Security Documents, without the consent of the Holders or the Trustee, to secure additional Indebtedness and additional secured creditors so long as such modifications do not expressly violate the provisions of the Lien Subordination Agreement, the Credit Agreement or this Indenture. Subject to the terms of the Collateral Documents, if at any time or from time to time Collateral which also secures the Priority Lien Obligations is released or otherwise disposed of pursuant to the Lien Subordination Agreement, such Collateral securing the Notes and any Subsidiary Guarantees shall be automatically released or disposed of; provided, however, that if an Event of Default under this Indenture exists or any Note Obligation remains outstanding as of the date on which the Priority Lien Obligations are repaid in full, the Note Liens on the proceeds from the sale, transfer or other disposition of such Collateral securing the Notes and the Subsidiary Guarantees shall not be released until such event of Default and all other 99 Events of Default shall have been cured or otherwise waived and all such outstanding Note Obligations are paid in full in accordance with the terms of this Indenture, except to the extent such Collateral was disposed of in order to repay the Priority Lien Obligations. (c) At such time as (i) the Priority Lien Obligations have been paid in full in Cash in accordance with the terms thereof, and all commitments and letters of credit thereunder have been terminated or collateralized to the satisfaction of the holders thereof, or (ii) the holders of Priority Lien Obligations have released their Priority Liens on all or any portion of the Collateral, the Note Liens on the Collateral shall also be automatically released to the same extent; provided, however, that (x) in the case of clause (i) of this sentence, if an Event of Default under this Indenture exists or any Note Obligation remains outstanding as of the date on which the Priority Lien Obligations are repaid in full or terminated as described in clause (i) the Note Liens on the proceeds from the sale, transfer or other disposition of the Collateral shall not be released except to the extent the Collateral or any portion thereof was disposed of in order to repay Priority Lien Obligations secured by the Collateral, and thereafter, the Trustee (acting at the direction of the Holders of a majority of outstanding principal amount of Notes) shall have the exclusive right and authority to foreclose upon the Collateral (but in such event, the Note Liens shall be released when such Event of Default and all other Events of Default under this Indenture cease to exist and all such outstanding Note Obligations are paid in full in accordance with the terms of this Indenture) or (y) in the case of clause (ii) of this sentence, if the Priority Lien Obligations (or any portion thereof) are thereafter secured by assets that would constitute Collateral, the Notes and any Subsidiary Guarantees shall then be secured by a Note Lien on such Collateral, to the same extent provided pursuant to the Collateral Documents and the Lien Subordination Agreement as then in effect immediately prior to the release of the Liens on the Collateral. If the Company subsequently enters into a new Credit Agreement or other Priority Lien Obligations which are secured by assets of the Company, the Subsidiary Guarantors and/or their Domestic Restricted Subsidiaries of the type constituting Collateral, then the Notes and the Subsidiary Guarantees shall be secured at such time by a Note Lien on the collateral securing such Priority Lien Obligations (to the extent such assets are of the type which constitute Collateral) to the same extent (in all material respects) and with the same (in all material respects) priorities, consent rights and provisions regarding release of Collateral and other provisions set forth in the Collateral Documents and the Lien Subordination Agreement as then in effect immediately prior to the release of the Liens on the Collateral. (d) Notwithstanding the provisions set forth in this Section 11.3, the Company and its Subsidiaries may, without any release or consent by the Trustee, take any and all actions in the ordinary course of business in respect of the Collateral to the extent permitted under the Collateral Documents and this Indenture. SECTION 11.4. OPINION OF COUNSEL. So long as the Collateral Documents have not been terminated in accordance with the terms thereof, the Company shall deliver to the Trustee, so long as 100 such delivery is required by Section 314(b) of the TIA, on the Issue Date and thereafter, at least annually, within 30 days of September 30 of each year (commencing with September 30, 2004), an Opinion of Counsel either stating that in the opinion of such counsel, such action has been taken with respect to the recording, filing, recording and refiling of the Indenture or any Collateral Document as is necessary to maintain the Note Liens, and reciting the details of such action, or stating that in the opinion of such counsel, no such action is necessary to maintain such Note Liens. SECTION 11.5. FURTHER ASSURANCES. Each of the Company and any Subsidiary Guarantor and each Domestic Restricted Subsidiary shall, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Trustee from time to time such lists, descriptions and designations of its Collateral, warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the Note Liens, which the Trustee under the Collateral Documents deems reasonably appropriate or advisable to perfect, preserve or protect the security interest of the Note Lien in the Collateral. SECTION 11.6. TRUST INDENTURE ACT REQUIREMENTS. The release of any Collateral from the Note Lien of any of the Collateral Documents or the release of, in whole or in part, the Note Liens created by any of the Collateral Documents, will not be deemed to impair the Note Lien in contravention of the provisions hereof if and to the extent the Collateral or Note Liens are released pursuant to the applicable Collateral Documents and the terms hereof. Each of the Holders of the Notes acknowledges that a release of Collateral or Note Liens strictly in accordance with the terms of the Collateral Documents and the terms hereof will not be deemed for any purpose to be an impairment of the Collateral, the Collateral Documents or otherwise contrary to the terms of this Indenture. So long as any Priority Lien Obligations are outstanding, the Company and the Subsidiary Guarantors shall comply with TIA Section 314(d) relating to the release of property or securities from the Note Liens hereof but only to the extent required by the TIA. SECTION 11.7. SUITS TO PROTECT THE COLLATERAL. Subject to the provisions of the Lien Subordination Agreement and the Collateral Documents, the Trustee shall have the authority to institute and to maintain such suits and proceedings as the Trustee may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Collateral Documents or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of the Notes in the Collateral (including suits or proceedings to restrain the enforcement of 101 or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Note Liens or be prejudicial to the interests of the Holders of the Notes). SECTION 11.8. PURCHASER PROTECTED. In no event shall any purchaser in good faith or other transferee of any property purported to be released hereunder or under the Lien Subordination Agreement and the Collateral Documents be bound to ascertain the authority of the Trustee to execute the release or to inquire as to the satisfaction of any conditions required by the provisions hereof for the exercise of such authority or to see to the application of any consideration given by such purchaser or other transferee; nor shall any purchaser or other transferee of any property or rights permitted to be sold by the Lien Subordination Agreement and the Collateral Documents, be under obligation to ascertain or inquire into the authority of the Company, any Subsidiary Guarantor or any Domestic Restricted Subsidiary, as applicable, to make any such sale or other transfer. SECTION 11.9. POWERS EXERCISABLE BY RECEIVER OR TRUSTEE. In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article XI upon the Company, any Subsidiary Guarantor or any Domestic Restricted Subsidiary, as applicable, with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Company, any Subsidiary Guarantor or any Domestic Restricted Subsidiary, as applicable, or of any officer or officers thereof required by the provisions of this Article XI. SECTION 11.10. RELEASE UPON TERMINATION OF COMPANY'S OBLIGATIONS. In the event that the Company delivers an Officers' Certificate and Opinion of Counsel certifying that its obligations under this Indenture have been satisfied and discharged by complying with the provisions of Article VIII, the Trustee shall (i) execute and deliver such releases, termination statements and other instruments (in recordable form, where appropriate) as the Company, any Subsidiary Guarantor or any Domestic Restricted Subsidiary, as applicable, may reasonably request to evidence the termination of the Note Liens created by the Collateral Documents and (ii) not be deemed to hold the Note Liens for its benefit and the benefit of the Holders of the Notes. 102 ARTICLE XII MISCELLANEOUS SECTION 12.1. TIA CONTROLS. If any provision of this Indenture limits, qualifies, or conflicts with the duties imposed by operation of the TIA, the imposed duties, whether or not this Indenture has been qualified under the TIA, shall control. SECTION 12.2. NOTICES. Any notices or other communications to the Company or the Trustee required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by telecopier, by first class mail postage pre-paid or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company: Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Gary W. LaChey Telecopy: (920) 725-7000 with a copy to: Kirkland & Ellis LLP 153 East 53rd Street New York, NY 10022 Attention: Joshua N. Korff, Esq. Telecopy: (212) 446-4900 if to the Trustee: The Bank of New York 101 Barclay Street, 8th Floor West New York, NY 10286 Attention: Corporate Trust Administration Telecopy: (212) 815-5707 Any party by notice to each other party may designate additional or different addresses as shall be furnished in writing by such party. Any notice or communication to any party shall be deemed to have been given or made as of the date so delivered, if personally delivered; when answered back, if telexed; when receipt is 103 acknowledged, if telecopied; and five Business Days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Noteholder shall be mailed to him or her by first class mail or other equivalent means at his or her address as it appears on the registration books of the Registrar and shall be sufficiently given to him or her if so mailed within the time prescribed. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c). SECTION 12.4. 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 fully complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been fully complied with. SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 104 (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been fully complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been fully complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters and information which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. The Trustee may make reasonable rules for action by or at a meeting of Noteholders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 12.7. BUSINESS DAY. If a payment date is other than a Business Day at such place, payment may be made at such place on the next succeeding Business Day, and no interest shall accrue for the intervening period. 105 SECTION 12.8. GOVERNING LAW. THIS INDENTURE, THE NOTES, THE SUBSIDIARY GUARANTEES AND THE COLLATERAL DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. NO RECOURSE AGAINST OTHERS. No direct or indirect partner, employee, stockholder, director or officer, as such, past, present or future of the Company or any successor corporation, shall have any personal liability in respect of the obligations of the Company under the Notes or this Indenture by reason of his, her or its status as such partner, stockholder, employee, director or officer. Each Noteholder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. SECTION 12.11. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.12. DUPLICATE ORIGINALS. All parties may sign any number of copies or counterparts of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. SECTION 12.13. SEVERABILITY. In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. 106 SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and headings of the Articles and the Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 12.15. QUALIFICATION OF INDENTURE. The Company shall qualify this Indenture under the TIA and shall pay all costs and expenses (including attorneys' fees for the Company and the Trustee) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the Notes and printing this Indenture and the Notes. The Trustee shall be entitled to receive from the Company any such Officers' Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the TIA. SECTION 12.16. REGISTRATION RIGHTS Certain Holders of the Notes are entitled to certain registration rights with respect to such Notes pursuant to, and subject to the terms of, the Registration Rights Agreement. 107 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written. NEENAH FOUNDRY COMPANY By: /s/ Gary W. LaChey Name: Gary W. LaChey ------------------------- Title: Vice President-Finance, Treasurer, Secretary, & CFO ADVANCED CAST PRODUCTS, INC. By: /s/ Gary W. LaChey ------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary, & CFO DALTON CORPORATION By: /s/ Gary W. LaChey ------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary, & CFO DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By: /s/ Gary W. LaChey ------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary, & CFO DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By: /s/ Gary W. LaChey ------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary, & CFO 108 DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------ Name: Gary LaChey Title: Vice President, Treasurer, Secretary and CFO DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY By: Gary LaChey ------------------------------- Name: Gary LaChey Title: Vice President, Treasurer, Secretary and CFO DEETER FOUNDRY, INC. By: Gary LaChey -------------------------------- Name: Gary LaChey Title: Vice President, Treasurer, Secretary and CFO GREGG INDUSTRIES, INC. By: Gary LaChey -------------------------------- Name: Gary LaChey Title: Vice President, Treasurer, Secretary and CFO MERCER FORGE CORPORATION By: Gary LaChey --------------------------------- Name: Gary LaChey Title: Vice President, Treasurer, Secretary and CFO 109 A&M SPECIALTIES, INC. By: /s/ Gary W. LaChey ------------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary & CFO NEENAH TRANSPORT, INC. By: /s/ Gary W. LaChey ------------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary & CFO CAST ALLOYS, INC. By: /s/ Gary W. LaChey ------------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary & CFO BELCHER CORPORATION By: /s/ Gary W. LaChey ------------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary & CFO PEERLESS CORPORATION By: /s/ Gary W. LaChey ------------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Treasurer, Secretary & CFO THE BANK OF NEW YORK By: /s/ Patricia Gallagher ------------------------------- Name: Title: 110 EXHIBIT A FORM OF NOTE A-1 [THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF SUCH SECURITY ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) AS PERMITTED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (F) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF US $250,000, FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF THE SECURITIES IN VIOLATION OF THE SECURITIES ACT OR (G) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION PURSUANT TO CLAUSES (D), (E), (F) OR (G) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.] [THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN A-2 CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] THIS NOTE WAS ISSUED AS PART OF AN INVESTMENT UNIT. THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" FOR U.S. FEDERAL INCOME TAX PURPOSES. WITH RESPECT TO THIS INVESTMENT UNIT WITH A PRINCIPAL AMOUNT OF $1,000, THE ISSUE PRICE IS $916.70. $915.36 OF SUCH ISSUE PRICE WAS ALLOCATED TO THE NOTE PORTION. THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $84.64. THE ISSUE DATE OF THIS SECURITY IS OCTOBER 8, 2003. THE YIELD TO MATURITY OF THIS SECURITY ON THE ISSUE DATE IS 13.28%, COMPOUNDED SEMIANNUALLY. THE LIENS SECURING THIS INSTRUMENT ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN LIEN SUBORDINATION AGREEMENT (THE "SUBORDINATION A-3 AGREEMENT") DATED AS OF OCTOBER 8, 2003 AMONG THE BANK OF NEW YORK (THE "TRUSTEE"), NEENAH FOUNDRY COMPANY (THE "COMPANY") AND THE OTHER "COMPANIES" (AS DEFINED THEREIN) PARTY THERETO AND FLEET CAPITAL CORPORATION ("AGENT"), TO THE LIENS SECURING THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY THE COMPANIES PURSUANT TO OR IN CONNECTION WITH THAT CERTAIN LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER 8, 2003 AMONG THE COMPANY, CERTAIN OF THE OTHER COMPANIES, AGENT AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AS SUCH LOAN AND SECURITY AGREEMENT MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME AND TO INDEBTEDNESS REFINANCING THE INDEBTEDNESS UNDER SUCH LOAN AND SECURITY AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT AND EACH AGREEMENT MADE THEREIN BY THE TRUSTEE ON ITS BEHALF. A-4 (FACE OF NOTE) NEENAH FOUNDRY COMPANY 11% SENIOR SECURED NOTE DUE 2010 No. CUSIP No. ___________ $_____________ Neenah Foundry Company, a Wisconsin corporation (hereinafter called the "Company," which term includes any successors under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & Co., Inc., or registered assigns, the principal sum of one hundred thirty three million one hundred thirty thousand dollars, on September 30, 2010. Interest Payment Dates: January 1 and July 1, commencing January 1, 2004. Record Dates: December 15 and June 15. Reference is made to the further provisions of this Note on the reverse side, which will, for all purposes, have the same effect as if set forth at this place. A-5 IN WITNESS WHEREOF, the Company has caused this Instrument to be duly executed under its corporate seal. NEENAH FOUNDRY COMPANY By:________________________ Name: Title: By:________________________ Name: Title: Attest:_________________________________ Secretary A-6 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes described in the within-mentioned Indenture. THE BANK OF NEW YORK By__________________________ Authorized Signatory Dated: October 8, 2003 A-7 (BACK OF NOTE) NEENAH FOUNDRY COMPANY 11% SENIOR SECURED NOTE DUE 2010 1. Interest. Neenah Foundry Company, a Wisconsin corporation (hereinafter called the "Company," which term includes any successors under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of 11% per annum. To the extent it is lawful, the Company promises to pay interest on any interest payment due but unpaid at the same rate of interest borne by the Notes. The Company will pay interest semi-annually on January 1 and July 1 of each year (each, an "Interest Payment Date"), commencing January 1, 2004. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid on the Notes, from September 30, 2003. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. 2. Method of Payment. The Company shall pay interest in cash on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. Any such interest not so punctually paid, and defaulted interest relating thereto, may be paid to the Persons who are registered Holders at the close of business on a Special Record Date for the payment of such defaulted interest, as more fully provided in the Indenture referred to below. Except as provided below, the Company shall pay principal and interest in such coin or currency of the United States of America as at the time of payment shall be legal tender for payment of public and private debts ("U.S. Legal Tender"). The Notes will be payable as to principal, and interest at the office or agency of the Company maintained for such purpose within the Borough of Manhattan, The City and State of New York, or at the option of the Company, payment of principal, and interest may be made by check mailed to the Holders at their addresses set forth in the registry of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of, and interest on Global Notes. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar or co-Registrar. A-8 4. Indenture. The Company issued the Notes under an Indenture, dated as of October 8, 2003 (the "Indenture"), among the Company, the Subsidiary Guarantors party thereto and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act, as in effect on the date of the Indenture. The Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of them. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are secured by second-priority security interests in the Collateral limited in aggregate principal amount to $133,130,000, and may be issued in one or more series. 5. Redemption. The Notes may not be redeemed prior to September 30, 2007. On or after September 30, 2007, the Notes may be redeemed in whole or from time to time in part at any time, at the option of the Company, at the Redemption Prices (expressed as a percentage of principal amount) set forth below with respect to the indicated Redemption Date, in each case, plus any accrued but unpaid interest to, but excluding, the Redemption Date.
If redeemed during the 12-month period beginning September 30, Redemption Price ----------------------- ---------------- 2007................................................ 105.500% 2008................................................ 104.125% 2009................................................ 102.750%
6. Notice of Redemption. Notice of redemption will be sent by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the Redemption Date to the Holder of each Note to be redeemed at such Holder's last address as then shown upon the registry books of the Registrar. Notes may be redeemed in part in multiples of $1,000 only. Except as set forth in the Indenture, from and after any Redemption Date, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent on such Redemption Date and payment of the Notes called for redemption is not prohibited under the Indenture, the Notes called for redemption will cease to bear interest and the only right of the Holders of such Notes will be to receive payment of the Redemption Price, plus any accrued and unpaid interest to, but excluding the Redemption Date. A-9 7. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of, or exchange Notes in accordance with, the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as the owner of it for all purposes. 9. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money back to the Company at its written request. After that, all liability of the Trustee and such Paying Agent(s) with respect to such money shall cease. 10. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented, and any existing Default or Event of Default or compliance with any provision may be waived, with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, or make any other change that does not adversely affect the rights of any Holder of a Note. 11. Collateral and Security. The due and punctual payment of the principal of, and interest on the Notes when and as the same shall be due and payable, and performance of all other obligations of the Company and the Subsidiary Guarantors to the Holders of Notes or the Trustee under the Indenture, the Notes and the Subsidiary Guarantees, according to the terms thereunder, shall be secured by a Note Lien on the Collateral, which shall be subordinate and subject to the rights and remedies of the holders of the Priority Liens in accordance with the terms of the Lien Subordination Agreement and the Collateral Documents. 12. Change of Control. In the event of a Change of Control of the Company, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes, at an offer price in cash equal to A-10 101% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon to the Change of Control Payment Date. 13. Asset Sales. In the event of certain Asset Sales, the Company may be required to make an Asset Sale Offer to purchase the maximum principal amount of Notes that may be purchased out of Excess Proceeds, at an offer price in cash equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to the date of purchase. 14. Successors. When a successor assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 15. Restrictive Covenants. The Indenture imposes certain limitations on, among other things, the ability of the Company to consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, the ability of the Company or its Restricted Subsidiaries to dispose of certain assets, to declare or pay dividends or make certain other distributions and payments, to make certain investments or purchase, redeem, or otherwise acquire or retire for value Equity Interests, to incur additional Indebtedness or incur Liens and to enter into certain transactions with Affiliates, all subject to certain limitations described in the Indenture. 16. Defeasance. The Indenture contains provisions that permit the Company to defease the Notes (and satisfy generally its Obligations under the Indenture or with respect to certain covenants contained therein) under certain circumstances subject to the conditions specified therein. 17. Defaults and Remedies. If an Event of Default occurs and is continuing (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization), then either the Trustee or the Holders of 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable immediately; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of outstanding Notes may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than non-payment of accelerated principal, have been cured or waived as provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the A-11 Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest), if it determines that withholding notice is in their interest. 18. 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 the Trustee. 19. No Recourse Against Others. No stockholder, director, officer or employee, as such, past, present or future, of the Company or any successor corporation shall have any personal liability in respect of the obligations of the Company under the Notes or the Indenture by reason of his, her or its status as such stockholder, director, officer or employee. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 20. Authentication. This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on the other side of this Note. 21. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. A-12 23. Additional Rights of Holders of Notes. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Gary W. LaChey 24. Governing Law. This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed entirely within the State of New York, without regard to principles of conflicts of law. 25. Agreement to Terms. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. A-13 FORM OF ASSIGNMENT I or we assign this Note to ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code of assignee) Please insert Social Note or other identifying number of assignee ___________________________________ and irrevocably appoint ______________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Dated:___________________ Signed:_____________________________ ________________________________________________________________________________ (Sign exactly as name appears on the other side of this Note) Signature Guarantee:_________________________ NOTICE: Your Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any other guarantee program acceptable to the Trustee. A-14 FORM OF OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.20 or Section 4.21 of the Indenture, check the appropriate box: Section 4.20 { } Section 4.21 { } If you want to have only part of this Note purchased by the Company pursuant to Section 4.20 or Section 4.21 of the Indenture, state the amount (in integral multiples of $1,000): $________________________ Date:__________________________ Signature:___________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:______________________________________________ NOTICE: Your Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any other guarantee program acceptable to the Trustee. A-15 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchange of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount of Amount of increase this Global Note Signature of Amount of decrease in Principal following such authorized officer in Principal Amount Amount of this decrease (or of Trustee or Date of Exchange of this Global Note Global Note increase) Notes Custodian - ---------------- ------------------- ------------------ ------------------- ------------------
A-16 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Gary W. LaChey Telecopy: (920) 725-7000 The Bank of New York 101 Barclay Street, 8th Floor West New York, New York 10286 Attention: Corporate Trust Department Telecopy: (212) 815-3272 Re: 11% Senior Secured Notes due 2010 Reference is hereby made to the Indenture, dated as of October 8, 2003 (the "Indenture"), among Neenah Foundry Company, as issuer (the "Company"), the Subsidiary Guarantors party thereto and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of US$___________ in such Note[s] or interests (the "Transfer"), to ___________________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [ ] Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. B-1 2. [ ] Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(a) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Distribution Compliance Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note, the Temporary Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [ ] Check and complete if Transferee will take delivery of a beneficial interest in the IAI Global Note or a Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [ ] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [ ] such Transfer is being effected to the Company or a Subsidiary thereof; or (c) [ ] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) [ ] such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of B-2 Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than US $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Definitive Notes and in the Indenture and the Securities Act. 4. [ ] Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note. (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. B-3 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ____________________________ [Insert Name of Transferor] By:_________________________ Name: Title: Dated: _____________________ B-4 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP _________), or (ii) [ ] Regulation S Global Note (CUSIP _________), or (iii) [ ] IAI Global Note (CUSIP _________); or (b) [ ] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE OF (a), (b) OR (c)] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP _________), or (ii) [ ] Regulation S Global Note (CUSIP _________), or (iii) [ ] IAI Global Note (CUSIP _________); or (iv) [ ] Unrestricted Global Note (CUSIP _________); or (b) [ ] a Restricted Definitive Note; or (c) [ ] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-5 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Gary W. LaChey Telecopy: (920) 725-7000 The Bank of New York 101 Barclay Street, 8th Floor West New York, New York 10286 Attention: Corporate Trust Department Telecopy: (212) 815-3272 Re: 11% Senior Secured Notes due 2010 Reference is hereby made to the Indenture, dated as of October 8, 2003 (the "Indenture"), among Neenah Foundry Company, as issuer (the "Company"), the Subsidiary Guarantors party thereto and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________, (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of US$____________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Note and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's C-1 beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Note and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CIRCLE ONE] 144A Global Note, Regulation S Global Note, IAI Global Note with an equal principal amount, the Owner hereby C-2 certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Definitive Note and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. C-3 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. _____________________________________ [Insert Name of Transferor] By:__________________________________ Name: Title: Dated:______________________ C-4 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Gary W. LaChey Telecopy: (920) 725-7000 The Bank of New York 101 Barclay Street, 8th Floor West New York, New York 10286 Attention: Corporate Trust Department Telecopy: (212) 815-3272 Re: 11% Senior Secured Notes due 2010 Reference is hereby made to the Indenture, dated as of October 8, 2003 (the "Indenture"), among Neenah Foundry Company, as issuer (the "Company"), the Subsidiary Guarantors party thereto and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of US$____________ aggregate principal amount of: (a) [ ] a beneficial interest in a Global Note, or (b) [ ] a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the transfer is being made in reliance on Rule D-1 144A under the Securities Act, (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, such transfer is in respect of a minimum principal amount of Notes of US $250,000, (D) pursuant to offers and sales to non-U.S. Persons that occur outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to any other available exemption under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. We have had access to such financial and other information and have been afforded the opportunity to ask such questions of representatives of the Company and receive answers thereto, as we deem necessary in connection with our decision to purchase the Notes. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account, or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion, for investment purposes only and are not acquiring the Notes with a view to any distribution thereof in a transaction that would violate the Securities Act of the securities laws of any state of the United States or any other applicable jurisdiction. 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. This letter shall be governed by, and construed in accordance with, the laws of the State of New York. _____________________________________ [Insert Name of Accredited Investor] By:__________________________________ Name: Title: Dated:______________________ D-2 EXHIBIT E GUARANTEE For value received, each of the undersigned hereby unconditionally guarantees to the Holders of Notes the payments of principal of, and interest on such Notes in the amounts and at the time when due and interest on the overdue principal, and interest, if any, of such Notes, if lawful, and the payment or performance of all other obligations of the Company under the Indenture and the Notes, to the Holders of the Notes and to the Trustee, all in accordance with and subject to the terms and limitations of the Notes, Article X of the Indenture and this Guarantee. This Guarantee will become effective in accordance with Article X of the Indenture and its terms shall be evidenced therein. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. The obligations of the undersigned to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article X of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee and all of the other provisions of the Indenture to which this Guarantee relates. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary to appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose. E-1 This Guarantee is subject to release upon the terms set forth in the Indenture. Advanced Cast Products, Inc. Dalton Corporation Dalton Corporation, Warsaw Manufacturing Facility Dalton Corporation, Stryker Machining Facility Co. Dalton Corporation, Ashland Manufacturing Facility Dalton Corporation, Kendallville Manufacturing Facility Deeter Foundry, Inc. Gregg Industries, Inc. Mercer Forge Corporation A&M Specialties, Inc. Neenah Transport, Inc. Cast Alloys, Inc. Belcher Corporation Peerless Corporation By:___________________________ Name: Title: E-2 EX-4.3 4 y92210exv4w3.txt LIEN SUBORDINATION AGREEMENT LIEN SUBORDINATION AGREEMENT ---------------------------- This LIEN SUBORDINATION AGREEMENT (this "Agreement") is entered into as of this 8th day of October, 2003, by and among Fleet Capital Corporation, a Rhode Island corporation, as Agent for all Senior Lenders party to the Senior Loan Agreement described below, Neenah Foundry Company, a Wisconsin corporation ("Neenah"), the Subsidiaries of Neenah listed on the signature pages hereto (collectively, the "Neenah Subsidiaries"), NFC Castings, Inc., a Delaware corporation ("Parent" and together with Neenah and the Neenah Subsidiaries, the "Companies" and each, a "Company"), and The Bank of New York, a New York banking corporation, as Trustee on behalf of the Noteholders, pursuant to the Indenture and the other Indenture Documents referred to below (the "Trustee"). RECITALS A. Neenah and certain of the Neenah Subsidiaries (collectively, "Borrowers"), Agent, Fleet Securities, Inc., as Arranger, and the Senior Lenders (as hereinafter defined) have entered into a Loan and Security Agreement of even date herewith (as the same may be amended, supplemented or otherwise modified from time to time, the "Senior Loan Agreement") pursuant to which, among other things, the Senior Lenders have agreed, subject to the terms and conditions set forth in the Senior Loan Agreement, to make certain loans and financial accommodations to Borrowers. Parent and each of the Neenah Subsidiaries not party to the Senior Loan Agreement as a Borrower have guaranteed all of the obligations, liabilities and other indebtedness of Borrowers under the Senior Loan Agreement. All of the Companies' obligations, liabilities and other indebtedness to Agent and the Senior Lenders under the Senior Loan Agreement and the other Senior Loan Documents (as hereinafter defined) are secured by liens on and security interests in substantially all of the now existing and hereafter acquired real and personal property of each of the Companies and in all of the capital stock of Neenah and each of the Neenah Subsidiaries (collectively, the "Collateral"). B. Trustee is the trustee for the holders (the "Noteholders") of certain 11% Senior Secured Notes due 2010, in the aggregate original principal amount of $133,130,000 (the "Indenture Notes"), which were issued by Neenah pursuant to the Indenture (as hereinafter defined). Parent and each of the Neenah Subsidiaries have guaranteed all of the obligations, liabilities and other indebtedness of Neenah in respect of the Indenture Notes. All of the Companies' obligations, liabilities and other indebtedness under the Indenture Notes and the other Indenture Documents (as hereinafter defined) are secured by liens on and security interests in the Collateral. C. As an inducement to and as one of the conditions precedent to the agreement of Agent and the Senior Lenders to consummate the transactions contemplated by the Senior Loan Agreement, Agent and the Senior Lenders have required the execution and delivery of this Agreement by the Trustee and each Company in order to set forth the relative rights and priorities of Agent, the Senior Lenders, the Trustee and Noteholders with respect to the Collateral. NOW, THEREFORE, in order to induce Agent and the Senior Lenders to consummate the transactions contemplated by the Senior Loan Agreement, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows: 1. CERTAIN DEFINITIONS. The following terms shall have the following meanings in this Agreement: "AGENT" shall mean Fleet Capital Corporation, a Rhode Island corporation, as Agent for the Senior Lenders, or any other Person appointed by the holders of the Senior Debt as administrative agent for purposes of the Senior Loan Documents and this Agreement. "BANKRUPTCY CODE" shall mean Chapter 11 of Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder. "FLEET LOAN DOCUMENTS" shall mean the Senior Loan Agreement, any guaranty, mortgage, security agreement or other collateral document securing the Senior Debt and all other agreements, documents and instruments executed from time to time in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time. "INDENTURE" shall mean that certain Indenture, dated as of October 8, 2003, among Neenah, the Neenah Subsidiaries party thereto as subsidiary guarantors, and the Trustee, as the same may be amended, supplemented or otherwise modified from time to time. "INDENTURE DEBT" shall mean all of the obligations of the Companies to the Trustee, any Noteholder or any other Person evidenced by or incurred pursuant to the Indenture, the Indenture Notes or any other Indenture Documents. "INDENTURE DOCUMENTS" shall mean the Indenture, the Indenture Notes, any guaranty, mortgage, security agreement or other collateral document securing the Indenture Debt and all other documents, agreements and instruments now existing or hereinafter entered into evidencing or pertaining to all or any portion of the Indenture Debt, as the same may be amended, supplemented or otherwise modified from time to time. "LIEN" shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type -2- of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. "PERSON" means any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity. "PROCEEDING" shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person. "REFINANCING SENIOR LOAN DOCUMENTS" shall mean any financing documentation which replaces the Fleet Loan Documents and pursuant to which the Senior Debt under the Fleet Loan Documents is refinanced in accordance with the limitations set forth in Section 4.11(viii) of the Indenture as in effect as of the date hereof (or as modified with Agent's approval), as such financing documentation may be amended, supplemented or otherwise modified from time to time in compliance with this Agreement. "SENIOR DEBT" shall mean all obligations, liabilities and indebtedness of every nature of any Company from time to time owed to Agent or any Senior Lender under the Senior Loan Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code, together with any interest accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest is an allowed claim, and together with any "Product Obligations" under and as defined in the Senior Loan Agreement; provided, however, that in no event shall the aggregate principal amount of the Senior Debt exceed the greater of (i) $102,000,000 and (ii) the "Borrowing Base Amount" as defined in the Indenture as in effect as of the date hereof. Senior Debt shall be considered to be outstanding whenever any loan commitment under the Senior Loan Documents is outstanding. "SENIOR LOAN DOCUMENTS" shall mean the Fleet Loan Documents and, after the consummation of any refinancing of the Senior Debt in accordance with the limitations set forth in Section 4.11(viii) of the Indenture as in effect as of the date hereof (or as modified with Agent's approval), the Refinancing Senior Loan Documents. -3- "SENIOR LENDERS" shall mean the holders of the Senior Debt. "UCC" means the Uniform Commercial Code as in effect from time to time in the state of Illinois. 2. SUBORDINATION OF LIENS. 2.1. COLLATERAL SUBORDINATION. The Trustee hereby subordinates and makes junior in favor of Agent and the holders of the Senior Debt (and not for the benefit of any other party) to the extent provided herein any and all of its now existing or hereafter acquired Liens (the "Subordinated Lien") on any or all of the Collateral to the now existing and hereafter acquired Liens of Agent on any or all of the Collateral (the "Senior Lien"). 2.2. PRIORITY OF LIENS. The relative priorities of the Subordinated Lien and the Senior Lien which are set forth in this Section 2 shall apply without regard to the time or order of creation, attachment or perfection of such Liens or the time or order of the execution or delivery of any agreements or other documents creating such Liens and notwithstanding anything to the contrary in the provisions of the UCC, the Bankruptcy Code, any other bankruptcy, insolvency or creditors' rights law, or any other applicable law. The Senior Liens shall continue to be treated as Senior Liens and the provisions of this Agreement shall continue to govern the relative rights and priorities of Agent, the Senior Lenders, the Trustee and Noteholders even if all or part of the Senior Lien or the Senior Debt is subordinated, set aside, avoided, invalidated or disallowed (whether in connection with a Proceeding or otherwise). 2.3. STANDSTILL ON ENFORCING SUBORDINATED LIEN. Notwithstanding anything contained in this Agreement to the contrary, the Trustee (on behalf of itself and each Noteholder) agrees not to take possession of (whether by set-off or otherwise) or collect any of the Collateral, commence the enforcement of any of its rights and remedies with respect to any of the Collateral, foreclose or realize upon the Subordinated Lien on the Collateral, or exercise any other right or remedy relating to or affecting the Collateral until the Senior Debt has been indefeasibly paid in full and all commitments to lend under the Senior Loan Documents have been terminated. 2.4. EXERCISE OF REMEDIES BY SENIOR LENDERS. The Trustee (on behalf of itself and each Noteholder) hereby agrees that, for so long as any Senior Debt or any commitment to lend under the Senior Loan Documents remains outstanding, Agent and the Senior Lenders exclusively shall be entitled to manage and exercise any or all of their rights and remedies with respect to the Collateral, and, except for any notice required to be provided to the Trustee under applicable law (including, without limitation, notices required by the UCC and local real estate law), without any obligation to give the Trustee or any Noteholder prior notice thereof, and that Agent and the Senior Lenders shall, except as expressly set forth in Section 2.5, be entitled to act without regard to any interest of the Trustee or any Noteholder in the Collateral and shall have no liability to the Trustee or any Noteholder for, and Trustee (on behalf of itself and the Noteholders) hereby waives any -4- claims which it may now or hereafter have against Agent or the Senior Lenders arising out of, any and all actions which Agent or the Senior Lenders take or omit to take with respect to the Collateral or any proceeds thereof, including, without limitation, actions or inactions with respect to the maintenance, preservation, insuring, completion, sale, transfer, exchange or disposition of or foreclosure upon any of the Collateral, or the collection, settlement or compromise of any of the Collateral, or the accounting for any surplus. 2.5. AGENT FOR PERFECTION AND POSSESSION OF COLLATERAL. (a) (i) The Agent agrees to hold any item of Collateral in its possession (or in the possession of its agents or bailees) as agent for the Trustee (it being understood that Agent is acting in such agency capacity for the Trustee for the sole purpose of perfecting the security interest granted in such Collateral pursuant to the Indenture Documents), subject to the terms and conditions of this Section 2.5. In the event any of the Collateral is evidenced by a deposit account, investment property, letter of credit right or chattel paper and, pursuant to the terms of the Senior Loan Documents, any of the obligors thereunder is required to deliver an agreement whereby the Agent obtains "control" (as defined in the UCC) over such Collateral, the Agent agrees (a) to exercise such "control" as agent for the Trustee (it being understood that Agent is acting in such agency capacity for the Trustee for the sole purpose of perfecting the security interest granted in such Collateral pursuant to the Indenture Documents), subject to the terms and conditions of this Section 2.5 and (b) endeavor to have it provided in any agreement providing for such "control" that upon payment in full of the Senior Debt and termination of all commitments to lend under the Senior Loan Documents, that the rights of the Agent thereunder shall, by operation of such agreement, inure to the benefit of the Trustee to the extent such rights are consistent with the terms of the Indenture (with Agent having no liability if any such agreement fails to have such a provision).(ii) The Agent shall be entitled to deal with the Collateral that is in its possession or under its control in accordance with the terms of the Senior Loan Documents and this Agreement. (iii) The Agent shall have no obligation whatsoever to the Trustee or to any Noteholder to ensure that the Collateral in its possession or under its control is genuine or owned by one of the Companies or to preserve rights or benefits of any Person except as expressly set forth in this Section 2.5. The duties or responsibilities of the Agent to the Trustee under this Section 2.5 shall be limited to holding the Collateral that is in its possession or under its control as agent for the Trustee for the sole purpose of perfecting the security interest of the Trustee therein. (iv) Upon the payment in full of the Senior Debt and termination of all commitments to lend under the Senior Loan Documents, except as otherwise required by applicable law or binding judicial proceedings, the Agent shall (a) deliver to the Trustee the Collateral in its possession (including, without limitation, the originals of -5- any vehicles titles in its possession relating to motor vehicles owned by a Company), together with any necessary endorsements (including, without limitation, any necessary endorsements in respect of motor vehicle titles) and any other proceeds of the Collateral held by it, to be held by the Trustee (or in the possession of its agents or bailees), and (b) assign its rights under each agreement pursuant to which the Agent has obtained "control" over all or any portion of the Collateral to the Trustee, to the extent such rights are consistent with the terms of the Indenture and such assignment is required to allow the Trustee to obtain "control" over such Collateral. (b) If the Trustee or any Noteholder obtains possession of any item of Collateral, such Person shall hold the same as agent and bailee for the holders of Senior Debt for the sole purpose of perfecting their Lien therein by such possession and the Trustee or any Noteholder shall promptly deliver the same to Agent for the benefit of the holders of Senior Debt. 2.6. NO CONTEST OF LIENS; COMMERCIAL REASONABLENESS. The Trustee (on behalf of itself and the Noteholders) agrees that it shall not contest the validity, extent, perfection, priority or enforceability of the Senior Lien on any of the Collateral; provided, that after the Senior Debt has been paid in full and all commitments to lend under the Senior Loan Documents have been terminated, the Trustee may take action necessary to remove or terminate a Senior Lien that is preventing the Trustee from realizing on the Subordinated Lien. 2.7. RELEASE OF SUBORDINATED LIEN. The Trustee (on behalf of itself and the Noteholders) agrees that if Agent or the Senior Lenders release or agree to release any Senior Lien on any Collateral and give written notice thereof to the Trustee, which notice states that such Collateral is to be sold or transferred free and clear of the Senior Lien, in each case for the purpose of repaying or otherwise reducing the balance of the Senior Debt (without the need for a reduction of the commitments to lend under the Senior Loan Documents), the Subordinated Lien on such Collateral shall, automatically and without the necessity of any further action on the part of the Trustee or any Noteholder, be released and terminated, and promptly upon the request of Agent, the Trustee shall execute and deliver such documents, instruments and agreements as are reasonably necessary and are provided to it to further effectuate such release and termination and to evidence such release and termination in the appropriate public records. Subject to the terms and conditions of Section 11.3 of the Indenture as in effect as of the date hereof (or as modified with Agent's approval), the Trustee and the Noteholders shall be deemed to have consented to any such sale or transfer and any such release of Collateral will not result in a default or event of default under any of the Indenture Documents, regardless of any provision to the contrary contained in any Indenture Document. 2.8. BANKRUPTCY PROCEEDINGS. In any Proceeding, unless the Senior Debt has been paid in full and all commitments to lend under the Senior Loan Documents have been terminated, (a) the Trustee (on behalf of itself and the Noteholders) agrees not to seek adequate protection for any of the Subordinated Liens and the Trustee (on behalf of itself and -6- the Noteholders) agrees that any payment, property or Lien received by the Trustee or any Noteholder as adequate protection of its claim in any Proceeding shall constitute a payment or distribution for purposes of Section 2 of this Agreement, (b) the Trustee (on behalf of itself and the Noteholders) agrees not to oppose any post-petition financing (or the grant of first-priority or priming security in connection therewith) or arrangement for the use of cash collateral (including adequate protection) which Agent or any of the Senior Lenders propose to provide any Company in any Proceeding, (c) the Trustee (on behalf of itself and the Noteholders) agrees not to seek adequate protection or other relief from the automatic stay with respect to the Collateral and (d) the Trustee (on behalf of itself and the Noteholders) agrees not to take any action which is inconsistent with the terms of this Agreement. If Agent consents to the sale or transfer of any of the Collateral, in each case for the purpose of repaying or otherwise reducing the balance of the Senior Debt (without the need for a reduction of the commitments to lender under the Senior Loan Documents), during any Proceeding (whether such sale or transfer is to be made pursuant to Section 363 of the Bankruptcy Code, pursuant to a plan of reorganization or otherwise), then, subject to the terms of Section 11.3 of the Indenture as in effect as of the date hereof (or as modified with Agent's approval) the Trustee (on behalf of itself and the Noteholders) shall be deemed to have consented to any such sale or transfer and shall, if requested to do so by Agent in connection with any such sale or transfer, promptly upon being provided with such documentation execute and deliver to Agent a release of Subordinated Liens with respect to the Collateral to be sold or transferred. Trustee (on behalf of itself and each Noteholder) waives any claim it may now or hereafter have arising out of Agent's or any Senior Lender's election, in any Proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code by any Company, as debtor in possession. Notwithstanding any of the foregoing in this Section 2.8 or as otherwise set forth in this Agreement, if any Proceeding the Agent (on behalf of itself and the Senior Lenders) or any Senior Lender is granted adequate protection in the form of additional collateral in connection with any post-petition financing, then, unless the same would materially and adversely affect the rights of Senior Lenders with respect to the Senior Debt (including the right to receive post-petition interest on the Senior Debt), the Trustee (on behalf of itself and the Noteholders), may seek or request adequate protection in the form of a replacement Lien on such additional collateral, which Lien shall be subordinated to the Liens securing the Senior Debt and such post-petition financing on the same basis as the Subordinated Lien is subordinated to the Senior Lien under this Agreement. 2.9. SUBORDINATION NON-IMPAIRED. All rights of Agent and the Senior Lenders and all agreements and obligations of the Trustee (on behalf of itself and the Noteholders) hereunder shall remain in full force and effect irrespective of: (a) any amendment, modification, waiver or consent of any term or provision set forth in the Senior Loan Documents (it being understood that any Refinancing Senior Loan Documents and any refinancing of the Senior Debt shall be subject to the limitations set forth in Section 4.11(viii) as in effect as of the date hereof (or as modified with Agent's approval)); -7- (b) any change in the time, manner or place of payment of, or any other term of, all or any portion of the Senior Debt (it being understood that any Refinancing Senior Loan Documents and any refinancing of the Senior Debt shall be subject to the limitations set forth in Section 4.11(viii) as in effect as of the date hereof (or as modified with Agent's approval)); or (c) subject to the terms of Section 2.5, any change, release or non-perfection of any security interest in or lien on any collateral securing all or any portion of the Senior Debt, or any amendment or waiver of or consent to the departure from, any guaranty for all or any part of the Senior Debt; provided, that the foregoing terms of this subsection 2.9 shall not be deemed to permit an increase in the principal amount of the Senior Debt that would be prohibited by the definition of Senior Debt herein. 2.10. CONTINUING SUBORDINATION. The subordination effected by this Agreement is a continuing subordination, and the Trustee (on behalf of itself and the Noteholders) hereby unconditionally waives notice of the incurring of any Senior Debt or any part thereof. The Trustee (on behalf of itself and the Noteholders) acknowledges the reliance by Agent and the Senior Lenders upon the subordination provisions provided for in this Agreement and acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement to Agent and the Senior Lenders, whether the Senior Debt was created or acquired before or after the incurrence or creation of any indebtedness under the Indenture Documents and whether Agent or any such Senior Lender is now known or hereafter becomes known, and Agent and each such Senior Lender shall be deemed conclusively to have relied upon such subordination provisions in acquiring and holding, or in continuing to hold, such Senior Debt and shall be entitled to enforce the provisions of this Agreement directly as if it were a party to this Agreement. 2.11. SALE, TRANSFER OR OTHER DISPOSITION OF INDENTURE DEBT. The subordination effected hereby shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion of the Indenture Debt, and the terms of this Agreement shall be binding upon the successors and assigns of Trustee, as provided in Section 9 hereof. 2.12. LEGENDS. Until the termination of this Agreement in accordance with Section 14 hereof, Trustee will cause to be clearly, conspicuously and prominently inserted in the Indenture, in each Indenture Note and each other Indenture Document, as well as any renewals or replacements thereof, the following legend: "The liens securing this instrument are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of October 8, 2003 among The Bank of New York, a New York banking corporation (the "Trustee"), Neenah Foundry Company ("Neenah") and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in -8- connection with that certain Loan and Security Agreement dated as of October 8, 2003 among Neenah, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf." 3. MODIFICATIONS. The Senior Lenders may at any time and from time to time without the consent of or notice to the Trustee or any Noteholder, without incurring liability to the Trustee or any Noteholder and without impairing or releasing the obligations of the Trustee (on behalf of itself and the Noteholders) under this Agreement, change the manner or place of payment or extend the time of payment of or renew or alter any of the terms of the Senior Debt, or amend in any manner any agreement, note, guaranty or other instrument evidencing or securing or otherwise relating to the Senior Debt; provided that (a) the Senior Lenders shall not increase the principal amount of the Senior Debt (except as permitted by the definition of Senior Debt herein) and (b) any Refinancing Senior Loan Documents and any refinancing of the Senior Debt shall be subject to the limitations set forth in Section 4.11(viii) of the Indenture as in effect as of the date hereof (or as modified with Agent's approval). Neenah agrees to provide the Trustee with written notice of any material change in the manner or place of payment or extension of the time of payment of or renewal of, or an alteration of any of the material terms of, the Senior Debt (with any failure by Neenah to provide such notice having no affect on the validity of the aforementioned terms of this Section 3 in respect of any such change, extension, renewal or alteration). 4. WAIVER OF CERTAIN RIGHTS. 4.1. MARSHALING. Trustee (on behalf of itself and each Noteholder) hereby waives any rights it may have under applicable law to assert the doctrine of marshaling or to otherwise require Agent or the Senior Lenders to marshal any property of any Company or any guarantor of the Senior Debt for the benefit of Trustee or any Noteholder. 4.2. RIGHTS RELATING TO AGENT'S ACTIONS WITH RESPECT TO THE COLLATERAL. Trustee (on behalf of itself and each Noteholder) hereby waives, to the extent permitted by applicable law, any rights which it may have to enjoin or otherwise obtain a judicial or administrative order preventing Agent or the Senior Lenders from taking, or refraining from taking, any action with respect to all or any part of the Collateral. Without limitation of the foregoing, the Trustee hereby agrees (a) that it has no right to direct or object to the manner in which Agent and the Senior Lenders apply the proceeds of the Collateral resulting from the exercise by Agent and the Senior Lenders of rights and remedies under the Senior Loan Documents to the Senior Debt and (b) that Agent has not assumed any obligation to act as the agent for Trustee or any Noteholder with respect to the Collateral except as expressly set forth in Section 2.5(a). -9- 5. REPRESENTATIONS AND WARRANTIES. Trustee hereby represents and warrants to Agent and the Senior Lenders that, as of the date hereof, Trustee has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement (on its behalf and on behalf of each Noteholder), all of which have been duly authorized. Agent hereby represents and warrants to the Trustee and the Noteholders that, as of the date hereof, Agent has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement (on its behalf and on behalf of each Senior Lender), all of which have been duly authorized. The Companies hereby represent and warrant to (i) Agent and the Senior Lenders that the execution of this Agreement by the Trustee will not violate or conflict with any Indenture Document and (ii) Trustee and the Noteholders that the execution of this Agreement by the Agent will not violate or conflict with any Senior Loan Document. 6. MODIFICATION. Any modification or waiver of any provision of this Agreement, or any consent to any departure by any party from the terms hereof, shall not be effective in any event unless the same is in writing and signed by Agent, Trustee and Neenah, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given. Any notice to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice or demand to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder. 7. FURTHER ASSURANCES. Each party to this Agreement promptly will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or desirable in order to effect fully the purposes of this Agreement. 8. NOTICES. Unless otherwise specifically provided herein, any notice, request or communication delivered under this Agreement shall be in writing addressed to the respective party as set forth below and may be personally served, facsimiled or sent by overnight courier service or certified or registered United States mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if delivered by facsimile, on the date of transmission if transmitted on a business day before 4:00 p.m. (Chicago time) or, if not, on the next succeeding business day; (c) if delivered by overnight courier, one business day after delivery to such courier properly addressed; or (d) if by United States mail, four business days after deposit in the United States mail, postage prepaid and properly addressed. Notices shall be addressed as follows: If to Trustee: The Bank of New York 101 Barclay Street 8th Floor West New York, NY 10286 -10- Attention: Corporate Trust Administration Facsimile: (212) 815-5707 If to the Companies: c/o Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54957 Attention: Gary W. LaChey Facsimile: (920) 725-7000 With a copy to: Kirkland & Ellis LLP 153 East 53rd Street New York, NY 10022 Attention: Joshua N. Korff, Esq. Facsimile: (212) 446-4900 If to Agent: Fleet Capital Corporation One South Wacker Drive Suite 1400 Chicago, Illinois 60606 Attention: Loan Administration Manager Facsimile: (312) 827-4222 With a copy to: Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd. 55 East Monroe Street Chicago, Illinois 60603 Attention: David L. Dranoff, Esq. Facsimile: (312) 332-2196 or in any case, to such other address as the party addressed shall have previously designated by written notice to the serving party, given in accordance with this Section 8. 9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of Agent, the Senior Lenders, the Trustee, the Noteholders and each Company. To the extent permitted under the -11- Senior Loan Documents, the Senior Lenders may, from time to time, without notice to the Trustee or any Noteholder, assign or transfer any or all of the Senior Debt or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the Senior Debt shall, subject to the terms hereof, be and remain Senior Debt for purposes of this Agreement, and every permitted assignee or transferee of any of the Senior Debt or of any interest therein shall, to the extent of the interest of such permitted assignee or transferee in the Senior Debt, be entitled to rely upon and be the third party beneficiary of the subordination provided under this Agreement and shall be entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto. 10. CONFLICT. In the event of any conflict among any term, covenant or condition of this Agreement, the Indenture Documents or the Senior Loan Documents, the provisions of this Agreement shall control and govern. 11. HEADINGS. The paragraph headings used in this Agreement are for convenience only and shall not affect the interpretation of any of the provisions hereof. 12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13. SEVERABILITY. In the event that any provision of this Agreement is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Agreement. 14. CONTINUATION OF SUBORDINATION; TERMINATION OF AGREEMENT. This Agreement shall remain in full force and effect until the indefeasible payment in full of the Senior Debt and the termination of all lending commitments under the Senior Loan Documents, after which this Agreement shall terminate without further action on the part of the parties hereto. 15. APPLICABLE LAW. This Agreement shall be governed by and shall be construed and enforced in accordance with the internal laws of the State of Illinois, without regard to conflicts of law principles. 16. WAIVER OF JURY TRIAL. THE TRUSTEE (ON BEHALF OF ITSELF AND THE NOTEHOLDERS), EACH COMPANY AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE INDENTURE DOCUMENTS OR ANY OF THE SENIOR LOAN DOCUMENTS. EACH OF THE TRUSTEE (ON BEHALF OF ITSELF AND THE -12- NOTEHOLDERS), EACH COMPANY AND AGENT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE SENIOR LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF THE TRUSTEE (ON BEHALF OF ITSELF AND THE NOTEHOLDERS), EACH COMPANY AND AGENT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS. 17. INCORPORATION BY REFERENCE. In connection with its appointment and acting hereunder the Trustee is entitled to all rights, privileges, benefits, protections, immunities and indemnities provided to it under the Indenture. -13- IN WITNESS WHEREOF, Trustee, each Company and Agent have caused this Agreement to be executed as of the date first above written. TRUSTEE: THE BANK OF NEW YORK, on behalf of the Noteholders By ___________________________________ Its___________________________________ COMPANIES: NFC CASTINGS, INC. By ___________________________________ Its___________________________________ NEENAH FOUNDRY COMPANY By ___________________________________ Its___________________________________ DEETER FOUNDRY, INC. By ___________________________________ Its___________________________________ MERCER FORGE CORPORATION By ___________________________________ Its___________________________________ DALTON CORPORATION By ___________________________________ Its___________________________________ -14- ADVANCED CAST PRODUCTS, INC. By ___________________________________ Its___________________________________ GREGG INDUSTRIES, INC. By ___________________________________ Its___________________________________ CAST ALLOYS, INC. By ___________________________________ Its___________________________________ NEENAH TRANSPORT, INC. By ___________________________________ Its___________________________________ A & M SPECIALTIES, INC. By ___________________________________ Its___________________________________ BELCHER CORPORATION By ___________________________________ Its___________________________________ PEERLESS CORPORATION By____________________________________ Its___________________________________ -15- DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By ___________________________________ Its___________________________________ DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By ___________________________________ Its___________________________________ DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY By ___________________________________ Its___________________________________ DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By ___________________________________ Its___________________________________ AGENT: FLEET CAPITAL CORPORATION, as Agent for the Senior Lenders By ___________________________________ Its___________________________________ -16- EX-4.4 5 y92210exv4w4.txt REGISTRATION RIGHTS AGREEMENT EXECUTION VERSION NEENAH FOUNDRY COMPANY 11% SENIOR SECOND SECURED NOTES DUE 2010 REGISTRATION RIGHTS AGREEMENT New York, New York October 8, 2003 Mackay Shields LLC Citicorp Mezzanine III, L.P. TCW Shared Opportunity Fund II, L.P. Shared Opportunity Fund IIB LLC TCW Shared Opportunity Fund IV, L.P. TCW Shared Opportunity Fund IVB, L.P. AIMCO CDO, Series 2000-A TCW High Income Partners, Ltd. TCW High Income Partners II, Ltd. Metropolitan Life Insurance Company Exis Differential Holdings Ltd. Ladies and Gentlemen: Neenah Foundry Company, a company organized under the laws of Wisconsin (the "Company"), proposes to issue its 11% Senior Second Secured Notes due 2010 (the "Notes") pursuant to, and upon the terms set forth in, the Company's Plan of Reorganization (the "Plan") under chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"), and in a Subscription Agreement, dated as of October 7, 2003, by and among the Investors referred to therein, ACP Holding Company, the Company and the Subsidiary Guarantors listed therein (the "Subscription Agreement"). The Notes will be guaranteed (the "Guarantees" and, together with the Notes, the "Securities") by each of the Company's direct and indirect subsidiaries set forth on the signature page hereto (the "Subsidiary Guarantors"). In accordance with the Plan and to satisfy a condition of your obligations under the Subscription Agreement, the Company and the Subsidiary Guarantors, jointly and severally, agree with you for your benefit and the benefit of the holders from time to time of the Securities (each a "Holder" and, together, the "Holders"), as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Subscription Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Actual Interest Amount" shall mean, with respect to any Note and with respect to any Registration Default Period, an amount equal to the amount of interest accruing on such Note during such Registration Default Period pursuant to the terms of such Note and the Indenture. "Assumed Interest Amount" shall mean, with respect to any Note and with respect to any Registration Default Period, an amount equal to the amount of interest which would accrue on such Note during such Registration Default Period at a rate equal to: (a) during the first 90 days of such Registration Default period, the rate of interest payable on such Note pursuant to the terms of such Note and the Indenture, plus 0.25%, and (b) during each subsequent 90-day period of such Registration Default Period, the rate of interest utilized in calculating the Assumed Interest Amount with respect to the prior 90 days of such Registration Default Period, plus an additional 0.25%. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such other Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "Broker-Dealer" shall mean any broker or dealer registered as such under the Exchange Act. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. "Commission" shall mean the Securities and Exchange Commission. "Company" shall have the meaning set forth in the preamble hereto. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Exchange Offer Registration Period" shall mean the period following the consummation of the Registered Exchange Offer, which period shall end on the sooner of the 180th day after the consummation of the Registered Exchange Offer and the date on which all Exchanging Dealers have sold all New Securities held by them (unless such period is extended pursuant to Section 4(k) hereof). "Exchange Offer Registration Statement" shall mean a registration statement of the Company and the Subsidiary Guarantors on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments thereto, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 2 "Exchanging Dealer" shall mean any Holder that is a Broker-Dealer and elects to exchange for New Securities any Securities that it acquired for its own account as a result of market-making activities or other trading activities. "Guarantees" shall have the meaning set forth in the preamble hereto. "Holder" and "Holders" shall have the respective meanings set forth in the preamble hereto. "Indenture" shall mean the Indenture relating to the Securities, dated as of the date hereof, among the Company, the Subsidiary Guarantors and The Bank of New York, as Trustee, as the same may be amended from time to time in accordance with the terms thereof. "Initial Holders" shall mean the persons to whom the New Securities are initially issued by the Company, whether in exchange for the PIK Note Claims referred to in the Plan, upon the exercise of the Rights referred to in the Plan or pursuant to the Subscription Agreement. "Liquidated Damages" shall mean with respect to any Note and with respect to any Registration Default Period an amount equal to (a) the Assumed Interest Amount for the duration of such Registration Default Period, minus (b) the Actual Interest Amount for the duration of such Registration Default Period. "Losses" shall have the meaning set forth in Section 7(d) hereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of Securities registered or to be registered under a Registration Statement. "Managing Underwriters" shall mean the investment banker or investment bankers and manager or managers that shall administer an underwritten offering. "New Securities" shall mean the 11% Senior Secured Notes due 2010 issued by the Company containing terms identical in all material respects to the Securities (except that (i) interest thereon shall accrue from the last date on which interest was paid on the Securities or, if no such interest has been paid, from the date of their original issue, and (ii) the transfer restrictions thereon shall be eliminated) to be offered to Holders in exchange for Securities pursuant to the Registered Exchange Offer. "Notes" shall have the meaning set forth in the preamble hereto. "Prospectus" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities or the New Securities covered by such Registration Statement, and all amendments and supplements thereto and all material incorporated by reference therein. "Registration Default" shall have the meaning set forth in Section 6 hereof. 3 "Registration Default Period" shall mean the period commencing on the day upon which a Registration Default shall have occurred and concluding on the day upon which such Registration Default shall have been cured, inclusive. "Registered Exchange Offer" shall mean the proposed offer of the Company and the Guarantors to issue and deliver to the Holders that are not prohibited by any law or policy of the Commission from participating in such offer, in exchange for the Securities, a like aggregate principal amount of the New Securities. "Registration Statement" shall mean any Exchange Offer Registration Statement or Shelf Registration Statement that covers any of the Securities or the New Securities pursuant to the provisions of this Agreement, any amendments and supplements to such registration statement, including post-effective amendments (in each case including the Prospectus contained therein), all exhibits thereto and all material incorporated by reference therein. "Securities" shall have the meaning set forth in the preamble hereto. "Shelf Registration" shall mean a registration effected pursuant to Section 3 hereof. "Shelf Registration Period" shall have the meaning set forth in Section 3(b)(ii) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and the Subsidiary Guarantors pursuant to the provisions of Section 3 hereof which covers some or all of the Securities or New Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Subscription Agreement" shall have the meaning set forth in the preamble hereto. "Subsidiary Guarantors" shall have the meaning set forth in the preamble hereto. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. "underwriter" shall mean any underwriter of the Securities in connection with an offering thereof under a Shelf Registration Statement. 2. Registered Exchange Offer. (a) The Company shall prepare and, not later than 60 days following the date of the original issuance of the Securities (or if such 60th day is not a Business Day, the next succeeding Business Day), shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer. The Company shall use its commercially reasonable best efforts to cause the Exchange Offer 4 Registration Statement to be declared effective under the Act within 140 days of the date of the original issuance of the Securities (or if such 140th day is not a Business Day, the next succeeding Business Day). (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for New Securities (assuming that such Holder is not an Affiliate of the Company, acquires the New Securities in the ordinary course of such Holder's business, has no arrangements with any Person to participate in the distribution of the New Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such New Securities from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. (c) In connection with the Registered Exchange Offer, the Company shall: (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (ii) keep the Registered Exchange Offer open for not less than 30 days and not more than 40 days after the date notice thereof is mailed to the Holders (or, in each case, longer if required by applicable law); (iii) use its commercially reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective under the Act, supplemented and amended as required under the Act, to ensure that it is available for sales of New Securities by Exchanging Dealers during the Exchange Offer Registration Period; (iv) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan in New York City, which may be the Trustee or its Affiliate; (v) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last Business Day on which the Registered Exchange Offer is open; (vi) prior to effectiveness of the Exchange Offer Registration Statement, if requested by the Commission, provide a supplemental letter to the Commission (A) stating that the Company and the Subsidiary Guarantors are conducting the Registered Exchange Offer in reliance on the position of the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B) including a representation that neither the Company nor any Subsidiary Guarantor has entered 5 into any arrangement or understanding with any Person to distribute the New Securities to be received in the Registered Exchange Offer and that neither the Company nor any Subsidiary Guarantor will issue New Securities to any Holder participating in the Registered Exchange Offer who fails to certify to the Company that such Holder is acquiring the New Securities in the ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the New Securities; and (vii) comply in all respects with all applicable laws. (d) As soon as practicable after the close of the Registered Exchange Offer, the Company and the Subsidiary Guarantors shall: (i) instruct the Trustee to accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer; (ii) instruct the Trustee to cancel in accordance with Section 4(s) hereof all Securities so accepted for exchange; and (iii) cause the Trustee promptly to authenticate and deliver to each Holder a principal amount of New Securities equal to the principal amount of the Securities of such Holder so accepted for exchange. (e) Each Holder participating in the Registered Exchange Offer shall be required to represent in writing to the Company that, at the time of the consummation of the Registered Exchange Offer: (i) any New Securities received by such Holder will be acquired in the ordinary course of business; (ii) such Holder has had and will have no arrangement or understanding with any Person to participate in the distribution of the Securities or the New Securities within the meaning of the Act; and (iii) such Holder is not an Affiliate of the Company or any of the Subsidiary Guarantors (or if it is such an Affiliate, that it will comply with the registration and prospectus delivery requirements of the Act to the extent applicable). 3. Shelf Registration. (a) If (i) due to any change in law or applicable interpretations thereof by the Commission's staff, the Company determines upon advice of its outside counsel that it or any Subsidiary Guarantor is not permitted to effect the Registered Exchange Offer as contemplated by Section 2 hereof; (ii) for any other reason the Exchange Offer Registration Statement is not declared effective by the Commission under the Act within 180 days of the date of the original issuance of the Securities (or if such 180th day is not a Business Day, the next succeeding Business Day) or the Registered Exchange Offer is 6 not consummated within 200 days of the date hereof (or if such 200th day is not a Business Day, the next succeeding Business Day); or (iii) any Holder is not eligible to participate in the Registered Exchange Offer or does not, for any reason, receive in the Registered Exchange Offer New Securities which are freely tradeable by such Holder (whether because such Holder is an Affiliate of the Company or otherwise, it being understood, however, that the requirement that a participating Broker-Dealer deliver the prospectus contained in the Exchange Offer Registration Statement in connection with sales of New Securities shall not result in such New Securities being not "freely tradable"), the Company shall effect, at its cost, a Shelf Registration Statement in accordance with subsection (b) below. (b) (i) The Company shall, as promptly as practicable (but in no event more than 60 days after so required or requested pursuant to this Section 3, or if such 60th day is not a Business Day, the next succeeding Business Day), file with the Commission and thereafter shall use its commercially reasonable best efforts to cause to be declared effective under the Act a Shelf Registration Statement relating to the offer and sale of the Securities and/or the New Securities, as applicable, by the Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that no Holder (other than an Initial Holder) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder. (ii) The Company shall use its best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for so long as any Holder shall require in order to offer or sell any of its New Securities publicly, freely and without restriction (the "Shelf Registration Period"). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities publicly, freely and without restriction during that period, unless (A) such action is required by applicable law; or (B) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets (to the extent permitted by the terms of the Indenture), so long as the Company promptly thereafter complies with the requirements of Section 4(k) hereof, if applicable. (iii) The Company shall cause at all times and from time to time the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, (A) to comply in all material respects with the applicable requirements of the Act; and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 7 4. Additional Registration Procedures. In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply. (a) The Company shall: (i) furnish to you, prior to the filing thereof with the Commission, a copy of any Exchange Offer Registration Statement and any Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein (including, upon reasonable request, all documents incorporated by reference therein after the initial filing) and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as you reasonably propose; (ii) include the information set forth in Annex A hereto on the facing page of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Exchange Offer, in Annex C hereto in the underwriting or plan of distribution section of the Prospectus contained in the Exchange Offer Registration Statement, and in Annex D hereto in the letter of transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by any Holder, include the information required by Item 507 or 508 of Regulation S-K, as applicable, in the Prospectus contained in the Exchange Offer Registration Statement; and (iv) in the case of a Shelf Registration Statement, include the names of the Holders that propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders. (b) The Company shall ensure that: (i) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act and the rules and regulations thereunder; and (ii) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto does not, when the Registration Statement becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (c) The Company shall advise you, the Holders of Securities covered by any Shelf Registration Statement and any Exchanging Dealer under any Exchange Offer Registration Statement that has provided in writing to the Company a telephone or facsimile number and address for notices, and, if requested by you or any such Holder or 8 Exchanging Dealer, shall confirm such advice in writing (which notice pursuant to clauses (ii) through (v) hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the Company shall have remedied the basis for such suspension): (i) when a Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or the Subsidiary Guarantors of any notification with respect to the suspension of the qualification of the Securities or the New Securities, as the case may be, included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (v) of the happening of any event that requires any change in the Registration Statement or the Prospectus so that, as of such date, the Registration Statement or the Prospectus does not contain an untrue statement of a material fact and does not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (d) The Company shall use its commercially reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement or the qualification of the securities therein for sale in any jurisdiction at the earliest possible time. (e) The Company shall furnish to each Holder of Securities or New Securities covered by any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities or New Securities covered by any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request. The Company and the Subsidiary Guarantors consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Securities or New Securities in connection with the offering and sale of the Securities or New Securities covered by the 9 Prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) The Company shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including all material incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (h) The Company shall promptly deliver to each Person required to deliver a Prospectus during the Exchange Offer Registration Period, without charge, as many copies of the final Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as any such Person may reasonably request. The Company and the Subsidiary Guarantors consent to the use of the Prospectus or any amendment or supplement thereto by any Person that may be required to deliver a Prospectus following the Registered Exchange Offer in connection with the offering and sale of the New Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Exchange Offer Registration Statement. (i) Prior to the Registered Exchange Offer or any other offering of Securities or New Securities pursuant to any Registration Statement, the Company and the Subsidiary Guarantors shall arrange, if necessary, for the qualification of the Securities or the New Securities for sale under state securities or blue sky laws of such jurisdictions in the United States as any Holder shall reasonably request and will maintain such qualification in effect so long as required; provided that in no event shall either the Company or any Subsidiary Guarantor be obligated to qualify to do business or as a dealer in securities in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits or taxation, other than suits arising out of the initial placement of the Securities, the Registered Exchange Offer or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where it is not then so subject. (j) The Company and the Subsidiary Guarantors shall cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing New Securities or Securities to be issued or sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request. (k) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above during any period of time in which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare a post-effective amendment to the applicable Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the securities included therein, the Prospectus shall not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such circumstances, the period of 10 effectiveness of the Exchange Offer Registration Statement provided for in Section 2 and the Shelf Registration Statement provided for in Section 3(b) shall each be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 4(c) hereof to and including the date when the Initial Holders, the Holders of the Securities and any known Exchanging Dealer shall have received such amended or supplemented Prospectus pursuant to this Section 4(k). (l) Not later than the effective date of any Registration Statement, the Company shall provide a CUSIP number for the Securities or the New Securities, as the case may be, registered under such Registration Statement and provide the Trustee with printed certificates for such Securities or New Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (m) The Company and the Subsidiary Guarantors shall comply in all material respects with all applicable rules and regulations of the Commission and shall make generally available to their security holders no later than 45 days after the end of the 12-month period (or 90 days if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter after the effective date of the applicable Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Act. (n) The Company shall cause the Indenture to be qualified under the Trust Indenture Act in a timely manner. (o) The Company may require each Holder of Securities or New Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Securities or New Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement. The Company may exclude from such Shelf Registration Statement the Securities or New Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (p) In the case of any Shelf Registration Statement, the Company and the Subsidiary Guarantors shall enter into such agreements and take all other appropriate actions (including if requested an underwriting agreement in customary form) in order to expedite or facilitate the registration or the disposition of the Securities or New Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 7 (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 7. (q) In the case of any Shelf Registration Statement, the Company and the Subsidiary Guarantors shall: (i) make reasonably available for inspection by the Holders of Securities or New Securities to be registered thereunder, any underwriter 11 participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders by the one firm or counsel designated by the Majority Holders pursuant to Section 5 hereof; provided, further, that any information that is designated in writing by the Company or any Subsidiary Guarantor, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, 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; (ii) cause the Company's and the Subsidiary Guarantors' officers, directors and employees to supply all relevant information reasonably requested by the Holders or any underwriter, attorney, accountant or agent in connection with any such Shelf Registration Statement as is customary for similar due diligence examinations; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders by the one firm or counsel designated by the Majority Holders pursuant to Section 5 hereof; provided, further, that any information that is designated in writing by the Company or any Subsidiary Guarantor, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, 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; (iii) make such representations and warranties to the Holders of Securities or New Securities registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Subscription Agreement; (iv) 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 Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (v) obtain "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 for which financial statements and financial data are, or are required to be, included in such Shelf Registration 12 Statement), addressed to each selling Holder of Securities or New Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 4(k) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company and the Subsidiary Guarantors. The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(q) shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (r) If a Registered Exchange Offer is to be consummated, upon delivery of the Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the New Securities, the Company shall mark, or caused to be marked, on the Securities so exchanged that such Securities are being canceled in exchange for the New Securities. In no event shall the Securities be marked as paid or otherwise satisfied. (s) The Company and the Subsidiary Guarantors shall use their respective best efforts (i) if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities or the New Securities, as the case may be, covered by a Registration Statement; or (ii) if the Securities were not previously rated, to cause the Securities or the New Securities covered by a Registration Statement to be rated with at least one nationally recognized statistical rating agency, if so requested by Majority Holders with respect to the related Registration Statement or by any Managing Underwriters. (t) In the event that any Broker-Dealer shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Rules of Fair Practice and the By-Laws of the National Association of Securities Dealers, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company and the Subsidiary Guarantors shall assist such Broker-Dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by: (i) if such Rules or By-Laws shall so require, engaging a "qualified independent underwriter" (as defined in such Rules) to participate in the preparation of the Registration Statement, to exercise usual standards of due diligence with respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities; 13 (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 7 hereof; and (iii) providing such information to such Broker-Dealer as may be required in order for such Broker-Dealer to comply with the requirements of such Rules. (u) The Company and the Subsidiary Guarantors shall use their respective commercially reasonable best efforts to take all other steps necessary to effect the registration of the Securities or the New Securities, as the case may be, covered by a Registration Statement. 5. Registration Expenses. The Company shall bear all expenses incurred in connection with the performance of its and the Subsidiary Guarantors' obligations under Sections 2, 3 and 4 hereof, and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the Initial Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Initial Holders in connection therewith. 6. Liquidated Damages. If (i) any Exchange Offer Registration Statement or Shelf Registration Statement required by this Agreement is not filed with the Commission on or prior to the date on which such Registration Statement is required by any provision of this Agreement to be so filed, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the date on which such Registration Statement is to be so declared effective pursuant to any provision of this Agreement, (iii) the Exchange Offer has not been consummated within 180 days of the date of the original issuance of the Securities (or if such 180th day is not a Business day, the next succeeding Business Day), or (iv) any Registration Statement required by this Agreement is filed and declared effective, but shall thereafter cease to be effective or fail to be usable for its intended purpose for any reason (including, but not limited to, by reason of the fact that any of the information set forth, or incorporated by reference, therein shall not be true, correct and current in all material respects) (each such event referred to in clauses (i) through (iv) above, a "Registration Default"), then the Company and the Subsidiary Guarantors hereby jointly and severally agree to pay to each Holder of Securities affected thereby Liquidated Damages; provided that the Company and the Subsidiary Guarantors shall in no event be required to pay Liquidated Damages for more than one Registration Default at any given time. All accrued Liquidated Damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture. All obligations of the Company and the Subsidiary Guarantors to pay Liquidated Damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. 14 7. Indemnification and Contribution. (a) The Company and the Subsidiary Guarantors, jointly and severally, agree to indemnify and hold harmless each Holder of Securities or New Securities, as the case may be, covered by any Registration Statement (including each Initial Holder and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees and agents of each such Holder and each Person who controls any such Holder within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (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 as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, 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 required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that (i) the Company and the Subsidiary Guarantors will not be liable in any case to the extent that any such loss, claim, damage or liability 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 and the Subsidiary Guarantors by or on behalf of any such Holder specifically for inclusion therein, (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary Prospectus relating to a Shelf Registration Statement, the foregoing indemnity shall not inure to the benefit of any Holder (including any Exchanging Dealer) from whom the Person asserting any such loss, claim, damage or liability purchased the Securities or the New Securities, as the case may be, to the extent that a final Prospectus relating to such Securities or New Securities, as the case may be, was required to be delivered by such Holder under the Act in connection with such purchase and any such loss, claim, damage or liability of such Holder results from the failure of such Holder to send to such Person, at or prior to the written confirmation of the sale of such Securities or New Securities, as the case may be, a copy of the final Prospectus if the Company had previously furnished copies thereof to such Holder and (iii) the Company and the Subsidiary Guarantors shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon the use of a Registration Statement after (x) a stop order has been issued in a respect of a Registration Statement or (y) a Registration Statement has been suspended, so long as, in the case of each of (x) and (y), such Holder has received notice of such action in accordance with Section 4(c) hereof. This indemnity agreement will be in addition to any liability which the Company and the Subsidiary Guarantors may otherwise have. The Company and the Subsidiary Guarantors also, jointly and severally, agree to indemnify or contribute as provided in Section 7(d) to Losses of any underwriter of any 15 Securities or New Securities, as the case may be, registered under a Shelf Registration Statement, their directors, officers, employees or agents and each Person who controls such underwriter (within the meaning of the Act or the Exchange Act) on substantially the same basis as that of the indemnification of the selling Holders provided in this Section 7(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(p) hereof. (b) Each Holder of Securities or New Securities, as the case may be, covered by a Registration Statement severally agrees to indemnify and hold harmless the Company and the Subsidiary Guarantors, each of their directors, each of their officers who signs such Registration Statement and each Person who controls the Company or any of the Subsidiary Guarantors within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Subsidiary Guarantors to each such Holder, but only with reference to written information furnished to the Company or the Subsidiary Guarantors by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred, as incurred, by them in connection with investigation or defending such loss, claim, liability, damage or action. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party 16 within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the amount paid or payable by such indemnified party as a result of the aggregate losses, claims, damages and liabilities referred to in subsection (a) or (b), as the case may be, above (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative faults of the indemnified and indemnifying parties. Relative fault shall be determined by reference to, among other things, whether the Losses arose from any alleged untrue statement or omission relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand; the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), 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 who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have the same rights to contribution as such Holder, and each Person who controls the Company or any of the Subsidiary Guarantors within the meaning of either the Act or the Exchange Act, each officer of the Company or any of the Subsidiary Guarantors who shall have signed the Registration Statement and each director of the Company or any of the Subsidiary Guarantors shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The provisions of this Section 7 will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Company and the Subsidiary Guarantors or any of the officers, directors or controlling Persons referred to in this Section 7, and will survive the sale by a Holder of Securities or New Securities covered by a Registration Statement or any termination or cancellation of this Agreement. 17 8. Underwritten Registrations. (a) If any of the Securities or New Securities, as the case may be, covered by any Shelf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders. (b) No Person may participate in any underwritten offering pursuant to any Shelf Registration Statement, unless such Person (i) agrees to sell such Person's Securities or New Securities, as the case may be, on the basis reasonably provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 9. No Inconsistent Agreements. The Company and the Subsidiary Guarantors have not, as of the date hereof, entered into, nor shall they, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. 10. Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Majority Holders (or, after the consummation of any Registered Exchange Offer in accordance with Section 2 hereof, holders of a majority in aggregate principal amount outstanding of New Securities). Notwithstanding the foregoing (except for the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of some Holders whose Securities or New Securities (the "affected Securities"), as the case may be, are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Holders representing a majority of the aggregate principal amount of the affected Securities, voting together as a single class. 11. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, facsimile transmission or air courier guaranteeing overnight delivery: (a) if to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of this Section, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture; (b) if to you, initially at the respective addresses set forth in the Subscription Agreement; and (c) if to the Company or the Subsidiary Guarantors, initially at the address of the Company set forth in the Subscription Agreement. 18 All such notices and communications shall be deemed to have been duly given when received. The Initial Holders, the Company or the Subsidiary Guarantors by notice to the other parties may designate additional or different addresses for subsequent notices or communications. 12. Successors. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Securities and the New Securities. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Securities and the New Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. 13. Counterparts. This Agreement may be in signed counterparts, each of which shall an original and all of which together shall constitute one and the same agreement. 14. Headings. The headings used herein are for convenience only and shall not affect the construction hereof. 15. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York. 16. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 17. Securities Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities or New Securities is required hereunder, Securities or New Securities, as applicable, held by the Company or its Affiliates (other than subsequent Holders of Securities or New Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities or New Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 18. Specific Performance. Without limiting or waiving in any respect any rights or remedies of the parties under this Agreement now or hereinafter existing at law or in equity or by statute, each of the parties hereto shall be entitled to seek specific performance of the obligations to be performed by the other(s) in accordance with the provisions of this Agreement. 19. Third Party Beneficiaries. Holders of Securities and the other Persons to be indemnified pursuant to Section 7(a) hereof are intended third party beneficiaries of this Agreement, and this Agreement shall inure to the benefit of and may be enforced by, such 19 Persons. Other than as set forth in the preceding sentence, this Agreement shall be binding upon and inure solely to the benefit of each party hereto. 20 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement among the Company, the Subsidiary Guarantors and the Initial Holders. Very truly yours, NEENAH FOUNDRY COMPANY By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO ADVANCED CAST PRODUCTS, INC. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION, KENDALVILLE MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DEETER FOUNDRY, INC. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO GREGG INDUSTRIES, INC. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO MERCER FORGE CORPORATION By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO A&M SPECIALTIES, INC. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO 22 \ NEENAH TRANSPORT, INC. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO CAST ALLOYS, INC. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO BELCHER CORPORATION By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO PEERLESS CORPORATION By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO 23 The foregoing Agreement is hereby confirmed and accepted as of the date first above written. MACKAY SHIELDS LLC By: /s/ Don Morgan III --------------------------------- Name: Don Morgan III Title: Senior Managing Director CITICORP MEZZANINE III, L.P. By: /s/ Byron Knief --------------------------------- Name: Byron Knief Title: Senior Vice President TCW Shared Opportunity Fund II, L.P. By: TCW Investment Management Company Its Investment Manager By: /s/ Nicholas W. Tell, Jr. --------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart --------------------------------- Name: Gary A. Hobart Title: Vice President Shared Opportunity Fund IIB LLC By: TCW Asset Management Company as its Investment Advisor By: /s/ Nicholas W. Tell, Jr. --------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart --------------------------------- Name: Gary A. Hobart Title: Vice President 24 TCW Shared Opportunity Fund IV, L.P. and TCW Shared Opportunity Fund IVB, L.P. By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. --------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart --------------------------------- Name: Gary A. Hobart Title: Vice President AIMCO CDO, Series 2000-A By: Allstate Investment Management Company Its Collateral Manager By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. --------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart --------------------------------- Name: Gary A. Hobart Title: Vice President TCW High Income Partners, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Nicholas W. Tell, Jr. --------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director TCW High Income Partners II, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Nicholas W. Tell, Jr. --------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director 25 METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Jacqueline D. Jenkins --------------------------------- Name: Jacqueline D. Jenkins Title: Managing Director EXIS DIFFERENTIAL HOLDINGS LTD. By: /s/ Chris Kane --------------------------------- Name: Chris Kane Title: Portfolio Manager 26 ANNEX A Each broker-dealer that receives new securities for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of these new securities. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new securities received in exchange for securities where those securities were acquired by this broker-dealer as a result of market-making activities or other trading activities. We have agreed that, starting on the expiration date and ending on the close of business 180 days after the expiration date, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." 27 ANNEX B Each broker-dealer that receives new securities for its own account in exchange for securities, where those securities were acquired by this 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 those new securities. See "Plan of Distribution." 28 ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives new securities for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of these new securities. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new securities received in exchange for securities where those securities were acquired as a result of market-making activities or other trading activities. We and the subsidiary guarantors have agreed that, starting on the expiration date and ending on the close of business 180 days after the expiration date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until __________, 200__, all dealers effecting transactions in the new securities may be required to deliver a prospectus. We will not receive any proceeds from any sale of new securities by broker-dealers. New securities received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such new securities. Any broker-dealer that resells new securities that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such new securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit of any such resale of new securities and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the expiration date, we and the Subsidiary Guarantors will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the securities) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. 29 ANNEX D Rider A CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________ Address: ______________________________________ ______________________________________ Rider B If the undersigned is not a broker-dealer, the undersigned represents that it acquired the new securities in the ordinary course of its business, it is not engaged in, and does not intend to engage in, a distribution of new securities and it has no arrangements or understandings with any person to participate in a distribution of the new securities. If the undersigned is a broker-dealer that will receive new securities for its own account in exchange for securities, it represents that the securities to be exchanged for new securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such new securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 30 EX-4.5 6 y92210exv4w5.txt SUBORDINATED SECURITY AGREEMENT SUBORDINATED SECURITY AGREEMENT THIS SUBORDINATED SECURITY AGREEMENT is made as of the 8th day of October, 2003 by Neenah Foundry Company, a Wisconsin corporation ("Issuer" and a "Grantor"), and each of the other entities listed on the signature pages hereof (each, a "Grantor" and collectively, together with Issuer, the "Grantors") in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. 1. DEFINITIONS. As used in this Agreement: "Account Debtor" shall mean any Person who is or may become obligated under or on account of any Account, Contract Right, Chattel Paper or General Intangible. "Agreement" shall mean this Security Agreement, as it may be amended, modified or supplemented from time to time. "Code" shall mean the Uniform Commercial Code as in effect in the State of New York on the date hereof, as it may be amended or otherwise modified. "Collateral" shall mean all of the Property and interests in Property described in Section 2 of this Agreement, and all other property that now or hereafter secures the payment and performance of any of the Obligations. "Contract Right" shall mean any right of Issuer or any Grantor to payment under a contract for the sale or lease of goods or the rendering of services, which right is at the time not yet earned by performance. "Default" shall have the meaning provided to such term in Section 4.1 of this Agreement. "Guaranty" shall mean the Subsidiary Guarantee as defined in the Indenture, as such Subsidiary Guarantee may be amended, modified or supplemented from time to time. "Guaranty Documents" shall mean, collectively, this Agreement, the Guaranty, the Indenture and all other agreements, instruments and documents now or hereafter executed and/or delivered by any Grantor to Trustee or any Noteholder in order to evidence or secure the Obligations, as each may be amended, modified or supplemented from time to time. "Indenture" shall mean that certain Indenture dated as of the date hereof (as may be amended, modified or supplemented from time to time) by and among Issuer, the Subsidiary Guarantors party thereto and the Trustee pursuant to which Issuer has issued its 11% senior secured notes due September 30, 2010 in the aggregate principal amount of $133,130,000. "Loan Agreement Termination" shall mean the payment in full of the Senior Indebtedness. "Obligations" shall mean all obligations with respect to the Guaranty and all other indebtedness, liabilities, obligations, covenants and duties arising due or payable from each Grantor to Trustee or any Noteholder of any kind or nature, present or future, arising under the Guaranty or any of the other Guaranty Documents, whether direct or indirect (including those acquired by assignment), absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising and however acquired. The term includes, without limitation, all interest, charges, expenses, fees, attorneys' fees and any other sums chargeable to each Grantor under the Guaranty, this Agreement or any of the other Guaranty Documents. The foregoing definitions shall be equally applicable to the singular and plural forms of the defined terms. Capitalized terms used in this Agreement without definition and defined in the Indenture shall have the meanings ascribed to such terms in the Indenture, it being understood and acknowledged that any such capitalized terms defined in the Indenture describing property or interests in property of Issuer or a Subsidiary Guarantor (including, without limitation, capitalized terms used in Section 2.1 of this Agreement) shall be construed herein to refer to property or interests in property of each Grantor. Terms used in this Agreement and not defined herein or in the Indenture shall have the meanings given such terms in the Code. 2. SECURITY INTEREST. 2.1. Security Interest in Collateral. To secure the prompt payment and performance to Trustee and each Noteholder of the Obligations, each Grantor hereby grants to Trustee for the benefit of itself and each Noteholder a continuing Lien upon all of such Grantor's assets, including all of the following Property and interests in Property of such Grantor, whether now owned or existing or hereafter created, acquired or arising and wheresoever located: (a) Accounts; (b) Certificated Securities; (c) Chattel Paper; (d) Computer Hardware and Software and all rights with respect thereto, including, any and all licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications, and any substitutions, replacements, additions or model conversions of any of the foregoing; (e) Contract Rights; 2- (f) Deposit Accounts; (g) Documents; (h) Equipment; (i) Financial Assets; (j) Fixtures; (k) General Intangibles, including Payment Intangibles and Software; (l) Goods (including all of its Equipment, Fixtures and Inventory), and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor; (m) Instruments; (n) Intellectual Property; (o) Inventory; (p) Investment Property; (q) money (located in every jurisdiction whatsoever); (r) Letter-of-Credit Rights; (s) Payment Intangibles; (t) Security Entitlements; (u) Software; (v) Supporting Obligations; (w) Uncertificated Securities; and (x) to the extent not included in the foregoing, all other personal property of any kind or description; together with all books, records, writings, data bases, information and other property relating to, used or useful in connection with, or evidencing, embodying, incorporating or referring to any of the foregoing, and all Proceeds, products, offspring, rents, issues, profits and returns of and from any of the foregoing; provided, that to the extent that the provisions of any lease, license, contract, permit, Document or Instrument expressly prohibit (which prohibition is enforceable under applicable law) any assignment thereof (unless such prohibition specifically excludes from its scope an assignment for collateral security purposes) or the grant of a Lien therein, (i) Trustee will not enforce its Lien in any Grantor's rights under such lease, license, contract, 3- permit, Document or Instrument (other than in respect of the Proceeds thereof) for so long as such prohibition continues, and (ii) to the extent a violation of any such prohibition caused by the Lien under this Section 2.1 would allow the counterparty to any such lease, license, contract, permit, Document or Instrument to terminate the same under applicable law, then such lease, license, contract, permit, Document or Instrument shall not constitute Collateral for so long as such prohibition continues; it being understood that upon request of Trustee, each Grantor will in good faith use reasonable efforts to obtain consent for the creation of a Lien in favor of Trustee (and to Trustee's enforcement of such Lien) in any lease, license, contract, permit, Document or Instrument that prohibits any assignment thereof or the grant of a Lien therein; and provided, further, that no Lien is granted in any "intent to use" trademark applications until such time as a verified statement of use is filed. 2.2. Other Collateral. 2.2.1. Commercial Tort Claims. Each Grantor shall promptly notify Trustee in writing upon having a Commercial Tort Claim that arises after the Issue Date against any third party and, upon request of Trustee, promptly enter into an amendment to this Agreement and do such other acts or things reasonably deemed necessary by Trustee to give Trustee a security interest in any such Commercial Tort Claim. Each Grantor represents and warrants that as of the date of this Agreement, to its knowledge, it does not possess any Commercial Tort Claims. 2.2.2. Other Collateral. Each Grantor shall (i) prior to the Loan Agreement Termination, from time to time (but in no event later than four months from any event giving rise to the notice obligation) and (ii) following the Loan Agreement Termination, promptly, notify Trustee in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of (1) Deposit Accounts, Investment Property or Letter-of-Credit Rights in (or relating to) an amount in excess of $250,000 or Electronic Chattel Paper in (or relating to) an amount in excess of $1,000,000 and, upon the request of Trustee and subject to the Subordination Agreement, promptly execute such other documents, and do such other acts or things deemed appropriate by Trustee to deliver to Trustee "control" (as such term is defined in the Code) with respect to such Collateral and (2) Documents or Instruments in (or relating to) an amount in excess of $250,000 and, upon the request of Trustee and subject to the Subordination Agreement, will promptly execute such other documents, and do such other acts or things deemed appropriate by Trustee to deliver to Trustee possession of such Documents which are negotiable and Instruments, and, with respect to nonnegotiable Documents, to have such nonnegotiable Documents issued in the name of Trustee; and with respect to Collateral having a value in excess of $250,000 that is in the possession of a third party, other than Certificated Securities and Goods covered by a Document, subject to the Subordination Agreement, obtain an acknowledgement from the third party that it is holding the Collateral for the benefit of Trustee. 2.2.3. Lien Perfection; Further Assurances. Each Grantor shall execute such instruments, assignments or documents as are necessary to perfect Trustee's Lien upon any of the Collateral and shall take such other action as may be required to 4- perfect or to continue the perfection of Trustee's Lien upon the Collateral. Unless prohibited by applicable law, each Grantor hereby authorizes Trustee to execute and file any such financing statement, including, without limitation, financing statements that indicate the Collateral (i) as all assets of such Grantor or words of similar effect, or (ii) as being of an equal or lesser scope, or with greater or lesser detail, than as set forth in Section 2.1, on such Grantor's behalf. Each Grantor also hereby ratifies its authorization for Trustee to have filed in any jurisdiction any like financing statements or amendments thereto if filed prior to the date hereof. The parties agree that a carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. At Trustee's request, each Grantor shall also promptly execute or cause to be executed and shall deliver to Trustee any and all documents, instruments and agreements reasonably deemed necessary by Trustee to give effect to or carry out the terms of the Guaranty Documents. 2.2.4. Lien Subordination. Notwithstanding anything in this Agreement to the contrary, the liens securing this Agreement are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, Neenah Foundry Company ("Neenah") and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Neenah, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 3. REPRESENTATIONS, WARRANTIES AND COVENANTS 3.1. [Intentionally Omitted] 3.2. Location of Collateral. All Collateral, other than Inventory in transit and motor vehicles, will at all times be kept by the Grantors at one or more of the business locations set forth in Exhibit 3.2 hereto, as updated by the Grantors providing prior written notice to Trustee of any new location. 3.3. Accounts. 3.3.1. Records of Accounts. Each Grantor shall keep accurate and complete records of its Accounts and all payments and collections thereon and shall submit to Trustee on such periodic basis as Trustee shall reasonably request a sales and collections report for the preceding period. 5- 3.3.2. Account Verification. Any of Trustee's officers, employees or agents shall have the right, at any time or times hereafter, in the name of Trustee, any designee of Trustee or any Grantor, to verify the validity, amount or any other matter relating to any Accounts by mail, telephone, electronic communication or otherwise, and each Grantor shall cooperate fully with Trustee in an effort to facilitate and promptly conclude any such verification process; provided, that so long as no Event of -------- Default has occurred and is continuing, (a) Trustee shall provide each Grantor with reasonable prior notice that Trustee will be conducting Account verifications (it being understood that Trustee shall have no duty to identify any of the specific Account debtors to be contacted by Trustee in connection therewith), and (b) Trustee shall afford each Grantor the opportunity to have an observational role with respect to any such Account verifications (it being understood that no Grantor will have any right to be an active participant with respect to any such Account verifications). 3.4. Inventory. Each Grantor shall keep accurate and complete records of its Inventory. 3.5. Equipment. Each Grantor shall keep accurate records itemizing and describing the kind, type, quantity and book value of its Equipment and all dispositions thereof. Promptly after the reasonable request therefor by Trustee, each Grantor shall deliver to Trustee any and all evidence of ownership, if any, of any of its Equipment. 4. DEFAULTS; RIGHTS AND REMEDIES ON DEFAULT. 4.1. Default. Each of the following occurrences shall constitute a default under this Agreement (each, a "Default"): (a) Breach of Indenture. The occurrence of any Event of Default under the Indenture (it being agreed and understood that, notwithstanding anything to the contrary contained in the Indenture, a breach of any of the terms of Section 2.2, Section 3.2, Section 3.3, Section 3.4 or Section 3.5 hereof shall only result in a Default hereunder and an Event of Default under the Indenture if such breach has not been cured within 30 days after the sooner to occur of any Grantor's receipt of notice of such breach from Trustee or the date on which such breach first becomes known to an officer of any such Grantor); or (b) Breach under other Guaranty Documents. Any Grantor's failure to pay when due any obligations of such Grantor under the Guaranty, or the occurrence of any breach of the terms and conditions contained in any Guaranty Document other than, subject to Section 4.1(a) above, the Indenture. 4.2. Remedies. Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default, Trustee shall have and may exercise from time to time the following other rights and remedies: 6- (a) All of the rights and remedies of a secured party under the UCC or under other applicable law, and all other legal and equitable rights to which Trustee or Noteholders may be entitled, all of which rights and remedies shall be cumulative and shall be in addition to any other rights or remedies contained in this Agreement or any of the other Guaranty Documents, and none of which shall be exclusive. (b) The right to take immediate possession of the Collateral, and to (i) require any Grantor to assemble the Collateral, at each Grantor's expense, and make it available to Trustee at a place designated by Trustee which is reasonably convenient to both parties, and (ii) enter any premises where any of the Collateral shall be located and to keep and store the Collateral on said premises until sold (and if said premises be the Property of any Grantor, each Grantor agrees not to charge Trustee for storage thereof). (c) The right to sell or otherwise dispose of all or any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as Trustee, in its sole discretion, may deem advisable. Trustee may, at Trustee's option, disclaim any and all warranties regarding the Collateral in connection with any such sale. Each Grantor agrees that 10 days' written notice to any Grantor of any public or private sale or other disposition of Collateral shall be reasonable notice thereof, and such sale shall be at such locations as Trustee may designate in said notice. Trustee shall have the right to conduct such sales on each Grantor's premises, without charge therefor, and such sales may be adjourned from time to time in accordance with applicable law. Trustee shall have the right to sell, lease or otherwise dispose of the Collateral, or any part thereof, for cash, credit or any combination thereof, and Trustee, on behalf of Noteholders, may purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations. The proceeds realized from the sale of any Collateral shall be applied in a manner that is consistent with the terms of the Indenture. If any deficiency shall arise, the Grantors shall remain liable to Trustee and Noteholders therefore. Any surplus shall be remitted to whomsoever shall be legally entitled to the same. (d) Trustee is hereby granted a non-exclusive license or other right to use, without charge, effective upon the occurrence and continuance of an Event of Default, each Grantor's labels, patents, copyrights, licenses, rights of use of any name, trade secrets, tradenames, trademarks and advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in completing, advertising for sale and selling any 7- Collateral and each Grantor's rights under all licenses and all franchise agreements shall inure to Trustee's benefit. 4.3. Remedies Cumulative; No Waiver. All covenants, conditions, provisions, warranties, guaranties, indemnities, and other undertakings of each Grantor contained in this Agreement and the other Guaranty Documents, or in any document referred to herein or contained in any agreement supplementary hereto or in any schedule or in any Guaranty Document given to Trustee or any Noteholder or contained in any other agreement between any Noteholder and any Grantor or between Trustee and any Grantor heretofore, concurrently, or hereafter entered into, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of each Grantor herein contained. The failure or delay of Trustee or any Noteholder to require strict performance by any Grantor of any provision of this Agreement or to exercise or enforce any rights, Liens, powers, or remedies hereunder or under any of the aforesaid agreements or other documents or security or Collateral shall not operate as a waiver of such performance, Liens, rights, powers and remedies, but all such requirements, Liens, rights, powers, and remedies shall continue in full force and effect until all Loans and other Obligations owing or to become owing from each Grantor to Trustee and each Noteholder have been fully satisfied. None of the undertakings, agreements, warranties, covenants and representations of each Grantor contained in this Agreement or any of the other Guaranty Documents and no Default or Event of Default by any Grantor under this Agreement or any other Guaranty Documents shall be deemed to have been suspended or waived by Noteholders, unless such suspension or waiver is by an instrument in writing specifying such suspension or waiver and is signed by a duly authorized representative of Trustee and directed to any such Grantor. 5. MISCELLANEOUS. 5.1. Power of Attorney. Each Grantor hereby irrevocably designates, makes, constitutes and appoints Trustee (and all Persons designated by Trustee) as such Grantor's true and lawful attorney (and agent-in-fact), solely with respect to the matters set forth in this Section 5.1, and Trustee, or Trustee's agent, may, subject to the Subordination Agreement, without notice to any Grantor and in any Grantor's or Trustee's name, but at the cost and expense of the Grantors: 5.1.1. [Intentionally Omitted] 5.1.2. At such time or times after the occurrence and during the continuance of an Event of Default, as Trustee or its agent in its sole discretion may determine: (i) demand payment of the Accounts from the Account Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and generally exercise all of each Grantor's rights and remedies with respect to the collection of the Accounts; (ii) settle, adjust, compromise, discharge or release any of the Accounts or other Collateral or any legal proceedings brought to collect any of the Accounts or other Collateral; (iii) sell or assign any of the Accounts and other Collateral upon such terms, for such amounts and at such time or times as Trustee deems advisable, and at Trustee's option, with all warranties regarding the Collateral disclaimed; (iv) prepare, 8- file and sign any Grantor's name to a proof of claim in bankruptcy or similar document against any Account Debtor or to any notice of lien, assignment or satisfaction of lien or similar document in connection with any of the Collateral; (v) receive, open and dispose of all mail addressed to any Grantor and, if an Event of Default has occurred and is continuing, notify postal authorities to change the address for delivery thereof to such address as Trustee may designate until such time as no Event of Default exists; provided, that any contents of such mail other than any checks, notes, acceptances, drafts, money orders or other evidence of payment or proceeds of the Collateral shall be furnished by Trustee to each Grantor in accordance with written instructions provided by any such Grantor; (vi) endorse the name of any Grantor upon any of the items of payment or proceeds relating to any Collateral and deposit the same to the account of Trustee on account of the Obligations; (vii) endorse the name of any Grantor upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to any Collateral; (viii) use each Grantor's stationery and sign the name of each Grantor to verifications of the Accounts and notices thereof to Account Debtors (provided that Trustee shall deliver drafts of any such written communication to each such Grantor prior to the delivery thereof to any Account Debtors); (ix) use the information recorded on or contained in any data processing equipment and Computer Hardware and Software relating to the Accounts, Inventory, Equipment and any other Collateral; (x) make and adjust claims under policies of insurance to the extent related to the Collateral; and (xi) do all other acts and things necessary, in Trustee's determination, to fulfill each Grantor's obligations under this Agreement. The power of attorney granted hereby shall constitute a power coupled with an interest and shall be irrevocable. 5.2. Indemnity. Each Grantor hereby agrees to indemnify Trustee and each Noteholder (and each of their Affiliates) and hold Trustee and each Noteholder (and each of their Affiliates) harmless from and against any liability, loss, damage, suit, action or proceeding suffered or incurred by any such Person (including reasonable documented attorneys fees and legal expenses) as the result of any Grantor's failure to observe, perform or discharge such Grantor's duties hereunder, except those determined by a court of competent jurisdiction in a final nonappealable judgment to have arisen out of the bad faith, gross negligence or willful misconduct of, or breach of the terms of this Agreement or any other Guaranty Document by, Trustee or such Noteholder. In addition, each Grantor shall defend Trustee and each Noteholder (and each of their Affiliates) against and hold it harmless from all claims of any Person with respect to the Collateral (except those resulting from the gross negligence or intentional misconduct of, or breach of the terms of this Agreement or any other Loan Document by, any such Person). Without limiting the generality of the foregoing, each Grantor shall indemnify and hold harmless Trustee and each Noteholder (and each of their Affiliates) from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or under the Environmental Laws, or attributable to the use, generation, storage, release, threatened release, discharge, disposal or presence of any pollutants, flammables, explosives, petroleum (including crude oil) or any fraction thereof, radioactive materials, hazardous wastes, toxic substances or related materials, 9- including, without limitation, any substances defined as or included in the definition of toxic or hazardous substances, wastes, or materials under any Environmental Law, except for those losses, damages, costs, expenses or liabilities determined by a court of competent jurisdiction in a final nonappealable judgment to have arisen out of the bad faith, gross negligence or willful misconduct of Trustee or such Noteholder. Notwithstanding any contrary provision in this Agreement, the obligation of each Grantor under this Section 5.2 shall survive the payment in full of the non-indemnity Obligations and the termination of this Agreement. In connection with its appointment and acting hereunder, the Trustee is entitled to all rights, privileges, benefits, protections, immunities and indemnities provided to it under the Indenture. 5.3. Complete Agreement; Sale of Interest. (a) The Guaranty Documents constitute the complete agreement among the parties with respect to the subject matter hereof and may not be modified, altered or amended, except by an agreement in writing signed by each Grantor and Trustee. No Grantor may sell, assign or transfer any interest in this Agreement or any of the other Guaranty Documents, or any of the Obligations or any portion thereof, including, without limitation, any Grantor's rights, title, interests, remedies, powers and duties hereunder or thereunder. (b) Each Grantor hereby consents to any Noteholder's participation, sale, assignment, transfer or other disposition, at any time or times hereafter, of this Agreement, the Indenture, any of the other Guaranty Documents or any of the Obligations, or of any portion hereof or thereof, including, without limitation, such Noteholder's rights, title, interests, remedies, powers and duties hereunder or thereunder. 5.4. Modification of Agreement. No amendment, modification or waiver of any provision of this Agreement or any other Guaranty Document nor consent to any departure by any Grantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Trustee and each Grantor, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 5.5. Reimbursement of Expenses. If, at any time or times regardless of whether or not an Event of Default then exists, (i) Trustee incurs reasonable and documented legal or accounting expenses or any other costs or out-of-pocket expenses in connection with (1) the negotiation and preparation of this Agreement or any of the other Guaranty Documents or any amendment of or modification of this Agreement or any of the other Guaranty Documents or (2) the administration of this Agreement or any of the other Guaranty Documents and the transactions contemplated hereby and thereby; or (ii) Trustee or any Noteholder incurs reasonable and documented legal or accounting expenses or any other costs or out-of-pocket expenses in connection with (1) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Trustee, any Noteholder, any Grantor or any other Person) relating to the Collateral, this Agreement or any of the other Guaranty Documents or any Grantor's affairs; (2) any attempt to enforce any rights of Trustee or any 10- Noteholder against any Grantor or any other Person which may be obligated to Trustee or any Noteholder by virtue of this Agreement or any of the other Guaranty Documents, including, without limitation, the Account Debtors; or (3) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral; then all such legal and accounting expenses, other costs and out of pocket expenses of Trustee or any Noteholder, as applicable, shall be charged to the Grantors; provided, that no Grantor shall be responsible for such expenses, costs and out-of-pocket expenses to the extent incurred because of the gross negligence, bad faith or willful misconduct of Trustee or any Noteholder. All amounts chargeable to any Grantor under this Section 5.5 shall be Obligations secured by all of the Collateral, shall be payable within 15 days following demand to Trustee or such Noteholder, as the case may be, and shall bear interest from the date due and owing until paid in full at the rate set forth in the Indenture. The Grantors shall also reimburse Trustee for expenses incurred by Trustee in its administration of the Collateral to the extent and in the manner provided in the Indenture. 5.6. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 5.7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of each Grantor, Trustee and each Noteholder. 5.8. Notice. Except as otherwise provided herein, all notices, requests and demands to or upon a party hereto, to be effective, shall be in writing, return receipt requested, by personal delivery against receipt, by overnight courier or by facsimile and, unless otherwise expressly provided herein, shall be deemed to have been validly served, given, delivered or received, as applicable, immediately when delivered against receipt, one Business Day after deposit with an overnight courier or, in the case of facsimile notice, when sent, addressed as follows: If to Trustee: The Bank of New York 101 Barclay Street, 8th Floor West New York, NY 10286 Attention: Corporate Trust Administration Fax No.: (212) 815-5707 If to any Grantor: c/o Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Mr. Gary LaChey Fax No.: (920) 729-3633 11- With a copy to: Kirkland & Ellis LLP Citigroup Center 153 E. 53rd Street New York, New York 10022 Attention: Geoffrey W. Levin, Esq. Fax No.: (212) 446-4900 or to such other address as each party may designate for itself by notice given in accordance with this Section 5.8. 5.9. Release; Termination. 5.9.1. Upon any sale, lease, transfer or other disposition of any item of Collateral that is consummated in compliance with the Subordination Agreement or the Indenture, Trustee shall execute and deliver such documents that the Grantors may reasonably request to evidence the release of any such item of Collateral from the security interests granted hereunder. 5.9.2. Upon termination of the Indenture and payment in full of all Obligations (other than contingent indemnity obligations), the security interests granted hereunder shall terminate and all rights to the Collateral shall revert back to the Grantors. Upon such termination, Trustee shall execute and deliver such documents that the Grantors may reasonably request to evidence such termination. 5.10. Interpretation. No provision of this Agreement or any of the other Guaranty Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have been structured, drafted or dictated such provision. 5.11. Governing Law; Consent to Forum. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS); PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF TRUSTEE'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF TRUSTEE'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY GRANTOR, TRUSTEE OR ANY NOTEHOLDER, EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE COURTS OF THE STATE OF NEW YORK, OR, AT TRUSTEE'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY GRANTOR ON THE ONE HAND AND 12- TRUSTEE OR ANY NOTEHOLDER ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE CONFIRMATION ORDER (OR IN ANY AGREEMENT TO WHICH ANY GRANTOR IS A PARTY) TO THE CONTRARY, EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH ANY GRANTOR MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH IN THIS AGREEMENT OR OTHERWISE PROVIDED TO TRUSTEE AS A NEW NOTICE ADDRESS IN ACCORDANCE WITH THE TERMS HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH GRANTOR'S ACTUAL RECEIPT THEREOF OR 5 BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF TRUSTEE OR ANY NOTEHOLDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY TRUSTEE OR ANY NOTEHOLDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION. 5.12. Waivers. EACH GRANTOR IRREVOCABLY WAIVES (A) THE RIGHT TO TRIAL BY JURY (WHICH TRUSTEE HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OF COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR ANY OF THE OTHER GUARANTY DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (B) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY TRUSTEE OR ANY NOTEHOLDER, ON WHICH ANY GRANTOR MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER TRUSTEE OR ANY NOTEHOLDER MAY DO IN THIS REGARD; (C) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING TRUSTEE TO EXERCISE ANY REMEDIES HEREUNDER; (D) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS AND (E) NOTICE OF ACCEPTANCE HEREOF. EACH GRANTOR ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO TRUSTEE'S ENTERING INTO THIS AGREEMENT AND THAT TRUSTEE IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH THE GRANTORS. EACH 13- GRANTOR WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 14- IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year specified at the beginning hereof. NEENAH FOUNDRY COMPANY By: _____________________________________ Title:___________________________________ DEETER FOUNDRY, INC. By: _____________________________________ Title:___________________________________ MERCER FORGE CORPORATION By: _____________________________________ Title:___________________________________ DALTON CORPORATION By: _____________________________________ Title:___________________________________ DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By: _____________________________________ Title:___________________________________ DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By: _____________________________________ Title:___________________________________ 15- ADVANCED CAST PRODUCTS, INC. By: _____________________________________ Title:___________________________________ GREGG INDUSTRIES, INC. By: _____________________________________ Title:___________________________________ NEENAH TRANSPORT, INC. By: _____________________________________ Title:___________________________________ CAST ALLOYS, INC. By: _____________________________________ Title:___________________________________ DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY By: _____________________________________ Title:___________________________________ DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By: _____________________________________ Title:___________________________________ 16- A&M SPECIALTIES, INC. By: _____________________________________ Title:___________________________________ BELCHER CORPORATION By: _____________________________________ Title:___________________________________ PEERLESS CORPORATION By: _____________________________________ Title:___________________________________ THE BANK OF NEW YORK, a New York banking corporation, as Trustee By:______________________________________ Title:___________________________________ 17- EXHIBIT 3.2 LOCATIONS OF COLLATERAL 18- EX-4.6 7 y92210exv4w6.txt SUBORDINATED PLEDGE AGREEMENT SUBORDINATED PLEDGE AGREEMENT THIS SUBORDINATED PLEDGE AGREEMENT (this "Agreement") is made and entered into as of October 8, 2003 by Dalton Corporation, an Indiana corporation, having an office at 2121 Brooks Avenue, Neenah, Wisconsin 54956 (the "Pledgor"), in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. Capitalized terms used and not otherwise defined herein have the meanings assigned in the Indenture (as defined below). W I T N E S S E T H: WHEREAS, that certain Indenture (as amended, supplemented or otherwise modified from time to time, the "Indenture") dated as of the date hereof by and among the Neenah Foundry Company, a Wisconsin corporation ("Neenah Foundry"), the Subsidiary Guarantors party thereto and the Trustee has been entered into pursuant to which Neenah Foundry has issued its 11% senior secured notes due September 30, 2010 (the "Senior Secured Notes") in the aggregate principal amount of $133,130,000; WHEREAS, Pledgor is jointly and severally liable for all of the Obligations of Neenah Foundry, itself and each other Subsidiary Guarantor under the Indenture; WHEREAS, Pledgor owns 100% of the issued and outstanding capital stock of Dalton Corporation, Stryker Machining Facility Co., an Ohio corporation, Dalton Corporation, Warsaw Manufacturing Facility, an Indiana corporation, Dalton Corporation, Kendallville Manufacturing Facility, an Indiana corporation, and Dalton Corporation, Ashland Manufacturing Facility, an Ohio corporation, (collectively, the "Issuers"), all as described on Schedule I hereto; and WHEREAS, to secure repayment and performance of all of Pledgor's obligations, liabilities and indebtedness under the Indenture (including the Subsidiary Guarantee thereunder), Trustee and Noteholders have required that Pledgor shall have made the pledge contemplated by this Agreement; NOW, THEREFORE, in consideration of the premises, Pledgor hereby agrees with Trustee as follows: 1. Pledge. Pledgor hereby pledges to Trustee, for its own benefit and the benefit of the Noteholders, and grants to Trustee, for its own benefit and the benefit of Noteholders, a security interest in: (a) the shares of stock of each "Issuer" identified on Schedule I hereto held by Pledgor (the "Pledged Shares") and the certificates representing the Pledged Shares, and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; (b) all additional shares of stock of each Issuer at any time acquired by Pledgor in any manner, and the certificates representing such additional shares (and any such additional shares shall constitute part of the Pledged Shares under this Agreement), and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and (c) all proceeds of any of the foregoing (the assets described in this Section 1 are collectively referred to as, the "Pledged Collateral"). (d) Notwithstanding anything in this Agreement to the contrary, the liens securing this Mortgage are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, Neenah Foundry and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Neenah Foundry, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 2. Security for Obligations. This Agreement and all of the Pledged Collateral secure the payment and performance of the Obligations (as such term is defined in the Indenture), together with all reasonable costs and expenses, including, without limitation, all court costs and reasonable attorneys' and paralegals' fees and expenses paid or incurred by Trustee or any Noteholder in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against Neenah Foundry, Pledgor or any other guarantor of all or any part of the Obligations (all such indebtedness, obligations and liabilities described in this Section 2 being collectively called the "Secured Obligations"). 3. Delivery of Pledged Collateral. Subject to the Subordination Agreement and the payment in full of the Senior Indebtedness (the "Loan Agreement Termination"), all certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed undated instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Trustee. Prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right, at any time in its discretion 2 and without notice to Pledgor following the occurrence and during the continuance of an Event of Default, to transfer to or to register in the name of Trustee or any of its nominees any or all of the Pledged Collateral. In addition, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. 4. Representations and Warranties. In order to induce Trustee to enter into this Agreement and the Indenture, Pledgor represents and warrants that the following statements are true, correct and complete: (a) Schedule I hereto completely and accurately sets forth all of the issued and outstanding stock of each Issuer as of the date hereof. All shares of such stock are owned legally and beneficially by Pledgor and have been duly authorized and validly issued and are fully paid and nonassessable. There are no outstanding warrants, options, subscriptions or other contractual arrangements for the purchase of any other shares of stock or any securities convertible into shares of stock of any Issuer, and there are no preemptive rights with respect to the shares of stock of any Issuer. (b) Assuming that Agent or Trustee has taken and is retaining possession of the Pledged Shares in the State of Illinois, in the case of Agent, or in the State of New York, in the case of Trustee, as required in Section 3 above and further assuming that Agent or Trustee, as the case may be pursuant to Section 3 above, has taken possession of the Pledged Shares without notice (actual or constructive) of any adverse claims in respect of the Pledged Shares, the delivery of the Pledged Shares to the Agent or Trustee, as the case may be pursuant to Section 3 above, is effective to create a valid and perfected first priority security interest in the Pledged Collateral, free of any adverse claim, securing the payment of the Priority Lien Obligations and, on a subordinated basis pursuant to the Subordination Agreement, the Secured Obligations. (c) Subject to the Subordination Agreement, no consent of any other party (including, without limitation, any creditor of Pledgor) and no consent, authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor or (ii) for the exercise by Trustee of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as has already been obtained or taken and except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally). (d) None of the Pledged Shares constitutes margin stock, as defined in Regulation U of the Board of Governors of the Federal Reserve System. 3 (e) This Agreement is the legal, valid and binding obligation of Pledgor, enforceable against Pledgor in accordance with its terms, except as limited by applicable bankruptcy, reorganization, insolvency or similar laws affecting the enforcement of creditors' rights generally. (f) All information herein or hereafter supplied to Trustee by or on behalf of Pledgor with respect to the Pledged Collateral is and will be accurate and complete in all material respects. 5. Further Assurances. (a) Subject to the Subordination Agreement, Pledgor will, from time to time, at Pledgor's expense, promptly execute and deliver all further instruments and documents and take all further action that is necessary, or that Trustee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby, to enable Trustee to exercise and enforce the rights and remedies of Trustee hereunder with respect to any Pledged Collateral or to carry out the provisions and purposes hereof. Without limiting the generality of the foregoing, Pledgor will: (i) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as is necessary, or as Trustee may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby under the laws of any applicable jurisdiction or (ii) appear in and defend any action or proceeding that may affect Pledgor's title to or Trustee's security interest in the Pledged Collateral. (b) Pledgor will, promptly (and in any event within three Business Days) upon the purchase or acquisition of any additional shares of stock of each Issuer, deliver such Pledged Shares to the Agent or the Trustee, as the case may be pursuant to Section 3 above, together with a proxy substantially in the form attached hereto as Exhibit A, and a pledge amendment, duly executed by Pledgor, in substantially the form of Exhibit B hereto (a "Pledge Amendment"), in respect of the additional shares which are to be pledged pursuant to this Agreement. Pledgor hereby authorizes Trustee to attach each Pledge Amendment to this Agreement and agrees that all shares listed on any Pledge Amendment delivered to Trustee shall for all purposes hereunder be considered Pledged Collateral. 6. Voting Rights; Dividends; Etc. (a) So long as no Event of Default shall have occurred and be continuing and Trustee shall not have delivered to Pledgor notice of its election to exercise the rights set forth in subsection (b) below: (i) Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part 4 thereof for any purpose not inconsistent with the terms of this Agreement or the Indenture. (ii) Except as otherwise expressly permitted in the Indenture, any and all instruments, chattel paper and other rights, property or proceeds and products (other than cash or checks) received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, shall be and shall be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, to hold as Pledged Collateral, and shall, if received by Pledgor, be received in trust for the benefit of Trustee, be segregated from the other property or funds of Pledgor, and be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). (iii) Trustee shall promptly upon request execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the voting and other rights which Pledgor is entitled to exercise pursuant to paragraph (i) above, and to receive the dividends which Pledgor is authorized to receive and retain pursuant to paragraph (ii) above. (b) Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default: (i) Except as otherwise expressly permitted in the Indenture, all rights of Pledgor to receive and retain any cash dividends and distributions pursuant to subsection 6(a)(ii), and to exercise the voting and other consensual rights which Pledgor would otherwise be entitled to exercise pursuant to subsection 6(a)(i), shall cease to be effective upon written notice by Trustee to Pledgor of Trustee's intent to exercise its rights hereunder, and upon delivery of such notice shall become vested in Trustee who shall thereupon have the sole right to exercise such voting and other consensual rights and the sole right to receive and hold as Pledged Collateral such dividends (and, to the extent permissible, apply them to payment of the Secured Obligations). In order to effect such transfer of rights, Trustee shall have the right, upon such notice, to date and present to the applicable Issuer an irrevocable proxy executed by Pledgor substantially in the form attached hereto as Exhibit A (a "Proxy"). (ii) Except as expressly permitted in the Indenture, all dividends which are received by Pledgor contrary to the provisions of this subsection 6(b) shall be received in trust for the benefit of Trustee (for the benefit of Noteholders), shall be segregated from other funds of Pledgor and shall be forthwith paid over to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). 5 7. Transfers and Other Liens; Additional Shares. (a) Other than for Priority Liens and Priority Lien Documents prior to the Loan Agreement Termination, Pledgor agrees that Pledgor will not (i) encumber, sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or (ii) enter into any other contractual obligations which could reasonably be expected to restrict or inhibit the right or ability of Trustee to sell or otherwise dispose of the Pledged Collateral or any part thereof after the occurrence and during the continuance of an Event of Default. (b) Pledgor agrees that if any Issuer issues any stock or other securities (including any warrants, options, subscriptions or other contractual arrangements for the purchase of stock or securities convertible into stock) in addition to or in substitution for the Pledged Shares, Pledgor will deliver, promptly (and in any event within three Business Days) upon its acquisition (directly or indirectly) thereof, any and all writings evidencing any additional Pledged Collateral to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee. Pledgor hereby authorizes Trustee to modify this Agreement by unilaterally amending Schedule I to include such shares of stock or other securities. 8. Trustee Appointed Attorney-in-Fact. Subject to the Subordination Agreement, Pledgor hereby irrevocably appoints Trustee as Pledgor's attorney-in-fact effective upon the occurrence and during the continuance of an Event of Default, with full authority in the place and stead of Pledgor and in the name of Pledgor, Trustee or otherwise, from time to time in the discretion of Trustee to take any action (including completion and presentation of any proxy) and to execute any instrument that is necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to (i) receive, endorse and collect all instruments made payable to Pledgor representing any dividend or other distribution in respect of the Pledged Collateral or any part thereof; (ii) exercise the voting and other consensual rights pertaining to the Pledged Collateral; and (iii) sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Pledged Collateral as fully and completely as though Trustee was the absolute owner thereof for all purposes, and to do, at the option of Trustee and at Pledgor's expense, at any time or from time to time, all acts and things that are necessary or that the Trustee deems necessary to protect, preserve or realize upon the Pledged Collateral. Pledgor hereby ratifies and approves all acts of Trustee made or taken in accordance with the terms of this Section 8. Except as specifically set forth in Section 10 hereof or in the event of the gross negligence or willful misconduct of Trustee, neither Trustee nor any person designated by Trustee shall be liable for any acts or omissions or for any error of judgment or mistake of fact or law. This power of attorney, being coupled with an interest, shall be irrevocable until all Secured Obligations (other than unasserted contingent indemnity obligations) shall have been paid in full and the Indenture Documents shall have been terminated. 9. Trustee May Perform. If Pledgor fails to perform any agreement contained herein, Trustee may itself perform, or cause performance of, such agreement, and 6 the expenses of Trustee incurred in connection therewith shall be a part of the Secured Obligations. 10. Limitation on Duty of Trustee with Respect to the Pledged Collateral. The powers conferred on Trustee hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for monies actually received by it hereunder, Trustee shall have no duty with respect to any Pledged Collateral. Trustee shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment that is substantially equivalent to that which a reasonably prudent person in the industry accords to such property, it being expressly agreed that Trustee shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not Trustee has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral, but Trustee may do so and all expenses incurred in connection therewith shall be payable by and for the sole account of Pledgor. 11. Remedies upon Event of Default. Subject to the Subordination Agreement, if any Event of Default shall have occurred and be continuing: (a) Trustee may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code (the "UCC") in the State of New York, whether or not the UCC applies to the affected Pledged Collateral, and Trustee may also, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any office of Trustee or elsewhere, for cash, on credit, or for future delivery, at such price or prices and upon such other terms as Trustee deems commercially reasonable. Pledgor acknowledges and agrees that such a private sale may result in prices and other terms which may be less favorable to the seller than if such sale were a public sale. Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Pledgor 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. At any sale of the Pledged Collateral, if permitted by law, Trustee, on behalf of Noteholders, may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Pledged Collateral or any portion thereof. Trustee shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Trustee 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. Trustee shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the issuing corporation of such securities to register 7 such securities for public sale under the Securities Act of 1933, as from time to time amended (the "Securities Act"), or under applicable state securities laws, even if the issuing corporation would agree to do so. To the extent permitted by law, Pledgor hereby specifically waives all rights of redemption, stay or appraisal which Pledgor has or may have under any law now existing or hereafter enacted. (b) Except as expressly permitted in the Indenture and in this Agreement, all cash proceeds received by Trustee in accordance with the terms hereof in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral may, in the discretion of Trustee, be held by Trustee as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Trustee pursuant to the terms of the Indenture) in whole or in part by Trustee against all or any part of the Secured Obligations in accordance with the provisions of Section 13. Any surplus of such cash or cash proceeds held by Trustee and remaining after payment in full of all the Secured Obligations shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct; provided, that in the event that all of the conditions to the termination of this Agreement pursuant to Section 14 shall not have been fulfilled, such balance shall be held and applied from time to time as provided in this subsection 11(b) until all such conditions shall have been fulfilled. (c) Pledgor recognizes that Trustee may be unable to effect a public sale of all or part of the Pledged Collateral and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to the seller than if sold at public sales and agrees that such private sales shall be deemed to have been made in a commercially reasonable manner, and that Trustee has no obligation to delay sale of any such Pledged Collateral for the period of time necessary to permit each issuer of such Pledged Collateral to register such Pledged Collateral for public sale under the Securities Act. 12. Remedies Cumulative. No failure on the part of Trustee to exercise, and no delay in exercising and no course of dealing with respect to, any power, privilege or right under the Indenture, the other Collateral Documents or this Agreement (collectively, the "Indenture Documents") shall operate as a waiver thereof; nor shall any single or partial exercise by Trustee of any power, privilege or right under any of the other Indenture Documents or this Agreement preclude any other or further exercise thereof or the exercise of any other such power, privilege or right. The powers, privileges and rights in this Agreement and the other Indenture Documents are cumulative and are not exclusive of any other remedies provided by law. 8 13. Application of Proceeds. Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default, the proceeds of any sale of, or other realization upon, all or any part of the Pledged Collateral shall be applied in the manner set forth in the Indenture. 14. Termination of Security Interests; Release of Collateral. Upon payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture in accordance with its terms, the security interests granted herein shall terminate and all rights to the Pledged Collateral shall revert to Pledgor. Upon such termination of the security interests or release of any Pledged Collateral, Trustee will, at the expense of Pledgor, and subject to Section 20 herein, promptly execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence the termination of the security interests or the release of such Pledged Collateral which has not yet theretofore been sold or otherwise applied or released. Such release shall be without recourse or warranty to Trustee, except as to the absence of any prior assignments by Trustee of its interest in the Pledged Collateral. 15. Amendments, Waivers and Consents. No amendment, modification, termination or waiver of any provision of this Agreement, or consent to any departure by Pledgor therefrom, shall in any event be effective without the written concurrence of Trustee and Pledgor. 16. Notices. Any notice, approval, request, demand, consent or other communication hereunder, including any notice of default or notice of sale, shall be given to Pledgor or Trustee at the applicable address set forth above (or to such other address previously designated by written notice to the serving party) in accordance with the notice provision of the Indenture. 17. Continuing Security Interest; Successors and Assigns. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture, (ii) be binding upon Pledgor, its successors and assigns, and (iii) inure, together with the rights and remedies of Trustee hereunder, to the benefit of Trustee and its successors and assigns. Pledgor may not assign or transfer any of its interests or obligations hereunder without the prior consent of Trustee. 18. Waiver. (a) In addition to any other waivers herein, Pledgor waives to the greatest extent it may lawfully do so, and agrees that it shall not at any time insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets, redemption or similar law, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by Pledgor of its obligations under, or the enforcement by Trustee of, this Agreement. Pledgor hereby waives diligence, presentment and demand 9 (whether for nonpayment or protest or of acceptance, maturity, extension of time, change in nature or form of the Secured Obligations, acceptance of further security, release of further security, composition or agreement arrived at as to the amount of, or the terms of the Secured Obligations, notice of adverse change in any Issuer's or any other Person's financial condition or any other fact which might materially increase the risk to Pledgor) with respect to any of the Secured Obligations or all other demands whatsoever and, to the fullest extent permitted by law, waives the benefit of all provisions of law which are or might be in conflict with the terms of this Agreement. (b) If Trustee may, under applicable law, proceed to realize its benefits under any of the Indenture Documents giving Trustee a Lien upon any Collateral, whether owned by any Issuer or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Trustee may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies of Trustee under this Agreement. 19. Subrogation. Subject to, and solely effective following, the payment in full in cash of all Obligations (other than unasserted contingent indemnity obligations), Pledgor shall be subrogated to the rights of the Noteholders to receive payments and distributions of cash, property and securities applicable to such Obligations. For purposes of such subrogation, no payments or distributions to the Noteholders of any cash, property or securities to which the Noteholders would be entitled except for this provision, and no payments over pursuant to the provisions of this paragraph to the Noteholders by Pledgor shall, as among each Issuer (as defined in the Indenture) or any Subsidiary Guarantor, their respective creditors (other than holders of such Obligations) and Pledgor be deemed to be a payment or distribution by such Issuer (as defined in the Indenture) or any Subsidiary Guarantor to or on account of such Obligations. 20. Reinstatement. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by Trustee or any Noteholder in respect of the Secured Obligations is rescinded or must otherwise be restored or returned by Trustee or any Noteholder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Pledgor or any Issuer or upon the appointment of any intervenor or conservator of, or trustee or similar official for, Pledgor or any Issuer or any substantial part of its assets, or otherwise, all as though such payments had not been made. 21. Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction. 22. Interpretation. Time is of the essence of each provision of this Agreement of which time is an element. All terms not defined herein or in the Indenture shall have the meanings set forth in the UCC, except where the context otherwise requires. 10 To the extent any term or provision of this Agreement conflicts with the provisions of the Indenture and is not dealt with more specifically herein, the Indenture shall control with respect to such term or provision. 23. Survival of Provisions. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the Indenture, the issuance of Notes thereunder and the execution and delivery of the Notes. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements, representations and warranties of Pledgor set forth herein shall terminate only upon payment of the Secured Obligations and the termination of this Agreement in accordance with its terms. 24. Statute of Limitations. Pledgor hereby waives the right to plead any statute of limitations as a defense to any indebtedness or obligation hereunder or secured hereby to the full extent permitted by law. 25. Headings Descriptive. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same agreement. 27. GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 28. WAIVER OF JURY TRIAL; JURISDICTION. PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF STATE OR FEDERAL COURT LOCATED WITHIN new york COUNTY, new york AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND CONSENTS THAT ALL SERVICE OF PROCESS UPON PLEDGOR BE MADE BY REGISTERED MAIL OR MESSENGER DIRECTED TO PLEDGOR AT THE ADDRESS SET FORTH ABOVE AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT thereof. PLEDGOR AND TRUSTEE EACH HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF TRUSTEE TO BRING ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. 11 29. Incorporation By Reference. In connection with its appointment and acting hereunder the Trustee is entitled to all rights, privileges, benefits, protections, immunities and indemnities provided to it under the Indenture. 12 IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be duly executed and delivered as of the day and year first above written. DALTON CORPORATION By /s/ Gary LaChey --------------------------------------- Title VP-Finance, Treasurer, Secty. & CFO ------------------------------------ By acceptance hereof as of this 8th day of October, 2003, Trustee agrees to be bound by the provisions hereof. BANK OF NEW YORK, as Trustee By /s/ Patricia Gallagher --------------------------------------- Title Vice President ------------------------------------ 13 SCHEDULE I TO PLEDGE AGREEMENT
Stock Type and Certificate Number of Issuer of Pledged Stock Class of Stock Numbers Par Value Shares Percentage - ----------------------- -------------- ----------- --------- --------- ---------- Dalton Corporation, Stryker 100% Machining Facility Co Dalton Corporation, Warsaw 100% Manufacturing Facility Dalton Corporation, 100% Kendallville Manufacturing Facility Dalton Corporation, Ashland 100% Manufacturing Facility
EXHIBIT A Irrevocable Proxy The undersigned hereby appoints Bank of New York, as Trustee ("Trustee") as proxy with full power of substitution, and hereby authorizes Trustee to represent and vote all of the shares of the capital stock of __________________________, held of record by the undersigned on the date of exercise hereof or at any meeting or at any other time chosen by Trustee in its sole discretion, but only at the times provided in that certain Pledge Agreement dated as of October 8, 2003, executed by the undersigned in favor of Trustee. Dated: ___________ __, 2003 DALTON CORPORATION By______________________________________ Title___________________________________ EXHIBIT B Pledge Amendment This Pledge Amendment, dated ___________________ is delivered pursuant to Section 5(c) of the Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated as of October 8, 2003, between the undersigned and Bank of New York, as trustee (the "Pledge Agreement"; capitalized terms defined therein being used herein as therein defined) and that the shares listed on this Pledge Amendment shall be deemed to be part of the Pledged Collateral and shall secure all Secured Obligations. Dated: __________, 200__ DALTON CORPORATION By______________________________________ Title___________________________________
Stock Issuer Class of Stock Stock Certificate No(s). Par Value Number of Shares - ------------ -------------- ------------------------ --------- ----------------
ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, _________________, a _______________ corporation, hereby sells, assigns and transfers unto Bank of New York, as trustee _____________ (_____) Shares of the common stock of _____________________, a _____________ corporation (the "Corporation"), standing in its name on the books of the Corporation represented by Certificate(s) No. ____________________ herewith and does hereby irrevocably constitute and appoint ____________________ attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises. Dated: _____________ DALTON CORPORATION By______________________________________ Title___________________________________ EX-4.7 8 y92210exv4w7.txt SUBORDINATED PLEDGE AGREEMENT SUBORDINATED PLEDGE AGREEMENT THIS SUBORDINATED PLEDGE AGREEMENT (this "Agreement") is made and entered into as of October 8, 2003 by Mercer Forge Corp., a Delaware corporation, having an office at 2121 Brooks Avenue, Neenah, Wisconsin 54956 (the "Pledgor"), in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. Capitalized terms used and not otherwise defined herein have the meanings assigned in the Indenture (as defined below). W I T N E S S E T H: WHEREAS, that certain Indenture (as amended, supplemented or otherwise modified from time to time, the "Indenture") dated as of the date hereof by and among the Neenah Foundry Company, a Wisconsin corporation ("Neenah Foundry"), the Subsidiary Guarantors party thereto and the Trustee has been entered into pursuant to which Neenah Foundry has issued its 11% senior secured notes due September 30, 2010 (the "Senior Secured Notes") in the aggregate principal amount of $133,130,000; WHEREAS, Pledgor is jointly and severally liable for all of the Obligations of Neenah Foundry, itself and each other Subsidiary Guarantor under the Indenture; WHEREAS, Pledgor owns 100% of the issued and outstanding capital stock of A&M Specialties, Inc., a Pennsylvania corporation (the "Issuer"), as described on Schedule I hereto; and WHEREAS, to secure repayment and performance of all of Pledgor's obligations, liabilities and indebtedness under the Indenture (including the Subsidiary Guarantee thereunder), Trustee and Noteholders have required that Pledgor shall have made the pledge contemplated by this Agreement; NOW, THEREFORE, in consideration of the premises, Pledgor hereby agrees with Trustee as follows: 1. Pledge. Pledgor hereby pledges to Trustee, for its own benefit and the benefit of the Noteholders, and grants to Trustee, for its own benefit and the benefit of Noteholders, a security interest in: (a) the shares of stock of the "Issuer" identified on Schedule I hereto held by Pledgor (the "Pledged Shares") and the certificates representing the Pledged Shares, and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; (b) all additional shares of stock of the Issuer at any time acquired by Pledgor in any manner, and the certificates representing such additional shares (and any such additional shares shall constitute part of the Pledged Shares under this Agreement), and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and (c) all proceeds of any of the foregoing (the assets described in this Section 1 are collectively referred to as, the "Pledged Collateral"). (d) Notwithstanding anything in this Agreement to the contrary, the liens securing this Mortgage are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, Neenah Foundry and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Neenah Foundry, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 2. Security for Obligations. This Agreement and all of the Pledged Collateral secure the payment and performance of the Obligations (as such term is defined in the Indenture), together with all reasonable costs and expenses, including, without limitation, all court costs and reasonable attorneys' and paralegals' fees and expenses paid or incurred by Trustee or any Noteholder in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against Neenah Foundry, Pledgor or any other guarantor of all or any part of the Obligations (all such indebtedness, obligations and liabilities described in this Section 2 being collectively called the "Secured Obligations"). 3. Delivery of Pledged Collateral. Subject to the Subordination Agreement and the payment in full of the Senior Indebtedness (the "Loan Agreement Termination"), all certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed undated instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Trustee. Prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right, at any time in its discretion and without notice to Pledgor following the occurrence and during the continuance of an Event of Default, to transfer to or to register in the name of Trustee or any of its nominees 2 any or all of the Pledged Collateral. In addition, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. 4. Representations and Warranties. In order to induce Trustee to enter into this Agreement and the Indenture, Pledgor represents and warrants that the following statements are true, correct and complete: (a) Schedule I hereto completely and accurately sets forth all of the issued and outstanding stock of the Issuer as of the date hereof. All shares of such stock are owned legally and beneficially by Pledgor and have been duly authorized and validly issued and are fully paid and nonassessable. There are no outstanding warrants, options, subscriptions or other contractual arrangements for the purchase of any other shares of stock or any securities convertible into shares of stock of the Issuer, and there are no preemptive rights with respect to the shares of stock of the Issuer. (b) Assuming that Agent or Trustee has taken and is retaining possession of the Pledged Shares in the State of Illinois, in the case of Agent, or in the State of New York, in the case of Trustee, as required in Section 3 above and further assuming that Agent or Trustee, as the case may be pursuant to Section 3 above, has taken possession of the Pledged Shares without notice (actual or constructive) of any adverse claims in respect of the Pledged Shares, the delivery of the Pledged Shares to the Agent or Trustee, as the case may be pursuant to Section 3 above, is effective to create a valid and perfected first priority security interest in the Pledged Collateral, free of any adverse claim, securing the payment of the Priority Lien Obligations and, on a subordinated basis pursuant to the Subordination Agreement, the Secured Obligations. (c) Subject to the Subordination Agreement, no consent of any other party (including, without limitation, any creditor of Pledgor) and no consent, authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor or (ii) for the exercise by Trustee of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as has already been obtained or taken and except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally). (d) None of the Pledged Shares constitutes margin stock, as defined in Regulation U of the Board of Governors of the Federal Reserve System. (e) This Agreement is the legal, valid and binding obligation of Pledgor, enforceable against Pledgor in accordance with its terms, except as 3 limited by applicable bankruptcy, reorganization, insolvency or similar laws affecting the enforcement of creditors' rights generally. (f) All information herein or hereafter supplied to Trustee by or on behalf of Pledgor with respect to the Pledged Collateral is and will be accurate and complete in all material respects. 5. Further Assurances. (a) Subject to the Subordination Agreement, Pledgor will, from time to time, at Pledgor's expense, promptly execute and deliver all further instruments and documents and take all further action that is necessary, or that Trustee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby, to enable Trustee to exercise and enforce the rights and remedies of Trustee hereunder with respect to any Pledged Collateral or to carry out the provisions and purposes hereof. Without limiting the generality of the foregoing, Pledgor will: (i) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as is necessary, or as Trustee may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby under the laws of any applicable jurisdiction or (ii) appear in and defend any action or proceeding that may affect Pledgor's title to or Trustee's security interest in the Pledged Collateral. (b) Pledgor will, promptly (and in any event within three Business Days) upon the purchase or acquisition of any additional shares of stock of the Issuer, deliver such Pledged Shares to the Agent or the Trustee, as the case may be pursuant to Section 3 above, together with a proxy substantially in the form attached hereto as Exhibit A, and a pledge amendment, duly executed by Pledgor, in substantially the form of Exhibit B hereto (a "Pledge Amendment"), in respect of the additional shares which are to be pledged pursuant to this Agreement. Pledgor hereby authorizes Trustee to attach each Pledge Amendment to this Agreement and agrees that all shares listed on any Pledge Amendment delivered to Trustee shall for all purposes hereunder be considered Pledged Collateral. 6. Voting Rights; Dividends; Etc. (a) So long as no Event of Default shall have occurred and be continuing and Trustee shall not have delivered to Pledgor notice of its election to exercise the rights set forth in subsection (b) below: (i) Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Indenture. 4 (ii) Except as otherwise expressly permitted in the Indenture, any and all instruments, chattel paper and other rights, property or proceeds and products (other than cash or checks) received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, shall be and shall be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, to hold as Pledged Collateral, and shall, if received by Pledgor, be received in trust for the benefit of Trustee, be segregated from the other property or funds of Pledgor, and be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). (iii) Trustee shall promptly upon request execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the voting and other rights which Pledgor is entitled to exercise pursuant to paragraph (i) above, and to receive the dividends which Pledgor is authorized to receive and retain pursuant to paragraph (ii) above. (b) Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default: (i) Except as otherwise expressly permitted in the Indenture, all rights of Pledgor to receive and retain any cash dividends and distributions pursuant to subsection 6(a)(ii), and to exercise the voting and other consensual rights which Pledgor would otherwise be entitled to exercise pursuant to subsection 6(a)(i), shall cease to be effective upon written notice by Trustee to Pledgor of Trustee's intent to exercise its rights hereunder, and upon delivery of such notice shall become vested in Trustee who shall thereupon have the sole right to exercise such voting and other consensual rights and the sole right to receive and hold as Pledged Collateral such dividends (and, to the extent permissible, apply them to payment of the Secured Obligations). In order to effect such transfer of rights, Trustee shall have the right, upon such notice, to date and present to the applicable Issuer an irrevocable proxy executed by Pledgor substantially in the form attached hereto as Exhibit A (a "Proxy"). (ii) Except as expressly permitted in the Indenture, all dividends which are received by Pledgor contrary to the provisions of this subsection 6(b) shall be received in trust for the benefit of Trustee (for the benefit of Noteholders), shall be segregated from other funds of Pledgor and shall be forthwith paid over to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). 7. Transfers and Other Liens; Additional Shares. 5 (a) Other than for Priority Liens and Priority Lien Documents prior to the Loan Agreement Termination, Pledgor agrees that Pledgor will not (i) encumber, sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or (ii) enter into any other contractual obligations which could reasonably be expected to restrict or inhibit the right or ability of Trustee to sell or otherwise dispose of the Pledged Collateral or any part thereof after the occurrence and during the continuance of an Event of Default. (b) Pledgor agrees that if the Issuer issues any stock or other securities (including any warrants, options, subscriptions or other contractual arrangements for the purchase of stock or securities convertible into stock) in addition to or in substitution for the Pledged Shares, Pledgor will deliver, promptly (and in any event within three Business Days) upon its acquisition (directly or indirectly) thereof, any and all writings evidencing any additional Pledged Collateral to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee. Pledgor hereby authorizes Trustee to modify this Agreement by unilaterally amending Schedule I to include such shares of stock or other securities. 8. Trustee Appointed Attorney-in-Fact. Subject to the Subordination Agreement, Pledgor hereby irrevocably appoints Trustee as Pledgor's attorney-in-fact effective upon the occurrence and during the continuance of an Event of Default, with full authority in the place and stead of Pledgor and in the name of Pledgor, Trustee or otherwise, from time to time in the discretion of Trustee to take any action (including completion and presentation of any proxy) and to execute any instrument that is necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to (i) receive, endorse and collect all instruments made payable to Pledgor representing any dividend or other distribution in respect of the Pledged Collateral or any part thereof; (ii) exercise the voting and other consensual rights pertaining to the Pledged Collateral; and (iii) sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Pledged Collateral as fully and completely as though Trustee was the absolute owner thereof for all purposes, and to do, at the option of Trustee and at Pledgor's expense, at any time or from time to time, all acts and things that are necessary or that the Trustee deems necessary to protect, preserve or realize upon the Pledged Collateral. Pledgor hereby ratifies and approves all acts of Trustee made or taken in accordance with the terms of this Section 8. Except as specifically set forth in Section 10 hereof or in the event of the gross negligence or willful misconduct of Trustee, neither Trustee nor any person designated by Trustee shall be liable for any acts or omissions or for any error of judgment or mistake of fact or law. This power of attorney, being coupled with an interest, shall be irrevocable until all Secured Obligations (other than unasserted contingent indemnity obligations) shall have been paid in full and the Indenture Documents shall have been terminated. 9. Trustee May Perform. If Pledgor fails to perform any agreement contained herein, Trustee may itself perform, or cause performance of, such agreement, and the expenses of Trustee incurred in connection therewith shall be a part of the Secured Obligations. 6 10. Limitation on Duty of Trustee with Respect to the Pledged Collateral. The powers conferred on Trustee hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for monies actually received by it hereunder, Trustee shall have no duty with respect to any Pledged Collateral. Trustee shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment that is substantially equivalent to that which a reasonably prudent person in the industry accords to such property, it being expressly agreed that Trustee shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not Trustee has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral, but Trustee may do so and all expenses incurred in connection therewith shall be payable by and for the sole account of Pledgor. 11. Remedies upon Event of Default. Subject to the Subordination Agreement, if any Event of Default shall have occurred and be continuing: (a) Trustee may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code (the "UCC") in the State of New York, whether or not the UCC applies to the affected Pledged Collateral, and Trustee may also, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any office of Trustee or elsewhere, for cash, on credit, or for future delivery, at such price or prices and upon such other terms as Trustee deems commercially reasonable. Pledgor acknowledges and agrees that such a private sale may result in prices and other terms which may be less favorable to the seller than if such sale were a public sale. Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Pledgor 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. At any sale of the Pledged Collateral, if permitted by law, Trustee, on behalf of Noteholders, may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Pledged Collateral or any portion thereof. Trustee shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Trustee 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. Trustee shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the issuing corporation of such securities to register such securities for public sale under the Securities Act of 1933, as from time to time amended (the "Securities Act"), or under applicable state securities laws, 7 even if the issuing corporation would agree to do so. To the extent permitted by law, Pledgor hereby specifically waives all rights of redemption, stay or appraisal which Pledgor has or may have under any law now existing or hereafter enacted. (b) Except as expressly permitted in the Indenture and in this Agreement, all cash proceeds received by Trustee in accordance with the terms hereof in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral may, in the discretion of Trustee, be held by Trustee as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Trustee pursuant to the terms of the Indenture) in whole or in part by Trustee against all or any part of the Secured Obligations in accordance with the provisions of Section 13. Any surplus of such cash or cash proceeds held by Trustee and remaining after payment in full of all the Secured Obligations shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct; provided, that in the event that all of the conditions to the termination of this Agreement pursuant to Section 14 shall not have been fulfilled, such balance shall be held and applied from time to time as provided in this subsection 11(b) until all such conditions shall have been fulfilled. (c) Pledgor recognizes that Trustee may be unable to effect a public sale of all or part of the Pledged Collateral and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to the seller than if sold at public sales and agrees that such private sales shall be deemed to have been made in a commercially reasonable manner, and that Trustee has no obligation to delay sale of any such Pledged Collateral for the period of time necessary to permit the issuer of such Pledged Collateral to register such Pledged Collateral for public sale under the Securities Act. 12. Remedies Cumulative. No failure on the part of Trustee to exercise, and no delay in exercising and no course of dealing with respect to, any power, privilege or right under the Indenture, the other Collateral Documents or this Agreement (collectively, the "Indenture Documents") shall operate as a waiver thereof; nor shall any single or partial exercise by Trustee of any power, privilege or right under any of the other Indenture Documents or this Agreement preclude any other or further exercise thereof or the exercise of any other such power, privilege or right. The powers, privileges and rights in this Agreement and the other Indenture Documents are cumulative and are not exclusive of any other remedies provided by law. 13. Application of Proceeds. Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default, the proceeds of any 8 sale of, or other realization upon, all or any part of the Pledged Collateral shall be applied in the manner set forth in the Indenture. 14. Termination of Security Interests; Release of Collateral. Upon payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture in accordance with its terms, the security interests granted herein shall terminate and all rights to the Pledged Collateral shall revert to Pledgor. Upon such termination of the security interests or release of any Pledged Collateral, Trustee will, at the expense of Pledgor, and subject to Section 20 herein, promptly execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence the termination of the security interests or the release of such Pledged Collateral which has not yet theretofore been sold or otherwise applied or released. Such release shall be without recourse or warranty to Trustee, except as to the absence of any prior assignments by Trustee of its interest in the Pledged Collateral. 15. Amendments, Waivers and Consents. No amendment, modification, termination or waiver of any provision of this Agreement, or consent to any departure by Pledgor therefrom, shall in any event be effective without the written concurrence of Trustee and Pledgor. 16. Notices. Any notice, approval, request, demand, consent or other communication hereunder, including any notice of default or notice of sale, shall be given to Pledgor or Trustee at the applicable address set forth above (or to such other address previously designated by written notice to the serving party) in accordance with the notice provision of the Indenture. 17. Continuing Security Interest; Successors and Assigns. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture, (ii) be binding upon Pledgor, its successors and assigns, and (iii) inure, together with the rights and remedies of Trustee hereunder, to the benefit of Trustee and its successors and assigns. Pledgor may not assign or transfer any of its interests or obligations hereunder without the prior consent of Trustee. 18. Waiver. (a) In addition to any other waivers herein, Pledgor waives to the greatest extent it may lawfully do so, and agrees that it shall not at any time insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets, redemption or similar law, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by Pledgor of its obligations under, or the enforcement by Trustee of, this Agreement. Pledgor hereby waives diligence, presentment and demand (whether for nonpayment or protest or of acceptance, maturity, extension of time, change in nature or form of the Secured Obligations, acceptance of 9 further security, release of further security, composition or agreement arrived at as to the amount of, or the terms of the Secured Obligations, notice of adverse change in the Issuer's or any other Person's financial condition or any other fact which might materially increase the risk to Pledgor) with respect to any of the Secured Obligations or all other demands whatsoever and, to the fullest extent permitted by law, waives the benefit of all provisions of law which are or might be in conflict with the terms of this Agreement. (b) If Trustee may, under applicable law, proceed to realize its benefits under any of the Indenture Documents giving Trustee a Lien upon any Collateral, whether owned by the Issuer or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Trustee may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies of Trustee under this Agreement. 19. Subrogation. Subject to, and solely effective following, the payment in full in cash of all Obligations (other than unasserted contingent indemnity obligations), Pledgor shall be subrogated to the rights of the Noteholders to receive payments and distributions of cash, property and securities applicable to such Obligations. For purposes of such subrogation, no payments or distributions to the Noteholders of any cash, property or securities to which the Noteholders would be entitled except for this provision, and no payments over pursuant to the provisions of this paragraph to the Noteholders by Pledgor shall, as among the Issuer (as defined in the Indenture) or any Subsidiary Guarantor, their respective creditors (other than holders of such Obligations) and Pledgor be deemed to be a payment or distribution by such Issuer (as defined in the Indenture) or any Subsidiary Guarantor to or on account of such Obligations. 20. Reinstatement. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by Trustee or any Noteholder in respect of the Secured Obligations is rescinded or must otherwise be restored or returned by Trustee or any Noteholder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Pledgor or the Issuer or upon the appointment of any intervenor or conservator of, or trustee or similar official for, Pledgor or the Issuer or any substantial part of its assets, or otherwise, all as though such payments had not been made. 21. Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction. 22. Interpretation. Time is of the essence of each provision of this Agreement of which time is an element. All terms not defined herein or in the Indenture shall have the meanings set forth in the UCC, except where the context otherwise requires. To the extent any term or provision of this Agreement conflicts with the provisions of the 10 Indenture and is not dealt with more specifically herein, the Indenture shall control with respect to such term or provision. 23. Survival of Provisions. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the Indenture, the issuance of Notes thereunder and the execution and delivery of the Notes. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements, representations and warranties of Pledgor set forth herein shall terminate only upon payment of the Secured Obligations and the termination of this Agreement in accordance with its terms. 24. Statute of Limitations. Pledgor hereby waives the right to plead any statute of limitations as a defense to any indebtedness or obligation hereunder or secured hereby to the full extent permitted by law. 25. Headings Descriptive. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same agreement. 27. GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 28. WAIVER OF JURY TRIAL; JURISDICTION. PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, NEW YORK AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND CONSENTS THAT ALL SERVICE OF PROCESS UPON PLEDGOR BE MADE BY REGISTERED MAIL OR MESSENGER DIRECTED TO PLEDGOR AT THE ADDRESS SET FORTH ABOVE AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. PLEDGOR AND TRUSTEE EACH HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF TRUSTEE TO BRING ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. 11 29. Incorporation By Reference. In connection with its appointment and acting hereunder the Trustee is entitled to all rights, privileges, benefits, protections, immunities and indemnities provided to it under the Indenture. 12 IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be duly executed and delivered as of the day and year first above written. MERCER FORGE CORP. By: /s/ Gary LaChey --------------------------------------- Title: VP-Finance, Treasurer, Secty. & CFO ------------------------------------ By acceptance hereof as of this 8th day of October, 2003, Trustee agrees to be bound by the provisions hereof. BANK OF NEW YORK, as Trustee By: /s/ Patricia Gallagher --------------------------------------- Title: Vice President ------------------------------------ 13 SCHEDULE I TO PLEDGE AGREEMENT
TYPE AND CLASS OF STOCK CERTIFICATE NUMBER OF ISSUER OF PLEDGED STOCK STOCK NUMBERS PAR VALUE SHARES PERCENTAGE - ----------------------- ----------------- ----------------- --------- --------- ---------- A&M Specialties, Inc. 100%
EXHIBIT A Irrevocable Proxy The undersigned hereby appoints Bank of New York, as Trustee ("Trustee") as proxy with full power of substitution, and hereby authorizes Trustee to represent and vote all of the shares of the capital stock of __________________________, held of record by the undersigned on the date of exercise hereof or at any meeting or at any other time chosen by Trustee in its sole discretion, but only at the times provided in that certain Pledge Agreement dated as of October 8, 2003, executed by the undersigned in favor of Trustee. Dated: ________________ __, 2003 MERCER FORGE CORP. By --------------------------------------- Title ------------------------------------ EXHIBIT B Pledge Amendment This Pledge Amendment, dated ___________________ is delivered pursuant to Section 5(c) of the Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated as of October 8, 2003, between the undersigned and Bank of New York, as trustee (the "Pledge Agreement"; capitalized terms defined therein being used herein as therein defined) and that the shares listed on this Pledge Amendment shall be deemed to be part of the Pledged Collateral and shall secure all Secured Obligations. Dated:______________, 200__ MERCER FORGE CORP. By --------------------------------------- Title ------------------------------------
STOCK ISSUER CLASS OF STOCK STOCK CERTIFICATE NO(S). PAR VALUE NUMBER OF SHARES - ------------------------------------- -------------- ------------------------ --------- ----------------
ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, _________________, a _______________ corporation, hereby sells, assigns and transfers unto Bank of New York, as trustee _____________ (_____) Shares of the common stock of _____________________, a _____________ corporation (the "Corporation"), standing in its name on the books of the Corporation represented by Certificate(s) No. ____________________ herewith and does hereby irrevocably constitute and appoint ____________________ attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises. Dated:_________________ MERCER FORGE CORP. By --------------------------------------- Title ------------------------------------ EX-4.8 9 y92210exv4w8.txt SUBORDINATED COPYRIGHT PATENT TRADEMARK MORTGAGE SUBORDINATED COPYRIGHT, PATENT, TRADEMARK AND LICENSE MORTGAGE THIS SUBORDINATED COPYRIGHT, PATENT, TRADEMARK AND LICENSE MORTGAGE (this "Mortgage") made as of this 8th day of October, 2003, by NEENAH FOUNDRY COMPANY, a Wisconsin corporation, having an office at 2121 Brooks Avenue, Neenah, Wisconsin 54956 ("Mortgagor") in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. W I T N E S S E T H: WHEREAS, (a) that certain Indenture (as amended, supplemented or otherwise modified from time to time, the "Indenture") dated as of the date hereof by and among the Mortgagor, the Subsidiary Guarantors party thereto and the Trustee and (b) the Collateral Documents (collectively with the Indenture, the "Indenture Documents"), have been entered into to provide, among other things, (i) for the issuance by Mortgagor of 11% senior secured notes due September 30, 2010 in the aggregate principal amount of $133,130,000 and (ii) for the grant by Mortgagor to the Trustee, on behalf of the Noteholders, of a security interest in substantially all of Mortgagor's assets, including, without limitation, the copyrights, copyright agreements, copyright applications, patents, patent applications, trademarks, trademark applications, trade names, service marks, service mark applications, goodwill and certain licenses of Mortgagor; NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, Mortgagor agrees as follows: 1. Incorporation of Indenture Documents. (a) The Indenture Documents and the terms and provisions thereof are hereby incorporated herein in their entirety by this reference. All terms capitalized but not otherwise defined herein shall have the same meanings herein as in the Indenture. (b) Notwithstanding anything set forth in this Agreement to the contrary, the liens securing this Mortgage are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, the Mortgagor and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Pledgor, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 2. Mortgage of Copyrights, Patents, Trademarks and Licenses. To secure the complete and timely payment and satisfaction of all of the Obligations, Mortgagor hereby grants to Mortgagee for its own benefit and the benefit of Noteholders, and hereby reaffirms its prior grant pursuant to the Indenture Documents of, a continuing security interest in all of its now existing and hereafter created or acquired: (i) copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright applications, including, without limitation, the copyright registrations and applications listed on Exhibit A attached hereto and hereby made a part hereof, and all renewals, extensions and continuations of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Copyrights"); (ii) patents and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all patentable inventions and those patents and patent applications listed on Exhibit B attached hereto and made a part hereof, and all reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, and all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Patents"); (iii) trademarks, trademark registrations, trademark applications, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations and recordings thereof, and all applications in connection therewith (other than "intent to use" applications until a verified statement of use is filed with respect to such applications), including, without limitation, the trademarks, trade names, service marks, registrations and applications listed on Exhibit C attached hereto and hereby made a part hereof, and all renewals, extensions and continuations of any of the foregoing, and all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and 2 the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Trademarks"; provided, however, the term "Trademarks" shall not include any trademarks, trade names, business names or service marks incorporating the word "Peerless"); (iv) all license agreements between Mortgagor and any other party with respect to any of the Copyrights or any of the Patents or any of the Trademarks or any other copyright, patent, trademark, service mark or any registration or application for registration or any other trade name or tradestyle, whether Mortgagor is a licensor or licensee under any such license agreement, including, without limitation, the licenses listed on Exhibit D attached hereto and hereby made a part hereof, other than license agreements which, according to their terms, may not be assigned without the prior consent of the other Person party thereto (unless such consent has been obtained) (all of the foregoing license agreements and Mortgagor's rights thereunder are referred to collectively as the "Licenses"); and (v) all rights corresponding to any of the foregoing throughout the world and the goodwill of Mortgagor's business connected with and symbolized by the Trademarks. Upon the occurrence and during the continuance of an Event of Default, Mortgagee, on behalf of the Noteholders, shall have the power, to the extent permitted by law, to exercise the rights and remedies of a secured party provided under the Indenture, including without limitation the right to sell the Copyrights, Patents, Trademarks and Licenses. 3. Warranties, Representations and Covenants. For purposes of this Agreement, (a) the Copyrights listed on Exhibit A hereto, any other registered Copyrights and any other Copyrights material to Mortgagor's business are collectively referred to as the "Material Copyrights", (b) the Patents listed on Exhibit B hereto, any other registered Patents and any other Patents material to Mortgagor's business are collectively referred to as the "Material Patents", (c) the Trademarks listed on Exhibit C hereto, any other registered Trademarks and any other Trademarks material to Mortgagor's business are collectively referred to as the "Material Trademarks") and (d) any Licenses added to Exhibit D hereto pursuant to Section 5 below and any other Licenses material to Mortgagor's business are collectively referred to as the "Material Licenses". Mortgagor warrants and represents to Mortgagee that: (i) No Material Copyright, Material Patent, or Material Trademark has been adjudged invalid or unenforceable or, has been cancelled, in whole or in part; (ii) Each Material Copyright, Material Patent and Material Trademark is valid and enforceable; 3 (iii) Mortgagor is the sole and exclusive owner of the entire unencumbered right, title and interest in and to each Material Copyright, Material Patent and Material Trademark, free and clear of any liens, charges and encumbrances, including, without limitation, licenses, shoprights and covenants by Mortgagor not to sue third parties; (iv) Mortgagor has no notice of any suits or actions commenced or threatened in writing with respect to any of the Material Copyrights, Material Patents or Material Trademarks; (v) Mortgagor has the unqualified right to execute and deliver this Mortgage and perform its terms; (vi) Mortgagor has no Material Licenses; (vii) Mortgagor has no notice of any infringement or unauthorized use presently being made of any of the Material Copyrights, Material Patents or Material Trademarks which would reasonably be expected to materially adversely affect the fair market value of the Material Copyrights, Material Patents or Material Trademarks or the benefits to Mortgagee of this Mortgage, including, without limitation, the priority or perfection of the security interest granted herein or the remedies of Mortgagee hereunder; and (viii) Mortgagor has no notice of any suits or actions commenced or threatened in writing with respect to any Material Copyright, Material Patent or Material Trademark. 4. Restrictions on Future Agreements. Mortgagor agrees that until the Obligations (other than unasserted indemnity obligations) shall have been satisfied in full and the Indenture Documents shall have been terminated (the "Indenture Termination"), Mortgagor shall not, without the prior written consent of Mortgagee, sell or assign its interest in, or grant any license under, any Material Copyright, Material Patent, Material Trademark or Material License, or enter into any other agreement with respect to any Material Copyright, Material Patent, Material Trademark or Material License which is inconsistent with the obligations under this Mortgage, except to the extent permitted under the terms of the Indenture. Mortgagor further agrees that it shall not take any action, or permit any action to be taken by others subject to its control, including licensees, or fail to take any action, which would adversely affect the validity or enforcement of the rights transferred to Mortgagee under this Mortgage. 5. New Copyrights, Patents, Trademarks, and Licenses. Mortgagor represents and warrants that the Copyrights, Patents, Trademarks and Licenses listed on Exhibits A, B, and C, respectively, constitute all of the United States registered Copyrights, Patents and registered Trademarks now owned by Mortgagor and not abandoned. If, before the Indenture Termination, Mortgagor shall (i) become aware of any existing Copyrights, Patents, Trademarks or Licenses of which Mortgagor has not previously informed mortgagee; (ii) obtain rights to any new Copyrights, patentable inventions, Patents, 4 Trademarks or Licenses, or (iii) become entitled to the benefit of any Copyrights, Patents, Trademarks or Licenses or any improvement on any Patent, the provisions of Section 2 above shall automatically apply thereto. Mortgagor hereby authorizes Mortgagee to modify this Mortgage by amending Exhibits A, B, C and D, as applicable, to include any such registered Copyrights, Patents, registered Trademarks and Material Licenses. 6. Royalties; Term. The term of the security interests/mortgages granted herein shall extend until the earlier of (i) the expiration of each of the respective Copyrights, Patents, Trademarks and Licenses encumbered hereunder, and (ii) the Indenture Termination. Upon the occurrence of an Event of Default, Mortgagor agrees that the use by Mortgagee of all Copyrights, Patents, Trademarks and Licenses shall be worldwide and without any liability for royalties or other related charges from Mortgagee to Mortgagor. 7. Release of Mortgage. This Mortgage is made for collateral purposes only. Upon the Indenture Termination, Mortgagee shall take such actions as may be necessary or proper to terminate and release its security interest in the Copyrights, Patents, Trademarks, and Licenses created hereby and pursuant to the Indenture Documents, subject to any disposition thereof which may have been made by Mortgagee pursuant hereto or pursuant to the Indenture. 8. Expenses. All reasonable expenses incurred in connection with the performance of any of the agreements set forth herein shall be borne by Mortgagor. All reasonable fees, costs and expenses, of whatever kind or nature, including reasonable attorneys' fees and legal expenses, incurred by Mortgagee in connection with the filing or recording of any documents (including all taxes in connection therewith) in public offices, the payment or discharge of any taxes, maintenance fees, encumbrances or otherwise in protecting, maintaining or preserving the Copyrights, Patents, Trademarks and Licenses, or in defending or prosecuting any actions or proceedings arising out of or related to the Copyrights, Patents, Trademarks and Licenses, shall be borne by and paid by Mortgagor on written demand by Mortgagee and until so paid shall be added to the principal amount of the Obligations and shall bear interest at the then applicable rate as set forth in the Indenture. 9. Duties of Mortgagor. Mortgagor shall have the duty, in each case as commercially reasonable (i) to file and prosecute diligently any copyright, patent, trademark or service mark applications material to Mortgagor's business and pending as of the date hereof or thereafter until the Indenture Termination, (ii) to make application on uncopyrighted but copyrightable works, on unpatented but patentable inventions and on trademarks and service marks, as appropriate, material to Mortgagor's business, (iii) to preserve and maintain all rights in the Material Copyrights, Material Patents, Material Trademarks and Material Licenses and (iv) to ensure that the Material Copyrights, Material Patents, Material Trademarks and Material Licenses are and remain enforceable subject to any statutory expirations. Any expenses incurred in connection with Mortgagor's obligations under this Section 9 shall be borne by Mortgagor. Mortgagor shall not abandon any right to file an application with respect to a copyright, patent, trademark or service mark that is material to Mortgagor's business, or abandon any material Copyright, material Patent, material Trademark or material License, without the written consent of Mortgagee. If Mortgagor fails to comply with any of the foregoing duties, Mortgagee may perform said 5 duties in Mortgagor's name, to the extent permitted by law. Mortgagor agrees (i) to maintain the quality of any and all products in connection with which the Material Trademarks are used, consistent with the quality of said products as of the date hereof, except to the extent that the failure to perform any of the following would not reasonably be expected to have a Material Adverse Effect, and (ii) to provide Mortgagee, upon Mortgagee's request from time to time, with a certificate of an officer of Mortgagor certifying Mortgagor's compliance with the foregoing. Upon the occurrence and during the continuation of an Event of Default, Mortgagor agrees that Mortgagee, or a conservator appointed by Mortgagee, shall have the right to establish such additional product quality controls as Mortgagee, or said conservator, in its sole judgment exercised in a commercially reasonable manner, may deem necessary to assure maintenance of the quality of products sold by Mortgagor under the Trademarks. Mortgagor shall promptly, upon demand, reimburse and indemnify Mortgagee for all reasonable costs and expenses of Mortgagee, including reasonable attorney's fees and expenses so incurred by Mortgagee, in the exercise of its rights under this Section 9. 10. Mortgagee's Right to Sue. After the occurrence of an Event of Default, Mortgagee shall have the right, but shall in no way be obligated, to bring suit in its own name to enforce the Copyrights, Patents, Trademarks and Licenses, and, if Mortgagee shall commence any such suit, Mortgagor shall, at the request of Mortgagee, do any and all lawful acts and execute any and all proper documents required by Mortgagee in aid of such enforcement and Mortgagor shall promptly, upon demand, reimburse and indemnify Mortgagee for all reasonable costs and expenses incurred by Mortgagee, including reasonable attorneys' fees and expenses so incurred by Mortgagee, in the exercise of its rights under this Section 10 other than costs and expenses incurred by Mortgagee as a result of its gross negligence or willful misconduct. 11. Waivers. No course of dealing among Mortgagor, Mortgagee and the Noteholders, nor any failure to exercise, nor any delay in exercising, on the part of Mortgagee or Noteholders, any right, power or privilege hereunder or under the Indenture shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 12. Severability. The provisions of this Mortgage are severable, and if any clause or provision shall be held invalid and unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Mortgage in any jurisdiction. 13. Modification. This Mortgage cannot be altered, amended or modified in any way, except as specifically provided in Section 5 hereof or by a writing signed by the parties hereto. 14. Cumulative Remedies; Power of Attorney; Effect on Indenture. All of Mortgagee's rights and remedies with respect to the Copyrights, Patents, Trademarks and Licenses, whether established hereby or by the Indenture, or by any other agreements or by 6 law shall be cumulative and may be exercised singularly or concurrently. Subject to the Subordination Agreement, upon the occurrence and during the continuation of an Event of Default, Mortgagor hereby authorizes Mortgagee to make, constitute and appoint any officer or agent of Mortgagee as Mortgagee may select, in its sole discretion, as Mortgagor's true and lawful attorney-in-fact, with power to (i) endorse Mortgagor's name on all applications, documents, papers and instruments necessary or desirable for Mortgagee in the use of any or all of the Copyrights, Patents, Trademarks and Licenses, or (ii) take any other actions with respect to any or all of the Copyrights, Patents, Trademarks and Licenses as Mortgagee deems to be in its best interest, or (iii) grant or issue any exclusive or non-exclusive license under any or all of the Copyrights, Patents, Trademarks or Licenses to any Person, or (iv) assign, pledge, convey or otherwise transfer title in or dispose of any or all of the Copyrights, Patents, Trademarks or Licenses to any Person, or (v) take any other actions with respect to any or all of the Copyrights, Patents, Trademarks and Licenses as Mortgagee deems to be in its best interests. Mortgagor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney, being coupled with an interest, shall be irrevocable until the Indenture Termination. Mortgagor acknowledges and agrees that this Mortgage is not intended to limit or restrict in any way the rights and remedies of Mortgagee or Noteholders or their respective successors transferees and assigns under the Indenture but rather is intended to facilitate the exercise of such rights and remedies. Mortgagee and such other parties shall have, in addition to all other rights and remedies given it or them by the terms of this Mortgage and the Indenture, all rights and remedies allowed by law and the rights and remedies of a secured party under the Uniform Commercial Code (or such other applicable law) as enacted in any jurisdiction in which the Copyrights, Patents, Trademarks or Licenses may be located. 15. Binding Effect; Benefits. This Mortgage shall be binding upon Mortgagor and its respective successors and permitted assigns, and shall inure to the benefit of Mortgagee and Noteholders, their successors, nominees and assigns. 16. GOVERNING LAW. THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. 17. CONSENT TO FORUM AND WAIVERS. TO INDUCE TRUSTEE AND NOTEHOLDERS TO ENTER INTO THE INDENTURE AND THIS AGREEMENT, MORTGAGOR IRREVOCABLY AGREES THAT, SUBJECT TO MORTGAGEE'S SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR ANY DOCUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE SUBJECT TO LITIGATION IN THE COURTS OF THE STATE OF NEW YORK, OR, AT MORTGAGEE'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. MORTGAGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, NEW YORK. MORTGAGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT 7 AGAINST MORTGAGOR BY MORTGAGEE IN ACCORDANCE WITH THIS SECTION. MORTGAGOR AND MORTGAGEE HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. MORTGAGOR FURTHER WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF MORTGAGEE. 18. Headings. Paragraph headings used herein are for convenience only and shall not modify the provisions which they precede. 19. Further Assurances. Mortgagor agrees to execute and deliver such further agreements, instruments and documents, and to perform such further acts, as Mortgagee shall request from time to time in order to carry out the purpose of this Mortgage and agreements set forth herein. 20. Survival of Representations. All representations and warranties of Mortgagor contained in this Mortgage shall survive the execution and delivery of this Mortgage. 8 IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage in favor of Mortgagee as of the date first written above. NEENAH FOUNDRY COMPANY By: /s/ Gary LaChey ------------------------------------- Its: VP-Finance, Treasurer, Secty. & CFO ------------------------------------ AGREED AND ACCEPTED THIS 8th day of October, 2003. Bank of New York, as Trustee By: /s/ Patricia Gallagher --------------------------------- Its: Vice President -------------------------------- 9 EXHIBIT A Copyrights
TITLE REG. NO. REG. DATE OWNER - ------------------------------------------------------------- ------------ --------- -------------- Cast iron tree grates by Neenah TX-1-003-379 10/29/82 Neenah Foundry Company Wheel load capacities for Neenah construction castings TX-1-308-915 01/27/84 Neenah Foundry Company Neenah inlet grate capacities: a research project/by Jack M. TX-1-551-837 04/03/85 Neenah Foundry Meyer, S.H. Anderson, Harry L. Miller, Paul VanHandel. Company Cast iron tree grates by Neenah TX-1-663-199 09/23/85 Neenah Foundry Neenah Foundry Company construction castings: catalog R, TX-2-875-729 05/15/90 Neenah Foundry sweet edition Company Cast iron tree grates by Neenah TX-2-881-301 05/15/90 Neenah Foundry Company Neenah construction castings TX-337-139 09/28/79 Neenah Foundry Company Neenah Foundry Company construction castings catalog "R" TX-1-002-035 10/28/82 Neenah Foundry Company Neenah Foundry Company construction castings catalog "R" TX-1-659-887 09/23/85 Neenah Foundry Company Neenah Foundry Company construction castings catalog "R" TX-2-881-074 05/15/90 Neenah Foundry Company Neenah Foundry Company construction castings catalog "R" TX-1-663-215 09/23/85 Neenah Foundry Company
EXHIBIT B Patents
DATE OF TITLE REG. NO. REGISTRANT REGISTRATION - ------------------------------------ --------------- ------------------------------ ---------------- Method and Apparatus for Forming a 5443327 Neenah Foundry Company 02/15/94 Lined Trench Access Hatch Cover With Left-Assist Application No. Neenah Foundry Company (by Date of Deposit: Assembly and Method Transferor 10/613,291 assignment the registration of 7/2/03 (Pending Application) which remains pending)
EXHIBIT C Trademarks
TITLE REG. NO. REG. DATE OWNER - ------------------ -------- --------- ---------------------- NEENAH FOUNDRY CO. 2105107 10/14/97 Neenah Foundry Company
Exceptions to ownership: Neenah sold its Peerless division to R.H. Little & Company in August 2002. While the "Peerless" name was sold in this transaction, not all marks containing the "Peerless" name were transferred. Neenah makes no representations or warranties concerning the "Peerless" marks. NF logo and design: Neenah uses the "NF Logo," which is material to its business and has used the logo for over thirty years. Neenah is aware of a registration held by National Forge Company for a logo that also incorporates the letters N and F (U.S. Registration No. 0410471). Neenah has not received any allegation that there is any conflict between these uses. EXHIBIT D Licenses None. EX-4.9 10 y92210exv4w9.txt SUBORDINATED COPYRIGHT PATENT TRADEMARK MORTGAGE SUBORDINATED COPYRIGHT, PATENT, TRADEMARK AND LICENSE MORTGAGE THIS SUBORDINATED COPYRIGHT, PATENT, TRADEMARK AND LICENSE MORTGAGE (this "Mortgage") made as of this 8th day of October, 2003, by ADVANCED CAST PRODUCTS, INC., an Ohio corporation, having an office at 2121 Brooks Avenue, Neenah, Wisconsin 54956 ("Mortgagor") in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. W I T N E S S E T H: WHEREAS, (a) that certain Indenture (as amended, supplemented or otherwise modified from time to time, the "Indenture") dated as of the date hereof by and among Neenah Foundry Company, a Wisconsin corporation ("Neenah Foundry"), the Subsidiary Guarantors party thereto and the Trustee and (b) the Collateral Documents (collectively with the Indenture, the "Indenture Documents"), have been entered into to provide, among other things, (i) for the issuance by Neenah Foundry of 11% senior secured notes due September 30, 2010 in the aggregate principal amount of $133,130,000 and (ii) for the grant by Mortgagor to the Trustee, on behalf of the Noteholders, of a security interest in substantially all of Mortgagor's assets, including, without limitation, the copyrights, copyright agreements, copyright applications, patents, patent applications, trademarks, trademark applications, trade names, service marks, service mark applications, goodwill and certain licenses of Mortgagor; NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, Mortgagor agrees as follows: 1. Incorporation of Indenture Documents. (a) The Indenture Documents and the terms and provisions thereof are hereby incorporated herein in their entirety by this reference. All terms capitalized but not otherwise defined herein shall have the same meanings herein as in the Indenture. (b) Notwithstanding anything set forth in this Agreement to the contrary, the liens securing this Mortgage are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, Neenah Foundry and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Neenah Foundry, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 2. Mortgage of Copyrights, Patents, Trademarks and Licenses. To secure the complete and timely payment and satisfaction of all of the Obligations, Mortgagor hereby grants to Mortgagee for its own benefit and the benefit of Noteholders, and hereby reaffirms its prior grant pursuant to the Indenture Documents of, a continuing security interest in all of its now existing and hereafter created or acquired: (i) copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright applications, including, without limitation, the copyright registrations and applications listed on Exhibit A attached hereto and hereby made a part hereof, and all renewals, extensions and continuations of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Copyrights"); (ii) patents and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all patentable inventions and those patents and patent applications listed on Exhibit B attached hereto and made a part hereof, and all reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, and all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Patents"); (iii) trademarks, trademark registrations, trademark applications, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations and recordings thereof, and all applications in connection therewith (other than "intent to use" applications until a verified statement of use is filed with respect to such applications), including, without limitation, the trademarks, trade names, service marks, registrations and applications listed on Exhibit C attached hereto and hereby made a part hereof, and all renewals, extensions and continuations of any of the foregoing, and all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and 2 the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Trademarks"; provided, however, the term "Trademarks" shall not include any trademarks, trade names, business names or service marks incorporating the word "Peerless"); (iv) all license agreements between Mortgagor and any other party with respect to any of the Copyrights or any of the Patents or any of the Trademarks or any other copyright, patent, trademark, service mark or any registration or application for registration or any other trade name or tradestyle, whether Mortgagor is a licensor or licensee under any such license agreement, including, without limitation, the licenses listed on Exhibit D attached hereto and hereby made a part hereof, other than license agreements which, according to their terms, may not be assigned without the prior consent of the other Person party thereto (unless such consent has been obtained) (all of the foregoing license agreements and Mortgagor's rights thereunder are referred to collectively as the "Licenses"); and (v) all rights corresponding to any of the foregoing throughout the world and the goodwill of Mortgagor's business connected with and symbolized by the Trademarks. Upon the occurrence and during the continuance of an Event of Default, Mortgagee, on behalf of the Noteholders, shall have the power, to the extent permitted by law, to exercise the rights and remedies of a secured party provided under the Indenture, including without limitation the right to sell the Copyrights, Patents, Trademarks and Licenses. 3. Warranties, Representations and Covenants. For purposes of this Agreement, (a) the Copyrights listed on Exhibit A hereto, any other registered Copyrights and any other Copyrights material to Mortgagor's business are collectively referred to as the "Material Copyrights", (b) the Patents listed on Exhibit B hereto, any other registered Patents and any other Patents material to Mortgagor's business are collectively referred to as the "Material Patents", (c) the Trademarks listed on Exhibit C hereto, any other registered Trademarks and any other Trademarks material to Mortgagor's business are collectively referred to as the "Material Trademarks") and (d) any Licenses added to Exhibit D hereto pursuant to Section 5 below and any other Licenses material to Mortgagor's business are collectively referred to as the "Material Licenses". Mortgagor warrants and represents to Mortgagee that: (i) No Material Copyright, Material Patent, or Material Trademark has been adjudged invalid or unenforceable or, has been cancelled, in whole or in part; (ii) Each Material Copyright, Material Patent and Material Trademark is valid and enforceable; 3 (iii) Mortgagor is the sole and exclusive owner of the entire unencumbered right, title and interest in and to each Material Copyright, Material Patent and Material Trademark, free and clear of any liens, charges and encumbrances, including, without limitation, licenses, shoprights and covenants by Mortgagor not to sue third parties; (iv) Mortgagor has no notice of any suits or actions commenced or threatened in writing with respect to any of the Material Copyrights, Material Patents or Material Trademarks; (v) Mortgagor has the unqualified right to execute and deliver this Mortgage and perform its terms; (vi) Mortgagor has no Material Licenses; (vii) Mortgagor has no notice of any infringement or unauthorized use presently being made of any of the Material Copyrights, Material Patents or Material Trademarks which would reasonably be expected to materially adversely affect the fair market value of the Material Copyrights, Material Patents or Material Trademarks or the benefits to Mortgagee of this Mortgage, including, without limitation, the priority or perfection of the security interest granted herein or the remedies of Mortgagee hereunder; and (viii) Mortgagor has no notice of any suits or actions commenced or threatened in writing with respect to any Material Copyright, Material Patent or Material Trademark. 4. Restrictions on Future Agreements. Mortgagor agrees that until the Obligations (other than unasserted indemnity obligations) shall have been satisfied in full and the Indenture Documents shall have been terminated (the "Indenture Termination"), Mortgagor shall not, without the prior written consent of Mortgagee, sell or assign its interest in, or grant any license under, any Material Copyright, Material Patent, Material Trademark or Material License, or enter into any other agreement with respect to any Material Copyright, Material Patent, Material Trademark or Material License which is inconsistent with the obligations under this Mortgage, except to the extent permitted under the terms of the Indenture. Mortgagor further agrees that it shall not take any action, or permit any action to be taken by others subject to its control, including licensees, or fail to take any action, which would adversely affect the validity or enforcement of the rights transferred to Mortgagee under this Mortgage. 5. New Copyrights, Patents, Trademarks, and Licenses. Mortgagor represents and warrants that the Copyrights, Patents, Trademarks and Licenses listed on Exhibits A, B, and C, respectively, constitute all of the United States registered Copyrights, Patents and registered Trademarks now owned by Mortgagor and not abandoned. If, before the Indenture Termination, Mortgagor shall (i) become aware of any existing Copyrights, Patents, Trademarks or Licenses of which Mortgagor has not previously informed mortgagee; (ii) obtain rights to any new Copyrights, patentable inventions, Patents, 4 Trademarks or Licenses, or (iii) become entitled to the benefit of any Copyrights, Patents, Trademarks or Licenses or any improvement on any Patent, the provisions of Section 2 above shall automatically apply thereto. Mortgagor hereby authorizes Mortgagee to modify this Mortgage by amending Exhibits A, B, C and D, as applicable, to include any such registered Copyrights, Patents, registered Trademarks and Material Licenses. 6. Royalties; Term. The term of the security interests/mortgages granted herein shall extend until the earlier of (i) the expiration of each of the respective Copyrights, Patents, Trademarks and Licenses encumbered hereunder, and (ii) the Indenture Termination. Upon the occurrence of an Event of Default, Mortgagor agrees that the use by Mortgagee of all Copyrights, Patents, Trademarks and Licenses shall be worldwide and without any liability for royalties or other related charges from Mortgagee to Mortgagor. 7. Release of Mortgage. This Mortgage is made for collateral purposes only. Upon the Indenture Termination, Mortgagee shall take such actions as may be necessary or proper to terminate and release its security interest in the Copyrights, Patents, Trademarks, and Licenses created hereby and pursuant to the Indenture Documents, subject to any disposition thereof which may have been made by Mortgagee pursuant hereto or pursuant to the Indenture. 8. Expenses. All reasonable expenses incurred in connection with the performance of any of the agreements set forth herein shall be borne by Mortgagor. All reasonable fees, costs and expenses, of whatever kind or nature, including reasonable attorneys' fees and legal expenses, incurred by Mortgagee in connection with the filing or recording of any documents (including all taxes in connection therewith) in public offices, the payment or discharge of any taxes, maintenance fees, encumbrances or otherwise in protecting, maintaining or preserving the Copyrights, Patents, Trademarks and Licenses, or in defending or prosecuting any actions or proceedings arising out of or related to the Copyrights, Patents, Trademarks and Licenses, shall be borne by and paid by Mortgagor on written demand by Mortgagee and until so paid shall be added to the principal amount of the Obligations and shall bear interest at the then applicable rate as set forth in the Indenture. 9. Duties of Mortgagor. Mortgagor shall have the duty, in each case as commercially reasonable (i) to file and prosecute diligently any copyright, patent, trademark or service mark applications material to Mortgagor's business and pending as of the date hereof or thereafter until the Indenture Termination, (ii) to make application on uncopyrighted but copyrightable works, on unpatented but patentable inventions and on trademarks and service marks, as appropriate, material to Mortgagor's business, (iii) to preserve and maintain all rights in the Material Copyrights, Material Patents, Material Trademarks and Material Licenses and (iv) to ensure that the Material Copyrights, Material Patents, Material Trademarks and Material Licenses are and remain enforceable subject to any statutory expirations. Any expenses incurred in connection with Mortgagor's obligations under this Section 9 shall be borne by Mortgagor. Mortgagor shall not abandon any right to file an application with respect to a copyright, patent, trademark or service mark that is material to Mortgagor's business, or abandon any material Copyright, material Patent, material Trademark or material License, without the written consent of Mortgagee. If Mortgagor fails to comply with any of the foregoing duties, Mortgagee may perform said 5 duties in Mortgagor's name, to the extent permitted by law. Mortgagor agrees (i) to maintain the quality of any and all products in connection with which the Material Trademarks are used, consistent with the quality of said products as of the date hereof, except to the extent that the failure to perform any of the following would not reasonably be expected to have a Material Adverse Effect, and (ii) to provide Mortgagee, upon Mortgagee's request from time to time, with a certificate of an officer of Mortgagor certifying Mortgagor's compliance with the foregoing. Upon the occurrence and during the continuation of an Event of Default, Mortgagor agrees that Mortgagee, or a conservator appointed by Mortgagee, shall have the right to establish such additional product quality controls as Mortgagee, or said conservator, in its sole judgment exercised in a commercially reasonable manner, may deem necessary to assure maintenance of the quality of products sold by Mortgagor under the Trademarks. Mortgagor shall promptly, upon demand, reimburse and indemnify Mortgagee for all reasonable costs and expenses of Mortgagee, including reasonable attorney's fees and expenses so incurred by Mortgagee, in the exercise of its rights under this Section 9. 10. Mortgagee's Right to Sue. After the occurrence of an Event of Default, Mortgagee shall have the right, but shall in no way be obligated, to bring suit in its own name to enforce the Copyrights, Patents, Trademarks and Licenses, and, if Mortgagee shall commence any such suit, Mortgagor shall, at the request of Mortgagee, do any and all lawful acts and execute any and all proper documents required by Mortgagee in aid of such enforcement and Mortgagor shall promptly, upon demand, reimburse and indemnify Mortgagee for all reasonable costs and expenses incurred by Mortgagee, including reasonable attorneys' fees and expenses so incurred by Mortgagee, in the exercise of its rights under this Section 10 other than costs and expenses incurred by Mortgagee as a result of its gross negligence or willful misconduct. 11. Waivers. No course of dealing among Mortgagor, Mortgagee and the Noteholders, nor any failure to exercise, nor any delay in exercising, on the part of Mortgagee or Noteholders, any right, power or privilege hereunder or under the Indenture shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 12. Severability. The provisions of this Mortgage are severable, and if any clause or provision shall be held invalid and unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Mortgage in any jurisdiction. 13. Modification. This Mortgage cannot be altered, amended or modified in any way, except as specifically provided in Section 5 hereof or by a writing signed by the parties hereto. 14. Cumulative Remedies; Power of Attorney; Effect on Indenture. All of Mortgagee's rights and remedies with respect to the Copyrights, Patents, Trademarks and Licenses, whether established hereby or by the Indenture, or by any other agreements or by 6 law shall be cumulative and may be exercised singularly or concurrently. Subject to the Subordination Agreement, upon the occurrence and during the continuation of an Event of Default, Mortgagor hereby authorizes Mortgagee to make, constitute and appoint any officer or agent of Mortgagee as Mortgagee may select, in its sole discretion, as Mortgagor's true and lawful attorney-in-fact, with power to (i) endorse Mortgagor's name on all applications, documents, papers and instruments necessary or desirable for Mortgagee in the use of any or all of the Copyrights, Patents, Trademarks and Licenses, or (ii) take any other actions with respect to any or all of the Copyrights, Patents, Trademarks and Licenses as Mortgagee deems to be in its best interest, or (iii) grant or issue any exclusive or non-exclusive license under any or all of the Copyrights, Patents, Trademarks or Licenses to any Person, or (iv) assign, pledge, convey or otherwise transfer title in or dispose of any or all of the Copyrights, Patents, Trademarks or Licenses to any Person, or (v) take any other actions with respect to any or all of the Copyrights, Patents, Trademarks and Licenses as Mortgagee deems to be in its best interests. Mortgagor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney, being coupled with an interest, shall be irrevocable until the Indenture Termination. Mortgagor acknowledges and agrees that this Mortgage is not intended to limit or restrict in any way the rights and remedies of Mortgagee or Noteholders or their respective successors transferees and assigns under the Indenture but rather is intended to facilitate the exercise of such rights and remedies. Mortgagee and such other parties shall have, in addition to all other rights and remedies given it or them by the terms of this Mortgage and the Indenture, all rights and remedies allowed by law and the rights and remedies of a secured party under the Uniform Commercial Code (or such other applicable law) as enacted in any jurisdiction in which the Copyrights, Patents, Trademarks or Licenses may be located. 15. Binding Effect; Benefits. This Mortgage shall be binding upon Mortgagor and its respective successors and permitted assigns, and shall inure to the benefit of Mortgagee and Noteholders, their successors, nominees and assigns. 16. GOVERNING LAW. THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. 17. CONSENT TO FORUM AND WAIVERS. TO INDUCE TRUSTEE AND NOTEHOLDERS TO ENTER INTO THE INDENTURE AND THIS AGREEMENT, MORTGAGOR IRREVOCABLY AGREES THAT, SUBJECT TO MORTGAGEE'S SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR ANY DOCUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE SUBJECT TO LITIGATION IN THE COURTS OF THE STATE OF NEW YORK, OR, AT MORTGAGEE'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. MORTGAGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, NEW YORK. MORTGAGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT 7 AGAINST MORTGAGOR BY MORTGAGEE IN ACCORDANCE WITH THIS SECTION. MORTGAGOR AND MORTGAGEE HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. MORTGAGOR FURTHER WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF MORTGAGEE. 18. Headings. Paragraph headings used herein are for convenience only and shall not modify the provisions which they precede. 19. Further Assurances. Mortgagor agrees to execute and deliver such further agreements, instruments and documents, and to perform such further acts, as Mortgagee shall request from time to time in order to carry out the purpose of this Mortgage and agreements set forth herein. 20. Survival of Representations. All representations and warranties of Mortgagor contained in this Mortgage shall survive the execution and delivery of this Mortgage. 8 IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage in favor of Mortgagee as of the date first written above. ADVANCED CAST PRODUCTS, INC. By: /s/ Gary LaChey ------------------------------------ Its: VP-Finance, Treasurer, Secty. & CFO ----------------------------------- AGREED AND ACCEPTED THIS 8th day of October, 2003. Bank of New York, as Trustee By: /s/ Patricia Gallagher ---------------------------------- Its: Vice President --------------------------------- 9 EXHIBIT A Copyrights None. EXHIBIT B Patents None. EXHIBIT C Trademarks
TITLE REG. NO. REG. DATE OWNER - ---------------------- -------- --------- ---------------------------- CTF 1317620 02/05/85 Advanced Cast Products, Inc. CASTUF 1336268 05/21/85 Advanced Cast Products, Inc.
EXHIBIT D Licenses None. EX-4.10 11 y92210exv4w10.txt SUBORDINATED COPYRIGHT PATENT TRADEMARK MORTGAGE SUBORDINATED COPYRIGHT, PATENT, TRADEMARK AND LICENSE MORTGAGE THIS SUBORDINATED COPYRIGHT, PATENT, TRADEMARK AND LICENSE MORTGAGE (this "Mortgage") made as of this 8th day of October, 2003, by PEERLESS CORPORATION, an Ohio corporation, having an office at 2121 Brooks Avenue, Neenah, Wisconsin 54956 ("Mortgagor") in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. W I T N E S S E T H: WHEREAS, (a) that certain Indenture (as amended, supplemented or otherwise modified from time to time, the "Indenture") dated as of the date hereof by and among Neenah Foundry Company, a Wisconsin corporation ("Neenah Foundry"), the Subsidiary Guarantors party thereto and the Trustee and (b) the Collateral Documents (collectively with the Indenture, the "Indenture Documents"), have been entered into to provide, among other things, (i) for the issuance by Neenah Foundry of 11% senior secured notes due September 30, 2010 in the aggregate principal amount of $133,130,000 and (ii) for the grant by Mortgagor to the Trustee, on behalf of the Noteholders, of a security interest in substantially all of Mortgagor's assets, including, without limitation, the copyrights, copyright agreements, copyright applications, patents, patent applications, trademarks, trademark applications, trade names, service marks, service mark applications, goodwill and certain licenses of Mortgagor; NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, Mortgagor agrees as follows: 1. Incorporation of Indenture Documents. (a) The Indenture Documents and the terms and provisions thereof are hereby incorporated herein in their entirety by this reference. All terms capitalized but not otherwise defined herein shall have the same meanings herein as in the Indenture. (b) Notwithstanding anything set forth in this Agreement to the contrary, the liens securing this Mortgage are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, Neenah Foundry and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Neenah Foundry, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 2. Mortgage of Copyrights, Patents, Trademarks and Licenses. To secure the complete and timely payment and satisfaction of all of the Obligations, Mortgagor hereby grants to Mortgagee for its own benefit and the benefit of Noteholders, and hereby reaffirms its prior grant pursuant to the Indenture Documents of, a continuing security interest in all of its now existing and hereafter created or acquired: (i) copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright applications, including, without limitation, the copyright registrations and applications listed on Exhibit A attached hereto and hereby made a part hereof, and all renewals, extensions and continuations of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Copyrights"); (ii) patents and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all patentable inventions and those patents and patent applications listed on Exhibit B attached hereto and made a part hereof, and all reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, and all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Patents"); (iii) trademarks, trademark registrations, trademark applications, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations and recordings thereof, and all applications in connection therewith (other than "intent to use" applications until a verified statement of use is filed with respect to such applications), including, without limitation, the trademarks, trade names, service marks, registrations and applications listed on Exhibit C attached hereto and hereby made a part hereof, and all renewals, extensions and continuations of any of the foregoing, and all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present or future infringements of any of the foregoing and 2 the right to sue for past, present and future infringements of any of the foregoing (all of the foregoing are sometimes hereinafter individually and/or collectively referred to as the "Trademarks"; provided, however, the term "Trademarks" shall not include any trademarks, trade names, business names or service marks incorporating the word "Peerless"); (iv) all license agreements between Mortgagor and any other party with respect to any of the Copyrights or any of the Patents or any of the Trademarks or any other copyright, patent, trademark, service mark or any registration or application for registration or any other trade name or tradestyle, whether Mortgagor is a licensor or licensee under any such license agreement, including, without limitation, the licenses listed on Exhibit D attached hereto and hereby made a part hereof, other than license agreements which, according to their terms, may not be assigned without the prior consent of the other Person party thereto (unless such consent has been obtained) (all of the foregoing license agreements and Mortgagor's rights thereunder are referred to collectively as the "Licenses"); and (v) all rights corresponding to any of the foregoing throughout the world and the goodwill of Mortgagor's business connected with and symbolized by the Trademarks. Upon the occurrence and during the continuance of an Event of Default, Mortgagee, on behalf of the Noteholders, shall have the power, to the extent permitted by law, to exercise the rights and remedies of a secured party provided under the Indenture, including without limitation the right to sell the Copyrights, Patents, Trademarks and Licenses. 3. Warranties, Representations and Covenants. For purposes of this Agreement, (a) the Copyrights listed on Exhibit A hereto, any other registered Copyrights and any other Copyrights material to Mortgagor's business are collectively referred to as the "Material Copyrights", (b) the Patents listed on Exhibit B hereto, any other registered Patents and any other Patents material to Mortgagor's business are collectively referred to as the "Material Patents", (c) the Trademarks listed on Exhibit C hereto, any other registered Trademarks and any other Trademarks material to Mortgagor's business are collectively referred to as the "Material Trademarks") and (d) any Licenses added to Exhibit D hereto pursuant to Section 5 below and any other Licenses material to Mortgagor's business are collectively referred to as the "Material Licenses". Mortgagor warrants and represents to Mortgagee that: (i) No Material Copyright, Material Patent, or Material Trademark has been adjudged invalid or unenforceable or, has been cancelled, in whole or in part; (ii) Each Material Copyright, Material Patent and Material Trademark is valid and enforceable; 3 (iii) Mortgagor is the sole and exclusive owner of the entire unencumbered right, title and interest in and to each Material Copyright, Material Patent and Material Trademark, free and clear of any liens, charges and encumbrances, including, without limitation, licenses, shoprights and covenants by Mortgagor not to sue third parties; (iv) Mortgagor has no notice of any suits or actions commenced or threatened in writing with respect to any of the Material Copyrights, Material Patents or Material Trademarks; (v) Mortgagor has the unqualified right to execute and deliver this Mortgage and perform its terms; (vi) Mortgagor has no Material Licenses; (vii) Mortgagor has no notice of any infringement or unauthorized use presently being made of any of the Material Copyrights, Material Patents or Material Trademarks which would reasonably be expected to materially adversely affect the fair market value of the Material Copyrights, Material Patents or Material Trademarks or the benefits to Mortgagee of this Mortgage, including, without limitation, the priority or perfection of the security interest granted herein or the remedies of Mortgagee hereunder; and (viii) Mortgagor has no notice of any suits or actions commenced or threatened in writing with respect to any Material Copyright, Material Patent or Material Trademark. 4. Restrictions on Future Agreements. Mortgagor agrees that until the Obligations (other than unasserted indemnity obligations) shall have been satisfied in full and the Indenture Documents shall have been terminated (the "Indenture Termination"), Mortgagor shall not, without the prior written consent of Mortgagee, sell or assign its interest in, or grant any license under, any Material Copyright, Material Patent, Material Trademark or Material License, or enter into any other agreement with respect to any Material Copyright, Material Patent, Material Trademark or Material License which is inconsistent with the obligations under this Mortgage, except to the extent permitted under the terms of the Indenture. Mortgagor further agrees that it shall not take any action, or permit any action to be taken by others subject to its control, including licensees, or fail to take any action, which would adversely affect the validity or enforcement of the rights transferred to Mortgagee under this Mortgage. 5. New Copyrights, Patents, Trademarks, and Licenses. Mortgagor represents and warrants that the Copyrights, Patents, Trademarks and Licenses listed on Exhibits A, B, and C, respectively, constitute all of the United States registered Copyrights, Patents and registered Trademarks now owned by Mortgagor and not abandoned. If, before the Indenture Termination, Mortgagor shall (i) become aware of any existing Copyrights, Patents, Trademarks or Licenses of which Mortgagor has not previously informed mortgagee; (ii) obtain rights to any new Copyrights, patentable inventions, Patents, 4 Trademarks or Licenses, or (iii) become entitled to the benefit of any Copyrights, Patents, Trademarks or Licenses or any improvement on any Patent, the provisions of Section 2 above shall automatically apply thereto. Mortgagor hereby authorizes Mortgagee to modify this Mortgage by amending Exhibits A, B, C and D, as applicable, to include any such registered Copyrights, Patents, registered Trademarks and Material Licenses. 6. Royalties; Term. The term of the security interests/mortgages granted herein shall extend until the earlier of (i) the expiration of each of the respective Copyrights, Patents, Trademarks and Licenses encumbered hereunder, and (ii) the Indenture Termination. Upon the occurrence of an Event of Default, Mortgagor agrees that the use by Mortgagee of all Copyrights, Patents, Trademarks and Licenses shall be worldwide and without any liability for royalties or other related charges from Mortgagee to Mortgagor. 7. Release of Mortgage. This Mortgage is made for collateral purposes only. Upon the Indenture Termination, Mortgagee shall take such actions as may be necessary or proper to terminate and release its security interest in the Copyrights, Patents, Trademarks, and Licenses created hereby and pursuant to the Indenture Documents, subject to any disposition thereof which may have been made by Mortgagee pursuant hereto or pursuant to the Indenture. 8. Expenses. All reasonable expenses incurred in connection with the performance of any of the agreements set forth herein shall be borne by Mortgagor. All reasonable fees, costs and expenses, of whatever kind or nature, including reasonable attorneys' fees and legal expenses, incurred by Mortgagee in connection with the filing or recording of any documents (including all taxes in connection therewith) in public offices, the payment or discharge of any taxes, maintenance fees, encumbrances or otherwise in protecting, maintaining or preserving the Copyrights, Patents, Trademarks and Licenses, or in defending or prosecuting any actions or proceedings arising out of or related to the Copyrights, Patents, Trademarks and Licenses, shall be borne by and paid by Mortgagor on written demand by Mortgagee and until so paid shall be added to the principal amount of the Obligations and shall bear interest at the then applicable rate as set forth in the Indenture. 9. Duties of Mortgagor. Mortgagor shall have the duty, in each case as commercially reasonable (i) to file and prosecute diligently any copyright, patent, trademark or service mark applications material to Mortgagor's business and pending as of the date hereof or thereafter until the Indenture Termination, (ii) to make application on uncopyrighted but copyrightable works, on unpatented but patentable inventions and on trademarks and service marks, as appropriate, material to Mortgagor's business, (iii) to preserve and maintain all rights in the Material Copyrights, Material Patents, Material Trademarks and Material Licenses and (iv) to ensure that the Material Copyrights, Material Patents, Material Trademarks and Material Licenses are and remain enforceable subject to any statutory expirations. Any expenses incurred in connection with Mortgagor's obligations under this Section 9 shall be borne by Mortgagor. Mortgagor shall not abandon any right to file an application with respect to a copyright, patent, trademark or service mark that is material to Mortgagor's business, or abandon any material Copyright, material Patent, material Trademark or material License, without the written consent of Mortgagee. If Mortgagor fails to comply with any of the foregoing duties, Mortgagee may perform said 5 duties in Mortgagor's name, to the extent permitted by law. Mortgagor agrees (i) to maintain the quality of any and all products in connection with which the Material Trademarks are used, consistent with the quality of said products as of the date hereof, except to the extent that the failure to perform any of the following would not reasonably be expected to have a Material Adverse Effect, and (ii) to provide Mortgagee, upon Mortgagee's request from time to time, with a certificate of an officer of Mortgagor certifying Mortgagor's compliance with the foregoing. Upon the occurrence and during the continuation of an Event of Default, Mortgagor agrees that Mortgagee, or a conservator appointed by Mortgagee, shall have the right to establish such additional product quality controls as Mortgagee, or said conservator, in its sole judgment exercised in a commercially reasonable manner, may deem necessary to assure maintenance of the quality of products sold by Mortgagor under the Trademarks. Mortgagor shall promptly, upon demand, reimburse and indemnify Mortgagee for all reasonable costs and expenses of Mortgagee, including reasonable attorney's fees and expenses so incurred by Mortgagee, in the exercise of its rights under this Section 9. 10. Mortgagee's Right to Sue. After the occurrence of an Event of Default, Mortgagee shall have the right, but shall in no way be obligated, to bring suit in its own name to enforce the Copyrights, Patents, Trademarks and Licenses, and, if Mortgagee shall commence any such suit, Mortgagor shall, at the request of Mortgagee, do any and all lawful acts and execute any and all proper documents required by Mortgagee in aid of such enforcement and Mortgagor shall promptly, upon demand, reimburse and indemnify Mortgagee for all reasonable costs and expenses incurred by Mortgagee, including reasonable attorneys' fees and expenses so incurred by Mortgagee, in the exercise of its rights under this Section 10 other than costs and expenses incurred by Mortgagee as a result of its gross negligence or willful misconduct. 11. Waivers. No course of dealing among Mortgagor, Mortgagee and the Noteholders, nor any failure to exercise, nor any delay in exercising, on the part of Mortgagee or Noteholders, any right, power or privilege hereunder or under the Indenture shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 12. Severability. The provisions of this Mortgage are severable, and if any clause or provision shall be held invalid and unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Mortgage in any jurisdiction. 13. Modification. This Mortgage cannot be altered, amended or modified in any way, except as specifically provided in Section 5 hereof or by a writing signed by the parties hereto. 14. Cumulative Remedies; Power of Attorney; Effect on Indenture. All of Mortgagee's rights and remedies with respect to the Copyrights, Patents, Trademarks and Licenses, whether established hereby or by the Indenture, or by any other agreements or by 6 law shall be cumulative and may be exercised singularly or concurrently. Subject to the Subordination Agreement, upon the occurrence and during the continuation of an Event of Default, Mortgagor hereby authorizes Mortgagee to make, constitute and appoint any officer or agent of Mortgagee as Mortgagee may select, in its sole discretion, as Mortgagor's true and lawful attorney-in-fact, with power to (i) endorse Mortgagor's name on all applications, documents, papers and instruments necessary or desirable for Mortgagee in the use of any or all of the Copyrights, Patents, Trademarks and Licenses, or (ii) take any other actions with respect to any or all of the Copyrights, Patents, Trademarks and Licenses as Mortgagee deems to be in its best interest, or (iii) grant or issue any exclusive or non-exclusive license under any or all of the Copyrights, Patents, Trademarks or Licenses to any Person, or (iv) assign, pledge, convey or otherwise transfer title in or dispose of any or all of the Copyrights, Patents, Trademarks or Licenses to any Person, or (v) take any other actions with respect to any or all of the Copyrights, Patents, Trademarks and Licenses as Mortgagee deems to be in its best interests. Mortgagor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney, being coupled with an interest, shall be irrevocable until the Indenture Termination. Mortgagor acknowledges and agrees that this Mortgage is not intended to limit or restrict in any way the rights and remedies of Mortgagee or Noteholders or their respective successors transferees and assigns under the Indenture but rather is intended to facilitate the exercise of such rights and remedies. Mortgagee and such other parties shall have, in addition to all other rights and remedies given it or them by the terms of this Mortgage and the Indenture, all rights and remedies allowed by law and the rights and remedies of a secured party under the Uniform Commercial Code (or such other applicable law) as enacted in any jurisdiction in which the Copyrights, Patents, Trademarks or Licenses may be located. 15. Binding Effect; Benefits. This Mortgage shall be binding upon Mortgagor and its respective successors and permitted assigns, and shall inure to the benefit of Mortgagee and Noteholders, their successors, nominees and assigns. 16. GOVERNING LAW. THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. 17. CONSENT TO FORUM AND WAIVERS. TO INDUCE TRUSTEE AND NOTEHOLDERS TO ENTER INTO THE INDENTURE AND THIS AGREEMENT, MORTGAGOR IRREVOCABLY AGREES THAT, SUBJECT TO MORTGAGEE'S SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR ANY DOCUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE SUBJECT TO LITIGATION IN THE COURTS OF THE STATE OF NEW YORK, OR, AT MORTGAGEE'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. MORTGAGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, NEW YORK. MORTGAGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT 7 AGAINST MORTGAGOR BY MORTGAGEE IN ACCORDANCE WITH THIS SECTION. MORTGAGOR AND MORTGAGEE HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. MORTGAGOR FURTHER WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF MORTGAGEE. 18. Headings. Paragraph headings used herein are for convenience only and shall not modify the provisions which they precede. 19. Further Assurances. Mortgagor agrees to execute and deliver such further agreements, instruments and documents, and to perform such further acts, as Mortgagee shall request from time to time in order to carry out the purpose of this Mortgage and agreements set forth herein. 20. Survival of Representations. All representations and warranties of Mortgagor contained in this Mortgage shall survive the execution and delivery of this Mortgage. 8 IN WITNESS WHEREOF, Mortgagor has duly executed this Mortgage in favor of Mortgagee as of the date first written above. PEERLESS CORPORATION By /s/ Gary LaChey --------------------------------------- Its VP-Finance, Treasurer, Secty. & CFO -------------------------------------- AGREED AND ACCEPTED THIS 8th day of October, 2003. Bank of New York, as Trustee By /s/ Patricia Gallagher ------------------------------------- Its Vice President ------------------------------------ 9 EXHIBIT A Copyrights
TITLE REG. NO. REG. DATE OWNER - ------------------------------------------------------ ------------ --------- -------------------- Roadrunner pony trailers for the construction industry TX-2-330-002 07/11/88 Peerless Corporation Roadrunner pony trailers: two and three axle models TX-2-330-003 07/11/88 Peerless Corporation
EXHIBIT B Patents
TITLE REG. NO. REGISTRANT DATE OF REGISTRATION - ----------------------------------------- ------------ ---------- -------------------- Trailer Frame Structure 4576398 Peerless Corporation 3/18/86 Waste Receptacle Dumping Apparatus 4673327 Peerless Corporation 10/9/85 Log Trailer Load Extension Axle Assembly 5163698 Peerless Corporation 11/17/92
EXHIBIT C Trademarks
TITLE REG. NO. REG. DATE OWNER - ----------------------- ------------ ---------- -------------------- PAGE AND PAGE 1368852 11/05/1985 Peerless Corporation ROADRUNNER 1771327 05/18/1993 Peerless Corporation
Exceptions to ownership: Neenah sold its Peerless division to R.H. Little & Company in August 2002. While the "Peerless" name was sold in this transaction, not all marks containing the "Peerless" name were transferred. Neenah makes no representations or warranties concerning the "Peerless" marks. EXHIBIT D Licenses None. EX-4.11 12 y92210exv4w11.txt SUBORDINATED PLEDGE AGREEMENT SUBORDINATED PLEDGE AGREEMENT THIS SUBORDINATED PLEDGE AGREEMENT (this "Agreement") is made and entered into as of October 8, 2003 by Neenah Foundry Company, a Wisconsin corporation, having an office at 2121 Brooks Avenue, Neenah, Wisconsin 54956 (the "Pledgor"), in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. Capitalized terms used and not otherwise defined herein have the meanings assigned in the Indenture (as defined below). W I T N E S S E T H: WHEREAS, that certain Indenture (as amended, supplemented or otherwise modified from time to time, the "Indenture") dated as of the date hereof by and among the Pledgor, the Subsidiary Guarantors party thereto and the Trustee has been entered into pursuant to which the Pledgor has issued its 11% senior secured notes due September 30, 2010 (the "Senior Secured Notes") in the aggregate principal amount of $133,130,000; WHEREAS, Pledgor is jointly and severally liable for all of the Obligations of itself and each Subsidiary Guarantor under the Indenture; WHEREAS, Pledgor owns 100% of the issued and outstanding capital stock of each of Advanced Cast Products, Inc., a Delaware corporation, Gregg Industries, Inc., a California corporation, Mercer Forge Corp., a Delaware corporation, Deeter Foundry, Inc., a Nebraska corporation, Dalton Corporation, an Indiana corporation, Cast Alloys, Inc., a California corporation, and Neenah Transport, Inc., a Wisconsin corporation (collectively, the "Issuers"), all as described on Schedule I hereto; and WHEREAS, to secure repayment and performance of all of Pledgor's obligations, liabilities and indebtedness under the Indenture, Trustee and Noteholders have required that Pledgor shall have made the pledge contemplated by this Agreement; NOW, THEREFORE, in consideration of the premises, Pledgor hereby agrees with Trustee as follows: 1. Pledge. Pledgor hereby pledges to Trustee, for its own benefit and the benefit of the Noteholders, and grants to Trustee, for its own benefit and the benefit of Noteholders, a security interest in: (a) the shares of stock of each "Issuer" identified on Schedule I hereto held by Pledgor (the "Pledged Shares") and the certificates representing the Pledged Shares, and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; (b) all additional shares of stock of each Issuer at any time acquired by Pledgor in any manner, and the certificates representing such additional shares (and any such additional shares shall constitute part of the Pledged Shares under this Agreement), and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and (c) all proceeds of any of the foregoing (the assets described in this Section 1 are collectively referred to as, the "Pledged Collateral"). (d) Notwithstanding anything in this Agreement to the contrary, the liens securing this Mortgage are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, the Pledgor and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Pledgor, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 2. Security for Obligations. This Agreement and all of the Pledged Collateral secure the payment and performance of the Obligations (as such term is defined in the Indenture), together with all reasonable costs and expenses, including, without limitation, all court costs and reasonable attorneys' and paralegals' fees and expenses paid or incurred by Trustee or any Noteholder in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against Pledgor or any guarantor of all or any part of the Obligations (all such indebtedness, obligations and liabilities described in this Section 2 being collectively called the "Secured Obligations"). 3. Delivery of Pledged Collateral. Subject to the Subordination Agreement and the payment in full of the Senior Indebtedness (the "Loan Agreement Termination"), all certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed undated instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Trustee. Prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right, at any time in its discretion and without notice to Pledgor following the occurrence and during the continuance of an Event of Default, to transfer to or to register in the name of Trustee or any of its nominees 2 any or all of the Pledged Collateral. In addition, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. 4. Representations and Warranties. In order to induce Trustee to enter into this Agreement and the Indenture, Pledgor represents and warrants that the following statements are true, correct and complete: (a) Schedule I hereto completely and accurately sets forth all of the issued and outstanding stock of each Issuer as of the date hereof. All shares of such stock are owned legally and beneficially by Pledgor and have been duly authorized and validly issued and are fully paid and nonassessable. There are no outstanding warrants, options, subscriptions or other contractual arrangements for the purchase of any other shares of stock or any securities convertible into shares of stock of any Issuer, and there are no preemptive rights with respect to the shares of stock of any Issuer. (b) Assuming that Agent or Trustee has taken and is retaining possession of the Pledged Shares in the State of Illinois, in the case of Agent, or in the State of New York, in the case of Trustee, as required in Section 3 above and further assuming that Agent or Trustee, as the case may be pursuant to Section 3 above, has taken possession of the Pledged Shares without notice (actual or constructive) of any adverse claims in respect of the Pledged Shares, the delivery of the Pledged Shares to the Agent or Trustee, as the case may be pursuant to Section 3 above, is effective to create a valid and perfected first priority security interest in the Pledged Collateral, free of any adverse claim, securing the payment of the Priority Lien Obligations and, on a subordinated basis pursuant to the Subordination Agreement, the Secured Obligations. (c) Subject to the Subordination Agreement, no consent of any other party (including, without limitation, any creditor of Pledgor) and no consent, authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor or (ii) for the exercise by Trustee of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as has already been obtained or taken and except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally). (d) None of the Pledged Shares constitutes margin stock, as defined in Regulation U of the Board of Governors of the Federal Reserve System. (e) This Agreement is the legal, valid and binding obligation of Pledgor, enforceable against Pledgor in accordance with its terms, except as 3 limited by applicable bankruptcy, reorganization, insolvency or similar laws affecting the enforcement of creditors' rights generally. (f) All information herein or hereafter supplied to Trustee by or on behalf of Pledgor with respect to the Pledged Collateral is and will be accurate and complete in all material respects. 5. Further Assurances. (a) Subject to the Subordination Agreement, Pledgor will, from time to time, at Pledgor's expense, promptly execute and deliver all further instruments and documents and take all further action that is necessary, or that Trustee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby, to enable Trustee to exercise and enforce the rights and remedies of Trustee hereunder with respect to any Pledged Collateral or to carry out the provisions and purposes hereof. Without limiting the generality of the foregoing, Pledgor will: (i) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as is necessary, or as Trustee may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby under the laws of any applicable jurisdiction or (ii) appear in and defend any action or proceeding that may affect Pledgor's title to or Trustee's security interest in the Pledged Collateral. (b) Pledgor will, promptly (and in any event within three Business Days) upon the purchase or acquisition of any additional shares of stock of any Issuer, deliver such Pledged Shares to the Agent or the Trustee, as the case may be pursuant to Section 3 above, together with a proxy substantially in the form attached hereto as Exhibit A, and a pledge amendment, duly executed by Pledgor, in substantially the form of Exhibit B hereto (a "Pledge Amendment"), in respect of the additional shares which are to be pledged pursuant to this Agreement. Pledgor hereby authorizes Trustee to attach each Pledge Amendment to this Agreement and agrees that all shares listed on any Pledge Amendment delivered to Trustee shall for all purposes hereunder be considered Pledged Collateral. 6. Voting Rights; Dividends; Etc. (a) So long as no Event of Default shall have occurred and be continuing and Trustee shall not have delivered to Pledgor notice of its election to exercise the rights set forth in subsection (b) below: (i) Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Indenture. 4 (ii) Except as otherwise expressly permitted in the Indenture, any and all instruments, chattel paper and other rights, property or proceeds and products (other than cash or checks) received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, shall be and shall be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, to hold as Pledged Collateral, and shall, if received by Pledgor, be received in trust for the benefit of Trustee, be segregated from the other property or funds of Pledgor, and be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). (iii) Trustee shall promptly upon request execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the voting and other rights which Pledgor is entitled to exercise pursuant to paragraph (i) above, and to receive the dividends which Pledgor is authorized to receive and retain pursuant to paragraph (ii) above. (b) Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default: (i) Except as otherwise expressly permitted in the Indenture, all rights of Pledgor to receive and retain any cash dividends and distributions pursuant to subsection 6(a)(ii), and to exercise the voting and other consensual rights which Pledgor would otherwise be entitled to exercise pursuant to subsection 6(a)(i), shall cease to be effective upon written notice by Trustee to Pledgor of Trustee's intent to exercise its rights hereunder, and upon delivery of such notice shall become vested in Trustee who shall thereupon have the sole right to exercise such voting and other consensual rights and the sole right to receive and hold as Pledged Collateral such dividends (and, to the extent permissible, apply them to payment of the Secured Obligations). In order to effect such transfer of rights, Trustee shall have the right, upon such notice, to date and present to the applicable Issuer an irrevocable proxy executed by Pledgor substantially in the form attached hereto as Exhibit A (a "Proxy"). (ii) Except as expressly permitted in the Indenture, all dividends which are received by Pledgor contrary to the provisions of this subsection 6(b) shall be received in trust for the benefit of Trustee (for the benefit of Noteholders), shall be segregated from other funds of Pledgor and shall be forthwith paid over to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). 7. Transfers and Other Liens; Additional Shares. 5 (a) Other than for Priority Liens and Priority Lien Documents prior to the Loan Agreement Termination, Pledgor agrees that Pledgor will not (i) encumber, sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or (ii) enter into any other contractual obligations which could reasonably be expected to restrict or inhibit the right or ability of Trustee to sell or otherwise dispose of the Pledged Collateral or any part thereof after the occurrence and during the continuance of an Event of Default. (b) Pledgor agrees that if any Issuer issues any stock or other securities (including any warrants, options, subscriptions or other contractual arrangements for the purchase of stock or securities convertible into stock) in addition to or in substitution for the Pledged Shares, Pledgor will deliver, promptly (and in any event within three Business Days) upon its acquisition (directly or indirectly) thereof, any and all writings evidencing any additional Pledged Collateral to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee. Pledgor hereby authorizes Trustee to modify this Agreement by unilaterally amending Schedule I to include such shares of stock or other securities. 8. Trustee Appointed Attorney-in-Fact. Subject to the Subordination Agreement, Pledgor hereby irrevocably appoints Trustee as Pledgor's attorney-in-fact effective upon the occurrence and during the continuance of an Event of Default, with full authority in the place and stead of Pledgor and in the name of Pledgor, Trustee or otherwise, from time to time in the discretion of Trustee to take any action (including completion and presentation of any proxy) and to execute any instrument that is necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to (i) receive, endorse and collect all instruments made payable to Pledgor representing any dividend or other distribution in respect of the Pledged Collateral or any part thereof; (ii) exercise the voting and other consensual rights pertaining to the Pledged Collateral; and (iii) sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Pledged Collateral as fully and completely as though Trustee was the absolute owner thereof for all purposes, and to do, at the option of Trustee and at Pledgor's expense, at any time or from time to time, all acts and things that are necessary or that the Trustee deems necessary to protect, preserve or realize upon the Pledged Collateral. Pledgor hereby ratifies and approves all acts of Trustee made or taken in accordance with the terms of this Section 8. Except as specifically set forth in Section 10 hereof or in the event of the gross negligence or willful misconduct of Trustee, neither Trustee nor any person designated by Trustee shall be liable for any acts or omissions or for any error of judgment or mistake of fact or law. This power of attorney, being coupled with an interest, shall be irrevocable until all Secured Obligations (other than unasserted contingent indemnity obligations) shall have been paid in full and the Indenture Documents shall have been terminated. 9. Trustee May Perform. If Pledgor fails to perform any agreement contained herein, Trustee may itself perform, or cause performance of, such agreement, and the expenses of Trustee incurred in connection therewith shall be a part of the Secured Obligations. 6 10. Limitation on Duty of Trustee with Respect to the Pledged Collateral. The powers conferred on Trustee hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for monies actually received by it hereunder, Trustee shall have no duty with respect to any Pledged Collateral. Trustee shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment that is substantially equivalent to that which a reasonably prudent person in the industry accords to such property, it being expressly agreed that Trustee shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not Trustee has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral, but Trustee may do so and all expenses incurred in connection therewith shall be payable by and for the sole account of Pledgor. 11. Remedies upon Event of Default. Subject to the Subordination Agreement, if any Event of Default shall have occurred and be continuing: (a) Trustee may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code (the "UCC") in the State of New York, whether or not the UCC applies to the affected Pledged Collateral, and Trustee may also, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any office of Trustee or elsewhere, for cash, on credit, or for future delivery, at such price or prices and upon such other terms as Trustee deems commercially reasonable. Pledgor acknowledges and agrees that such a private sale may result in prices and other terms which may be less favorable to the seller than if such sale were a public sale. Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Pledgor 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. At any sale of the Pledged Collateral, if permitted by law, Trustee, on behalf of Noteholders, may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Pledged Collateral or any portion thereof. Trustee shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Trustee 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. Trustee shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the issuing corporation of such securities to register such securities for public sale under the Securities Act of 1933, as from time to time amended (the "Securities Act"), or under applicable state securities laws, 7 even if the issuing corporation would agree to do so. To the extent permitted by law, Pledgor hereby specifically waives all rights of redemption, stay or appraisal which Pledgor has or may have under any law now existing or hereafter enacted. (b) Except as expressly permitted in the Indenture and in this Agreement, all cash proceeds received by Trustee in accordance with the terms hereof in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral may, in the discretion of Trustee, be held by Trustee as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Trustee pursuant to the terms of the Indenture) in whole or in part by Trustee against all or any part of the Secured Obligations in accordance with the provisions of Section 13. Any surplus of such cash or cash proceeds held by Trustee and remaining after payment in full of all the Secured Obligations shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct; provided, that in the event that all of the conditions to the termination of this Agreement pursuant to Section 14 shall not have been fulfilled, such balance shall be held and applied from time to time as provided in this subsection 11(b) until all such conditions shall have been fulfilled. (c) Pledgor recognizes that Trustee may be unable to effect a public sale of all or part of the Pledged Collateral and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to the seller than if sold at public sales and agrees that such private sales shall be deemed to have been made in a commercially reasonable manner, and that Trustee has no obligation to delay sale of any such Pledged Collateral for the period of time necessary to permit the issuer of such Pledged Collateral to register such Pledged Collateral for public sale under the Securities Act. 12. Remedies Cumulative. No failure on the part of Trustee to exercise, and no delay in exercising and no course of dealing with respect to, any power, privilege or right under the Indenture, the other Collateral Documents or this Agreement (collectively, the "Indenture Documents") shall operate as a waiver thereof; nor shall any single or partial exercise by Trustee of any power, privilege or right under any of the other Indenture Documents or this Agreement preclude any other or further exercise thereof or the exercise of any other such power, privilege or right. The powers, privileges and rights in this Agreement and the other Indenture Documents are cumulative and are not exclusive of any other remedies provided by law. 13. Application of Proceeds. Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default, the proceeds of any 8 sale of, or other realization upon, all or any part of the Pledged Collateral shall be applied in the manner set forth in the Indenture. 14. Termination of Security Interests; Release of Collateral. Upon payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture in accordance with its terms, the security interests granted herein shall terminate and all rights to the Pledged Collateral shall revert to Pledgor. Upon such termination of the security interests or release of any Pledged Collateral, Trustee will, at the expense of Pledgor, and subject to Section 20 herein, promptly execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence the termination of the security interests or the release of such Pledged Collateral which has not yet theretofore been sold or otherwise applied or released. Such release shall be without recourse or warranty to Trustee, except as to the absence of any prior assignments by Trustee of its interest in the Pledged Collateral. 15. Amendments, Waivers and Consents. No amendment, modification, termination or waiver of any provision of this Agreement, or consent to any departure by Pledgor therefrom, shall in any event be effective without the written concurrence of Trustee and Pledgor. 16. Notices. Any notice, approval, request, demand, consent or other communication hereunder, including any notice of default or notice of sale, shall be given to Pledgor or Trustee at the applicable address set forth above (or to such other address previously designated by written notice to the serving party) in accordance with the notice provision of the Indenture. 17. Continuing Security Interest; Successors and Assigns. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture, (ii) be binding upon Pledgor, its successors and assigns, and (iii) inure, together with the rights and remedies of Trustee hereunder, to the benefit of Trustee and its successors and assigns. Pledgor may not assign or transfer any of its interests or obligations hereunder without the prior consent of Trustee. 18. Waiver. (a) In addition to any other waivers herein, Pledgor waives to the greatest extent it may lawfully do so, and agrees that it shall not at any time insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets, redemption or similar law, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by Pledgor of its obligations under, or the enforcement by Trustee of, this Agreement. Pledgor hereby waives diligence, presentment and demand (whether for nonpayment or protest or of acceptance, maturity, extension of time, change in nature or form of the Secured Obligations, acceptance of 9 further security, release of further security, composition or agreement arrived at as to the amount of, or the terms of the Secured Obligations, notice of adverse change in any Issuer's or any other Person's financial condition or any other fact which might materially increase the risk to Pledgor) with respect to any of the Secured Obligations or all other demands whatsoever and, to the fullest extent permitted by law, waives the benefit of all provisions of law which are or might be in conflict with the terms of this Agreement. (b) If Trustee may, under applicable law, proceed to realize its benefits under any of the Indenture Documents giving Trustee a Lien upon any Collateral, whether owned by any Issuer or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Trustee may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies of Trustee under this Agreement. 19. Subrogation. Subject to, and solely effective following, the payment in full in cash of all Obligations (other than unasserted contingent indemnity obligations), Pledgor shall be subrogated to the rights of the Noteholders to receive payments and distributions of cash, property and securities applicable to such Obligations. For purposes of such subrogation, no payments or distributions to the Noteholders of any cash, property or securities to which the Noteholders would be entitled except for this provision, and no payments over pursuant to the provisions of this paragraph to the Noteholders by Pledgor shall, as among the Issuer (as defined in the Indenture) or any Subsidiary Guarantor, their respective creditors (other than holders of such Obligations) and Pledgor be deemed to be a payment or distribution by such Issuer (as defined in the Indenture) or any Subsidiary Guarantor to or on account of such Obligations. 20. Reinstatement. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by Trustee or any Noteholder in respect of the Secured Obligations is rescinded or must otherwise be restored or returned by Trustee or any Noteholder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Pledgor or any Issuer or upon the appointment of any intervenor or conservator of, or trustee or similar official for, Pledgor or any Issuer or any substantial part of its assets, or otherwise, all as though such payments had not been made. 21. Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction. 22. Interpretation. Time is of the essence of each provision of this Agreement of which time is an element. All terms not defined herein or in the Indenture shall have the meanings set forth in the UCC, except where the context otherwise requires. To the extent any term or provision of this Agreement conflicts with the provisions of the 10 Indenture and is not dealt with more specifically herein, the Indenture shall control with respect to such term or provision. 23. Survival of Provisions. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the Indenture, the issuance of Notes thereunder and the execution and delivery of the Notes. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements, representations and warranties of Pledgor set forth herein shall terminate only upon payment of the Secured Obligations and the termination of this Agreement in accordance with its terms. 24. Statute of Limitations. Pledgor hereby waives the right to plead any statute of limitations as a defense to any indebtedness or obligation hereunder or secured hereby to the full extent permitted by law. 25. Headings Descriptive. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same agreement. 27. GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 28. WAIVER OF JURY TRIAL; JURISDICTION. PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, NEW YORK AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND CONSENTS THAT ALL SERVICE OF PROCESS UPON PLEDGOR BE MADE BY REGISTERED MAIL OR MESSENGER DIRECTED TO PLEDGOR AT THE ADDRESS SET FORTH ABOVE AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. PLEDGOR AND TRUSTEE EACH HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF TRUSTEE TO BRING ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. 11 29. Incorporation By Reference. In connection with its appointment and acting hereunder the Trustee is entitled to all rights, privileges, benefits, protections, immunities and indemnities provided to it under the Indenture. 12 IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be duly executed and delivered as of the day and year first above written. NEENAH FOUNDRY COMPANY By: /s/ Gary LaChey --------------------------------------- Title: VP-Finance, Treasurer, Secty. & CFO ------------------------------------ By acceptance hereof as of this 8th day of October, 2003, Trustee agrees to be bound by the provisions hereof. BANK OF NEW YORK, as Trustee By: /s/ Patricia Gallagher --------------------------------------- Title: Vice President ------------------------------------ 13 SCHEDULE I TO PLEDGE AGREEMENT
STOCK ISSUER OF PLEDGED TYPE AND CLASS CERTIFICATE PAR NUMBER OF STOCK OF STOCK NUMBERS VALUE SHARES PERCENTAGE - ----------------------------- -------------------- ----------------- ------------ ------------- --------------- Advanced Cast Products, Inc. 100% - ----------------------------- -------------------- ----------------- ------------ ------------- --------------- Gregg Industries, Inc. 100% - ----------------------------- -------------------- ----------------- ------------ ------------- --------------- Mercer Forge Corp. 100% - ----------------------------- -------------------- ----------------- ------------ ------------- --------------- Deeter Foundry, Inc. 100% - ----------------------------- -------------------- ----------------- ------------ ------------- --------------- Dalton Corporation 100% - ----------------------------- -------------------- ----------------- ------------ ------------- --------------- Cast Alloys, Inc. 100% - ----------------------------- -------------------- ----------------- ------------ ------------- --------------- Neenah Transport, Inc. 100% - ----------------------------- -------------------- ----------------- ------------ ------------- ---------------
EXHIBIT A Irrevocable Proxy The undersigned hereby appoints Bank of New York, as Trustee ("Trustee") as proxy with full power of substitution, and hereby authorizes Trustee to represent and vote all of the shares of the capital stock of __________________________, held of record by the undersigned on the date of exercise hereof or at any meeting or at any other time chosen by Trustee in its sole discretion, but only at the times provided in that certain Pledge Agreement dated as of October 8, 2003, executed by the undersigned in favor of Trustee. Dated: ___________ __, 2003 NEENAH FOUNDRY COMPANY By ----------------------------------------- Title -------------------------------------- EXHIBIT B Pledge Amendment This Pledge Amendment, dated ___________________ is delivered pursuant to Section 5(c) of the Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated as of October 8, 2003, between the undersigned and Bank of New York, as trustee (the "Pledge Agreement"; capitalized terms defined therein being used herein as therein defined) and that the shares listed on this Pledge Amendment shall be deemed to be part of the Pledged Collateral and shall secure all Secured Obligations. Dated: __________, 200__ NEENAH FOUNDRY COMPANY By ----------------------------------------- Title --------------------------------------
STOCK CERTIFICATE STOCK ISSUER CLASS OF STOCK NO(S). PAR VALUE NUMBER OF SHARES - ---------------------------------------- ---------------- ------------------------ ------------- ------------------- - ---------------------------------------- ---------------- ------------------------ ------------- ------------------- - ---------------------------------------- ---------------- ------------------------ ------------- ------------------- - ---------------------------------------- ---------------- ------------------------ ------------- ------------------- - ---------------------------------------- ---------------- ------------------------ ------------- -------------------
ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, _________________, a _______________ corporation, hereby sells, assigns and transfers unto Bank of New York, as trustee _____________ (_____) Shares of the common stock of _____________________, a _____________ corporation (the "Corporation"), standing in its name on the books of the Corporation represented by Certificate(s) No. ____________________ herewith and does hereby irrevocably constitute and appoint ____________________ attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises. Dated:_____________ NEENAH FOUNDRY COMPANY By ----------------------------------------- Title -------------------------------------- EX-4.12 13 y92210exv4w12.txt SUBORDINATED PLEDGE AGREEMENT SUBORDINATED PLEDGE AGREEMENT THIS SUBORDINATED PLEDGE AGREEMENT (this "Agreement") is made and entered into as of October 8, 2003 by Advanced Cast Products, Inc., a Delaware corporation, having an office at 2121 Brooks Avenue, Neenah, Wisconsin 54956 (the "Pledgor"), in favor of The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") for the noteholders (the "Noteholders") under the Indenture (as defined below). The Trustee's address is 101 Barclay Street, 8th Floor West, New York, New York 10286. Capitalized terms used and not otherwise defined herein have the meanings assigned in the Indenture (as defined below). W I T N E S S E T H: WHEREAS, that certain Indenture (as amended, supplemented or otherwise modified from time to time, the "Indenture") dated as of the date hereof by and among the Neenah Foundry Company, a Wisconsin corporation ("Neenah Foundry"), the Subsidiary Guarantors party thereto and the Trustee has been entered into pursuant to which Neenah Foundry has issued its 11% senior secured notes due September 30, 2010 (the "Senior Secured Notes") in the aggregate principal amount of $133,130,000; WHEREAS, Pledgor is jointly and severally liable for all of the Obligations of Neenah Foundry, itself and each other Subsidiary Guarantor under the Indenture; WHEREAS, Pledgor owns 100% of the issued and outstanding capital stock of Belcher Corporation, a Delaware corporation, and Peerless Corporation, an Ohio corporation, (collectively, the "Issuers"), all as described on Schedule I hereto; and WHEREAS, to secure repayment and performance of all of Pledgor's obligations, liabilities and indebtedness under the Indenture (including the Subsidiary Guarantee thereunder), Trustee and Noteholders have required that Pledgor shall have made the pledge contemplated by this Agreement; NOW, THEREFORE, in consideration of the premises, Pledgor hereby agrees with Trustee as follows: 1. Pledge. Pledgor hereby pledges to Trustee, for its own benefit and the benefit of the Noteholders, and grants to Trustee, for its own benefit and the benefit of Noteholders, a security interest in: (a) the shares of stock of each "Issuer" identified on Schedule I hereto held by Pledgor (the "Pledged Shares") and the certificates representing the Pledged Shares, and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; (b) all additional shares of stock of each Issuer at any time acquired by Pledgor in any manner, and the certificates representing such additional shares (and any such additional shares shall constitute part of the Pledged Shares under this Agreement), and all stock dividends, cash dividends, cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and (c) all proceeds of any of the foregoing (the assets described in this Section 1 are collectively referred to as, the "Pledged Collateral"). (d) Notwithstanding anything in this Agreement to the contrary, the liens securing this Mortgage are subordinate in the manner and to the extent set forth in that certain Lien Subordination Agreement (the "Subordination Agreement") dated as of the date hereof among Trustee, Neenah Foundry and the other "Companies" (as defined therein) party thereto and Fleet Capital Corporation ("Agent"), to the liens securing the indebtedness (including interest) owed by the Companies pursuant to or in connection with that certain Loan and Security Agreement dated as of the date hereof among Neenah Foundry, certain of the other Companies, Agent and the lenders from time to time party thereto, as such Loan and Security Agreement may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under such Loan and Security Agreement; and the Trustee (on behalf of itself and each Noteholder), by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement and each agreement made therein by the Trustee on its behalf. 2. Security for Obligations. This Agreement and all of the Pledged Collateral secure the payment and performance of the Obligations (as such term is defined in the Indenture), together with all reasonable costs and expenses, including, without limitation, all court costs and reasonable attorneys' and paralegals' fees and expenses paid or incurred by Trustee or any Noteholder in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against Neenah Foundry, Pledgor or any other guarantor of all or any part of the Obligations (all such indebtedness, obligations and liabilities described in this Section 2 being collectively called the "Secured Obligations"). 3. Delivery of Pledged Collateral. Subject to the Subordination Agreement and the payment in full of the Senior Indebtedness (the "Loan Agreement Termination"), all certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed undated instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Trustee. Prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right, at any time in its discretion and without notice to Pledgor following the occurrence and during the continuance of an Event of Default, to transfer to or to register in the name of Trustee or any of its nominees 2 any or all of the Pledged Collateral. In addition, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, shall have the right to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. 4. Representations and Warranties. In order to induce Trustee to enter into this Agreement and the Indenture, Pledgor represents and warrants that the following statements are true, correct and complete: (a) Schedule I hereto completely and accurately sets forth all of the issued and outstanding stock of each Issuer as of the date hereof. All shares of such stock are owned legally and beneficially by Pledgor and have been duly authorized and validly issued and are fully paid and nonassessable. There are no outstanding warrants, options, subscriptions or other contractual arrangements for the purchase of any other shares of stock or any securities convertible into shares of stock of any Issuer, and there are no preemptive rights with respect to the shares of stock of any Issuer. (b) Assuming that Agent or Trustee has taken and is retaining possession of the Pledged Shares in the State of Illinois, in the case of Agent, or in the State of New York, in the case of Trustee, as required in Section 3 above and further assuming that Agent or Trustee, as the case may be pursuant to Section 3 above, has taken possession of the Pledged Shares without notice (actual or constructive) of any adverse claims in respect of the Pledged Shares, the delivery of the Pledged Shares to the Agent or Trustee, as the case may be pursuant to Section 3 above, is effective to create a valid and perfected first priority security interest in the Pledged Collateral, free of any adverse claim, securing the payment of the Priority Lien Obligations and, on a subordinated basis pursuant to the Subordination Agreement, the Secured Obligations. (c) Subject to the Subordination Agreement, no consent of any other party (including, without limitation, any creditor of Pledgor) and no consent, authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor or (ii) for the exercise by Trustee of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as has already been obtained or taken and except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally). (d) None of the Pledged Shares constitutes margin stock, as defined in Regulation U of the Board of Governors of the Federal Reserve System. (e) This Agreement is the legal, valid and binding obligation of Pledgor, enforceable against Pledgor in accordance with its terms, except as 3 limited by applicable bankruptcy, reorganization, insolvency or similar laws affecting the enforcement of creditors' rights generally. (f) All information herein or hereafter supplied to Trustee by or on behalf of Pledgor with respect to the Pledged Collateral is and will be accurate and complete in all material respects. 5. Further Assurances. (a) Subject to the Subordination Agreement, Pledgor will, from time to time, at Pledgor's expense, promptly execute and deliver all further instruments and documents and take all further action that is necessary, or that Trustee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby, to enable Trustee to exercise and enforce the rights and remedies of Trustee hereunder with respect to any Pledged Collateral or to carry out the provisions and purposes hereof. Without limiting the generality of the foregoing, Pledgor will: (i) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as is necessary, or as Trustee may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby under the laws of any applicable jurisdiction or (ii) appear in and defend any action or proceeding that may affect Pledgor's title to or Trustee's security interest in the Pledged Collateral. (b) Pledgor will, promptly (and in any event within three Business Days) upon the purchase or acquisition of any additional shares of stock of each Issuer, deliver such Pledged Shares to the Agent or the Trustee, as the case may be pursuant to Section 3 above, together with a proxy substantially in the form attached hereto as Exhibit A, and a pledge amendment, duly executed by Pledgor, in substantially the form of Exhibit B hereto (a "Pledge Amendment"), in respect of the additional shares which are to be pledged pursuant to this Agreement. Pledgor hereby authorizes Trustee to attach each Pledge Amendment to this Agreement and agrees that all shares listed on any Pledge Amendment delivered to Trustee shall for all purposes hereunder be considered Pledged Collateral. 6. Voting Rights; Dividends; Etc. (a) So long as no Event of Default shall have occurred and be continuing and Trustee shall not have delivered to Pledgor notice of its election to exercise the rights set forth in subsection (b) below: (i) Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Indenture. 4 (ii) Except as otherwise expressly permitted in the Indenture, any and all instruments, chattel paper and other rights, property or proceeds and products (other than cash or checks) received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, shall be and shall be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, to hold as Pledged Collateral, and shall, if received by Pledgor, be received in trust for the benefit of Trustee, be segregated from the other property or funds of Pledgor, and be forthwith delivered to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). (iii) Trustee shall promptly upon request execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the voting and other rights which Pledgor is entitled to exercise pursuant to paragraph (i) above, and to receive the dividends which Pledgor is authorized to receive and retain pursuant to paragraph (ii) above. (b) Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default: (i) Except as otherwise expressly permitted in the Indenture, all rights of Pledgor to receive and retain any cash dividends and distributions pursuant to subsection 6(a)(ii), and to exercise the voting and other consensual rights which Pledgor would otherwise be entitled to exercise pursuant to subsection 6(a)(i), shall cease to be effective upon written notice by Trustee to Pledgor of Trustee's intent to exercise its rights hereunder, and upon delivery of such notice shall become vested in Trustee who shall thereupon have the sole right to exercise such voting and other consensual rights and the sole right to receive and hold as Pledged Collateral such dividends (and, to the extent permissible, apply them to payment of the Secured Obligations). In order to effect such transfer of rights, Trustee shall have the right, upon such notice, to date and present to the applicable Issuer an irrevocable proxy executed by Pledgor substantially in the form attached hereto as Exhibit A (a "Proxy"). (ii) Except as expressly permitted in the Indenture, all dividends which are received by Pledgor contrary to the provisions of this subsection 6(b) shall be received in trust for the benefit of Trustee (for the benefit of Noteholders), shall be segregated from other funds of Pledgor and shall be forthwith paid over to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee, as Pledged Collateral in the same form as so received (with any necessary endorsement). 7. Transfers and Other Liens; Additional Shares. 5 (a) Other than for Priority Liens and Priority Lien Documents prior to the Loan Agreement Termination, Pledgor agrees that Pledgor will not (i) encumber, sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or (ii) enter into any other contractual obligations which could reasonably be expected to restrict or inhibit the right or ability of Trustee to sell or otherwise dispose of the Pledged Collateral or any part thereof after the occurrence and during the continuance of an Event of Default. (b) Pledgor agrees that if any Issuer issues any stock or other securities (including any warrants, options, subscriptions or other contractual arrangements for the purchase of stock or securities convertible into stock) in addition to or in substitution for the Pledged Shares, Pledgor will deliver, promptly (and in any event within three Business Days) upon its acquisition (directly or indirectly) thereof, any and all writings evidencing any additional Pledged Collateral to, prior to the Loan Agreement Termination, the Agent, and after the Loan Agreement Termination, the Trustee. Pledgor hereby authorizes Trustee to modify this Agreement by unilaterally amending Schedule I to include such shares of stock or other securities. 8. Trustee Appointed Attorney-in-Fact. Subject to the Subordination Agreement, Pledgor hereby irrevocably appoints Trustee as Pledgor's attorney-in-fact effective upon the occurrence and during the continuance of an Event of Default, with full authority in the place and stead of Pledgor and in the name of Pledgor, Trustee or otherwise, from time to time in the discretion of Trustee to take any action (including completion and presentation of any proxy) and to execute any instrument that is necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to (i) receive, endorse and collect all instruments made payable to Pledgor representing any dividend or other distribution in respect of the Pledged Collateral or any part thereof; (ii) exercise the voting and other consensual rights pertaining to the Pledged Collateral; and (iii) sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Pledged Collateral as fully and completely as though Trustee was the absolute owner thereof for all purposes, and to do, at the option of Trustee and at Pledgor's expense, at any time or from time to time, all acts and things that are necessary or that the Trustee deems necessary to protect, preserve or realize upon the Pledged Collateral. Pledgor hereby ratifies and approves all acts of Trustee made or taken in accordance with the terms of this Section 8. Except as specifically set forth in Section 10 hereof or in the event of the gross negligence or willful misconduct of Trustee, neither Trustee nor any person designated by Trustee shall be liable for any acts or omissions or for any error of judgment or mistake of fact or law. This power of attorney, being coupled with an interest, shall be irrevocable until all Secured Obligations (other than unasserted contingent indemnity obligations) shall have been paid in full and the Indenture Documents shall have been terminated. 9. Trustee May Perform. If Pledgor fails to perform any agreement contained herein, Trustee may itself perform, or cause performance of, such agreement, and the expenses of Trustee incurred in connection therewith shall be a part of the Secured Obligations. 6 10. Limitation on Duty of Trustee with Respect to the Pledged Collateral. The powers conferred on Trustee hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for monies actually received by it hereunder, Trustee shall have no duty with respect to any Pledged Collateral. Trustee shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment that is substantially equivalent to that which a reasonably prudent person in the industry accords to such property, it being expressly agreed that Trustee shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not Trustee has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral, but Trustee may do so and all expenses incurred in connection therewith shall be payable by and for the sole account of Pledgor. 11. Remedies upon Event of Default. Subject to the Subordination Agreement, if any Event of Default shall have occurred and be continuing: (a) Trustee may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code (the "UCC") in the State of New York, whether or not the UCC applies to the affected Pledged Collateral, and Trustee may also, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any office of Trustee or elsewhere, for cash, on credit, or for future delivery, at such price or prices and upon such other terms as Trustee deems commercially reasonable. Pledgor acknowledges and agrees that such a private sale may result in prices and other terms which may be less favorable to the seller than if such sale were a public sale. Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Pledgor 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. At any sale of the Pledged Collateral, if permitted by law, Trustee, on behalf of Noteholders, may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Pledged Collateral or any portion thereof. Trustee shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Trustee 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. Trustee shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the issuing corporation of such securities to register such securities for public sale under the Securities Act of 1933, as from time to time amended (the "Securities Act"), or under applicable state securities laws, 7 even if the issuing corporation would agree to do so. To the extent permitted by law, Pledgor hereby specifically waives all rights of redemption, stay or appraisal which Pledgor has or may have under any law now existing or hereafter enacted. (b) Except as expressly permitted in the Indenture and in this Agreement, all cash proceeds received by Trustee in accordance with the terms hereof in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral may, in the discretion of Trustee, be held by Trustee as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Trustee pursuant to the terms of the Indenture) in whole or in part by Trustee against all or any part of the Secured Obligations in accordance with the provisions of Section 13. Any surplus of such cash or cash proceeds held by Trustee and remaining after payment in full of all the Secured Obligations shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct; provided, that in the event that all of the conditions to the termination of this Agreement pursuant to Section 14 shall not have been fulfilled, such balance shall be held and applied from time to time as provided in this subsection 11(b) until all such conditions shall have been fulfilled. (c) Pledgor recognizes that Trustee may be unable to effect a public sale of all or part of the Pledged Collateral and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to the seller than if sold at public sales and agrees that such private sales shall be deemed to have been made in a commercially reasonable manner, and that Trustee has no obligation to delay sale of any such Pledged Collateral for the period of time necessary to permit each issuer of such Pledged Collateral to register such Pledged Collateral for public sale under the Securities Act. 12. Remedies Cumulative. No failure on the part of Trustee to exercise, and no delay in exercising and no course of dealing with respect to, any power, privilege or right under the Indenture, the other Collateral Documents or this Agreement (collectively, the "Indenture Documents") shall operate as a waiver thereof; nor shall any single or partial exercise by Trustee of any power, privilege or right under any of the other Indenture Documents or this Agreement preclude any other or further exercise thereof or the exercise of any other such power, privilege or right. The powers, privileges and rights in this Agreement and the other Indenture Documents are cumulative and are not exclusive of any other remedies provided by law. 13. Application of Proceeds. Subject to the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default, the proceeds of any 8 sale of, or other realization upon, all or any part of the Pledged Collateral shall be applied in the manner set forth in the Indenture. 14. Termination of Security Interests; Release of Collateral. Upon payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture in accordance with its terms, the security interests granted herein shall terminate and all rights to the Pledged Collateral shall revert to Pledgor. Upon such termination of the security interests or release of any Pledged Collateral, Trustee will, at the expense of Pledgor, and subject to Section 20 herein, promptly execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence the termination of the security interests or the release of such Pledged Collateral which has not yet theretofore been sold or otherwise applied or released. Such release shall be without recourse or warranty to Trustee, except as to the absence of any prior assignments by Trustee of its interest in the Pledged Collateral. 15. Amendments, Waivers and Consents. No amendment, modification, termination or waiver of any provision of this Agreement, or consent to any departure by Pledgor therefrom, shall in any event be effective without the written concurrence of Trustee and Pledgor. 16. Notices. Any notice, approval, request, demand, consent or other communication hereunder, including any notice of default or notice of sale, shall be given to Pledgor or Trustee at the applicable address set forth above (or to such other address previously designated by written notice to the serving party) in accordance with the notice provision of the Indenture. 17. Continuing Security Interest; Successors and Assigns. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until payment and performance in full of all Secured Obligations (other than unasserted contingent indemnity obligations) and termination of the Indenture, (ii) be binding upon Pledgor, its successors and assigns, and (iii) inure, together with the rights and remedies of Trustee hereunder, to the benefit of Trustee and its successors and assigns. Pledgor may not assign or transfer any of its interests or obligations hereunder without the prior consent of Trustee. 18. Waiver. (a) In addition to any other waivers herein, Pledgor waives to the greatest extent it may lawfully do so, and agrees that it shall not at any time insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets, redemption or similar law, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by Pledgor of its obligations under, or the enforcement by Trustee of, this Agreement. Pledgor hereby waives diligence, presentment and demand (whether for nonpayment or protest or of acceptance, maturity, extension of time, change in nature or form of the Secured Obligations, acceptance of 9 further security, release of further security, composition or agreement arrived at as to the amount of, or the terms of the Secured Obligations, notice of adverse change in any Issuer's or any other Person's financial condition or any other fact which might materially increase the risk to Pledgor) with respect to any of the Secured Obligations or all other demands whatsoever and, to the fullest extent permitted by law, waives the benefit of all provisions of law which are or might be in conflict with the terms of this Agreement. (b) If Trustee may, under applicable law, proceed to realize its benefits under any of the Indenture Documents giving Trustee a Lien upon any Collateral, whether owned by any Issuer or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Trustee may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies of Trustee under this Agreement. 19. Subrogation. Subject to, and solely effective following, the payment in full in cash of all Obligations (other than unasserted contingent indemnity obligations), Pledgor shall be subrogated to the rights of the Noteholders to receive payments and distributions of cash, property and securities applicable to such Obligations. For purposes of such subrogation, no payments or distributions to the Noteholders of any cash, property or securities to which the Noteholders would be entitled except for this provision, and no payments over pursuant to the provisions of this paragraph to the Noteholders by Pledgor shall, as among each Issuer (as defined in the Indenture) or any Subsidiary Guarantor, their respective creditors (other than holders of such Obligations) and Pledgor be deemed to be a payment or distribution by such Issuer (as defined in the Indenture) or any Subsidiary Guarantor to or on account of such Obligations. 20. Reinstatement. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by Trustee or any Noteholder in respect of the Secured Obligations is rescinded or must otherwise be restored or returned by Trustee or any Noteholder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Pledgor or any Issuer or upon the appointment of any intervenor or conservator of, or trustee or similar official for, Pledgor or any Issuer or any substantial part of its assets, or otherwise, all as though such payments had not been made. 21. Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction. 22. Interpretation. Time is of the essence of each provision of this Agreement of which time is an element. All terms not defined herein or in the Indenture shall have the meanings set forth in the UCC, except where the context otherwise requires. To the extent any term or provision of this Agreement conflicts with the provisions of the 10 Indenture and is not dealt with more specifically herein, the Indenture shall control with respect to such term or provision. 23. Survival of Provisions. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the Indenture, the issuance of Notes thereunder and the execution and delivery of the Notes. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements, representations and warranties of Pledgor set forth herein shall terminate only upon payment of the Secured Obligations and the termination of this Agreement in accordance with its terms. 24. Statute of Limitations. Pledgor hereby waives the right to plead any statute of limitations as a defense to any indebtedness or obligation hereunder or secured hereby to the full extent permitted by law. 25. Headings Descriptive. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same agreement. 27. GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 28. WAIVER OF JURY TRIAL; JURISDICTION. PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, NEW YORK AND WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND CONSENTS THAT ALL SERVICE OF PROCESS UPON PLEDGOR BE MADE BY REGISTERED MAIL OR MESSENGER DIRECTED TO PLEDGOR AT THE ADDRESS SET FORTH ABOVE AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. PLEDGOR AND TRUSTEE EACH HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF TRUSTEE TO BRING ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. 11 29. Incorporation By Reference. In connection with its appointment and acting hereunder the Trustee is entitled to all rights, privileges, benefits, protections, immunities and indemnities provided to it under the Indenture. 12 IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be duly executed and delivered as of the day and year first above written. ADVANCED CAST PRODUCTS, INC. By: /s/ Gary LaChey ------------------------------------------ Title: VP-Finance, Treasurer, Secty. & CFO --------------------------------------- By acceptance hereof as of this 8th day of October, 2003, Trustee agrees to be bound by the provisions hereof. BANK OF NEW YORK, as Trustee By: /s/ Patricia Gallagher ------------------------------------------ Title: Vice President --------------------------------------- 13 SCHEDULE I TO PLEDGE AGREEMENT
STOCK TYPE AND CERTIFICATE NUMBER ISSUER OF PLEDGED STOCK CLASS OF STOCK NUMBERS PAR VALUE OF SHARES PERCENTAGE - ----------------------- --------------- ------------ ---------- --------- ---------- Belcher Corporation. 100% Peerless Corporation 100%
EXHIBIT A Irrevocable Proxy The undersigned hereby appoints Bank of New York, as Trustee ("Trustee") as proxy with full power of substitution, and hereby authorizes Trustee to represent and vote all of the shares of the capital stock of __________________________, held of record by the undersigned on the date of exercise hereof or at any meeting or at any other time chosen by Trustee in its sole discretion, but only at the times provided in that certain Pledge Agreement dated as of October 8, 2003, executed by the undersigned in favor of Trustee. Dated: ___________ __, 2003 ADVANCED CAST PRODUCTS, INC. By______________________________________ Title___________________________________ EXHIBIT B Pledge Amendment This Pledge Amendment, dated ___________________ is delivered pursuant to Section 5(c) of the Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated as of October 8, 2003, between the undersigned and Bank of New York, as trustee (the "Pledge Agreement"; capitalized terms defined therein being used herein as therein defined) and that the shares listed on this Pledge Amendment shall be deemed to be part of the Pledged Collateral and shall secure all Secured Obligations. Dated: __________, 200__ ADVANCED CAST PRODUCTS, INC. By______________________________________ Title___________________________________
STOCK ISSUER CLASS OF STOCK STOCK CERTIFICATE NO(S). PAR VALUE NUMBER OF SHARES ------------ -------------- ------------------------ --------- -----------------
ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, _________________, a _______________ corporation, hereby sells, assigns and transfers unto Bank of New York, as trustee _____________ (_____) Shares of the common stock of _____________________, a _____________ corporation (the "Corporation"), standing in its name on the books of the Corporation represented by Certificate(s) No. ____________________ herewith and does hereby irrevocably constitute and appoint ____________________ attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises. Dated: _____________ ADVANCED CAST PRODUCTS, INC. By______________________________________ Title___________________________________ EX-5.1 14 y92210exv5w1.txt OPINION OF FOLEY & LARDNER Exhibit 5.1 (FOLEY & LARDNER LETTERHEAD) December 8, 2003 CLIENT/MATTER NUMBER 011092-0103 Neenah Foundry Company 2121 Brooks Street P.O. Box 729 Neenah, WI 54957 Re: Registration Statement on Form S-4 Ladies and Gentlemen: We are issuing this opinion letter in our capacity as special Wisconsin legal counsel to Neenah Foundry Company, a Wisconsin corporation (the "Issuer"), and Neenah Transport, Inc., a Wisconsin corporation ("Neenah Transport" and together with the Issuer, the "Wisconsin Entities"), in connection with the proposed registration by the Issuer of $133,130,000 in aggregate principal amount of the Issuer's 11% Senior Secured Exchange Notes due 2010 (the "Exchange Notes") pursuant to a Registration Statement on Form S-4 to be filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"). Such Registration Statement, as amended or supplemented, is hereinafter referred to as the "Registration Statement." The obligations of the Issuer under the Exchange Notes will be guaranteed by Neenah Transport and the other guarantors listed on Exhibit A hereto (the "Guarantees"). The Exchange Notes and the Guarantees are to be issued pursuant to the Indenture (as amended and supplemented from time to time, the "Indenture"), dated as of October 8, 2003, by and among the Issuer, Neenah Transport and the other guarantors listed on Exhibit A hereto and The Bank of New York, as trustee. The Exchange Notes and the Guarantees are to be issued in exchange for and in replacement of the Issuer's 11% Senior Secured Notes due 2010 (the "Old Notes"). As such counsel, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion, including (i) the Articles of Incorporation and Bylaws of the Issuer and Neenah Transport, (ii) the Indenture and (iii) the Registration Statement. For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Registrants, and the due authorization, execution and delivery of all documents by the parties thereto other than the Registrants. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Registrants and others. Our opinion expressed below is subject to the qualifications that we express no opinion as to the applicability of, compliance with, or effect of (i) any bankruptcy, insolvency, (FOLEY & LARDNER LOGO) Neenah Foundry Company December 8, 2003 Page 2 reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other similar law affecting the enforcement of creditors' rights generally, (ii) general principals of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and (iii) public policy considerations which may limit the rights of parties to obtain certain remedies. Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that: (i) The Wisconsin Entities are corporations validly existing under the laws of the State of Wisconsin. (ii) Each of the Wisconsin Entities has the requisite corporate power and authority to execute and deliver the Indenture and to perform its obligations thereunder. (iii) The execution and delivery of the Indenture by each of the Wisconsin Entities and the performance of its obligations thereunder, has been duly authorized by each such Wisconsin Entity, and does not conflict with the articles of incorporation, bylaws or any applicable provision of Wisconsin law. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of the rules and regulations of the Commission. Our advice on every legal issue addressed in this letter is based exclusively on the internal law of the State of Wisconsin or the federal law of the United States. This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. We assume no obligation to revise or supplement this opinion should the present laws of the State of Wisconsin or the federal law of the United States be changed by legislative action, judicial decision or otherwise. This opinion is furnished to you in connection with the filing of the Registration Statement, and is not to be used, circulated, quoted or otherwise relied upon for any other purposes. Yours very truly, /s/ Foley & Lardner FOLEY & LARDNER EXHIBIT A Advanced Cast Products, Inc., Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility, Dalton Corporation, Stryker Machining Facility Co., Dalton Corporation, Ashland Manufacturing Facility, Dalton Corporation, Kendallville Manufacturing Facility, Deeter Foundry, Inc., Gregg Industries, Inc., Mercer Forge Corporation, A&M Specialties, Inc., Cast Alloys, Inc., Belcher Corporation Peerless Corporation EX-5.2 15 y92210exv5w2.txt OPINION OF KIRKLAND & ELLIS LLP EXHIBIT 5.2 [LETTERHEAD OF KIRKLAND & ELLIS LLP] December 8, 2003 Neenah Foundry Company 2121 Brooks Avenue P.O. Box 729 Neenah, Wisconsin 54957 Re: Registration Statement on Form S-4 Ladies and Gentlemen: We are issuing this opinion letter in our capacity as special legal counsel to Neenah Foundry Company (the "Issuer"), in connection with the proposed registration by the Issuer of $133,130,000 in aggregate principal amount of the Issuer's 11% Senior Secured Notes due 2010 (the "Exchange Notes") pursuant to a Registration Statement on Form S-4 filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"). Such Registration Statement, as amended or supplemented, is hereinafter referred to as the "Registration Statement." The Exchange Notes are to be guaranteed pursuant to guarantees (the "Guarantees") by the guarantors listed on Schedule A hereto (the "Guarantors" and together with the Issuer, the "Registrants"). The Exchange Notes and the Guarantees are to be issued pursuant to the Indenture (as amended and supplemented from time to time, the "Indenture"), dated as of October 8, 2003 by and among the Issuer, the Guarantors and The Bank of New York, as trustee. The Exchange Notes and the Guarantees are to be issued in exchange for and in replacement of the Issuer's 11% Senior Secured Notes due 2010 (the "Old Notes") which were issued on October 8, 2003. In that connection, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion, including (i) the Indenture; (ii) the Registration Statement; (iii) the forms of Exchange Notes and Guarantees; and (iv) such other records, certificates and documents as we have deemed necessary or appropriate in order to deliver the opinions set forth herein. For purposes of this opinion, we have assumed (i) the authenticity of all documents submitted to us as originals; (ii) the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies; (iii) the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto, and the due authorization, execution and delivery of all documents by the parties thereto; (iv) that the Issuer and the Guarantors and other parties thereto have or will have the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authentication by all requisite action, corporate or other, to enter into and perform all obligations thereunder and also have assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and, except as set forth in our opinion below, the validity and binding effect thereof on such parties. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Registrants and others. Our opinion expressed below is subject to the qualifications that we express no opinion as to the applicability of, compliance with, or effect of (i) any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other similar law affecting the enforcement of creditors' rights generally, (ii) general principals of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and (iii) public policy considerations which may limit the rights of parties to obtain certain remedies. Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that when the Exchange Notes (in the form examined by us) have been duly executed and authenticated in accordance with the provisions of the Indenture and duly delivered to holders of the Old Notes in exchange for the Old Notes, the Exchange Notes and the Guarantees will be binding obligations of the Issuer and the Guarantors, respectively. We hereby consent to the filing of this opinion as Exhibit 5.2 to the Registration Statement. We also consent to the reference to our firm under the heading "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of the rules and regulations of the Commission. Our advice on every legal issue addressed in this letter is based on exclusively on the internal law of the State of New York normally applicable to transactions of this type (the "Applicable Law"). This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. We assume no obligation to revise or supplement this opinion should the Applicable Law as now in effect be changed by legislative action, judicial decision or otherwise. We have also assumed that the execution and delivery of the Indenture, the Exchange Notes, and the Guarantees and the performance by the Registrants of their respective obligations thereunder do not and will not violate, conflict with or constitute a default under any agreement or instrument to which any Registrant is bound, except those agreements and instruments that have been identified by any Registrant as being material to it and that have been filed as exhibits to the Registration Statement. This opinion is furnished to you in connection with the filing of the Registration Statement and in accordance with the requirements of Item 601(b)(5) of Regulation S-K promulgated under 2 the Securities Act, and is not to be used, circulated, quoted or otherwise relied upon for any other purposes. Yours very truly, /s/ Kirkland & Ellis LLP Kirkland & Ellis LLP 3 Schedule A Guarantors Advanced Cast Products, Inc. Dalton Corporation Dalton Corporation, Warsaw Manufacturing Facility Dalton Corporation, Stryker Machining Facility Co. Dalton Corporation, Ashland Manufacturing Facility Dalton Corporation, Kendallville Manufacturing Facility Deeter Foundry, Inc. Gregg Industries, Inc. Mercer Forge Corporation A&M Specialties, Inc. Neenah Transport, Inc. Cast Alloys, Inc. Belcher Corporation Peerless Corporation 4 EX-10.2 16 y92210exv10w2.txt SUBSCRIPTION AGREEMENT Exhibit 10.2 EXECUTION VERSION SUBSCRIPTION AGREEMENT AGREEMENT, dated as of October 7, 2003, by and among MacKay Shields LLC, Citicorp Mezzanine III, L.P., TCW Shared Opportunity Fund II, L.P., Shared Opportunity Fund IIB LLC, TCW Shared Opportunity Fund IV, L.P., TCW Shared Opportunity Fund IVB, L.P., AIMCO CDO, Series 2000-A, TCW High Income Partners, Ltd., TCW High Income Partners II, Ltd., Metropolitan Life Insurance Company and Exis Differential Holdings, Ltd. (collectively, together with their respective Affiliates, the "INVESTORS" and each an "INVESTOR"), and ACP Holding Company, a Delaware corporation ("ACP HOLDING"), Neenah Foundry Company, a Wisconsin corporation (the "COMPANY"), and the Subsidiary Guarantors listed on the signature page hereto. WITNESSETH: WHEREAS, on August 5, 2003 (the "FILING DATE"), ACP Holding, NFC Castings, Inc., a Delaware corporation ("NFC CASTINGS"), the Company and the Company's Subsidiaries filed voluntary petitions in the United States Bankruptcy Court in the Southern District of New York (the "BANKRUPTCY COURT") under chapter 11 (the "CHAPTER 11 CASES") of Title 11 of the United States Code (the "BANKRUPTCY CODE"), and will seek Bankruptcy Court approval of the plan of reorganization substantially in the form attached hereto as Exhibit A (the "PLAN"); WHEREAS, on August 28, 2003, the Bankruptcy Court entered an order (a) approving the Commitment Letter (as hereinafter defined) entered into between the Company and the Investors on June 30, 2003 solely with respect to Investors who were not existing equity holders of the Company as of the Filing Date, and (b) providing that the Company and the Investors could enter into a subscription agreement and any related documents without further approval of the Bankruptcy Court; WHEREAS, the Plan provides that the holders of allowed unsecured claims in Class 6, including the Investors (such claim holders, including the Investors, eligible to purchase Units under the Plan being referred to as the "PARTICIPATING HOLDERS"), shall have the right, but not the obligation, to purchase in accordance with Article IV and related definitions of the Plan (as amended in accordance with Section 5.06 herein) (the "RIGHTS OFFERING") an aggregate of 119,996 Units (the "MAXIMUM UNITS"), at a purchase price per Unit of $916.70 (the "UNIT PURCHASE PRICE"); WHEREAS, to ensure the purchase of all Maximum Units, each of the Investors has determined to (i) exercise in full its right under the Rights Offering to purchase its pro rata share of the Maximum Units and (ii) subscribe for any and all Units not purchased by the Participating Holders (other than the Investors) up to the maximum number of Units set forth opposite the name of such Investor on Schedule I hereto. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. (a) The following terms, as used herein, have the following meanings: "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "BUSINESS DAY" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. Any event the scheduled occurrence of which would fall on a day that is not a Business Day shall be deferred until the next succeeding Business Day. "COMMITMENT LETTER" means the standby funding commitment letter (including all exhibits and annexes thereto), dated June 30, 2003, among the Investors and the Company. "COMMON STOCK" means shares of Common Stock, par value $.01 per share of Reorganized ACP Holding. "CONFIDENTIALITY AGREEMENT" means the confidentiality agreement entered into among the Investors and the Company dated as of May 13, 2003. "CREDIT AGREEMENT" means the Credit Agreement, dated the Closing Date, among the Company, certain of the Subsidiary Guarantors party thereto, the lenders from time to time party to such agreement, Fleet Capital Corporation, as Agent and Fleet Securities, Inc., as Arranger, including any related notes, collateral documents, letters of credit and documentation and guarantees and any appendices, exhibits or schedules to any of the foregoing, as well as any and all of such agreements (and any other agreements that refinance any and all such agreements), as may be amended, restated, modified or supplemented from time to time, or renewed, refunded, refinanced, restructured, replaced, repaid or extended from time to time (including increases in principal amount), whether with the original agents and lenders or with other agents or lenders. "EBITDA" means the sum of the net income of the Company and its consolidated Subsidiaries, plus interest, taxes, depreciation and amortization, each as reflected on the Company's income statement for the applicable measurement period. "EFFECTIVE DATE" means the date on which the Plan becomes Effective. "GOVERNMENTAL AUTHORITY" means any nation or government , any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "INDENTURES" means the Senior Secured Notes Indenture and the Senior Subordinated Notes Indenture 2 "LIEN" means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset. "LIEN SUBORDINATION AGREEMENT" means that certain Lien Subordination Agreement, dated the Closing Date, by and among the Company, certain of the Company's Subsidiaries and the other parties thereto, as amended (including any amendments and restatements thereof), supplemented or otherwise modified from time to time. "MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the business, condition (financial or otherwise), operation, performance or properties of the Representing Persons taken as a whole, (ii) a material adverse effect on the rights and remedies of the Investors under the Transaction Documents, or (iii) the material impairment of the ability of the Representing Persons (taken as a whole) to perform their obligations hereunder or under any Transaction Document. "NEW FACILITIES" means the Term Loan and the Revolver. "OPTION" with respect to any Person means any security, right, subscription, warrant, option, "phantom" stock right or other contract that gives the right to (i) purchase or otherwise receive or be issued any shares of capital stock of such Person or any security of any kind convertible into or exchangeable or exercisable for any shares of capital stock of such Person or (ii) receive or exercise any benefits or rights similar to any rights enjoyed by or accruing to the holder of shares of capital stock of such Person, including any rights to participate in the equity or income of such Person or to participate in or direct the election of any directors or officers of such Person or the manner in which any shares of capital stock of such Person are voted. "PERMITTED LIENS" means Liens which do not materially detract from the value of any property (whether real, personal, tangible or intangible) of ACP Holdings, NFC Castings, the Company or the Company's Subsidiaries or materially interfere with any present or intended use of such property. "PERSON" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PLAN TERM SHEET" means the Terms of Plan of Reorganization attached as Exhibit B to the Commitment Letter. "REGISTRATION RIGHTS AGREEMENTS" means the Senior Secured Notes Registration Rights Agreement, the Senior Subordinated Notes Registration Rights Agreement and the Warrant Registration Rights Agreement. "REORGANIZED ACP HOLDING" means ACP Holding, as reorganized pursuant to the Chapter 11 Cases. 3 "REORGANIZED DEBTOR" means each of ACP Holding, the Company and the Subsidiary Guarantors, each as reorganized pursuant to the Chapter 11 Cases.` "REPRESENTING PERSONS" means ACP Holding, the Company and the Subsidiary Guarantors. "RESTATED BYLAWS" means the amended and restated bylaws of the ACP Holding which is in the form attached hereto as Exhibit B. "RESTATED CERTIFICATE OF INCORPORATION" means the amended and restated certificate of incorporation of ACP Holding to be filed with the Secretary of State of the State of Delaware, which is in the form attached hereto as Exhibit C. "REVOLVER" means the revolving credit facility extended to the Company as part of the New Facilities under the Credit Agreement. "SENIOR SECURED NOTES" means the Company's 11% Senior Second Secured Notes due 2010 to be issued pursuant to the terms of the Plan. "SENIOR SECURED NOTES INDENTURE" means the Indenture, dated the Closing Date, among the Company the Subsidiary Guarantors and The Bank of New York, as trustee, governing the Senior Secured Notes. "SENIOR SECURED NOTES REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated the Closing Date, among the Company, the Subsidiary Guarantors and the Investors, substantially in the form attached hereto as Exhibit D-1. "SENIOR SUBORDINATED NOTES" means the Company's 13% Senior Subordinated Notes due 2013 to be issued pursuant to the terms of the Plan. "SENIOR SUBORDINATED NOTES INDENTURE" means the Indenture, dated the Closing Date, among the Company the Subsidiary Guarantors and The Bank of New York, as trustee, governing the Senior Subordinated Notes. "SENIOR SUBORDINATED NOTES REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated the Closing Date, among the Company, the Subsidiary Guarantors and the Investors, substantially in the form attached hereto as Exhibit D-2. "STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated the Closing Date, among ACP Holding and the stockholders party thereto. "SUBSIDIARY" of any Person means 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 at the time directly or indirectly owned by such Person. "SUBSIDIARY GUARANTEES" means the guarantees on the terms set forth in the Indentures by a Subsidiary Guarantor of the Company's obligations with respect to the Senior Secured Notes and the Senior Subordinated Notes, as applicable. 4 "SUBSIDIARY GUARANTOR" means each Subsidiary which is organized under the laws of the United States of America or any state thereof or the District of Columbia, and executes and delivers a Subsidiary Guarantee pursuant to the terms of the Indentures. "TERM LOAN" means the term loan made to the Company as part of the New Facilities under the Credit Agreement. "TERMINATION EVENT" means any of the events described in Section 10.1(e). "TRANSACTION DOCUMENTS" means this Agreement, the Indentures, the Senior Secured Notes (including related Subsidiary Guarantees), the Senior Subordinated Notes (including related Subsidiary Guarantees), the Warrant Agreement, the Warrants, the Stockholders Agreement, the Registration Rights Agreements, the Restated Certificate of Incorporation, the Restated Bylaws, the Credit Agreement, the New Facilities, the Lien Subordination Agreement and any other agreement to be entered into in accordance with the terms hereof. "UNIT" means a unit of securities consisting of (i) $1,000 in principal amount of Senior Secured Notes of the Company and related Subsidiary Guarantees, and (ii) Warrants to purchase 285.41256 shares of Common Stock of ACP Holding (subject to rounding down or up to the nearest whole number). "WARRANTS" means warrants, to purchase an aggregate of 38,000,000 shares of Common Stock of Reorganized ACP Holdings, which are to be issued pursuant to the Warrant Agreement. "WARRANT AGREEMENT" means the Warrant Agreement, dated the Closing Date, by and between ACP Holding and The Bank of New York, as warrant agent. "WARRANT REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated the Closing Date, among ACP Holding and the Investors, substantially in the form attached hereto as Exhibit D-3. (b) Each of the following terms is defined in the Section set forth opposite such term:
TERM SECTION ---- ------- ACP Holding Preamble Automatic Stay 10.01 Bankruptcy Code Recitals Bankruptcy Court Recitals Chapter 11 Cases Recitals Closing 2.02(a) Closing Date 2.02(a) Company Preamble Damages 9.02 Electing Investor 2.01(b) Expense Obligations 2.02(c) Expenses 2.02(c) Filing Date Recitals
5
TERM SECTION ---- ------- Indemnification Obligations 9.02(a) Indemnified Parties 9.03 Indemnifying Parties 9.03 Information 3.10 Investor(s) Preamble Material Adverse Change 3.06 Maximum Units Recitals NFC Castings Recitals Nonpurchased Units 2.01(b) Nonpurchasing Investor 2.01(b) Participating Holders Recitals Plan Recitals Representatives 9.02 Rights Offering Recitals Securities Act 4.07 Third Party Claims 9.03 Unit Purchase Price Recitals Unsubscribed Units 2.01(a)
ARTICLE II PURCHASE AND SALE Section 2.01 Purchase and Subscription of Units; Standby Commitment; Subscription Price. (a) In accordance with the Commitment Letter and the applicable provisions of the Plan (i) each of ACP Holding and the Company hereby agrees to cause the Rights Offering to be made in accordance with the applicable provisions of the Plan and (ii) each of the Investors hereby agrees to (A) exercise in full its right under the Rights Offering to purchase its pro rata share of the Maximum Units and (B) on the basis of the representations, warranties, covenants and agreements contained in this Agreement, subscribe for and purchase its pro rata share (based on the percentage set forth opposite the name of such Investor on Schedule I hereto) of any and all Units not purchased by the Participating Holders (other than the Investors) (the "UNSUBSCRIBED UNITS") up to the maximum number of Units set forth opposite the name of such Investor on Schedule I hereto, at a purchase price per Unit equal to the Unit Purchase Price. The aggregate Unit Purchase Price will be payable in immediately available funds at the Closing in the manner provided in Section 2.02. (b) The obligations of the Investors to subscribe for the Units are several, and not joint, obligations. No Investor guarantees, or has any other obligation relating to, the obligation of any other Investor to purchase any Units hereunder. Notwithstanding the foregoing, in the event any Investor (a "NONPURCHASING INVESTOR") fails, for any reason, to purchase any of the Units to be purchased by such Nonpurchasing Investor hereunder (the "NONPURCHASED UNITS"), the other Investors shall have the right, but not the obligation, to purchase such Nonpurchased Units. Each Investor, who elects to purchase such Nonpurchased Units (an "ELECTING INVESTOR"), shall have the right to purchase such number of Nonpurchased Units calculated by multiplying the number of Nonpurchased Units by a fraction the numerator of which is the maximum number of Units such Electing Investor has agreed to purchase 6 hereunder as set forth opposite the name of such Electing Investor on Schedule I hereto and the denominator of which is the maximum number of Units which all Electing Investors have agreed to purchase hereunder as set forth opposite the names of such Electing Investors on Schedule I hereto. In the event Electing Investors elect to purchase all of the Nonpurchased Units, any failure of any condition to ACP Holding's and the Company's obligations arising as a result of any Nonpurchasing Investor's breach of this Agreement will be deemed waived and ACP Holding and the Company shall have no right to terminate this Agreement based on such breach. (c) The Investors acknowledge that on June 30, 2003, the Company paid to the Investors $1,100,000, representing 20% of the total Commitment Fee (as defined and provided for in the Commitment Letter). The Company agrees that such $1,100,000 shall not be refundable nor form the basis of any defense, setoff, or recoupment claim under any circumstances, regardless of whether the transactions contemplated by this Agreement and the other Transaction Documents are consummated. Section 2.02 Closing; Expenses. (a) The closing of the subscription for, and purchase of, the Units under this Agreement (the "CLOSING") will take place at the offices of Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., 55 East Monroe Street, Chicago, Illinois 60603, at 10:00 A.M., local time, on the Effective Date, provided that each condition set forth in Article VIII has been satisfied or waived, unless another time, date or place is agreed to in writing by ACP Holding, the Company and the Investors (the "CLOSING DATE"). (b) At the Closing, (i) the Reorganized Debtors will deliver to each Investor one or more (as designated by such Investor) duly executed certificates to be dated the Closing Date evidencing (A) the Senior Secured Notes and related Subsidiary Guarantees and (y) the Warrants; provided that, any Investor may notify the Company in writing prior to such issuance, but not later than two (2) Business Days before the Closing Date, that it desires such certificates to be issued in other denominations or registered in the name or names of any of its Affiliates or designees, in which case the certificates shall be issued in the denominations and registered in the name or names specified in such notice; (ii) Each Investor shall pay the aggregate Unit Purchase Price for the Units purchased thereby by wire transfer of immediately available funds to such account as ACP Holding and the Company may reasonably direct by written notice delivered to the Investors by ACP Holding and the Company at least two (2) Business Days before the Closing Date; and (iii) The Company shall pay to each Investor the balance of the Commitment Fee payable to such Investor in the amount set forth opposite the name of such Investor on Schedule I hereto, by wire transfer of immediately available funds to such account as such Investor may reasonably direct by written notice delivered to the Company by such Investor at least two (2) Business Days before the Closing Date. (c) At the Closing, the Company shall reimburse each Investor for its reasonable actual out-of-pocket fees and expenses (the "EXPENSES") incurred by or on behalf of the Investors in connection with the negotiation, preparation, execution and delivery of the Transaction Documents (including any 7 commitment letter and term sheets preceding the Transaction Documents and documents prepared in connection with the Chapter 11 Cases) and any and all definitive documentation or other acts relating hereto or thereto, including, but not limited to, the actual reasonable fees and expenses of counsel, accountants and/or consultants to the Investors and the reasonable and documented fees and expenses incurred by the Investors in connection with any due diligence (including reasonable fees and expenses payable to counsel, accountants and/or consultants), the aggregate amount of which each Investor shall notify the Company no later than two (2) Business Days prior to the Closing Date. The obligations of the Company under this paragraph (c) (the "EXPENSE OBLIGATIONS") shall remain effective whether or not any of the transactions contemplated by this Agreement are consummated and notwithstanding the termination of the Commitment Letter and shall, subject to approval of the Bankruptcy Court, be binding upon the Company as reorganized pursuant to the Chapter 11 Cases in the event that any plan of reorganization of the Company is consummated. The Investors acknowledge that the Company has previously advanced to the Investors $604,603.68 to be used by them to fund Expenses in connection with the matters described in this paragraph (c). ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE REPRESENTING PERSONS Each of ACP Holding and the Company represents and warrants with respect to the Representing Persons and NFC Castings, and each of the Company's Subsidiaries represents and warrants with respect to itself, jointly and severally, to each Investor as of the date hereof and as of the Closing Date that: Section 3.01 Corporate Existence and Power. Each of ACP Holding, NFC Castings, the Company and each of the Company's Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (to the extent such concepts are recognized in such jurisdiction) and has all requisite corporate power and authority necessary to carry on its business as now conducted. Each of ACP Holding, NFC Castings, the Company and each of the Company's Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the failure to be so qualified would have a Material Adverse Effect. The Company has heretofore delivered to the Investors true and complete copies of the certificates of incorporation and bylaws (or analogous organizational documents) of each of ACP Holding, NFC Castings, the Company and each of the Company's Subsidiaries as currently in effect. Section 3.02 Corporate Authorization. Subject to the approval of the Bankruptcy Court, each of the Representing Persons has all corporate right, power and authority to enter into this Agreement and each of the other Transaction Documents to which it is a party, to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. The execution and delivery by each of the Representing Persons of this Agreement and of each other Transaction Document to which it is a party is, and the issuance, sale and delivery of the Units by the Reorganized Debtors and the compliance by the Representing Persons (or the Reorganized Debtors, as the case may be) with each of the provisions of this Agreement and of each other Transaction Document to which they (or the Reorganized Debtors, as the case may be) are a party will, upon the approval of the Bankruptcy Court, be (i) within the corporate power and authority of the Representing Persons (or the Reorganized Debtors, as the case may be) and (ii) have been duly authorized by all requisite 8 corporate action of the Representing Persons (or the Reorganized Debtors, as the case may be). This Agreement has been, and each of the other Transaction Documents to which the Representing Persons (or the Reorganized Debtors, as the case may be) are a party, when executed and delivered by the Representing Persons (or the Reorganized Debtors, as the case may be) will be, duly and validly executed and delivered by the Representing Persons (or the Reorganized Debtors, as the case may be), and this Agreement constitutes, and each of the other Transaction Documents when executed and delivered by the Representing Persons (or the Reorganized Debtors, as the case may be) will constitute, upon approval of the Bankruptcy Court, a valid and binding agreement of the Representing Persons (or the Reorganized Debtors, as the case may be), enforceable against the Representing Persons (or the Reorganized Debtors, as the case may be) in accordance with its terms, except as such enforcement may be limited by bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors' rights generally and limitations imposed by general principles of equity. Section 3.03 Capital Stock. (a) Upon consummation of the Plan, the authorized capital stock of Reorganized ACP Holding will consist solely of 100,000,000 shares of Common Stock. After giving effect to the consummation of the Plan and this Agreement, Reorganized ACP Holding will have 42,000,000 (subject to rounding to the nearest whole number pursuant to the Plan) shares of Common Stock issued and outstanding and such shares will be duly authorized, validly issued, fully paid and nonassessable. Except for this Agreement and as contemplated under the Plan, as of the Effective Date there shall be no outstanding Options with respect to any capital stock of Reorganized ACP Holding, NFC Castings, the Company or any of the Company's Subsidiaries. The delivery of a certificate or certificates at the Closing representing the Units in the manner provided in Section 2.02(b) will transfer to each Investor good and valid title in such Units, free and clear of all Liens created by or imposed on the Representing Persons. (b) The Warrants, when issued and allotted in accordance with the provisions of the Plan and this Agreement, will be duly authorized, validly issued, fully paid and nonassessable and free of any pre-emptive rights or any Lien. The Common Stock issuable upon exercise of the Warrants have been duly authorized and reserved for issuance by all necessary corporate action and, when issued and allotted in accordance with the provisions of the Warrants, will be duly authorized, validly issued, fully paid and nonassessable. As of the Effective Date, there are no pre-emptive rights applicable to the issuance of the Warrants or the shares of Common Stock issuable upon exercise of the Warrants. Section 3.04 Governmental Authorization. The execution, delivery and performance by each of the Representing Persons of the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby require no action by or in respect of, or filing with, any governmental body, agency or official, except for such actions and filings as have been or will be made or the absence of which would not reasonably be expected to have a Material Adverse Effect. Section 3.05 Noncontravention. The execution, delivery and performance by each of the Representing Persons of the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby do not and will not (i) violate the certificate of incorporation or bylaws of such Representing Person (or the Reorganized Debtor, as the case may be), (ii) assuming compliance with the matters referred to in Section 3.04, violate any applicable law, rule, regulation, judgment, injunction, order or decree, (iii) assuming the 9 obtaining of all required consents, constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of such Representing Person (or the Reorganized Debtor, as the case may be) under any provision of any agreement or other instrument binding upon such Representing Person (or the Reorganized Debtor, as the case may be) or by which any of such assets or properties of such Representing Person (or the Reorganized Debtor, as the case may be) are or may be bound or (iv) result in the creation or imposition of any Lien on any of the assets or properties of such Representing Person (or the Reorganized Debtor, as the case may be), other than Permitted Liens or as otherwise contemplated by the Transaction Documents. Section 3.06 Absence of Certain Developments. Except for the commencement of the Chapter 11 Cases, since March 31, 2003, the business of ACP Holding, NFC Castings, the Company and the Company's Subsidiaries has been conducted in the ordinary course consistent with past practice and there has been no material adverse change in the business, condition (financial or otherwise), operations, performance or properties of ACP Holding, NFC Castings, the Company and the Company's Subsidiaries (a "MATERIAL ADVERSE CHANGE"); provided that none of (i) the commencement of the Chapter 11 Cases nor any public announcement in respect thereof, (ii) the filing or confirmation of the Plan (iii) the facts or events related to the MACT compliance project and the Kendallville facility disclosed to the Investors prior to the date hereof, (iv) changes or events effecting general economic conditions or capital markets, but not otherwise materially and adversely effecting the business, assets or financial condition of the Representing Persons as a whole, nor (iv) any event, circumstance or condition disclosed in writing to the Investors prior to June 30, 2003 shall constitute a Material Adverse Change. Section 3.07 Financial Advisory Fees. No agent, broker, investment bank or other financial advisor is or will be entitled to any fee, commission, expense or other amount with respect to any transaction contemplated by this Agreement or the other Transaction Documents except for fees, commissions, expenses or other amounts payable under agreements heretofore disclosed to the Investors or approved by the Bankruptcy Court. Section 3.08 Disclosure. No information contained in this Agreement, the Plan, the Disclosure Statement or the consolidated financial statements of the Company as of and for the fiscal year ended September 30, 2002 previously delivered to the Investors, as the same may have been supplemented or amended (the "INFORMATION") contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made, and, to the extent that any such Information contains projections, such projections were prepared in good faith on the basis of (A) assumptions, methods and tests which were believed by the Representing Persons to be reasonable at the time such projections were made and (B) information believed by the Representing Persons to have been accurate based upon the information available to the Representing Persons at the time such projections were made. 10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTORS Each Investor represents and warrants, only with respect to itself, severally and not jointly, to the Representing Persons as of the date hereof and as of the Closing Date that: Section 4.01 Corporate Existence and Power. The Investor is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. Section 4.02 Authorization. The execution, delivery and performance by the Investor of this Agreement and each of the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby are within the powers of the Investor and have been duly authorized by all necessary action on the part of the Investor. Each Transaction Document to which it is a party constitutes a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, except that such enforcement may be limited by bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement or creditors' rights generally and limitations imposed by general principles of equity. Section 4.03 Governmental Authorization. The execution, delivery and performance by the Investor of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby require no material action by or in respect of, or material filing with, any governmental body, agency or official. Section 4.04 Noncontravention. The execution, delivery and performance by the Investor of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby do not and will not (i) violate the organizational documents of the Investor or, (ii) assuming compliance with the matters referred to in Section 4.03, violate any applicable material law, rule, regulation, judgment, injunction, order or decree. Section 4.05 Litigation. There is no action, suit, investigation or proceeding pending against, or to the knowledge of the Investor, threatened against or affecting the Investor, before any court or arbitrator or any governmental body, agency or official which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by the Transaction Documents. Section 4.06 Financial Advisory Fees. No agent, broker, investment bank or other financial advisor is or will be entitled to any fee, commission, expense or other amount from such Investor in connection with any of the transactions contemplated by this Agreement or the other Transaction Documents. Section 4.07 Investment Knowledge; Access to Information. The Investor: (a) understands that the Units sold pursuant to this Agreement have not been, and will not be, registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions 11 for transactions not involving any public offering; (b) is acquiring the Units solely for its own account (or the account of the funds or managed accounts to be designated by such Investor) for investment purposes and not with a view to their distribution; (c) has knowledge and experience in business and financial matters; (d) has received certain information concerning ACP Holding, NFC Casting, the Company and the Company's Subsidiaries and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Units; (e) is able to bear the economic risk and lack of liquidity inherent in holding the Units; and (f) is, or will be as of the Closing, an "Accredited Investor" (as defined in Regulation D promulgated under the Securities Act). Section 4.08 Financing. The Investor will have sufficient financial resources available on the Closing Date in order to purchase the Units being purchased by it. Section 4.09 Legend. The Investor is aware that each certificate representing any shares of Common Stock shall bear a legend in substantially the following form: "THE SHARES OF COMMON STOCK 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 NEENAH FOUNDRY COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED." ARTICLE V COVENANTS OF ACP HOLDING AND THE COMPANY ACP Holding and the Company agree that: Section 5.01 Conduct of the Business. From and after the date hereof until the Closing Date, each of ACP Holding and the Company shall, and shall cause each of its Subsidiaries and Affiliates to, conduct its business in the ordinary course consistent with past practice, and shall use its best efforts to preserve intact the business organizations and relationships with third parties and to keep available the services of the present employees of ACP Holding, NFC Castings, the Company and the Company's Subsidiaries. Without limiting the generality of the foregoing, from the date hereof until the Closing Date, each of ACP Holding and the Company will not and will cause each of its Subsidiaries and Affiliates not to: (a) amend its charter, bylaws or other comparable organizational documents other than in accordance with this Agreement or amend or waive any provisions of the Transaction Documents; (b) acquire a material amount of assets from any other Person; (c) issue shares or other securities except in compliance with the Plan; 12 (d) sell, lease, license or otherwise dispose of any properties except (i) pursuant to existing contracts or commitments and (ii) in the ordinary course consistent with past practice; (e) change its methods of accounting, except as required by changes in GAAP; (f) (i) incur any additional indebtedness, except as permitted under the Plan, or (ii) make any loans, advances or capital contributions to, or investments in, any Person (excluding any Subsidiary), except as permitted under the Plan; (g) except as otherwise permitted under the Plan, modify the compensation or benefits of, or hire any employees, except for increases or hirings in the ordinary course consistent with past practice; provided that any modification to the compensation or benefits or hiring of any employee with a base salary in excess of $120,000 per year or holding a position of at least vice president shall require the prior written consent of the Investors; or (h) agree or commit to do any of the foregoing. Section 5.02 Access to Information. From and after the date hereof until the Closing Date, subject to the terms of the Confidentiality Agreement, and upon reasonable prior notice, ACP Holding and the Company will afford and will cause NFC Castings and the Company's Subsidiaries to afford the Investors and their Representatives full and complete access to the books, records and properties of ACP Holding, NFC Castings, the Company and the Company's Subsidiaries and the opportunity to discuss the business, affairs and finances of ACP Holding, NFC Castings, the Company and the Company's Subsidiaries and Affiliates with directors, officers, employees, accountants, attorneys and representatives of ACP Holding, NFC Castings, the Company and the Company's Subsidiaries and Affiliates in order to enable the Investors and their Representatives to make such investigations of ACP Holding, NFC Castings, the Company, the Company's Subsidiaries and Affiliates and their respective businesses as the Investors and their Representatives reasonably deem appropriate. Each of ACP Holding and the Company agrees that it will cause the officers and employees of ACP Holding, NFC Castings, the Company and the Company's Subsidiaries and Affiliates, and will request their respective legal counsel and accountants, to cooperate so that the Investors can complete such review, including promptly disclosing to the Investors any material fact known to such parties which has resulted in, or could reasonably be expected to result in, a Material Adverse Change or the occurrence of any Termination Event. Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of ACP Holding, NFC Castings, the Company or the Company's Subsidiaries and Affiliates. No investigation by the Investors or other information received by the Investors shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Representing Persons hereunder. Section 5.03 Notices of Certain Events. From and after the date hereof until the Closing Date, each of ACP Holding and the Company shall promptly notify the Investors of: (a) 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 the Transaction Documents or the Plan; 13 (b) any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by the Transaction Documents or the Plan; (c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting ACP Holding, NFC Castings, the Company, any of the Company's Subsidiaries and Affiliates or their respective businesses that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.09 or that relate to the consummation of the transactions contemplated by the Transaction Documents; (d) the occurrence of any Termination Event; (e) the occurrence of any event, or the existence of any material fact which has resulted in, or could reasonably be expected to result in, a Material Adverse Change; or (f) any fact, event, transaction or circumstance that (i) causes or will cause any covenant or agreement of the Representing Persons under the Transaction Documents to be breached, (ii) that renders or will render untrue any representation or warranty of the Representing Persons contained in this Agreement as if the same were made on or as of the date of such fact, event, transaction or circumstance or (iii) renders the satisfaction of any condition to the Investors' obligations under this Agreement impossible or impracticable with the use of commercially reasonable efforts. Section 5.04 Corporate Governance. ACP Holding shall take all necessary action to provide that the number of directors on the Board of Directors of Reorganized ACP Holding shall consist of five (5) members. ACP Holding shall nominate and take all necessary action to provide that representatives to the Board of Directors of Reorganized ACP Holding immediately after the Closing shall be elected, replaced or removed in the manner set forth in the Stockholders Agreement. Section 5.05 Rights Offering. ACP Holding and the Company shall have accepted all validly tendered subscriptions pursuant to the terms of the Rights Offering and in accordance with Article IV of the Plan. Section 5.06 Regulatory Approval Expenses. ACP Holding and the Company agree to reimburse the Investors for all expenses, including all filing and/or application fees and the reasonable fees and expenses of counsel, incurred by or on behalf of the Investors in connection with obtaining all waivers, consents, approvals and actions of, and making all filings with and giving all notices to any Governmental Authority or any other public or private third parties required of the Investors or ACP Holding and the Company to consummate the transactions contemplated by the Transaction Documents. ARTICLE VI COVENANTS OF THE INVESTORS Each Investor agrees, severally and not jointly, that: Section 6.01 Confidentiality. (a) All confidential documents and information concerning the Company or any its Subsidiaries furnished to the Investors in connection with the 14 transactions contemplated by the Transaction Documents shall be accorded the treatment prescribed for Evaluation Materials in the Confidentiality Agreement. (b) Notwithstanding anything herein to the contrary, each party hereto (and each Affiliate and person acting on behalf of any such party) agrees that each party (and each employee, representative, and other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by the Transaction Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such party or such person relating to such tax treatment and tax structure, except to the extent necessary to comply with any applicable federal or state securities laws. This authorization is not intended to permit disclosure of any other information including (without limitation) (i) any portion of any materials to the extent not related to the tax treatment or tax structure of the contemplated transactions, (ii) the identities of participants or potential participants in the contemplated transactions, (iii) the existence or status of any negotiations, (iv) any pricing or financial information (except to the extent such pricing or financial information is related to the tax treatment or tax structure of the contemplated transactions), or (v) any other term or detail not relevant to the tax treatment or the tax structure of the contemplated transactions. ARTICLE VII COVENANTS OF ACP HOLDING, THE COMPANY AND THE INVESTORS ACP Holding, the Company and each Investor (with respect to itself only) agree that: Section 7.01 Best Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, the parties to this Agreement will use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by the Transaction Documents to which they are a party. Each party hereto agrees to execute and deliver, or cause to be executed and delivered, such other documents, certificates, agreements and other writings and to take or to cause to be taken such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by the Transaction Documents. Section 7.02 Public Announcements. Neither ACP Holding nor the Company shall issue any press release that references the Investors or any of the transactions contemplated under the Transaction Documents without the consent of the Investors; provided, however, that if ACP Holding or the Company has provided the Investors with a copy of the press release, and the Investors have not responded within four (4) Business Days, ACP Holding and the Company may proceed with issuance of such press release. ARTICLE VIII CONDITIONS TO CLOSING Section 8.01 Conditions to Obligation of the Investors. The obligation of each Investor to consummate the Closing is subject to the satisfaction of the following further conditions: (a) Performance of Obligations. (i) Each of ACP Holdings, the Company and the Company's Subsidiaries shall have performed in all material respects all of its obligations under the 15 Transaction Documents and the Plan required to be performed by it on or prior to the Closing Date; (ii) the representations and warranties of ACP Holding, the Company and the Company's Subsidiaries contained in this Agreement and in any certificate or other writing delivered by ACP Holding, the Company or any of the Company's Subsidiaries pursuant hereto shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such time, in each case individually and in the aggregate; and (iii) the Investors shall have received a certificate signed by the President and the Chief Financial Officer of ACP Holding and the Company to the foregoing effect. (b) Corporate Existence; Authority. The Investors shall have received all documents they may reasonably request relating to the existence of each of the Representing Persons and the authority of each such Representing Person to enter into, and complete the transactions contemplated by, the Transaction Documents to which it is a party, all in form and substance reasonably satisfactory to the Investors. (c) Instruments and Proceedings to be Satisfactory. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated by this Agreement and the other Transaction Documents shall be reasonably satisfactory to the Investors. (d) Amendment to Certificate of Incorporation and Bylaws. ACP Holding shall have caused the Reorganized ACP Holding to adopt the Restated Certificate of Incorporation and Restated Bylaws in accordance with Delaware law and the Investors shall have received evidence thereof reasonably satisfactory to the Investors. (e) Satisfactory Form of the Plan. The Plan shall be in form and substance consistent with the Plan Term Sheet or otherwise in form and substance reasonably satisfactory to the Investors and such Plan shall not have been amended or modified without the consent of the Investors and the conditions precedent to the confirmation and consummation of such Plan shall not have been waived without the consent of the Investors; (f) Confirmation of the Plan. (1) All conditions precedent to the effectiveness of the Plan (other than those relating to the Closing hereunder) shall have been satisfied or waived; and (2) an order confirming the Plan, reasonably satisfactory to the Investor, substantially in the form attached hereto as Exhibit E, shall have been entered and shall not have been stayed or modified or vacated on appeal; (g) Absence of Adverse Change. For the period from March 31, 2003 until immediately prior to Closing, there shall not have occurred or been existing, at any time, a Material Adverse Change. (h) Transaction Documents. Each of ACP Holding, the Company and each of the Company's Subsidiaries shall have duly executed and delivered all the Transaction Documents to which it is a party, in form and substance satisfactory to the Investors in their reasonable discretion, and shall have satisfied the conditions precedent contained in such Transaction Documents (unless waived in writing by the Investors). (i) New Facilities. The Company and each of the lenders party to the New Facilities shall have executed and delivered the New Facilities and made any initial funding contemplated under the New Facilities and each of the New Facilities shall be in full force and effect. 16 (j) Governmental, Regulatory and Third Party Consents and Approvals. All necessary governmental, regulatory and third party approvals, waivers and/or consents in connection with the transactions contemplated by the Transaction Documents shall have been obtained by ACP Holding and the Company and remain in full force and effect, and there shall exist no claim, action, suit, investigation, litigation or proceeding, pending or threatened in any court or before any arbitrator or governmental instrumentality, which seeks to restrict the consummation of the transactions contemplated by the Transaction Documents. (k) Senior Secured Notes Registration Rights Agreement and Senior Subordinated Notes Registration Rights Agreement. The Company shall have executed and delivered the Senior Secured Notes Registration Rights Agreement and the Senior Subordinated Notes Registration Rights Agreement and such agreements shall be in full force and effect. (l) Warrant Registration Rights Agreement. ACP Holding shall have executed and delivered the Warrant Registration Rights Agreement and such agreement shall be in full force and effect. (m) Legality of Investment. There shall not be in effect any law or order of any Governmental Authority restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by the Transaction Documents and there shall exist no claim, action, suit, investigation, litigation, arbitration or proceeding, pending or threatened, in any court or before any tribunal or arbitrator, commenced or sought by any Person, seeking such a law or order. (n) Liquidity. After giving effect to the purchase of the Maximum Units by the Investors and the Participating Holders, if any, and the payments to be made under the Plan, the Company and its Subsidiaries shall have cash and cash equivalents plus available borrowings under the Revolver as of the Closing Date of no less than $25,000,000. (o) Other Investors. All other Investors shall have purchased the Units that they are obligated to purchase pursuant to Schedule I hereto and shall have performed all of their other obligations under the Transaction Documents to which they are a party. (p) Executive Officer Certificate. No later than the Business Day immediately prior to the Closing Date, each of ACP Holding and the Company shall deliver to the Investors a certificate executed by the President and Chief Executive Officer and the Chief Financial Officer of each of ACP Holding and the Company: (i) setting forth the actual EBITDA of the Company and its Subsidiaries on a consolidated basis calculated in accordance with GAAP, consistently applied for the twelve months period ended August 31, 2003; (ii) confirming that, to the best of their knowledge, the actual EBITDA of the Company and its Subsidiaries on a consolidated basis calculated in accordance with GAAP, consistently applied for the twelve months period ended September 30, 2003 exceeds $50,000,000; (iii) confirming that the Company will have immediately following the Closing, cash and cash equivalents, plus available borrowings under the Revolver of not less than $25,000,000; and 17 (iv) confirming satisfaction of the conditions set forth in Sections 8.01(b), (g), (i), (k) and (m). (q) The Investors and the Participating Holders shall have subscribed and paid for the Maximum Units for a price per Unit of not less than the Unit Purchase Price. (r) The Company shall have reimbursed the Investors for their Expenses in accordance with Section 2.02(c). Section 8.02 Conditions to Obligations of ACP Holding and the Company. The obligation of ACP Holding and the Company to consummate the Closing is subject to the satisfaction of the following conditions: (a) Performance of Obligations. (i) Each Investor shall have performed in all material respects all of its obligations under the Transaction Documents required to be performed by it at or prior to the Closing Date and (ii) the representations and warranties of each Investor contained in this Agreement and in any certificate or other writing delivered by such Investor pursuant hereto shall be true in all material respects at and as of the Closing Date, as if made at and as of such date. (b) Governmental and Regulatory Consent and Approvals. Each Investor shall have received all consents, authorizations or approvals from governmental agencies referred to in Section 4.03, in each case in form and substance reasonably satisfactory to ACP Holding and the Company, and no such consent, authorization or approval shall have been revoked. (c) Existence; Authority. The Company shall have received all documents it may reasonably request relating to the existence of each Investor and the authority of such Investor to enter into, and complete the transactions contemplated by, the Transaction Documents to which it is a party, all in form and substance reasonably satisfactory to the Company. (d) Legality of Investment. There shall not be in effect any law or order of any Governmental Authority restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by the Transaction Documents. Section 8.03 Conditions to Obligations of the Investors, ACP Holding and the Company. (a) Lien Subordination Agreement. The Lien Subordination Agreement shall be on terms reasonably acceptable to the Company, the lenders party to the Credit Agreement and the Investors. ARTICLE IX SURVIVAL; INDEMNIFICATION Section 9.01 Survival. The representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant to or in connection with this Agreement shall survive the Closing until the second anniversary of the Closing Date; provided that the representations and warranties set forth in Sections 3.02, 3.03, 4.02 and 4.06 shall survive indefinitely. Notwithstanding the preceding sentence, any representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if notice of the 18 inaccuracy thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time. The covenants and agreements of the parties (including, without limitation, the covenants and agreements of the parties set forth in this Article IX) contained in this Agreement or in any other Transaction Document which by their terms are to be performed following the Closing Date shall survive indefinitely. Section 9.02 Indemnification. (a) Each of ACP Holdings and the Company (or the Reorganized Debtors, as the case may be) hereby agrees to indemnify each Investor and its Affiliates and each of their shareholders, directors, officers, partners, members, managers, employees, agents and assignees, including Affiliates thereof, (collectively, with respect to any Person, such Person's "REPRESENTATIVES") against and agrees to hold each of them harmless from, any and all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding whether involving a third-party claim or a claim solely between the parties hereto) ("DAMAGES") incurred or suffered by them arising out of: (i) any misrepresentation or breach of warranty, covenant or agreement made or to be performed by ACP Holding or the Company pursuant to this Agreement; (ii) any and all Damages arising out of or in any way relating to or resulting from the Commitment Letter or this Agreement, or in any way arising from any use or intended use of the Commitment Letter, this Agreement or the proceeds of the Investment (as defined in the Commitment Letter), including reimbursement (on an as-incurred monthly basis) of each Investor for any reasonable and documented legal or other expenses incurred in connection with investigating, defending or participating in any such loss, claim, damage, liability or action or other proceeding (whether or not such Investor is a party to any action or proceeding out of which indemnified expenses arise), but excluding therefrom all Damages that are finally determined by a court of competent jurisdiction to have resulted primarily from the bad faith, gross negligence or willful misconduct of such Investor; and (iii) the enforcement of its rights under this Section 9.02. The obligations of ACP Holding and the Company under this Section 9.02(a) (the "INDEMNIFICATION OBLIGATIONS") shall remain effective whether or not any of the transactions contemplated in the Transaction Documents are consummated, any definitive legal documentation is executed and notwithstanding any termination of this Agreement and shall, subject to the approval of the Bankruptcy Court, be binding upon the Reorganized Debtors in the event that any plan of reorganization of the Company is consummated. (b) Each Investor, severally and not jointly, hereby agrees to indemnify ACP Holding, the Company, the Company's Subsidiaries and their respective Representatives against and agrees to hold each of them harmless from any and all Damages incurred or suffered by them arising out of: (i) any misrepresentation or breach of warranty (disregarding any qualification or exception contained in such representation or warranty relating to 19 materiality), covenant or agreement made or to be performed by such Investor pursuant to any of the Transaction Documents; and (ii) the enforcement of their rights under this Section 9.02. Section 9.03 Procedures for Third Party Claims. (a) The parties seeking indemnification under Section 9.02 (the "INDEMNIFIED PARTIES") shall give prompt notice to the parties against whom indemnity is sought (the "INDEMNIFYING PARTIES") of the assertion of any claim, or the commencement of any suit, action or proceeding in respect of which indemnity may be sought under Section 9.02 (the "THIRD PARTY CLAIMS"). The failure by any Indemnified Party so to notify the Indemnifying Parties shall not relieve any Indemnifying Party from any liability which it may have to such Indemnified Party with respect to any claim made pursuant to this Section 9.03, except to the extent such failure shall actually prejudice an Indemnifying Party. (b) Upon receipt of notice from the Indemnified Parties pursuant to Section 9.03(a), the Indemnifying Parties will, subject to the provisions of Section 9.03(c), assume the defense and control of such Third Party Claims but shall allow the Indemnified Parties a reasonable opportunity to participate in the defense of such Third Party Claims with their own counsel and at their own expense (except as provided in Section 9.03(d)). The Indemnifying Parties shall select counsel, contractors and consultants of recognized standing and competence who shall be reasonably acceptable to the Indemnified Parties; shall take all steps necessary in the defense or settlement of such Third Party Claims; and shall at all times diligently and promptly pursue the resolution of such Third Party Claims. The Indemnified Parties shall, and shall cause each of their Subsidiaries and Affiliates and their Representatives to, cooperate fully with the Indemnifying Parties in the defense of any Third Party Claim defended by the Indemnifying Parties. (c) The Indemnifying Parties shall not be authorized to consent to a settlement of, or the entry of any judgment arising from, any Third Party Claim, without the consent of the Indemnified Parties; provided, however, that upon ten (10) days notice and the opportunity to object by the Indemnified Parties, the Indemnifying Parties shall be authorized to consent to such a settlement or judgment if the Indemnifying Parties shall (i) pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement; (ii) not encumber any of the assets of any Indemnified Party or agree to any restriction or condition that would apply to or adversely affect any Indemnified Party or the conduct of any Indemnified Party's business; and (iii) obtain, as a condition of any settlement or other resolution, a complete release of any Indemnified Party potentially affected by such Third Party Claim. (d) The Indemnifying Parties shall also be liable for the reasonable fees and expenses of counsel incurred by each Indemnified Party in defending any Third Party Claim if such Third Party Claim, if successful, is likely to result in a judgment, decree or order of injunction or other equitable relief or relief for other than money Damages against such Indemnified Party. Section 9.04 Procedures for Direct Claims. In the event any Indemnified Party should have a claim for indemnity against any Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver notice of such claim with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to such 20 Indemnified Party with respect to any claim made pursuant to this Section 9.04, it being understood that notices for claims in respect of a breach of a representation or warranty must be delivered prior to the expiration of the survival period for such representation or warranty except to the extent of any actual harm suffered by such Indemnifying Party as a result of such failure. If the Indemnifying Party does not notify the Indemnified Party within 30 calendar days following its receipt of such notice that the Indemnifying Party disputes its liability to the Indemnified Party under this Article IX, the claim specified by the Indemnified Party in such notice shall be conclusively deemed a liability of the Indemnifying Party under this Article IX, and the Indemnifying Party shall pay the amount of such liability to the Indemnified Party within 30 days of demand or, in the case of any notice in which the amount of the claim (or any portion of the claim) is estimated, on such later date when the amount of such claim (or such portion of such claim) becomes finally determined. If the Indemnifying Party has timely disputed its liability with respect to such claim as provided above, the Indemnifying Party and the Indemnified Party shall resolve such dispute in accordance with Section 11.06. Section 9.05 Liability. The liability of the Representing Persons to the Investors pursuant to this Agreement is joint and several and extends solely to any matter relating to the purchase of the Unsubscribed Units and no Investor shall have any claim for damages hereunder in respect of Units acquired thereby pursuant to the Rights Offering. ARTICLE X TERMINATION Section 10.01 Grounds for Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual written agreement of ACP Holding, the Company and the Investors; (b) by ACP Holding, the Company or any Investor if the Participating Holders acquire the Maximum Units pursuant to the Plan; (c) by ACP Holding or the Company if there shall be any law or regulation that makes consummation of the transactions contemplated hereby by any Investor illegal or otherwise prohibited or consummation of the transactions contemplated hereby by any Investor would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction; (d) by ACP Holding or the Company in the event (i) of a material breach hereof by any Investor if such breaching Investor fails to cure such breach within ten (10) Business Days following notification thereof by the Company or (ii) upon notification of any Investor by ACP Holding or the Company that the satisfaction of any condition to the obligations of ACP Holding or the Company under this Agreement becomes impossible or impracticable with the use of commercially reasonable efforts if the failure of such condition to be satisfied is not caused by a breach hereof by ACP Holding or the Company; or (e) upon the occurrence of any of the following events (unless waived by any Investor as set forth below): 21 (i) the Bankruptcy Court does not confirm the Plan on or before October 4, 2003; (ii) the Effective Date of the Plan does not occur on or before October 20, 2003; (iii) a trustee, responsible officer, or an examiner with powers beyond the duty to investigate and report, as set forth in subclauses (3) and (4) of clause (a) of section 1106 of the Bankruptcy Code shall have been appointed under section 1104 or 105 of the Bankruptcy Code for service in the Chapter 11 Cases; (iv) the Chapter 11 Cases shall have been converted to cases under chapter 7 of the Bankruptcy Code; (v) the failure or non-occurrence of any condition precedent contained in Section 8.01; (vi) after filing the Plan, ACP Holding, NFC Castings or the Company (i) submits a second or amended plan of reorganization or liquidation that is materially adverse to the Investors and inconsistent with the terms and provisions of the Plan Term Sheet or (ii) moves to withdraw or withdraws the Plan; (vii) ACP Holding or the Company executes and/or seeks Bankruptcy Court approval for a different offering or sale of debt or equity of the Reorganized Debtors or any other standby commitment or proposal for any other transaction in excess of $110 million, other than with the Investors or as contemplated by the Plan Term Sheet; (viii) as of the last day of each fiscal month ending after the date hereof and prior to the consummation of the Plan, the EBITDA of the Company and its Subsidiaries on a consolidated basis calculated in accordance with GAAP consistently applied for the twelve months ending as of such last day shall be less than $50 million; and (ix) a material breach hereof by either ACP Holding or the Company. The party desiring to terminate this Agreement pursuant to clauses 10.01(b), (c) or (d) shall give notice of such termination to the other party and, except as provided in clause (i) of Section 10.01(d), upon receipt of such notice by the non-terminating parties, this Agreement shall be terminated. In the event of a termination by the Company pursuant to clause 10.01(c) or (d) arising from facts or circumstances applicable only to one Investor, the other Investors may, by written notice delivered to ACP Holding and the Company not later than five (5) Business Days following receipt of the Company's notice of termination, elect to subscribe for and purchase all the Units not purchased by the breaching Investor. In the event of such election, the Company's termination of this Agreement with respect to such Electing Investors shall be deemed null and void and the Electing Investors shall be deemed to have subscribed for all of such Units at a per Unit purchase price equal to the Unit Purchase Price, subject to the satisfaction (with respect to such Electing Investors only) of the conditions contained in Section 8.02 by such Electing 22 Investors. The number of Units each Electing Investor shall have the right to purchase under this paragraph shall be calculated in the manner set forth in Section 2.01(b). All provisions of this Agreement shall terminate effective upon (A) written notice being provided to the Company by the Investors stating that (1) a Termination Event has occurred and (2) setting forth the nature of such Termination Event; provided that the Company hereby agrees to waive the requirement (if any) that the automatic stay in effect pursuant to section 362 of the Bankruptcy Code (the "AUTOMATIC STAY") be lifted in connection with giving such notice (and not to object to the Investors seeking to lift the Automatic Stay in connection with giving such notice, if necessary), and (B) with respect to any Termination Event capable of being cured, a ten (10) day cure period with respect thereto shall have lapsed and such event or breach shall have remained uncured. The Company shall notify the Investors in writing of the occurrence of any Termination Event. Section 10.02 Effect of Termination. If this Agreement is terminated as permitted by Section 10.01, such termination shall be without liability of either party (or any stockholder, partner, member, director, officer, employee, agent, consultant or representative of such party) to the other party to this Agreement; provided that if such termination shall result from the (i) willful failure of either party to fulfill a condition to the performance of the obligations of the other party, (ii) failure to perform a covenant of this Agreement or (iii) breach by either party hereto of any representation or warranty or agreement contained herein, such party shall be fully liable for any and all Damages incurred or suffered by the other party as a result of such failure or breach. The provisions of Sections 2.02(c) (which Expenses will be paid to the Investors within one (1) day of receipt of the Investors' invoices therefor), 5.07, 6.01, 9.02 (and Section 9.03 and 9.04 to the extent applicable to a claim under 9.02), 11.03, 11.05, 11.06 and 11.07 shall survive any termination hereof pursuant to Section 10.01. ARTICLE XI MISCELLANEOUS Section 11.01 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given, if to the Investors, to: MacKay Shields LLC 9 West 57th Street, 33rd Floor New York, NY 10019 Attention: Neal G. Goldman Fax: (212) 754-9187 Citicorp Mezzanine III, L.P. 399 Park Avenue, 14th Floor New York, NY 10043 Attention: Richard E. Mayberry, Jr. Fax: (212) 888-2940 23 TCW Shared Opportunity Fund II, L.P. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 Shared Opportunity Fund IIB LLC c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW Shared Opportunity Fund IV, L.P. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW Shared Opportunity Fund IVB, L.P. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 AIMCO CDO, Series 2000-A c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW High Income Partners, Ltd. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW High Income Partners II, Ltd. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 24 Metropolitan Life Insurance Company 10 Park Avenue Morristown, NJ 07962 Attention: Lisa Glass, Esq. Fax: (212) 251-1563 Exis Differential Holdings, Ltd. 767 Third Avenue New York, NY 10017 Attention: Christopher P. Kane Fax: (212) 688-6010 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Michael F. Walsh Fax: (212) 310-8007 if to ACP Holding: ACP Holding Company 2121 Brooks Street Neenah, Wisconsin 54956 Attention: William M. Barrett Fax: (920) 729-3633 if to the Company, to: Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: William M. Barrett Fax: (920) 729-3633 with a copy to: Kirkland & Ellis LLP 153 East 53rd Street New York, NY 10022 Attention: Geoffrey W. Levin Fax: (212) 446-4900 All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day 25 is a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt. Section 11.02 Amendments and Waivers. (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 11.03 Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with the Transaction Documents shall be paid by the party incurring such cost or expense. Section 11.04 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other parties hereto and any attempt to do so will be void. Section 11.05 Governing Law. Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state. Section 11.06 Jurisdiction. The Bankruptcy Court shall retain jurisdiction with respect to all matters arising from or related to the implementation of this Agreement or the transactions contemplated hereby and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that such suit, action or proceeding which is brought in such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 11.01 shall be deemed effective service of process on such party. Section 11.07 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 26 Section 11.08 Counterparts; Third Party Beneficiaries. 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. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by each other party hereto. No provision of this Agreement is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. Section 11.09 Entire Agreement. This Agreement and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. Section 11.10 Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. Section 11.11 Service on Committee of Creditors. Notwithstanding anything herein to the contrary, the terms of this Agreement shall not be construed so as to limit any Investor's exercise of its fiduciary duties as a member of a creditors' committee to any person arising from its service on such committee, and any such exercise of such fiduciary duty shall not be deemed to constitute a breach of the terms of this Agreement. Section 11.12 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to the Company or the Investors upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of the Company or Investors nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of the Company or the Investors of any breach or default under this Agreement, or any waiver on the part of any such party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to the Company or the Investors shall be cumulative and not alternative. Section 11.13 Interpretation. The parties agree that to the extent any provision of the Plan relating to the Investors and the Participating Investors conflicts with any provision of this Agreement, the provisions of this Agreement shall control. 27 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. MACKAY SHIELDS LLC By: /s/ Don Morgan III ------------------------------------ Name: Don Morgan III Title: Senior Managing Director CITICORP MEZZANINE III, L.P. By: /s/ Byron Knief ------------------------------------ Name: Byron Knief Title: Senior Vice President TCW Shared Opportunity Fund II, L.P. By: TCW Investment Management Company Its Investment Manager By: /s/ Nicholas W. Tell, Jr. ------------------------------------ Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ------------------------------------ Name: Gary A. Hobart Title: Vice President Shared Opportunity Fund IIB LLC By: TCW Asset Management Company as its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------ Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ------------------------------------ Name: Gary A. Hobart Title: Vice President 28 TCW Shared Opportunity Fund IV, L.P. and TCW Shared Opportunity Fund IVB, L.P. By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------ Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ------------------------------------ Name: Gary A. Hobart Title: Vice President AIMCO CDO, Series 2000-A By: Allstate Investment Management Company Its Collateral Manager By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------ Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ------------------------------------ Name: Gary A. Hobart Title: Vice President TCW High Income Partners, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------ Name: Nicholas W. Tell, Jr. Title: Managing Director 29 TCW High Income Partners II, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------ Name: Nicholas W. Tell, Jr. Title: Managing Director METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Jacqueline D. Jenkins ------------------------------------ Name: Jacqueline D. Jenkins Title: Managing Director EXIS DIFFERENTIAL HOLDINGS, LTD. By: /s/ Chris Kane ------------------------------------ Name: Chris Kane Title: Portfolio Manager ACP HOLDING COMPANY By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: NEENAH FOUNDRY COMPANY By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: ADVANCED CAST PRODUCTS, INC. By: /s/ Gary LaChey ------------------------------------ Name: Gary LaChey Title: 30 DALTON CORPORATION By: /s/ Gary LaChey -------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By: /s/ Gary LaChey -------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO DEETER FOUNDRY, INC. By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO 31 GREGG INDUSTRIES, INC. By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO MERCER FORGE CORPORATION By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO A&M SPECIALTIES, INC. By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO NEENAH TRANSPORT, INC. By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO CAST ALLOYS, INC. By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO BELCHER CORPORATION By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO PEERLESS CORPORATION By: /s/ Gary LaChey --------------------------------------- Name: Gary LaChey Title: VP - Finance, Treasurer, Secty. & CFO 32 EX-10.3 17 y92210exv10w3.txt WARRANT AGREEMENT EXECUTION VERSION WARRANT AGREEMENT by and between ACP HOLDING COMPANY and THE BANK OF NEW YORK as Warrant Agent For up to 38,000,000 Warrants Dated as of October 8, 2003 TABLE OF CONTENTS
PAGE ---- Article 1 DEFINITIONS........................................................... 1 Article 2 ISSUANCE OF WARRANTS.................................................. 4 2.1 Initial Issuance...................................................... 4 2.2 Initial Share Amount.................................................. 4 2.3 Form of Warrant Certificates.......................................... 4 2.4 Execution of Warrant Certificates..................................... 4 2.5 Countersignature of Warrant Certificates.............................. 4 2.6 Tax Treatment......................................................... 5 Article 3 EXERCISE PERIOD....................................................... 5 Article 4 EXERCISE OF WARRANTS.................................................. 5 4.1 The Exercise Price.................................................... 5 4.2 Manner of Exercise.................................................... 6 4.3 When Exercise Effective............................................... 6 4.4 Delivery of Certificates, Etc......................................... 6 4.5 Fractional Shares..................................................... 7 4.6 Contingent Exercise................................................... 7 Article 5 ADJUSTMENT OF THE AMOUNT OF COMMON STOCK ISSUABLE AND THE EXERCISE PRICE UPON EXERCISE.................................. 8 5.1 Adjustment for Change in Capital Stock................................ 8 5.2 Distributions......................................................... 8 5.3 Adjustments for Mergers and Consolidations............................ 9 5.4 No De Minimis Adjustments; Calculation to Nearest Cent and One- hundredth of Share.................................................... 9 5.5 Notice of Adjustment; Warrant Agent's Disclaimer...................... 9 5.6 Other Notices......................................................... 10 5.7 No Change in Warrant Terms on Adjustment.............................. 10 5.8 Other Adjustments..................................................... 10 5.9 Other Events.......................................................... 10 Article 6 MERGER, CONSOLIDATION, ETC............................................ 11 Article 7 NOTIFICATION OF CERTAIN EVENTS........................................ 11 7.1 Corporate Action...................................................... 11
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PAGE ---- 7.2 Available Information................................................. 12 Article 8 RESERVATION OF STOCK.................................................. 12 Article 9 LOSS OR MUTILATION.................................................... 13 Article 10 WARRANT REGISTRATION.................................................. 13 10.1 Registration.......................................................... 13 10.2 Transfer or Exchange.................................................. 13 10.3 Valid and Enforceable................................................. 14 10.4 Endorsement........................................................... 14 10.5 No Service Charge..................................................... 14 10.6 Treatment of Holders of Warrant Certificates.......................... 14 10.7 Cancellation.......................................................... 14 Article 11 WARRANT AGENT......................................................... 14 11.1 Obligations Binding................................................... 14 11.2 No Liability.......................................................... 15 11.3 Instructions.......................................................... 15 11.4 Agents................................................................ 15 11.5 Cooperation........................................................... 16 11.6 Agent Only............................................................ 16 11.7 Right to Counsel...................................................... 16 11.8 Compensation.......................................................... 16 11.9 Accounting............................................................ 17 11.10 No Conflict........................................................... 17 11.11 Resignation; Termination.............................................. 17 11.12 Change of Warrant Agent............................................... 18 11.13 Successor Warrant Agent............................................... 18 Article 12 REMEDIES, ETC......................................................... 18 Article 13 MISCELLANEOUS......................................................... 19 13.1 Notices............................................................... 19 13.2 Governing Law and Consent to Forum.................................... 19 13.3 Benefits of this Agreement............................................ 20 13.4 Agreement of Holders of Warrant Certificates.......................... 20 13.5 Counterparts.......................................................... 20
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PAGE ---- 13.6 Amendments............................................................ 20 13.7 Consent to Jurisdiction............................................... 20 13.8 Headings.............................................................. 21 EXHIBITS Exhibit A: Form of Warrant Certificate................................................ A-1
iii EXECUTION VERSION REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October 8, 2003, by and among ACP Holding Company, a Delaware corporation (the "Company"), and the Persons identified on Schedule I hereto (the "Initial Holders"). RECITALS WHEREAS, pursuant to the Company's Plan of Reorganization dated as of July 1, 2003 (the "Plan"), upon satisfaction of certain conditions, the Company will issue New Common Stock and New Warrants (both as defined below) to the Initial Holders in the amounts set forth on Schedule I hereto. WHEREAS, in order to induce the Initial Holders to consent to the Plan and enter into the Subscription Agreement, dated October 7, 2003, among the Initial Holders, the Company, Neenah Foundry Company and the Subsidiary Guarantors party thereto (the "Subscription Agreement"), the Company has agreed to grant registration rights to the Initial Holders as set forth herein. WHEREAS, this Agreement shall become effective upon the consummation of the Plan. NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Certain Definitions and General Interpretive Principles. In addition to the capitalized terms defined elsewhere in this Agreement, the following capitalized terms shall have the following meanings when used in this Agreement: "Adverse Disclosure" means public disclosure of material non-public information, which disclosure in the good faith judgment of the board of directors of the Company (i) would be required to be made in any registration statement filed with the Commission by the Company so that such registration statement would not be materially misleading; (ii) would not be required to be made at such time but for the filing of such registration statement; and (iii) would adversely interfere with any previously announced business combination transaction involving the Company pursuant to which the Company would issue, in connection with such transaction, shares of Common Stock to some or all of the equity owners of the counter-party to such business combination transaction, or result in the premature disclosure of any pending financing, acquisition, corporate reorganization or any other corporate development involving the Company or any of its subsidiaries. "Allocation Percentage" has the meaning set forth in Section 2(e). "Commission" means the U.S. Securities and Exchange Commission and any agency succeeding to its functions. "Demand Registration" has the meaning set forth in Section 2(a). "Demand Suspension" has the meaning set forth in Section 2(c). "Holder" means an Initial Holder or a successor, assignee or transferee of an Initial Holder as contemplated by Section 10 hereof, in each case for so long as such Initial Holder, successor, assignee or transferee holds Registrable Securities. "Included Registrable Securities" has the meaning set forth in Section 3(a). "Indemnified Party" has the meaning set forth in Section 6(c). "Indemnifying Party" has the meaning set forth in Section 6(c). "Majority Holders" means Holders holding the majority of the outstanding Registrable Securities. "NASD" means the National Association of Securities Dealers, Inc. "New Common Stock" means the common stock, $.01 par value per share, of the Company. "New Warrant Stock" means any New Common Stock or other security of the Company or any successor entity issued or issuable upon exercise of any New Warrant. "New Warrants" means the warrants to purchase shares of New Common Stock pursuant to the Warrant Agreement, dated as of the date hereof, between the Company and the warrant agent thereunder. "Person" means a natural person, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or other entity, or a governmental entity or any department, agency or political subdivision thereof. "Piggyback Registration" has the meaning set forth in Section 3(a). "Registrable Securities" means (i) the New Common Stock and (ii) the New Warrant Stock issuable upon exercise of the New Warrants, in each case including any securities of the Company or any successor entity that may be issued or distributed in respect thereof by way of stock dividend, stock split or other distribution, consolidation, reclassification or any similar transaction; provided, however, that the foregoing securities shall cease to be "Registrable Securities" to the extent that (i) a registration statement with respect to the sale of such securities has been declared effective under the 2 Securities Act and such securities have been disposed of pursuant to such registration statement, (ii) such securities have been disposed of (A) pursuant to and in accordance with Rule 144 (or any similar provision then in force) under the Securities Act or (B) pursuant to another exemption from the registration requirements of the Securities Act pursuant to which the securities are thereafter freely tradable without restriction under the Securities Act, (iii) such securities may be disposed of by the Holder thereof pursuant to Rule 144 (or any similar provision then in force) within the volume limitations thereunder within a 90 day period or pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act, (iv) such securities shall be sold by the applicable Holder to the public pursuant to Section 1145 of Title 11 of the United States Code, as amended, or (iv) such securities cease to be outstanding. For purposes of this Agreement, any reference to a percentage (or a majority in number) of Registrable Securities shall mean that percentage of Registrable Securities, collectively, computed based on the assumption that all such New Warrants were exercised. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Shelf Registration Statement" means a registration statement of the Company filed with the Commission on Form S-l or, if available, Form S-2 or S-3 (or any successors thereto) for an offering to be made on a continuous or delayed basis pursuant to Rule 415 under the Securities Act (or any similar rule that may be adopted by the Commission) covering all of the Registrable Securities requested to be included by the Initial Holders. "Stockholders Agreement" means the Stockholders Agreement, dated the date hereof, among the Company and the stockholders party thereto. "Subscription Agreement" has the meaning set forth in the Recitals hereto. "Trust Company of the West" means TCW Shared Opportunity Fund II, L.P., Shared Opportunity Fund IIB LLC, TCW Shared Opportunity Fund IV, L.P., TCW Shared Opportunity Fund IVB, L.P., AIMCO CDO, Series 2000-A, TCW High Income Partners, Ltd. and TCW High Income Partners II, Ltd. "Underwritten Offering" means an offering registered under the Securities Act in which securities of the Company are sold to an underwriter on a firm commitment basis for reoffering to the public. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned this Agreement and the section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, the terms "hereof," "herein," "hereunder" and similar terms refer to 3 this Agreement as a whole, and references herein to Sections refer to Sections of this Agreement. 2. Demand Registrations. (a) Demand by Holders. (i) The Majority Holders may make a written request to the Company for registration of all or any part of the Registrable Securities held by such requesting Holders. Notwithstanding the foregoing, (i) if the Majority Holders do not request the registration of their Registrable Securities as aforesaid within two years of the date hereof, then each of MacKay Shields LLC, Trust Company of the West, Citicorp Mezzanine III, L.P. and the Majority Holders will have the right to one (1) Demand Registration in lieu of the Demand Registration rights of the Majority Holders as provided in the preceding sentence, or (ii) if the Majority Holders request the registration of their Registrable Securities and the number of Registrable Securities of the Initial Holders included in such registration does not exceed 90% of the number of Registrable Securities requested thereby to be included in such registration statement, then following the effectiveness of such registration statement, each of MacKay Shields LLC, Trust Company of the West and Citicorp Mezzanine III, L.P. shall have the right to one Demand Registration in lieu of the Demand Registration rights of the Majority Holders as provided in the preceding sentence. Any such requested registration shall hereinafter be referred to as a "Demand Registration." Each request for a Demand Registration shall specify the aggregate amount of Registrable Securities to be registered and the intended methods of disposition thereof. Any Demand Registration hereunder shall be required to be effected only if the estimated market value of the Registrable Securities to be so registered exceeds $10 million in the aggregate. (ii) Within ten (10) days following receipt of any request for a Demand Registration, the Company shall deliver written notice of such request to all other Holders of Registrable Securities. Thereafter, subject to Section 2(e), the Company shall include in such Demand Registration any additional Registrable Securities which the Holder or Holders thereof have requested in writing be included in such Demand Registration, provided that all requests therefor have been received by the Company within ten (10) days of the receipt of the Company's notice by such Holder or Holders. All such requests shall specify the aggregate amount of Registrable Securities to be registered and the intended method or methods of distribution of the same. The Company also may elect to include in such registration additional securities of the Company to be registered thereunder, including securities to be sold for the Company's own account or for the account of Persons who are not Holders. (iii) As promptly as practicable following receipt of a request for a Demand Registration in accordance with Section 2(a)(i), the Company shall, subject to the terms hereof and applicable law, use its commercially reasonable efforts to file a registration statement relating to such Demand Registration no more than sixty (60) days following the initial request of a Demand Registration and shall use its commercially reasonable efforts to cause such registration statement to be declared effective under the 4 Securities Act as soon as practicable thereafter and to keep such registration statement effective for not less than ninety (90) days (or such shorter period during which a prospectus is required to be delivered under the Securities Act). (b) Limitations on Demand Registration; Effective Registration. The Company shall not be required to file a registration statement for a Demand Registration (i) at any time during the 120-day period following the effective date of another such registration statement, or (ii) during the period commencing on the seventh day prior to the effective date of an offering by the Company that is registered under the Securities Act and ending on the ninetieth day after such offering is completed. The Company shall not be required to effect more than one Demand Registration in any 12-month period or four (4) Demand Registrations in the aggregate, of any Registrable Securities pursuant to this Section 2 unless the Company shall be eligible at any time to file a registration statement on Form S-2 or S-3 (or other comparable short form) under the Securities Act, in which event there shall be no limit at such time on the number of such registrations pursuant to this Section 2. Notwithstanding anything herein to the contrary, the Company shall not be required to effect more than one registration pursuant to this Section 2 (whether pursuant to a Demand Registration or a registration statement with respect to Common Stock or Common Stock equivalents on Form S-2 or S-3 (or other comparable short form)) in any 6-month period; however, any registration statement filed by the Company for the benefit of any holder of the Common Stock or Common Stock equivalents other than the Holders shall be ignored for purposes of the foregoing restriction and shall not restrict the number of registration statements that may be effected for the Holders pursuant to this Agreement. A registration will not count as a Demand Registration under this Agreement until the related registration statement becomes effective and has remained effective for the period of time specified in Section 2(a)(iii). (c) Suspension of Registration. If the filing, initial effectiveness or continued use of a registration statement in respect of a Demand Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such registration statement of audited financial statements that are unavailable to the Company for reasons beyond the Company's reasonable control, the Company may, upon giving written notice of such action to the Holders holding Registrable Securities included or proposed to be included in such Demand Registration, delay the filing or initial effectiveness of, or suspend use of, such registration statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose (a "Demand Suspension"); provided, however, that the Company shall not be permitted to exercise a Demand Suspension (i) more than one time during any twelve (12) month period, or (ii) for a period exceeding ninety (90) days on any one occasion. In the event of a Demand Suspension, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, any sale or offer to sell the Registrable Securities, and the use of the prospectus related to the Demand Registration in connection with any such sale or offer to sell Registrable Securities, and agree not to disclose to any other Person the fact that the Company has exercised a Demand Suspension or any related facts. The Company shall promptly notify the Holders holding Registrable Securities affected by any Demand Suspension upon the termination of such Demand Suspension. 5 (d) Underwritten Offering. If the Holders holding not less than a majority of the Registrable Securities included in any offering pursuant to a Demand Registration so elect by written request to the Company, such offering shall be in the form of an Underwritten Offering. Holders holding a majority of the Registrable Securities included in such Underwritten Offering shall have the right to select the managing underwriter or underwriters for the offering, subject to the right of the Company to approve such managing underwriter or underwriters (which approval shall not be unreasonably withheld). (e) Priority of Securities Registered Pursuant to Demand Registrations. If the managing underwriter or underwriters of a proposed offering of Registrable Securities included in a Demand Registration inform the Holders of such Registrable Securities and the Company in writing that, in its or their opinion, the number of securities requested to be included in such Demand Registration (including securities of the Company for its own account or for the account of other Persons which are not Holders) exceeds the number of securities which can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the Company will include in such registration securities requested to be included therein in accordance with the following priorities: (i) first, all of the Registrable Securities sought to be registered in such Demand Registration by the Holders; (ii) second, and only if the securities referenced in clause (i) above have been included, all securities requested to be included for the account of the Company, or such lesser number of securities as shall not in the opinion of the managing underwriter or underwriters, be likely to have such an adverse effect; and (iii) third, and only if all the securities referenced in clause (i) and (ii) above have been included, only such lesser number of securities requested to be included for the account of other Persons which are not Holders as shall not, in the opinion of the managing underwriter or underwriters, be likely to have such an adverse effect; provided, that, the number of such securities to be included for the account of other Persons which are not Holders shall be allocated pro rata among such Persons which are not Holders that have requested participation in the Demand Registration (based, for each such Person which is not a Holder, on the percentage derived by dividing (i) the number of securities which such Person which is not a Holder has requested to include in such Demand Registration by (ii) the aggregate number of securities which all such Persons which are not Holders have requested to include in such Demand Registration). In the event that, despite the reduction in the number of securities to be offered for the account of the Company or for the account of Persons which are not Holders in such registration pursuant to the immediately preceding sentence, the number of Registrable Securities to be included in such registration exceeds the number which, in the written opinion of the managing underwriter or underwriters, can be sold without having the adverse effect referred to above, the number of Registrable Securities that can 6 be included without having such an adverse effect shall be allocated pro rata among the Holders which have requested participation in the Demand Registration (based, for each such Holder, on the percentage (such Holder's "Allocation Percentage") derived by dividing (i) the number of Registrable Securities which such Holder has requested to include in such Demand Registration by (ii) the aggregate number of Registrable Securities which all such Holders have requested to include in such Demand Registration). (f) Registration Statement Form. Registrations under this Section 2 shall be on such appropriate registration form of the Commission (i) as shall be selected by the Company and as shall be reasonably acceptable to the Holders holding a majority of Registrable Securities requesting participation in the Demand Registration and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders' requests for such registration. 3. Piggyback Registration. (a) Participation. (i) If the Company at any time proposes to file a registration statement with respect to any offering of equity securities for its own account or for the account of any holders of its securities on Form S-1, S-2 or S-3 or any successor or similar form(s) (other than (A) a registration under Section 2 hereof, (B) a registration solely for registration of securities in connection with an employee benefit plan or dividend reinvestment plan or a merger or consolidation or incidental to an issuance of securities under Rule 144A under the Securities Act or (C) a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities (other than information as to the selling stockholders and their intended method or methods of disposition)), then, as soon as practicable (but in no event less than fifteen (15) days prior to the proposed date of filing such registration statement with the Commission), the Company shall give written notice of such proposed filing to all Holders of Registrable Securities and such notice shall offer the Holders the opportunity to register such number of Registrable Securities as each such Holder may request in writing (a "Piggyback Registration"). Subject to Section 3(b), the Company shall include in such registration statement all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the Company's notice has been given ("Included Registrable Securities"). If at any time after giving written notice of its intention to register any equity securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such equity securities, the Company may, at its election, give written notice of such determination to each Holder holding Included Registrable Securities and, (x) in the case of a determination not to register, shall be relieved of its obligation to register any Included Registrable Securities in connection with such registration, and (y) in the case of a determination to delay registering, shall be 7 permitted to delay registering any Included Registrable Securities for the same period as the delay in registering such other equity securities. The Holders agree not to disclose to any other Person the fact that such determination of the Company not to register or to delay registration of equity securities or any related facts. (ii) If the offering pursuant to a Piggyback Registration is to be an Underwritten Offering, then (i) the Company shall have the right to designate the managing underwriter or underwriters of the offering and (ii) each Holder making a request for its Registrable Securities to be included therein must, and the Company shall use its reasonable best efforts to make such arrangements with the underwriters so that each such Holder may, participate in such Underwritten Offering on the same terms as other Persons selling securities in such Underwritten Offering. If the offering pursuant to such registration is to be on any other basis, then each Holder making a request for a Piggyback Registration pursuant to this Section 3(a) must participate in such offering on such basis. Notwithstanding any provision in this Agreement to the contrary, any Holder participating through a Piggyback Registration shall have no right to change the intended method or methods of disposition otherwise applicable. (b) Priority of Piggyback Registration. If the managing underwriter or underwriters of any proposed offering of securities included in a Piggyback Registration informs the Holders holding Included Registrable Securities in writing that, in its or their opinion, the total number of securities which such Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the Company will include in such registration securities requested to be included therein in accordance with the following priorities: (i) first, 100% of the securities that the Company proposed to sell for its own account shall be included therein; (ii) second, and only if all the securities referenced in clause (i) have been included, the number of Included Registrable Securities that, in the opinion of such underwriter or underwriters, can be sold without having such adverse effect shall be included therein, with such number to be allocated pro rata among the Holders of Included Registrable Securities (based, for each such Holder, on such Holder's Allocation Percentage); provided, however, that if as a result of the provisions of this Section 3(b), any Holder shall not be entitled to include at least 50% of such Holder's Included Registrable Securities, such Holder may withdraw such Holder's request to include all, or any number of such Registrable Securities in such registration statement no later than 20 days prior to its effectiveness; and (iii) third, and only if all of securities and the Registrable Securities referenced in clauses (i) and (ii), respectively, have been included, any other equity securities eligible for inclusion in such registration which, in the opinion of such underwriters, can be sold without having such adverse effect shall be included therein. 8 4. Registration Procedures. (a) In connection with the Company's registration obligations pursuant to this Agreement, the Company shall, subject to the limitations set forth herein, use its commercially reasonable efforts to effect any such registration so as to permit the sale of the applicable Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as practicable and, in any event, in conformity with any required time period set forth herein, and in connection therewith the Company shall: (i) before filing a registration statement or prospectus with the Commission, or any amendments or supplements thereto, furnish to the underwriter or underwriters, if any, and to the Holders holding Registrable Securities included in such registration statement, copies of all documents prepared to be filed, which documents shall be subject to the reasonable review and comment of such Holders, such underwriters, if any, and their respective counsel; (ii) prepare and file with the Commission a registration statement relating to the registration of the Registrable Securities on any appropriate form under the Securities Act, which form shall be available for the sale of the Registrable Securities and thereafter cause such registration statement to become and remain effective; (iii) prepare and file with the Commission such amendments or supplements to the applicable registration statement and the prospectus used in connection therewith as may be (A) reasonably requested by any participating Holder (to the extent such request relates to information relating to such Holder), (B) necessary to keep such registration effective for the period of time required by this Agreement or (C) necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; (iv) notify the selling Holders and the managing underwriter or underwriters, if any, as soon as reasonably practicable after notice thereof is received by the Company (A) when the applicable registration statement or any amendment thereto has been filed or becomes effective and when the applicable prospectus or any amendment or supplement thereto has been filed, (B) of any written comments by the Commission or any request by the Commission for amendments or supplements to such registration statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or any order preventing or suspending the use of any preliminary or final prospectus or the initiation or threat of any proceedings for such purposes and (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threat of any proceeding for such purpose; 9 (v) promptly notify each selling Holder and the managing underwriter or underwriters, if any, when the Company becomes aware of the occurrence of any event as a result of which the applicable registration statement or prospectus (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the prospectus and any preliminary prospectus, in light of the circumstances under which they were made) not misleading or, if for any other reason it shall be necessary to amend or supplement such registration statement or prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission a post-effective amendment or supplement to such registration statement or prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Registrable Securities, the prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (vi) use its commercially reasonable efforts to prevent or obtain as promptly as practicable the withdrawal of any stop order with respect to the applicable registration statement or other order suspending the use of any preliminary or final prospectus; (vii) promptly incorporate in a prospectus supplement or post-effective amendment to the applicable registration statement such information as the managing underwriter or underwriters, if any, or the Holders holding a majority of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, the amount of Registrable Securities being distributed and the purchase price being paid therefor; and make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; (viii) furnish to each selling Holder and each managing underwriter, if any, without charge, as many conformed copies as such Holder or managing underwriter may reasonably request of the applicable registration statement, including all documents incorporated by reference therein or exhibits to such registration statement; (ix) deliver to each selling Holder and each managing underwriter, if any, without charge, as many copies of the applicable prospectus (including each preliminary prospectus) as such Holder or managing underwriter may reasonably request (it being understood that the Company consents to the use of the prospectus by each of the selling Holders and the underwriter or underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by the prospectus); (x) on or prior to the date on which the applicable registration statement is declared effective, use its commercially reasonable efforts to register or qualify such Registrable Securities for offer and sale under the securities or "Blue Sky" 10 laws of each state and other jurisdiction of the United States, as any such selling Holder or underwriter, if any, or their respective counsel reasonably and timely requests in writing, and do any and all other acts or things reasonably necessary or advisable to keep such registration or qualification in effect so as to permit the commencement and continuance of sales and dealings in such jurisdictions for as long as may be necessary to complete the distribution of the Registrable Securities covered by the registration statement; provided, that the Company shall not be required (A) to qualify generally to do business in any jurisdiction where it is not then so qualified, or (B) to take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject; (xi) cooperate with the selling Holders and the managing underwriter, underwriters or agent, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; (xii) not later than the effective date of the applicable registration statement, provide a CUSIP number for all Registrable Securities included in such registration statement and provide the applicable transfer agent with printed certificates for the Registrable Securities, which certificates shall be in a form eligible for deposit with The Depository Trust Company; (xiii) furnish to the Holders a signed counterpart, addressed to each Holder and the underwriters, if any, of (x) an opinion of counsel for the Company, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, an opinion dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance to the Holders and the underwriters, and (y) a "comfort" letter (or, in the case of any such Person which does not satisfy the conditions for receipt of a "comfort" letter specified in Statement on Auditing Standards No. 72, an "agreed upon procedures" letter), dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter of like kind dated the date of the closing under the underwriting agreement), signed by the independent public accountants who have certified the Company's financial statements included in such registration statement, covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of the accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to the underwriters in underwritten public offerings of securities (with, in the case of an "agreed upon procedures" letter, such modifications or deletions as may be required under Statement on Auditing Standards No. 35) and, in the case of the accountants' letter, such other financial matters, and, in the case of the legal opinion, such other legal matters, as the Holders (or the underwriters, if any) may reasonably request; (xiv) use its commercially reasonable efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to 11 enable the seller or sellers thereof to consummate the disposition of such Registrable Securities; (xv) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first day of the Company's first full calendar quarter after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder, and will furnish to each Holder at least five business days prior to the filing thereof a copy of any amendment or supplement to such registration statement or prospectus and shall not file any thereof to which any Holder shall have reasonably objected on the grounds that such amendment or supplement does not comply in all material respects with the requirements of the Securities Act or of the rules or regulations thereunder; (xvi) reasonably cooperate with each selling Holder of Registrable Securities and each underwriter or agent, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD; (xvii) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable registration statement from and after a date not later than the effective date of such registration statement; (xviii) use its commercially reasonable efforts to cause all Registrable Securities covered by the applicable registration statement to be listed on each securities exchange on which any of the Company's securities of such class are then listed or quoted and on each inter-dealer quotation system on which any of the Company's securities of such class are then quoted; (xix) make available upon reasonable notice at reasonable times and for reasonable periods for inspection by each Initial Holder and a representative appointed by the Holders holding a majority of the Registrable Securities covered by the applicable registration statement, by any managing underwriter or underwriters participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by such Holders or any such managing underwriter, all pertinent financial and other records, pertinent corporate documents and properties and officers and employees of the Company as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement as shall be reasonably necessary to enable them to exercise their due diligence responsibility (subject to the entry by each party referred to in this clause (xviii) into a customary confidentiality agreement in a form reasonably acceptable to the Company); and 12 (xx) enter into such agreements and take such other actions as the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (b) The Company may require each selling Holder as to which any registration is being effected to furnish to the Company such information regarding itself, the Registrable Securities held by it, the distribution of such Holder's Registrable Securities and such other information relating to such Holder and its ownership of the applicable Registrable Securities as the Company may from time to time reasonably request, including without limitation information required under Item 507 of Regulation S-K. Each Holder agrees to furnish such information to the Company and to cooperate with the Company as necessary to enable the Company to comply with the provisions of this Agreement. The Company shall have the right to exclude any Holder that does not comply with the preceding sentence from the applicable registration. (c) Each Holder agrees by acquisition of its Registrable Securities that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in Section 4(a)(v), such Holder shall discontinue disposition of its Registrable Securities pursuant to such registration statement until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(a)(v) and of any additional or supplemental filings that are incorporated by reference in the prospectus, or until such Holder is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies and, if so directed by the Company, such Holder shall 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 Registrable Securities which are current at the time of the receipt of such notice. (d) The Company shall be deemed to have satisfied its obligations under Section 3 at any time that the Company maintains the effectiveness of a Shelf Registration Statement with respect to such Registrable Securities. 5. Registration Expenses. The Company shall pay all expenses incident to its performance or compliance with its obligations under this Agreement, including without limitation: (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the Commission or the NASD, (ii) all fees and expenses of compliance with federal and state securities or "Blue Sky" laws, (iii) all of its printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company, (v) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or the quotation of the Registrable Securities on any inter-dealer quotation system, and (vi) the reasonable fees and expenses of not more than one counsel for all Holders (selected by the Holders of a majority of the Registrable Securities included in a registration). In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees 13 performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including underwriters and special experts, retained by the Company. Notwithstanding the foregoing, the Holders requesting registration of Registrable Securities under Section 2 of this Agreement shall be required to reimburse the Company for any expense incurred in connection with such registration if such registration is withdrawn at the request of such Holders. The Company shall not be required to pay, (x) any expenses incurred by the Holders (except as provided in clauses (i), (ii) and (vi) of the preceding sentence), (y) any underwriting discounts or commissions or transfer taxes attributable to the sale of Registrable Securities or (z) any fees and expenses of counsel to the underwriters incurred in connection with a Demand Registration. 6. Indemnification. (a) Indemnification by the Company. In the event of any registration of any securities of the Company under the Securities Act, the Company will, and hereby does agree to, indemnify and hold harmless each selling Holder, its directors and officers, each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Holder or any such director or officer or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such Holder and each such director, officer, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding, provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such Holder specifically stating that it is for use in the preparation thereof and, provided further that the Company shall not be liable to any Person who participates as an underwriter in the offering or sale of Registrable Securities or to any other Person who controls such underwriter within the meaning of the Securities Act, in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of such Person's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, within the time required by the Securities Act to the Person asserting the existence of an untrue statement or 14 alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any such director, officer, underwriter or controlling person and shall survive the transfer of such securities by such Holder. (b) Indemnification by the Holders. The Company may require, as a condition to including any Registrable Securities in any registration statement, that the Company shall have received an undertaking satisfactory to it from each Holder, to indemnify and hold harmless (in the same manner and to the same extent as set forth in subdivision (a) of this Section 6) the Company, each director of the Company, each officer of the Company and each other person, if any, who controls the Company within the meaning of the Securities Act, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such Holder specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Any such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer of such securities by such Holder. (c) Indemnification Proceedings. Any Person entitled to indemnification hereunder (an "Indemnified Party") shall (i) give prompt written notice to the Person from whom such indemnification may be sought (the "Indemnifying Party") of any claim with respect to which it seeks indemnification, provided, however, that the failure to so notify the Indemnifying Party shall not relieve it of any obligation or liability which it may have hereunder or otherwise except to the extent it is materially prejudiced by such failure, and (ii) permit such Indemnifying Party to assume the defense of such claim with counsel reasonably satisfactory to the Indemnified Party; provided, however, that the Indemnified Party shall have the right to select and employ separate counsel and to participate in the defense of such claim, and the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (A) the Indemnifying Party has agreed in writing to pay such fees or expenses, (B) the Indemnifying Party shall have failed to assume the defense of such claim within a reasonable time after having received notice of such claim from the Indemnified Party and to employ counsel reasonably satisfactory to the Indemnified Party, (C) in the reasonable judgment of the Indemnified Party, based upon advice of its counsel, a conflict of interest exists between the Indemnified Party and the Indemnifying Party with respect to such claims or (D) the Indemnified Party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other Indemnified Parties that are different from or in addition to those available to the Indemnifying Party (in which case, if the Indemnified Party notifies the Indemnifying Party in writing that the Indemnified Party elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying 15 Party shall not have the right to assume the defense of such claim on behalf of the Indemnified Party). If such defense is assumed by the Indemnifying Party, or if such defense is not assumed by the Indemnifying Party but the Indemnifying Party acknowledges that the Indemnified Party is entitled to indemnification hereunder, the Indemnifying Party shall not be subject to any liability for any settlement made without its consent, which consent shall not be unreasonably withheld; provided, that an Indemnifying Party shall not be required to consent to any settlement involving the imposition of equitable remedies or involving the imposition of any material obligations on such Indemnifying Party other than financial obligations for which such Indemnified Party will be indemnified hereunder. If the Indemnifying Party assumes the defense, the Indemnifying Party shall have the right to settle such action without the consent of the Indemnified Party; provided, that the Indemnifying Party shall be required to obtain the consent of the Indemnified Party (which consent shall not be unreasonably withheld) if the settlement includes any admission of wrongdoing on the part of the Indemnified Party or any equitable remedies or restriction on the Indemnified Party or its officers, directors or employees. No Indemnifying Party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each Indemnified Party of an unconditional release from all liability in respect of such claim or litigation. An Indemnifying Party (or, as the case may be, Indemnifying Parties) shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time from all Indemnified Parties collectively unless (x) the employment of more than one counsel has been authorized in writing by such Indemnifying Party (or Indemnifying Parties) or (y) a conflict exists or may exist (based on advice of counsel to an Indemnified Party) between such Indemnified Party and other Indemnified Parties, in each of which cases the Indemnifying party (or Indemnifying Parties) shall be obligated to pay the reasonable fees and expenses of such additional counselor counsels. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party or any officer, director or controlling Person of such Indemnified Party and shall survive the transfer of Registrable Securities. (d) Contribution. If for any reason the indemnification provided for in paragraphs (a) and (b) of this Section 6 is unavailable to an Indemnified Party or is insufficient to hold it harmless as contemplated by paragraphs (a) and (b) of this Section 6, then the Indemnifying Party shall contribute to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on the other. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. Notwithstanding anything in this Section 6(d) to the contrary, no Indemnifying Party (other than the Company) shall be required pursuant to this Section 6(d) to contribute any amount in excess of the amount by which the proceeds (less 16 underwriting fees and discounts) received by such Indemnifying Party from the sale of Registrable Securities in the offering to which the loss, claim, damage or liability of the Indemnified Parties relate exceeds the amount of any damages which such Indemnifying Party has otherwise been required to pay by reason of such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the preceding sentences. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. If indemnification is available under this Section 6, the Indemnifying Parties shall indemnify each Indemnified Party to the fullest extent provided in Sections 6(a) and 6(b) hereof without regard to the relative fault of said Indemnifying Parties or Indemnified Party. 7. Compliance with Rule 144. The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Securities Exchange Act so long as the Company is obligated to file such reports, and it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time or (b) any similar rules or regulations hereafter adopted by the Commission. Upon the written request of any Holder, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. 8. Underwriting Agreements. If requested by the underwriters for any Underwritten Offering requested by Holders pursuant to Section 2, the Company and the Holders of Registrable Securities to be included therein shall enter into an underwriting agreement with such underwriters, such agreement to be reasonably satisfactory in substance and form to the Company, the Holders holding a majority of the Registrable Securities to be included in such Underwritten Offering and the underwriters, and to contain such terms and conditions as are generally prevailing in agreements of that type. The Holders holding any Registrable Securities to be included in any Underwritten Offering pursuant to Section 3 shall enter into such an underwriting agreement at the request of the Company. 9. Amendments and Waivers. The provisions of this Agreement may be amended or waived at any time only by the written agreement of the Company and the Holders holding a majority of the Registrable Securities. Any amendment or waiver on the part of any such Holders of any provision or condition of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in writing. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder and the Company. Each Holder acknowledges that by operation of this paragraph the Holders holding a majority of the Registrable Securities, acting in conjunction with the Company, will have the right and power to diminish or eliminate all rights pursuant to this Agreement. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to 17 the rights of some Holders whose Registrable Securities (the "affected Securities") are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Holders representing the majority of the affected Securities, voting together as a single class. 10. Successors, Assigns and Transferees. (a) The registration rights of any Holder under this Agreement with respect to any Registrable Securities may be transferred and assigned; provided, however, that registration rights pursuant to this Agreement may be transferred and assigned by an Initial Holder in connection with the transfer and assignment of any of such Initial Holder's Registrable Securities effected in accordance with the applicable provisions of the Stockholders Agreement; and provided further, however, that no such transfer or assignment of any registration rights under this Agreement shall be binding upon or obligate the Company under this Agreement to any such transferee or assignee unless and until (i) the Company shall have received notice of such transfer or assignment as herein provided and a written agreement of the transferee or assignee to be bound by the provisions of this Agreement and (ii) such transferee or assignee holds Registrable Securities. Any transfer or assignment of the rights and obligations under this Agreement made other than as provided in the first sentence of this Section 10 shall be null and void. (b) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their respective successors and permitted assigns. 11. Final Agreement. This Agreement constitutes the final agreement of the parties concerning the matters referred to herein, and supersedes all prior agreements and understandings. 12. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 13. Notices. All notices, demands or other communications or documents to be given or delivered under or by reason of the provisions of this Agreement shall be made in writing and shall be deemed to have been received (a) when delivered personally to the recipient; (b) when sent to the recipient by telecopy (receipt electronically confirmed by sender's telecopy machine) if during normal business hours of the recipient, otherwise on the next business day; one business day after the date when sent to the recipient by reputable express courier service (charges prepaid), or (c) seven business days after the date when mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands and other communications shall be sent to the parties at the addresses indicated below, or to such other address as any party hereto may, from time to time, designate in writing delivered pursuant to the terms of this Section 13: 18 If to the Initial Holders, to the addresses set forth on Schedule I hereto. If to Holders other than the Initial Holders, to the addresses set forth on the stock record books of the Company. If to the Company, to: ACP Holding Company 2121 Brooks Street Neenah, Wisconsin 54956 Attention: William M. Barrett Fax: (920) 729-3633 With a copy, which shall not constitute notice, to: Kirkland & Ellis LLP 153 East 53rd Street New York, New York 10022-4611 Attention: Geoffrey W. Levin Fax: (212) 446-4900 14. Governing Law; Service of Process; Consent to Jurisdiction. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE STATE WITHOUT REGARD TO ANY CHOICE OF LAW OR CONFLICT OF LAW PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF THE INTERNAL LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK. (a) To the fullest extent permitted by applicable law, each party hereto (i) agrees that any claim, action or proceeding by such party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the U.S. District Court for the Southern District of New York and in any New York State court located in the Borough of Manhattan and not in any other State or Federal court in the United States of America or any court in any other country, (ii) agrees to submit to the exclusive jurisdiction of such courts located in the State of New York for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby and (iii) irrevocably waives 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 forum. 15. Counterparts and Facsimile Execution. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument. This agreement may be executed by the exchange of signatures by facsimile transmission. Each party shall receive a duplicate original of the counterpart copy or copies executed by it and the Company. 19 16. Specific Performance. Without limiting or waiving in any respect any rights or remedies of the parties under this Agreement now or hereinafter existing at law or in equity or by statute, each of the parties hereto shall be entitled to seek specific performance of the obligations to be performed by the other(s) in accordance with the provisions of this Agreement. 17. No Inconsistent Agreements. The Company shall 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 pursuant to this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any other agreement in effect on the date hereof. 18. Third Party Beneficiaries. Holders of Registrable Securities and the Indemnified Parties are intended third party beneficiaries of this Agreement, and this Agreement shall inure to the benefit of and may be enforced by, such Persons. Other than as set forth in the preceding sentence, this Agreement shall be binding upon and inure solely to the benefit of each party hereto. 19. Securities Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its direct or indirect subsidiaries shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 20. Subsequent Registration Rights. The Company shall not grant at any time after the date hereof any registration rights (the "Subsequent Registration Rights") to any person unless (i) such Subsequent Registration Rights are subordinated to, and are less favorable than, the registration rights granted to the Holders under this Agreement or (ii) such Subsequent Registration Rights are approved by the majority of the Company's Board of Directors (which majority shall include the affirmative vote of each of the directors designated by each of MacKay Shields LLC, Citicorp Mezzanine III, L.P. and Trust Company of the West). [Remainder of page intentionally left blank] 20 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. ACP HOLDING COMPANY By: /s/ Gary LaChey ---------------------------------------- Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO MACKAY SHIELDS LLC By: /s/ Don Morgan III ---------------------------------------- Name: Don Morgan III Title: Senior Managing Director CITICORP MEZZANINE III, L.P. By: /s/ Byron Knief ---------------------------------------- Name: Byron Knief Title: Senior Vice President TCW Shared Opportunity Fund II, L.P. By: TCW Investment Management Company Its Investment Manager By: /s/ Nicholas W. Tell, Jr. ---------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ---------------------------------------- Name: Gary A. Hobart Title: Vice President 21 Shared Opportunity Fund IIB LLC By: TCW Asset Management Company as its Investment Advisor By: /s/ Nicholas W. Tell, Jr. --------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart --------------------------------------- Name: Gary A. Hobart Title: Vice President TCW Shared Opportunity Fund IV, L.P. and TCW Shared Opportunity Fund IVB, L.P. By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. --------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart --------------------------------------- Name: Gary A. Hobart Title: Vice President 22 AIMCO CDO, Series 2000-A By: Allstate Investment Management Company Its Collateral Manager By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ----------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ----------------------------------------- Name: Gary A. Hobart Title: Vice President TCW High Income Partners, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ----------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director TCW High Income Partners II, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Gary A. Hobart ----------------------------------------- Name: Gary A. Hobart Title: Vice President 23 METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Jacqueline D. Jenkins ----------------------------------------- Name: Jacqueline D. Jenkins Title: Managing Director EXIS DIFFERENTIAL HOLDINGS, LTD. By: /s/ Chris Kane ---------------------------------------- Name: Chris Kane Title: Portfolio Manager 24 SCHEDULE I Initial Holders MACKAY SHIELDS LLC 9 West 57th Street, 33rd Floor New York, NY 10019 Attention: Neal G. Goldman Fax: (212) 754-9187 CITICORP MEZZANINE III, L.P. 399 Park Avenue, 14th Floor New York, NY 10043 Attention: Richard E. Mayberry, Jr. Fax: (212) 888-2940 TCW Shared Opportunity Fund II, L.P. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 Shared Opportunity Fund IIB LLC c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW Shared Opportunity Fund IV, L.P. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW Shared Opportunity Fund IVB, L.P. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 25 AIMCO CDO, Series 2000-A c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW High Income Partners, Ltd. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 TCW High Income Partners II, Ltd. c/o Trust Company of the West 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, CA 90025 Attention: Jamison J. Van Niel Fax: (310) 235-5965 METROPOLITAN LIFE INSURANCE COMPANY 10 Park Avenue Morristown, NJ 07962 Attention: Lisa Glass, Esq. Fax: (212) 251-1563 EXIS DIFFERENTIAL HOLDINGS, LTD. 767 Third Avenue New York, NY 10017 Attention: Christopher P. Kane Fax: (212) 688-6010 26 EX-10.5 18 y92210exv10w5.txt STOCKHOLDERS' AGREEMENT Exhibit 10.5 EXECUTION VERSION STOCKHOLDERS AGREEMENT Dated as of October 7, 2003 TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS......................................................................................... 1 1.1 Definitions................................................................................. 1 1.2 Rules of Construction....................................................................... 5 ARTICLE II MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES................................................... 5 2.1 Board of Directors.......................................................................... 5 2.2 Director Compensation....................................................................... 7 2.3 Special Director Votes for Certain Matters.................................................. 7 2.4 Special Stockholder Actions................................................................. 8 2.5 Other Activities of the Holders; Fiduciary Duties........................................... 9 ARTICLE III TRANSFERS OF SECURITIES........................................................................... 9 3.1 Preemptive Rights........................................................................... 9 3.2 Right of First Offer........................................................................ 10 3.3 Drag Along Rights........................................................................... 11 3.4 Tag Along Rights............................................................................ 12 3.5 Certain Events Not Deemed Transfers......................................................... 13 3.6 Transfer and Exchange...................................................................... 13 3.7 Replacement Securities..................................................................... 13 ARTICLE IV LIMITATION ON TRANSFERS........................................................................... 13 4.1 Restrictions on Transfer................................................................... 13 4.2 Restrictive Legends........................................................................ 13 4.3 Notice of Proposed Transfers............................................................... 14 4.4 Termination of Certain Restrictions........................................................ 14 ARTICLE V MISCELLANEOUS...................................................................................... 15 5.1 Counterparts............................................................................... 15 5.2 Governing Law.............................................................................. 15 5.3 Notices.................................................................................... 15 5.4 Severability............................................................................... 16 5.5 Successors and Assigns..................................................................... 16 5.6 Termination................................................................................ 16
i TABLE OF CONTENTS (CONTINUED)
PAGE 5.7 No Waivers; Amendments..................................................................... 16
ii EXECUTION COPY STOCKHOLDERS AGREEMENT THIS STOCKHOLDERS AGREEMENT is entered into as of October [ ], 2003 (this "Agreement"), among ACP Holding Company, a Delaware corporation (together with its successors, the "Company"), the Management Stockholders and MacKay Shields LLC ("MacKay Shields"), Citigroup Mezzanine III, L.P. ("CM-III") and Trust Company of the West ("TCW," and together with MacKay Shields and CM-III, the "Standby Purchasers"), and all other holders of shares of Common Stock and New Warrants of the Company as of the Effective Date. Terms used herein and not defined shall have the meanings ascribed to such terms in the Plan (as defined below). NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. As used in this Agreement, the following terms have the following meanings: "5% Stockholder" means and includes each Stockholder who (together with its Affiliates) is the record or Beneficial Owner of 5% or more of the outstanding Common Stock on a fully diluted basis, including, without limitation, any "group" of Stockholders (within the meaning of Section 13(d) of the Exchange Act) which is the record Beneficial Owner of 5% or more of the outstanding Common Stock on a fully diluted basis. "Accredited Investor" means an "accredited investor" as defined in Rule 501(a) of Regulation D under the Securities Act or any successor rule then in effect. "Accredited Offeree" has the meaning set forth in Section 3.1(a). "Affiliate" means, in respect of any specified person, any other person who, directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such specified person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") when used in respect of any specified person means the power to direct the management and policies of such specified person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise. "Agreement" has the meaning set forth in the preamble hereto. "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as codified in Title 11 of the United States Code, 11 U.S.C. Section 101, et seq., as amended from time to time. "Beneficial Owner" has the meaning set forth in Rule 13d-3 under the Exchange Act; provided, however, that each Beneficial Owner of any New Warrant shall ipso facto be deemed to be the Beneficial Owner of all of the shares of Common Stock then issuable upon the exercise of such New Warrant. "Board of Directors" means the board of directors of the Company. "Business Day" means any day other than Saturday, Sunday, or any day on which banks in the City of New York, New York are required or authorized by law to be closed for business. "CM-III Designee" has the meaning set forth in Section 2.1(b)(iii). "Common Stock" means the Common Stock, par value $0.01 per share, of the Company, or, in the event that such Common Stock is, at any time following the Effective Date, converted into any other class of security, such other class of security. All references herein to the "Common Stock on a fully diluted basis" shall include, without limitation, all shares of Common Stock then issuable upon then outstanding New Warrants. "Common Stock Equivalents" means, without duplication with any other Common Stock or Common Stock Equivalents, any rights, warrants, options, convertible securities or indebtedness, exchangeable securities or indebtedness, or other rights, exercisable for or convertible or exchangeable into, directly or indirectly, Common Stock and securities convertible or exchangeable into Common Stock, whether at the time of issuance, upon the passage of time, or the occurrence of some future event. "Company" has the meaning set forth in the preamble hereto. "DGCL" means the General Corporation Law of the State of Delaware, as amended from time to time, or any successor statute. "Effective Date" means the date on which the Plan became effective. "Election Period" has the meaning set forth in Section 3.2(b). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Family Group" means, in respect of any person, the spouse and lineal descendants of such person. "First Option" has the meaning set forth in Section 3.2(b). "MacKay Shields Designee" has the meaning set forth in Section 2.1(b)(ii). "Management Compensation Plans" means the Employment Agreements, Severance Plans, Change of Control Agreements, Annual Incentive Plan and Management Equity Incentive Plan, as described in Article IV.L. of the Plan. "Management Stockholders" means each officer of the Company who is a party to one or more Management Compensation Plans, including but not limited to William M. Barrett, Gary W. LaChey, Joseph L. DeRita, Frank C. Headington, Timothy Koller, William Martin, Joseph Varkaly, Steve Shaffer and John Andrews. "MetLife" has the meaning set forth in Section 3.4(a). "Minimum CM-III Ownership" has the meaning set forth in Section 2.1(b)(iii). "Minimum MacKay Shields Ownership" has the meaning set forth in Section 2.1(b)(ii). "Minimum TCW Ownership" has the meaning set forth in Section 2.1(b)(iv). "New Warrants" means warrants to acquire shares of Common Stock expiring 10 years from the Effective Date and having an exercise price of $0.01 per share. 2 "Offer Notice" has the meaning set forth in Section 3.1(a). "Offered Securities" has the meaning set forth in Section 3.1(a). "Option Holders" has the meaning set forth in Section 3.2(a). "Participation Offer" has the meaning set forth in Section 3.4(a). "Permitted Transfers" means (i) in the case of an individual Stockholder (other than Management Stockholders, unless permitted under the terms pursuant to which shares of the Common Stock to be transferred were initially issued to the Management Stockholders), Transfers pursuant to applicable laws of descent and distribution or to any member of such Stockholder's Family Group or to any Affiliate of such Stockholder or (ii) in the case of any Stockholder that is not an individual, Transfers among its Affiliates, employees, or as a distribution in kind to the partners, stockholders or beneficiaries of such Stockholder (other than a Stockholder or beneficiary acquiring an interest in such Stockholder in connection with or in anticipation of such Transfer). Persons to whom Permitted Transfers are referred to herein as "Permitted Transferees." "person" means any individual, corporation, partnership, limited partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof. "Plan" means the Joint Prepackaged Plan of Reorganization of the Company, NFC Castings, Inc., Neenah Foundry Company and certain of its Subsidiaries under Chapter 11 of the Bankruptcy Code, dated July 1, 2003, including the Plan Supplement and other supplements, appendices and schedules to the Plan, in each case, as amended or supplemented on or before the Effective Date. "Preemptive Rights Offer" has the meaning set forth in Section 3.1(a). "Preemptive Rights Transaction" has the meaning set forth in Section 3.1(a). "Proposed Purchaser" has the meaning set forth in Section 3.1(a). "Qualified Public Offering" means the sale in a public offering pursuant to a registration statement under the Securities Act and underwritten by an internationally recognized investment bank selected by the Company of Common Stock resulting in aggregate gross proceeds to the Company (based upon the offering price of such offering) of at least $50 million. "Registered Sale" means the sale of shares of Common Stock pursuant to a registration statement under the Securities Act in connection with the exercise of registration rights. "Reorganized Neenah" means Neenah Foundry Company, a Wisconsin corporation and an indirect wholly-owned Subsidiary of the Company, or any successor(s) thereto by merger, consolidation or otherwise, on or after the Effective Date. "Right of First Offer Proposed Transfer" has the meaning set forth in Section 3.2(a). "Right of First Offer Selling Stockholder" means and includes each Stockholder who (together with its Affiliates) is the record or Beneficial Owner of 10% or more of the outstanding Common Stock on a fully diluted basis, including, without limitation, any "group" of Stockholders (within the meaning of 3 Section 13(d) of the Exchange Act) which is the record Beneficial Owner of 10% or more of the outstanding Common Stock on a fully diluted basis. "Sale of the Company" has the meaning set forth in Section 3.3(a). "Second Option" has the meaning set forth in Section 3.2(b). "Securities" means the Common Stock and Common Stock Equivalents. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Shares" has the meaning set forth in Section 3.2(a). "Special Director Vote" has the meaning set forth in Section 2.2. "Stockholders" means, collectively, the Management Stockholders, the Standby Purchasers and all other holders of shares of Common Stock and New Warrants of the Company as of the Effective Date. Pursuant to the Plan, all Stockholders, whether or not they have executed this Agreement, shall be bound by the provisions of this Agreement. "Subsidiary" of any person means (i) a corporation a majority of the voting power of which is owned by such person, by one or more Subsidiaries of such person, or by such person and one or more Subsidiaries of such person, and (ii) any person other than a corporation in which such person, a Subsidiary of such person, or such person and one or more Subsidiaries of such person, directly or indirectly, at the date of determination thereof, has (x) at least a majority ownership interest or (y) the power to elect or direct the election of the directors or other governing body of such person. "Tag-Along Participating Shareholder" has the meaning set forth in Section 3.4(a). "Tag-Along Selling Shareholder" has the meaning set forth in Section 3.4(a). "Tag-Along Transaction" has the meaning set forth in Section 3.4(a). "TCW Designee" has the meaning set forth in Section 2.1(b)(iv). "Transfer" means any direct or indirect sale, conveyance, transfer, pledge, hypothecation or other disposition, of any nature whatsoever, of any security or any interest, of any nature whatsoever, in any security. "Transfer Notice" has the meaning set forth in Section 3.2(a). "Transferor" has the meaning set forth in Section 3.2(a). 4 1.2 Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) words in the singular include the plural and vice versa; (iii) words in masculine, feminine, or neuter gender include each other gender; (iv) references to Articles, Sections, or other subdivisions shall refer to Articles, Sections, and other subdivisions of this Agreement; (v) provisions apply to successive events and transactions; and (vi) "herein," "hereof," "hereunder," and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, or other subdivision. The article and section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provision hereof. ARTICLE II MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES 2.1 Board of Directors. (a) Composition. So long as MacKay Shields has the Minimum MacKay Shields Ownership, CM-III has the Minimum CM-III Ownership or TCW has the Minimum TCW Ownership, the Board of Directors shall consist at all times of a total of five directors. (b) Voting. The Company will nominate, and each of the Stockholders will vote all of their Common Stock to cause, the following representatives to be elected to the Board of Directors: (i) the then duly elected and acting Chief Executive Officer of the Company; (ii) one member of the Board of Directors designated by MacKay Shields so long as MacKay Shields and its Affiliates and Permitted Transferees are the Beneficial Owners of at least 10% of the Common Stock on a fully-diluted basis (the "Minimum MacKay Shields Ownership") and one additional member of the Board of Directors designated by MacKay Shields so long as MacKay Shields and its Affiliates and Permitted Transferees are the Beneficial Owners of at least 20% of the Common Stock on a fully-diluted basis (together, the "MacKay Shields Designees"); (iii) one member of the Board of Directors designated by CM-III (the "CM-III Designee") so long as CM-III and its Affiliates and Permitted Transferees are in the aggregate the Beneficial Owners of at least 10% of the Common Stock on a fully-diluted basis (the "Minimum CM-III Ownership"); and (iv) one member of the Board of Directors designated by TCW (the "TCW Designee") so long as TCW and its Affiliates and Permitted Transferees are in the aggregate the Beneficial Owners of at least 10% of the Common Stock on a fully-diluted basis (the "Minimum TCW Ownership"). (c) Vacancies. If, prior to his or her election to the Board of Directors pursuant to Section 2.1(b)(ii), (iii) or (iv), any MacKay Shields Designee, CM-III Designee or TCW Designee shall be unable or unwilling to serve as a director of the Company, MacKay Shields, CM-III or TCW, as applicable, shall be entitled to designate a replacement who shall then be a MacKay Shields Designee, CM-III Designee or TCW Designee, as the case may be, for purposes of this Article II. If, after his election to the Board of Directors pursuant to Section 2.1(b), any MacKay Shields Designee, CM-III Designee or TCW Designee, as the case may be, shall resign or be removed (which, except as otherwise provided by applicable law, may only be done by 5 MacKay Shields, CM-III or TCW, as applicable), or be unable to serve for any reason prior to the expiration of his or her term as a director of the Company, MacKay Shields, CM-III or TCW, as applicable, shall, within 30 days after notice from the Company of such event, notify the Board of Directors in writing of a replacement designee, and either (i) the Holders shall comply with Section 2.1(d) to ensure the election to the Board of Directors of such replacement designee to fill the unexpired term of the designee whom such replacement designee is replacing or (ii) the Board of Directors shall elect or appoint such replacement designee to fill the unexpired term of the designee whom such replacement designee is replacing. If MacKay Shields, CM-III or TCW requests that any of its respective designees be removed as a director (with or without cause), the Company and each Shareholder shall take all actions as may be necessary or expedient to effect such removal upon such request. (d) Removal. No member of the Board of Directors shall be removed without the consent of the Stockholder which has the right to designate such member as provided in clause (b) above. (e) Election of Designees. Each Stockholder shall vote all of the shares of Common Stock of which it is a Beneficial Owner at any regular or special meeting of stockholders of the Company or consent in any written consent executed in lieu of such a meeting of stockholders and shall take all other actions (including, without limitation, using its best efforts to cause the Board of Directors to take all actions) necessary to give effect to the agreements contained in this Agreement (including the election of the MacKay Shields Designee(s), CM-III Designee and TCW Designee) and to ensure that the charter and bylaws of the Company as in effect at any time hereafter do not conflict in any respect with the provisions of this Agreement. In order to effectuate the provisions of this Article II, at such time or time as any action or vote is required to be taken by a Stockholder pursuant to this Agreement, such Stockholder shall use its best efforts to call, or cause the appropriate officers and directors of the Company to call, a special or annual meeting of stockholders of the Company, or execute or cause to be executed a consent in writing in lieu of any such meetings pursuant to Section 228(a) of the DGCL. (f) Costs and Expenses. The Company will pay all reasonable out-of-pocket expenses incurred by each MacKay Shields Designee(s), CM-III Designee and TCW Designee in connection with participating in meetings of the Board of Directors (and any committee thereof) and the boards of directors (and any committee thereof) of any Subsidiaries of the Company. (g) D&O Insurance and Compensation of Non-Management Directors. The Company shall maintain director and officer insurance in an amount of no less than $25 million. The Company may pay to non-management directors such fees, and grant such stock options, in such amounts as may be approved from time to time by MacKay Shields, CM-III and TCW, provided that MacKay Shields has the Minimum MacKay Shields Ownership, CM-III has the Minimum CM-III Ownership and TCW has the Minimum TCW Ownership, as the case may be (or if none of them has such minimum ownership, as approved by a majority of the non-management directors). (f) Board of Directors of Subsidiaries. The board of directors of any Subsidiary of the Company shall consist of the same number of directors and shall have the same composition as the Board of Directors as set forth in clauses (a) and (b) above. The provisions of this Section 2.1 in respect of election of designees, removal, vacancies, and costs and expenses shall apply equally to the board of directors of any Subsidiary of the Company. 6 (g) Additional Representatives at Board Meetings. Notwithstanding the preceding provisions of this Section 2.1, so long as MacKay Shields has the Minimum MacKay Shields Ownership, CM-III has the Minimum CM-III Ownership or TCW has the Minimum TCW Ownership, each of MacKay Shields, CM-III and TCW shall have the right to designate one representative to attend all meetings of the Board of Directors of the Company as an observer. For avoidance of doubt, such representative shall not be deemed to be a member of the Board of Directors, shall not have any voting rights and shall not be entitled to any compensation or reimbursement of costs and expenses by the Company in connection with attending meetings of the Board of Directors of the Company. 2.2 Director Compensation. (a) Cash Compensation. Each member of the Board of Directors of the Company that is not an officer of the Company shall be entitled to receive annual compensation for their services in the amount $40,000, payable in cash quarterly in four equal installments, and are entitled to receive reimbursement by the Company for all reasonable out-of-pocket expenses, including, without limitation, travel expenses, incurred by such director in connection with the performance of such director's duties. However, no more than one MacKay Shields Designee who is a director, an officer, an employee or a shareholder of MacKay Shields or its Affiliates shall be entitled to such compensation, but shall be entitled to reimbursement of expenses as aforesaid. In addition, each member of the Board of Directors that is not an officer of the Company shall be paid a fee of $1,000 for in person attendance at annual, regular, special and adjourned meetings of the Board of the Directors of the Company or committee meetings of the Board of the Directors of the Company. (b) Stock Compensation. On the date hereof, the Company shall, pursuant to the Plan, issue to each member of the Board of Directors of the Company that is not an officer of the Company 200,000 shares of Common Stock representing 0.25% of the Company's Common Stock on a fully-diluted basis as of the Effective Date. However, no more than one MacKay Shields Designee who is a director, an officer, an employee or a shareholder of MacKay Shields or its Affiliates shall be entitled to receive such shares. 2.3 Special Director Votes for Certain Matters. Notwithstanding that approval by a lesser percentage vote may be permitted by applicable law and that fewer than five directors may then be in office, the parties hereto agree that the vote of at least three of the members of the board of directors of the Company or any of its Subsidiaries, as applicable (a "Special Director Vote"), shall be required to authorize the Company or any of its Subsidiaries, as applicable, to take any of the following actions: (a) making any acquisition or disposition in which the consideration exceeds $1.0 million; (b) incurring any indebtedness other than (x) as approved pursuant to the annual capital expenditure and operating budgets of the Company, (y) indebtedness existing on the Effective Date or (z) other indebtedness not to exceed $500,000 in the aggregate; (c) approving the Company's annual business plan (which business plan shall include annual capital expenditure and operating budgets); (d) any capital expenditures exceeding any amounts set forth in the annual business plan or any deviation therefrom; 7 (e) commence any process for an initial public offering for the account, in whole or in part, of the Company, of the securities of the Company or any of its Subsidiaries; (f) the creation of any compensation or option plan (other than the Management Compensation Plans) and the setting of annual compensation (including bonuses) for any members of the senior management of the Company and its Subsidiaries; (g) authorize, issue or enter into any agreement providing for the sale or issuance of any capital stock of the Company or any of its Subsidiaries (or securities convertible into or exchangeable for capital stock) except pursuant to the Management Compensation Plans; (h) any voluntary liquidation or dissolution of the Company or any of its Subsidiaries; (i) declaration of dividends or other distributions or repurchases or redemptions of capital stock or options by the Company or any of its Subsidiaries; (h) termination of the Chief Executive Officer of the Company or Reorganized Neenah; (j) the entry by the Company or any of its Subsidiaries into a line of business unrelated to the lines of business of the Company and its Subsidiaries as of the Effective Date; (k) the creation of any committees of the Board of Directors and/or the delegation of any power of the Board of Directors to any such committee; (l) taking any action, directly or indirectly, in contemplation of any of the foregoing; and (m) any other actions that may from time to time be agreed upon by the parties to this Agreement in writing. 2.4 Special Stockholder Actions. Except as set forth below, all matters to be determined by the stockholders of the Company and any of its Subsidiaries under the laws of the State of Delaware shall be determined through a majority vote in accordance with the DGCL. In no event will the Company or any of its Subsidiaries take any of the following actions without the prior written approval of each of MacKay Shields, CM-III and TCW, provided that MacKay Shields, CM-III or TCW have the Minimum MacKay Shields Ownership, the Minimum CM-III Ownership or the Minimum TCW Ownership, as the case may be: (a) except as provided under Section 3.3 hereof, a Sale of the Company; (b) any amendment to the charter or by-laws of the Company or any of its Subsidiaries; (c) any increase or decrease in the number of directors on the board of directors of the Company or any of its Subsidiaries; and (d) any transaction between the Company and any of its Subsidiaries, on the one hand, and any stockholder, director of officer of the Company (or any Subsidiary, Affiliate, director or officer of any of such persons), on the other hand, having a value in excess of 8 $100,000, other than customary transactions with any Management Stockholders in connection with customary employment agreements. 2.5 Other Activities of the Holders; Fiduciary Duties. It is understood and accepted that the Holders and their Affiliates have interests in other business ventures that may be in conflict with the activities of the Company and its Subsidiaries and that, subject to applicable law and any other agreement that may be executed by any such Stockholder, nothing in this Agreement shall limit the current or future business activities of the Holders whether or not such activities are competitive with those of the Company and its Subsidiaries. Nothing in this Agreement, express or implied, shall relieve any officer or director of the Company, or any of its Subsidiaries, or any Stockholder, of any fiduciary or other duties or obligations they may have to the stockholders of the Company. ARTICLE III TRANSFERS OF SECURITIES 3.1 Preemptive Rights. (a) Applicability; Offer Notice. Prior to a Qualified Public Offering, if the Company proposes to issue or sell to any person (the "Proposed Purchaser") any Common Stock or any Common Stock Equivalents (collectively, the "Offered Securities"), the Company shall, no later than 30 days prior to the consummation of such transaction (a "Preemptive Rights Transaction"), give written notice (the "Offer Notice") to each Management Stockholder and each 5% Stockholder of the proposed Preemptive Rights Transaction. The Offer Notice shall (i) describe the proposed Preemptive Rights Transaction, (ii) identify the Proposed Purchaser, and (iii) contain an offer (the "Preemptive Rights Offer") to sell to each such Management Stockholder or 5% Stockholder who certifies (to the reasonable satisfaction of the Company) that such holder is an Accredited Investor (an "Accredited Offeree"), at the same price and for the same consideration to be paid by the Proposed Purchaser, all or part of such Accredited Offeree's pro rata portion of the Offered Securities (which shall be the percentage ownership of the Common Stock on a fully diluted basis Beneficially Owned by such holder, excluding, for the purposes of such calculation, any shares of Common Stock issuable upon exercise of any Common Stock Equivalents granted pursuant to any employee, officer, or director benefit plan or arrangement). In the event of any sale or sales of Offered Securities to one or more Accredited Investors, the number of Offered Shares which may be sold to the Proposed Purchaser shall be such number as was set forth in the Offer Notice minus the aggregate number of Offered Shares so sold to Accredited Investors. If any Management Stockholder or 5% Stockholder fails to accept such offer by written notice to the Company 15 days after its receipt of the Offer Notice, then the Company may proceed with the issue or sale of the Offered Securities described in the Offer Notice (but subject to the provisions of the preceding sentence hereof) free of any right on the part of such Management Stockholder or 5% Stockholder under this Section 3.1(a) in respect thereof. (b) Exceptions to Preemptive Rights. Section 3.1(a) shall not apply to issuances or sales of Common Stock or Common Stock Equivalents (i) pursuant to the Management Compensation Plans, (ii) upon exercise of any Common Stock Equivalent that, when issued, was subject to or exempt from the preemptive rights under Section 3.1(a), (iii) to providers of financing to the Company or any of its Subsidiaries where such issuance or sale is, in whole or in part, made as consideration for such financing (e.g., as an "equity kicker" in such financing) and (iv) to third-party sellers (who are not Affiliates of the Company) in connection with acquisitions made by the Company or any of its Subsidiaries. 9 (c) Units. If any issuances or sales of any class of Common Stock or Common Stock Equivalents are made as a unit with any other security of the Company or its Subsidiaries, the preemptive rights under Section 3.1(a) shall be applicable to the entire unit rather than only the Common Stock or Common Stock Equivalent included in the unit. 3.2 Right of First Offer. (a) Applicability; Transferor's Notice. Prior to a Qualified Public Offering and so long as MacKay Shields has the Minimum MacKay Shields Ownership, CM-III has the Minimum CM-III Ownership or TCW has the Minimum TCW Ownership (unless waived by each of MacKay Shields, CM-III and TCW, as hereinafter provided), if a Right of First Offer Selling Stockholder (each, a "Transferor") desires to Transfer (a "Right of First Offer Proposed Transfer") for value any shares of Common Stock or New Warrants (for purposes of this Article III, and individually or collectively, "Shares") to any person (other than by Registered Sale or Permitted Transfer), the Transferor shall give written notice (the "Transfer Notice") to the Company and the 5% Stockholders (the "Option Holders") of such Right of First Offer Proposed Transfer. The Transfer Notice shall (i) specify the number of shares of Common Stock and New Warrants to be transferred, the consideration to be received therefor, and the other material terms on which the Transferor proposes to Transfer the shares of Common Stock and New Warrants and (ii) contain the offer described in Section 3.2(b). (b) Option Offers. (i) The Transferor shall offer to sell (the "First Option") all such shares to the Company for the same consideration as specified in the Transfer Notice, consisting of (A) cash equal to the amount of cash and (B) if applicable, non-cash consideration (other than consideration having a fair market value equal to the fair market value of such non-cash consideration) specified in the Transfer Notice. The decision whether or not the Company will accept the First Option shall be made by the Board of Directors and the Company shall give the Transferor written notice of such determination on or prior to the tenth Business Day (the "Election Period") after receipt of the Transfer Notice. If the Company (A) fails to notify the Transferor in writing on or prior to the tenth Business Day after receipt of the Transfer Notice that it elects to accept the First Option or (B) by written notice within such ten-day period rejects the First Option in whole or part, then the Transferor shall offer to sell (the "Second Option") the Shares not so purchased to the other Option Holders for the same consideration; provided, however, that the Transferor shall not be obligated to offer such Shares to any Holder who is not an Accredited Investor. (ii) The other Option Holders may purchase the Shares so offered in proportion to the number of shares of Common Stock on a fully-diluted basis Beneficially Owned by each such Option Holder who desires to participate in the purchase of such Shares pursuant to the Second Option bears to the aggregate number of shares of Common Stock on a fully-diluted basis Beneficially Owned by all such Option Holders who desire to participate in the purchase of such Shares pursuant to the Second Option. (iii) If the First Option and/or the Second Option, as the case may be, is accepted in a manner such that all Shares covered by the Transfer Notice are to be purchased, the Transferor shall Transfer all such shares (free of all liens and encumbrances except this Agreement, all as reasonably determined by the Company) to 10 the respective purchasers thereof within 15 Business Days following the receipt by the Option Holders of the Transfer Notice against delivery by the purchaser(s) of the consideration payable to the Transferor as set forth in the Transfer Notice; provided, however, that if the HSR Act is applicable to the First Option or the Second Option, such date shall be extended to the date that is five Business Days after the date the applicable HSR Act waiting period expires or is terminated. (iv) Unless, through exercise of the First Option and/or Second Option, all the Shares proposed to be Transferred in the Transfer Notice are to be acquired by the Company and/or one or more other Option Holders, the Transferor shall be permitted to transfer the Shares on the terms set forth in the Transfer Notice (with no additional terms more favorable to the transferee than those offered to the Option Holders, including, without limitation, at a price no less than the price offered to the Option Holders); provided, however, that such Transfer shall occur no later than 180 days following the Election Period or five days after the expiration or termination of any waiting period applicable to the transfer pursuant to the HSR Act, whichever is later, on the terms set forth in the Transfer Notice. If such Transfer does not occur within such 180-day period, or such five-day period after the expiration or termination of any HSR Act waiting period, then the Shares shall be re-offered (without obligation to purchase) to the Company and the other Option Holders under this Section 3.2 prior to any subsequent Transfer pursuant to the terms of this Section 3.2. (c) The provisions of this Section 3.2 shall be subject to the terms and conditions of the second paragraph of Section 3.4(a). 3.3 Drag Along Rights. (a) Applicability. The Board of Directors of the Company by a Special Director Vote shall have the right, prior to the occurrence of a Qualified Public Offering, to cause a sale of the Company or any of its Subsidiaries through a sale of shares of Common Stock and/or Common Stock Equivalents, merger, recapitalization, sale of substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or other similar transaction (a "Sale of the Company"), and to cause all Stockholders to consent to, approve and participate in a Sale of the Company; provided, however, that (i) all Stockholders receive the same consideration on a per share basis, (ii) the identity of such purchaser is approved (which approval shall not be unreasonably withheld) by MacKay Shields, CM-III and TCW; provided that MacKay Shields has the Minimum MacKay Shields Ownership, CM-III has the Minimum CM-III Ownership and TCW has the Minimum TCW Ownership, as the case may be, and (iii) such purchaser is not MacKay Shields, CM-III or TCW or any 5% Stockholder or any Affiliate of the foregoing. (b) Notice of Sale of the Company. The Board of Directors, on behalf of the Company, shall give the Stockholder at least 30 days' prior written notice of any such proposed Sale of the Company. If the Board of Directors elects to cause a Sale of the Company under this Section 3.3, the Stockholders shall take such actions as may be reasonably required and otherwise cooperate in good faith with the Board of Directors in connection with consummating the Sale of the Company (including, without limitation, the voting of any Common Stock, Common Stock Equivalents or other voting capital stock of the Company to approve such Sale of the Company). At the closing of such Sale of the Company, each Stockholder shall deliver certificates for all shares of Common Stock and all Common Stock Equivalents to be sold by such Stockholder, duly endorsed for transfer, with the signature guaranteed, to the purchaser against payment of the appropriate purchase price. 11 3.4 Tag Along Rights. (a) Applicability. Prior to a Qualified Public Offering, but other than with respect to a Registered Sale, and so long as MacKay Shields has the Minimum MacKay Shields Ownership, CM-III has the Minimum CM-III Ownership or TCW has the Minimum TCW Ownership, if any 5% Stockholder (a "Tag-Along Selling Stockholder") desires to effect a sale of Shares (other than a Permitted Transfer) (a "Tag-Along Transaction"), then at least 30 days prior to the closing of such Tag-Along Transaction, the Tag-Along Selling Stockholder shall make an offer (the "Participation Offer") to each other 5% Stockholder (together with the Permitted Transferees of such stockholder, the "Tag-Along Participating Stockholders") to include in the proposed Tag-Along Transaction a number of Shares equal to the product of (i) the quotient determined by dividing the percentage of Shares (as determined on a fully-diluted basis) owned by the Tag-Along Participating Stockholder, by the aggregate percentage of Shares (as determined on a fully-diluted basis) owned by all Tag-Along Participating Stockholders and all Tag-Along Selling Stockholders in such sale, times (iii) the number of Shares proposed to be sold by the Tag-Along Selling Stockholder; provided, however, that if the consideration to be received by the Tag-Along Participating Stockholders includes any securities, only Tag-Along Participating Stockholders who have certified to the reasonable satisfaction of the Company that they are Accredited Investors shall be entitled to participate in such Transfer, unless the transferee consents otherwise. The Tag-Along Participating Stockholders shall give the Tag-Along Selling Stockholder written notice of their intent to participate in such Tag-Along Transaction on or prior to the tenth Business Day after receipt of the Participation Offer. Solely for purposes of determining whether Metropolitan Life Insurance Company ("MetLife") may be treated as a Tag-Along Participating Stockholder, MetLife shall be deemed to be the Beneficial Owner also of the Shares Beneficially Owned by TCW; provided, however, that any pro rata participation of MetLife in any Tag-Along Transaction or in any Right of First Offer Proposed Transfer shall be based solely on the amount of shares of Common Stock of which MetLife shall be the Beneficial Owner (and shall not include, and shall not be duplicative with, any shares of Common Stock of which TCW is the Beneficial Owner); provided, further, however, that for purposes of determining any pro rata participation of any other Stockholder in any Tag-Along Transaction or Right of First Offer Proposed Transfer where Shares are Beneficially Owned by more than one person or entity, such pro rata participation shall be determined without duplication of Beneficial Ownership. (b) Participation Offer. The Participation Offer shall describe the terms and conditions of the proposed Tag-Along Transaction and shall be conditioned upon (i) the consummation of the transactions contemplated in the Participation Offer with the transferee named therein, and (ii) each Tag-Along Participating Stockholders' execution and delivery of all agreements and other documents as the Tag-Along Selling Stockholders are required to execute and deliver in connection with such Tag-Along Transaction; provided, however, that the Tag-Along Participating Stockholders shall not be required to make any representations or warranties with respect to other Tag-Along Participating Stockholders as to (A) such other Tag-Along Participating Stockholders' ownership of their Shares to be sold or transferred, (B) such other Tag-Along Participating Stockholders' power and authority to effect such transfer, and (C) matters pertaining to compliance with securities laws by other Tag-Along Participating Stockholders. If any Tag-Along Participating Stockholder accepts the Participation Offer, the Tag-Along Selling Stockholder shall reduce, to the extent necessary, the number of Shares it otherwise would have sold in the proposed transfer so as to permit those Tag-Along Participating Stockholders who have accepted the Participation Offer to sell the number of Shares that they are entitled to sell under this Section 3.4, and the Tag-Along Selling Stockholder and such Tag-Along 12 Participating Stockholders shall transfer the number of Shares specified in the Participation Offer to the proposed transferee in accordance with the terms of such transfer set forth in the Participation Offer. 3.5 Certain Events Not Deemed Transfers. Sections 3.2, 3.3 and 3.4 shall not apply with respect to any Permitted Transfers. 3.6 Transfer and Exchange. When Securities are presented to the Company with a request to register the transfer of such Securities or to exchange such Securities for Securities of other authorized denominations, the Company shall register the transfer or make the exchange as requested if the requirements of this Agreement for such transaction are met; provided, however, that the Securities surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company, duly executed by the holder thereof or its attorney and duly authorized in writing. No service charge shall be made for any registration of transfer or exchange, but the Company, may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith. 3.7 Replacement Securities. If a mutilated Security is surrendered to the Company or if the holder of a Security claims and submits an affidavit or other evidence, reasonably satisfactory to the Company, to the effect that the Security has been lost, destroyed, or wrongfully taken, the Company shall issue a replacement Security if the Company's requirements are met. If required by the Company, such holder must provide an indemnity bond, or other form of indemnity, sufficient in the judgment of the Company to protect the Company against any loss that may be suffered. The Company may charge such holder for its reasonable out-of-pocket expenses in replacing a Security that has been mutilated, lost, destroyed, or wrongfully taken. ARTICLE IV LIMITATION ON TRANSFERS 4.1 Restrictions on Transfer. No Securities shall be Transferred before satisfaction of (i) the conditions specified in Sections 4.1, 4.2, and 4.3, which conditions are intended to ensure compliance with the provisions of the Securities Act in respect of the Transfer of any Security and (ii) if applicable, Article III. No such Transfer shall result in the Company being subject to registration pursuant to the Investment Company Act of 1940, as amended. Any purported Transfer in violation of this Article IV and/or, if applicable, Article III shall be void ab initio and of no force or effect other than Transfers subject to and in compliance with Sections 3.2, 3.3, and 3.4 and other than Transfers to the public pursuant to an effective registration statement or Transfers to the public pursuant to Rule 144 under the Securities Act otherwise permitted hereunder. Each Stockholder will cause any proposed transferee (including Permitted Transferees) of any Security or any interest therein held by it to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. 4.2 Restrictive Legends. (a) Securities Act Legend. Except as otherwise provided in Section 4.4, each Security held by a Stockholder, and each Security issued to any subsequent transferee of such Security, shall bear a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, 13 AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT IN RESPECT OF SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT. (b) Other Legends. Each Security held by a Stockholder, and each Security issued to any subsequent transferee of such Security, shall bear a legend in substantially the following form: THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING, AND OTHER TERMS AND CONDITIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER [ ], 2003, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES. 4.3 Notice of Proposed Transfers. Prior to any Transfer or attempted Transfer of any Security by any 5% Stockholder (other than Transfers subject to Sections 3.2, 3.3, or 3.4 or Transfers described in Section 3.5 or Transfers pursuant to a Registered Sale), such 5% Stockholder shall (i) give ten days' prior written notice to the Company of such holder's intention to effect such Transfer, describing the manner and circumstances of the proposed Transfer, and (ii) either (A) provide to the Company an opinion reasonably satisfactory to the Company from counsel who shall be reasonably satisfactory to the Company (or supply such other evidence reasonably satisfactory to the Company) that the proposed Transfer of such Security may be effected without registration under the Securities Act, or (B) certify to the Company that the holder reasonably believes the proposed transferee is a "qualified institutional buyer" and that such holder has taken reasonable steps to make the proposed transferee aware that such holder may rely on Rule 144A under the Securities Act in effecting such Transfer. After receipt of the notice of Transfer and opinion (if required), the Company shall, within five days thereafter, so notify the holder of such Security and such holder shall thereupon be entitled to Transfer such Security in accordance with the terms of the notice. Each Security issued upon such Transfer shall bear the restrictive legend set forth in Section 4.2(a), unless in the opinion of such counsel such legend is not required in order to ensure compliance with the Securities Act. The holder of the Security giving the notice of Transfer shall not be entitled to Transfer such Security until receipt of the notice from the Company under this Section 4.3. 4.4 Termination of Certain Restrictions. Notwithstanding the foregoing provisions of this Article IV, the restrictions imposed by Section 4.2(a) upon the transferability of the Securities and the legend requirements of Section 4.2(a) shall terminate as to any Security (i) when and so long as such Security shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) when the Company shall have received an opinion of counsel reasonably satisfactory to it that such Security may be transferred without registration thereof under the Securities Act and that such legend may be removed. Whenever the restrictions imposed by Section 4.2(a) shall terminate as to any Security, the holder thereof shall be entitled to receive from the Company, at the Company's expense, a new Security not bearing the restrictive legend set forth in Section 4.2(a). 14 ARTICLE V MISCELLANEOUS 5.1 Counterparts. This Agreement may be executed in multiple counterparts, each of which when so executed and delivered shall be an original, and all of which when taken together shall constitute one and the same instrument. 5.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CHOICE OF LAW OR THE CONFLICT OF LAW PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF THE INTERNAL LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK. 5.3 Notices. Any notice, request, demand, or other communication required or permitted to be given hereunder by any party hereto to any other party shall be in writing and delivered (i) in person, (ii) by a nationally recognized overnight courier service requiring acknowledgment of receipt of delivery, (iii) by United States certified or registered mail, postage prepaid and return receipt requested, or (iv) by facsimile, as follows: If to the Company, to: ACP Holding Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Facsimile: (920) 729-3633 Attention: William M. Barrett with a copy to (which shall not constitute notice): Kirkland & Ellis LLP Citigroup Center 153 East 53rd Street New York, New York 10022-4611 Facsimile: (212) 446-4900 Attention: Geoffrey W. Levin If to any Stockholder, to: such Stockholder's address or facsimile number set forth in the records of the Company or any Transfer Agent thereof. Notice shall be deemed given, received, and effective on: (i) if given by personal delivery or courier service, the date of actual receipt by the receiving party, or if delivery is refused on the date delivery was first attempted; (ii) if given by certified or registered mail, the third day after being so mailed if posted with the United States Postal Service; and (iii) if given by facsimile, the date on which the facsimile is transmitted if confirmed by transmission report during the transmitter's normal business hours, or at the beginning of the next Business Day after transmission if confirmed at any time other than the transmitter's normal business hours. Any person entitled to notice may change any address or facsimile number to which notice is to be given to it by giving notice of such change of address or facsimile number as provided in this Section 5.3. The inability to deliver notice because of changed address or facsimile number of which no notice was given shall be deemed to be receipt of the notice as 15 of the date such attempt was first made. Notwithstanding any other provision of this Section 5.3 to the contrary, any notice given in a manner other than as provided in this Agreement, that is actually received, shall be effective in respect of the recipient on receipt of such notice. Failure to send a notice to any person or any defect in any notice shall not affect its sufficiency in respect of any other person. 5.4 Severability. In case any provision in this Agreement shall be held invalid, illegal, or unenforceable in any respect for any reason, the validity, legality, and enforceability of any such provision in every other respect and the remaining provisions shall not in any way be affected or impaired thereby. 5.5 Successors and Assigns. Whether or not an express assignment has been made pursuant to the provisions of this Agreement, provisions of this Agreement that are for the Holders' benefit as the holders of any Securities are also for the benefit of, and enforceable by, all subsequent holders of Securities, except as otherwise expressly provided herein. This Agreement shall be binding upon the Company, each Stockholder, and their respective successors and assigns. 5.6 Termination. The provisions of this Agreement shall terminate on the date that no Standby Purchaser owns any shares of Common Stock or any New Warrants; provided, however, that Sections 3.1, 3.2, 3.3 and 3.4 shall terminate upon the consummation of a Qualified Public Offering. 5.7 No Waivers; Amendments. (a) No failure or delay on the part of the Company or any Stockholder in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or any Stockholder at law, in equity, or otherwise. (b) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and signed by (i) the Company, (ii) the holders of a majority of the aggregate number of shares of Common Stock on a fully-diluted basis owned by the Stockholders who are parties to this Agreement and (iii) each of MacKay Shields, CM-III and TCW so long as such person holds the Minimum MacKay Shields Ownership, the Minimum CM-III Ownership or the Minimum TCW Ownership, as the case may be; provided, however, that no such amendment or waiver shall, unless signed by all of the Stockholders affected, (i) amend this Section 5.7(b) or (ii) change the number of Stockholders that shall be required for the Stockholders or any of them to take any action under this Section 5.7(b) or any other provision of this Agreement. ***** [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 16 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. THE COMPANY: ACP HOLDING COMPANY By: /s/ Gary LaChey ---------------------- Name: Gary LaChey Title: MANAGEMENT STOCKHOLDERS AND DIRECTORS: By: /s/ William M. Barrett ------------------------------------------ Name: William M. Barrett Title: President, Chief Executive Officer and Director of ACP Holding Company and each of its subsidiaries By: /s/ Gary LaChey ------------------------------------------ Name: Gary W. LaChey Title: Vice President--Finance, Treasurer, Secretary and Chief Financial Officer of ACP Holding Company and each of its subsidiaries By: /s/ Joseph L. DeRita ------------------------------------------ Name: Joseph L. DeRita Title: Division President, Dalton Corporation By: /s/ Frank C. Headington ------------------------------------------ Name: Frank C. Headington Title: Vice President--Marketing and Technology, Neenah Foundry Company By: /s/ Timothy Koller ------------------------------------------ Name: Timothy Koller Title: Vice President--Construction Product Sales, Neenah Foundry Company By: /s/ William Martin ------------------------------------------------ Name: William Martin Title: Vice President -- International Development, Neenah Foundry Company By: /s/ Joseph Varkaly ------------------------------------------------ Name: Joseph Varkaly Title: Vice President -- Business Development, ACP Holding Company By: /s/ Steve Shaffer ------------------------------------------------ Name: Steve Shaffer Title: Vice President -- Human Resources, Dalton Corporation By: /s/ John Andrews ------------------------------------------------ Name: John Andrews Title: Vice President -- Manufacturing, Neenah Foundry Company By: /s/ Andrew Brooke Cohen ------------------------------------------------ Name: Andrew Brooke Cohen Title: Director of ACP Holding Company and each of its subsidiaries By: /s/ Benjamin C. Duster ------------------------------------------------ Name: Benjamin C. Duster, IV, Esq. Title: Director of ACP Holding Company and each of its subsidiaries By: /s/ Michael J. Farrell ------------------------------------------------ Name: Michael J. Farrell Title: Director of ACP Holding Company and each of its subsidiaries By: /s/ Jeffrey G. Marshall ------------------------------------------------ Name: Jeffrey G. Marshall Title: Director of ACP Holding Company and each of its subsidiaries STANDBY PURCHASERS: MACKAY SHIELDS LLC By: /s/ Don Morgan III ------------------------------------------------- Name: Don Morgan III Title: Senior Managing Director Address: 9 West 57th Street, 33rd Floor New York, New York 10019 Facsimile: (212) 754-9187 Attention: Neal G. Goldman CITICORP MEZZANINE III, L.P. By: /s/ Byron Knief ------------------------------------------------- Name: Byron Knief Title: Senior Vice President Address: 399 Park Avenue, 14th Floor New York, New York 10043 Facsimile: (212) 888-2940 Attention: Richard E. Mayberry, Jr. TRUST COMPANY OF THE WEST TCW SHARED OPPORTUNITY FUND II, L.P. By: TCW INVESTMENT MANAGEMENT COMPANY, Its Investment Manager By: /s/ Michael K. Parks -------------------------------------------- Name: Michael K. Parks Title: Managing Director By: /s/ C. Shawn Bookin -------------------------------------------- Name: C. Shawn Bookin Title: Senior Vice President Address: 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, California 90025 Facsimile: (310) 235-5965 Attention: Jameson J. Van Niel SHARED OPPORTUNITY FUND IIB LLC By: TCW ASSET MANAGEMENT COMPANY, Its Investment Advisor By: /s/ Michael K. Parks -------------------------------------------- Name: Michael K. Parks Title: Managing Director By: /s/ C. Shawn Bookin -------------------------------------------- Name: C. Shawn Bookin Title: Senior Vice President Address: 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, California 90025 Facsimile: (310) 235-5965 Attention: Jameson J. Van Niel TCW SHARED OPPORTUNITY FUND IV, L.P. TCW SHARED OPPORTUNITY FUND IVB, L.P. By: TCW ASSET MANAGEMENT COMPANY, Its Investment Advisor By: /s/ Michael K. Parks -------------------------------------------- Name: Michael K. Parks Title: Managing Director By: /s/ C. Shawn Bookin -------------------------------------------- Name: C. Shawn Bookin Title: Senior Vice President Address: 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, California 90025 Facsimile: (310) 235-5965 Attention: Jameson J. Van Niel AIMCO CDO, SERIES 2000-A By: ALLSTATE INVESTMENT MANAGEMENT COMPANY, Its Collateral Manager By: TCW ASSET MANAGEMENT COMPANY, Its Investment Advisor By: /s/ Michael K. Parks -------------------------------------------- Name: Michael K. Parks Title: Managing Director By: /s/ C. Shawn Bookin -------------------------------------------- Name: C. Shawn Bookin Title: Senior Vice President Address: 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, California 90025 Facsimile: (310) 235-5965 Attention: Jameson J. Van Niel TCW HIGH INCOME PARTNERS, LTD. By: TCW ASSET MANAGEMENT COMPANY, Its Investment Advisor By: /s/ Michael K. Parks -------------------------------------------- Name: Michael K. Parks Title: Managing Director Address: 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, California 90025 Facsimile: (310) 235-5965 Attention: Jameson J. Van Niel TCW HIGH INCOME PARTNERS II, LTD. By: TCW ASSET MANAGEMENT COMPANY, Its Investment Advisor By: /s/ Michael K. Parks -------------------------------------------- Name: Michael K. Parks Title: Managing Director Address: 11100 Santa Monica Boulevard, Suite 2000 Los Angeles, California 90025 Facsimile: (310) 235-5965 Attention: Jameson J. Van Niel METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Jacqueline D. Jenkins -------------------------------------------- Name: Jacqueline D. Jenkins Title: Managing Director Address: 10 Park Avenue Morristown, New Jersey 07962 Facsimile: (212) 251-1563 Attention: Lisa Glass, Esq. EXIS DIFFERENTIAL HOLDINGS, LTD. By: /s/ Chris Kane -------------------------------------------- Name: /s/ Chris Kane Title: Portfolio Manager Address: 767 Third Avenue New York, New York 10017 Facsimile: (212) 688-6010 Attention: Christopher P. Kane EX-10.6 19 y92210exv10w6.txt INDENTURE EXECUTION VERSION ================================================================================ NEENAH FOUNDRY COMPANY, AS ISSUER, ADVANCED CAST PRODUCTS, INC., DALTON CORPORATION, DALTON CORPORATION, WARSAW MANUFACTURING FACILITY, DALTON CORPORATION, STRYKER MACHINING FACILITY CO., DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY, DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY, DEETER FOUNDRY, INC., GREGG INDUSTRIES, INC., MERCER FORGE CORPORATION, A&M SPECIALTIES, INC., NEENAH TRANSPORT, INC., CAST ALLOYS, INC., BELCHER CORPORATION, PEERLESS CORPORATION, AS SUBSIDIARY GUARANTORS AND ----------------------------- THE BANK OF NEW YORK, AS TRUSTEE ----------------------------- INDENTURE DATED AS OF OCTOBER 8, 2003 ----------------------------- UP TO $100,000,000 13% SENIOR SUBORDINATED NOTES DUE 2013 ================================================================================ TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE........................................1 Section 1.1. Definitions..............................................................1 Section 1.2. Incorporation by Reference of TIA.......................................21 Section 1.3. Rules of Construction...................................................21 ARTICLE II THE NOTES........................................................................22 Section 2.1. Form and Dating.........................................................22 Section 2.2. Execution and Authentication............................................23 Section 2.3. Registrar and Paying Agent..............................................24 Section 2.4. Paying Agent to Hold Assets in Trust....................................25 Section 2.5. Noteholder Lists........................................................25 Section 2.6. Transfer and Exchange...................................................25 Section 2.7. Replacement Notes.......................................................30 Section 2.8. Outstanding Notes.......................................................30 Section 2.9. Treasury Notes..........................................................31 Section 2.10. Temporary Notes.........................................................31 Section 2.11. Cancellation............................................................31 Section 2.12. Defaulted Interest......................................................32 Section 2.13. Persons Deemed Owners...................................................33 Section 2.14. Issuance of Additional Notes ...........................................33 Section 2.15. CUSIP Numbers...........................................................33 ARTICLE III REDEMPTION.......................................................................34 Section 3.1. Right of Redemption.....................................................34 Section 3.2. Notices to Trustee......................................................34 Section 3.3. Selection of Notes to Be Redeemed.......................................34 Section 3.4. Notice of Redemption....................................................35 Section 3.5. Effect of Notice of Redemption..........................................36 Section 3.6. Deposit of Redemption Price.............................................36 Section 3.7. Notes Redeemed in Part..................................................36 Section 3.8. Optional Redemption.....................................................37
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PAGE ---- Section 3.9. Mandatory Redemption....................................................37 ARTICLE IV COVENANTS........................................................................37 Section 4.1. Payment of Notes........................................................37 Section 4.2. Maintenance of Office or Agency.........................................37 Section 4.3. Corporate Existence.....................................................38 Section 4.4. Payment of Taxes and Other Claims.......................................38 Section 4.5. Maintenance of Properties and Insurance.................................39 Section 4.6. Compliance Certificate; Notice of Default...............................39 Section 4.7. Reports.................................................................40 Section 4.8. Limitation on Status as Investment Company..............................40 Section 4.9. Waiver of Stay, Extension or Usury Laws.................................40 Section 4.10. [Reserved]..............................................................41 Section 4.11. Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock......................................................41 Section 4.12. Limitation on Restricted Payments.......................................43 Section 4.13. Limitation on Liens.....................................................46 Section 4.14. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries............................................................46 Section 4.15. Limitation on Transactions with Affiliates..............................47 Section 4.16. Limitation on Lines of Business.........................................48 Section 4.17. Limitation on Layering Debt.............................................48 Section 4.18. Future Guarantors.......................................................48 Section 4.19. Payments for Consent....................................................48 Section 4.20. Asset Sales.............................................................49 Section 4.21. Change of Control.......................................................52 Section 4.22. Calculation of Original Issue Discount..................................54 ARTICLE V SUCCESSORS.......................................................................54 Section 5.1. Limitation on Merger, Consolidation or Sale of Assets...................54 Section 5.2. Successor Corporation Substituted.......................................55 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES...................................................56
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PAGE ---- Section 6.1. Events of Default.......................................................56 Section 6.2. Acceleration of Maturity Date; Rescission and Annulment.................58 Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee.........59 Section 6.4. Trustee May File Proofs of Claim........................................60 Section 6.5. Trustee May Enforce Claims Without Possession of Notes..................60 Section 6.6. Priorities..............................................................61 Section 6.7. Limitation on Suits.....................................................61 Section 6.8. Unconditional Right of Holders to Receive Principal, Premium and Interest................................................................62 Section 6.9. Rights and Remedies Cumulative..........................................62 Section 6.10. Delay or Omission Not Waiver............................................62 Section 6.11. Control by Holders......................................................63 Section 6.12. Waiver of Past Default..................................................63 Section 6.13. Undertaking for Costs...................................................64 Section 6.14. Restoration of Rights and Remedies......................................64 ARTICLE VII TRUSTEE..........................................................................64 Section 7.1. Duties of Trustee.......................................................64 Section 7.2. Rights of Trustee.......................................................66 Section 7.3. Individual Rights of Trustee............................................67 Section 7.4. Trustee's Disclaimer....................................................67 Section 7.5. Notice of Default.......................................................67 Section 7.6. Reports by Trustee to Holders...........................................67 Section 7.7. Compensation and Indemnity..............................................68 Section 7.8. Replacement of Trustee..................................................69 Section 7.9. Successor Trustee by Merger, Etc........................................70 Section 7.10. Eligibility; Disqualification...........................................71 Section 7.11. Preferential Collection of Claims Against Company.......................71
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PAGE ---- Section 7.12. "Trustee" to Include Paying Agent.......................................71 ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................................71 Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance................71 Section 8.2. Legal Defeasance and Discharge..........................................72 Section 8.3. Covenant Defeasance.....................................................72 Section 8.4. Conditions to Legal or Covenant Defeasance..............................73 Section 8.5. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions..........................................74 Section 8.6. Repayment to Company....................................................75 Section 8.7. Reinstatement...........................................................75 Section 8.8. Discharge of Liability on Securities; Defeasance........................75 ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS..............................................76 Section 9.1. Without Consent of Holders..............................................76 Section 9.2. With Consent of Holders.................................................77 Section 9.3. Compliance with TIA.....................................................78 Section 9.4. Revocation and Effect of Consents.......................................78 Section 9.5. Notation on or Exchange of Notes........................................79 Section 9.6. Trustee to Sign Amendments, Etc.........................................79 ARTICLE X GUARANTEE OF NOTES...............................................................79 Section 10.1. Subsidiary Guarantee....................................................79 Section 10.2. Execution and Delivery of Subsidiary Guarantee..........................80 Section 10.3. Subsidiary Guarantors May Consolidate, etc., on Certain Terms...........81 Section 10.4. Releases Following Sale of Assets.......................................82 Section 10.5. Releases Following Designation as an Unrestricted Subsidiary...........83 Section 10.6. Limitation on Subsidiary Guarantor Liability............................83 Section 10.7. Subordination of Guarantees.............................................83 ARTICLE XI SUBORDINATION....................................................................84
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PAGE ---- Section 11.1. Agreement to Subordinate................................................84 Section 11.2. Liquidation; Dissolution; Bankruptcy....................................84 Section 11.3. Default on Senior Indebtedness..........................................85 Section 11.4. Acceleration of Notes...................................................86 Section 11.5. When Distribution Must be Paid Over.....................................86 Section 11.6. Notice by Company.......................................................87 Section 11.7. Subrogation.............................................................87 Section 11.8. Relative Rights.........................................................87 Section 11.9. Subordination May Not be Impaired by Company............................88 Section 11.10. Distribution or Notice to Representative................................88 Section 11.11. Rights of Trustee and Paying Agent......................................88 Section 11.12. Authorization to Effect Subordination...................................89 Section 11.13. Amendment...............................................................89 Section 11.14. Third Party Beneficiaries...............................................89 Section 11.15. Liens...................................................................89 ARTICLE XII MISCELLANEOUS....................................................................90 Section 12.1. TIA Controls............................................................90 Section 12.2. Notices.................................................................90 Section 12.3. Communications by Holders with Other Holders............................91 Section 12.4. Certificate and Opinion as to Conditions Precedent......................91 Section 12.5. Statements Required in Certificate or Opinion...........................91 Section 12.6. Rules by Trustee, Paying Agent, Registrar...............................92 Section 12.7. Business Day............................................................92 Section 12.8. Governing Law...........................................................93 Section 12.9. No Adverse Interpretation of Other Agreements...........................93 Section 12.10. No Recourse Against Others..............................................93 Section 12.11. Successors..............................................................93 Section 12.12. Duplicate Originals.....................................................93 Section 12.13. Severability............................................................93
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PAGE ---- Section 12.14. Table of Contents, Headings, Etc........................................94 Section 12.15. Qualification of Indenture..............................................94 EXHIBIT A - FORM OF NOTE ...................................................................A-1 EXHIBIT B - GUARANTEE........................................................................B-1
vi CROSS-REFERENCE TABLE
TIA INDENTURE SECTION SECTION - ------- ------------ 310 (a)(1)........................................................................ Section 7.10 (a)(2)........................................................................ Section 7.10 (a)(3)........................................................................ N.A. (a)(4)........................................................................ N.A. (a)(5)........................................................................ Section 7.8, Section 7.10 (b)........................................................................... Section 7.10 (b)(1)........................................................................ Section 7.10 (c)........................................................................... N.A. 311 (a)........................................................................... Section 7.11 (b)........................................................................... Section 7.11 (c)........................................................................... N.A. 312 (a)........................................................................... Section 2.5 (b)........................................................................... Section 12.3 (c)........................................................................... Section 12.3 313 (a)........................................................................... Section 7.6 (b)........................................................................... Section 7.6 (b)(1)........................................................................ N.A. (b)(2)........................................................................ N.A. (c)........................................................................... Section 7.6 (d)........................................................................... N.A. 314 (a)........................................................................... N.A. (a)(4)........................................................................ Section 4.6 (b)........................................................................... N.A. (c)(1)........................................................................ N.A. (c)(2)........................................................................ N.A. (c)(3)........................................................................ N.A. (d)........................................................................... N.A. (e)........................................................................... N.A. (f)........................................................................... N.A. 315 (a)........................................................................... N.A. (b)........................................................................... N.A. (c)........................................................................... N.A. (d)........................................................................... N.A. (e)........................................................................... N.A. 316 (a)........................................................................... N.A. (a)(1)(A)..................................................................... N.A. (a)(1)(B)..................................................................... N.A. (a)(2)........................................................................ N.A.
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TIA INDENTURE SECTION SECTION - ------- ------------ (b)........................................................................... N.A. 317 (a)(1)........................................................................ N.A. (a)(2)........................................................................ N.A. (b)........................................................................... N.A. 318 (a)........................................................................... N.A.
N.A. means Not Applicable. Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. ii INDENTURE, dated as of October 8, 2003, between Neenah Foundry Company, a Wisconsin corporation (the "Company"), each Subsidiary Guarantor listed on the signature pages hereto or which becomes a party hereto pursuant to a supplemental indenture and The Bank of New York, a New York banking corporation, as Trustee. The Company, the Subsidiary Guarantors and the Trustee agree as follows for the equal and rateable benefit of the Holders of the 13% Senior Subordinated Notes due 2013 (the "Notes"): ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1 DEFINITIONS. "Acceleration Notice" shall have the meaning specified in Section 6.2. "ACP Holding" means ACP Holding Company, a Delaware corporation. "Acquired Debt" means, with respect to any specified Person: (i) Indebtedness of any other Person existing at the time such other Person merged with or into or became a Restricted Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Notes" means any Notes (other than Initial Notes and Notes issued under Sections 2.6, 2.7, 2.10 and 3.1 hereof) issued under this Indenture in accordance with Sections 2.2, 2.14 and 4.11 hereof, as part of the same series as the Initial Notes or as an additional series. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities (or the equivalents) of a Person shall be deemed to be control. "Affiliate Transaction" shall have the meaning specified in Section 4.15. "Agent" means any Registrar, Paying Agent or co-Registrar. "Agent Member" means a member of, or a participant in, the Depositary. "Asset Sale" means any sale, transfer or other disposition (including, without limitation, by merger, consolidation or sale-and-leaseback transaction) of (i) shares of Capital Stock of a Subsidiary of the Company (other than directors' qualifying shares), including any issuance of such Capital Stock, or (ii) property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that an Asset Sale shall not include (a) any sale, transfer or other disposition of shares of Capital Stock, property or assets by a Restricted Subsidiary of the Company to the Company or to any Restricted Subsidiary that is a Wholly Owned Subsidiary of the Company, (b) any sale, transfer or other disposition of defaulted receivables for collection, (c) any sales, transfers or other dispositions that do not involve aggregate consideration in excess of $2,500,000 in any fiscal year, (d) the grant in the ordinary course of business of any license of patents, trademarks, registrations therefor and other similar intellectual property, (e) any Lien (or foreclosure thereon) securing Indebtedness to the extent that such Lien is granted in compliance with Section 4.13, (f) any Restricted Payment or Permitted Investment permitted by Section 4.12, (g) any disposition of assets or property to the extent such assets are obsolete, worn-out or no longer useful in the Company's or any Restricted Subsidiary's business, (h) the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company as permitted by Article V, (i) any disposition that constitutes a Change of Control, (j) any transaction or series of transactions pertaining to sales, transfers or other dispositions of properties or assets of the Company or any Restricted Subsidiary in connection with closures of plants for a purchase price not exceeding 10% of the total consolidated assets of Company as reflected on its consolidated balance sheet as of the Company's fiscal year end immediately preceding the first sale of such property or assets, (k) the disposition of any Investment in Cash Equivalents, (l) sales, leases and other dispositions of the Non-Core Fixed Assets; or (m) so long as no Event of Default exists, sales, leases and other dispositions of fixed assets that are worn, scrap, excess, damaged or obsolete, the net proceeds of which are used to prepay the outstanding principal amount of the Term Loan or the Revolver (regardless of whether the corresponding revolving commitment thereunder is reduced in connection therewith). "Asset Sale Offer" shall have the meaning specified in Section 4.20. "Bankruptcy Law" means title 11, U.S. Code, or any similar federal, state or foreign law for the relief of debtors. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. 2 "Board of Directors" means, with respect to any Person, the Board of Directors of such Person or any committee of the Board of Directors of such Person authorized, with respect to any particular matter, to exercise the power of the Board of Directors of such Person. "Board Resolution" means, with respect to any Person, a duly adopted resolution of the Board of Directors of such Person. "Borrowing Base Amount" means, as to the Company and its Restricted Subsidiaries, the sum of (x) 65% of the gross value of Inventory plus (y) 85% of the gross value of Receivables, in each case determined on a consolidated basis in accordance with GAAP, as reflected in the most recent quarterly consolidated financial statements delivered pursuant to Section 4.7. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. "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 (i) any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (ii) in the case of a partnership, partnership interests (whether general or limited) and (iii) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than twelve months from the date of acquisition, (iii) certificates of deposit and Eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers' acceptances with maturities not exceeding twelve months and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500,000,000, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within nine months after the date of acquisition and (vi) shares of any money market mutual fund, or similar fund, in each case having assets in excess of $500,000,000, which invests solely in investments of the types described in clauses (i) through (v) above. 3 "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of ACP Holding, NFC Castings or the Company and the Restricted Subsidiaries, taken as a whole, to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act); (2) the adoption of a plan relating to the liquidation or dissolution of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company; (3) the consummation of any transaction, as a result of which any "person" (as referenced in clause (2) above), other than the Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of, in the aggregate, more than 50% of the total voting power of the Voting Stock of the Company, NFC Castings or ACP Holding, whether as a result of issuance of securities of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company, any merger, consolidation, liquidation or dissolution of NFC Castings or ACP Holding (or any other direct or indirect parent of the Company) or the Company or otherwise, provided, however, that the Permitted Holders Beneficially Own, directly or indirectly, less than such "person"; or (4) the first day on which a majority of the members of the Board of Directors of any of the Company, NFC Castings or ACP Holding are not Continuing Directors; provided, however, for purposes of clause (3), the Permitted Holders shall be deemed to Beneficially Own any Voting Stock of a Person held by any other Person (the "parent entity") so long as the Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent entity. "Change of Control Offer" shall have the meaning specified in Section 4.21. "Change of Control Payment Date" shall have the meaning specified in Section 4.21. "Change of Control Put Date" shall have the meaning specified in Section 4.21. "Change of Control Repurchase Price" shall have the meaning specified in Section 4.21. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the Securities and Exchange Commission. 4 "Commitment Fee" means the Commitment Fee payable to the Permitted Holders pursuant to the Standby Funding Commitment Letters, dated June 30, 2003, between the Company and each of the Permitted Holders. "Commodity Agreement" means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any of its Restricted Subsidiaries designed to protect the Company or any of its Restricted Subsidiaries against fluctuations in the price of commodities actually used in the ordinary course of business of the Company and its Restricted Subsidiaries each, as may be amended, supplemented or otherwise modified from time to time. "Common Stock" means, with respect to any Person, Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to this Indenture, and thereafter means such successor. "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (1) if the Company or any Restricted Subsidiary has incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an incurrence of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness and the application of the proceeds thereof as if such Indebtedness had been incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period (except that in the case of Indebtedness to finance seasonal fluctuations in working capital needs incurred under a revolving credit or similar arrangement, the amount thereof shall be deemed to be the average daily balance of such Indebtedness during such four quarter period); (2) if since the beginning of such period the Company or any Restricted Subsidiary shall have disposed of any assets constituting all or substantially all of the assets of an operating unit of a business (a "Disposal"), (x) the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Disposal for such period or increased by an amount equal to the EBITDA (if 5 negative) directly attributable thereto for such period and (y) Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Disposal for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of the assets of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the incurrence of any Indebtedness in connection therewith) as if such Investment or acquisition occurred on the first day of such period; and (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Disposal or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Disposal, Investment or acquisition of assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term as at the date of determination in excess of 12 months). If any Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a fixed or floating rate of interest and is being given pro forma effect, then (i) if any interest had accrued on such Indebtedness prior to the date of determination, the interest expense on such Indebtedness shall be computed by applying a fixed or floating rate of interest as 6 selected by the Company or such Restricted Subsidiary for the interest period immediately preceding such determination or (ii) if no interest accrued on such Indebtedness prior to the date of determination, the interest expense on such Indebtedness shall be computed by applying, at the option of the Company or such Restricted Subsidiary, either a fixed or floating rate. If any Indebtedness which is being given pro forma effect was incurred under a revolving credit facility that was in effect throughout the applicable period, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. "Consolidated Interest Expense" means, with respect to any Person for any period, the aggregate consolidated interest, whether expensed or capitalized, paid, accrued or scheduled to be paid or accrued, of such Person and its Restricted Subsidiaries for such period (including (i) amortization of original issue discount and deferred financing costs and non-cash interest payments and accruals, (ii) the interest portion of all deferred payment obligations, calculated in accordance with the effective interest method, and (iii) the interest component of any payments associated with Capital Lease Obligations and net payments (if any) pursuant to Hedging Obligations, in each case, to the extent attributable to such period, but excluding (x) commissions, discounts and other fees and charges incurred with respect to letters of credit and bankers' acceptances financing and (y) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or secured by a Lien on assets of such Person) determined in accordance with GAAP. Consolidated Interest Expense of the Company shall not include any prepayment premiums or amortization of original issue discount or deferred financing costs, to the extent such amounts are incurred as a result of the prepayment on the date of this Indenture of any Indebtedness of the Company with the proceeds of the Notes. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP, adjusted to exclude (only to the extent included and without duplication): (i) all gains which are extraordinary or are non-recurring (including any gain from the sale or other disposition of assets outside the ordinary course of business or from the issuance or sale of Capital Stock); (ii) all gains resulting from currency or hedging transactions; (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition; (iv) depreciation, amortization or other expenses recorded as a result of the application of purchase accounting in accordance with Statements of Financial Accounting Standards Nos. 141 and 142; and (v) the cumulative effect of a change in accounting principles; provided that (a) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of cash dividends or cash distributions actually paid to the referent Person or a Wholly Owned Subsidiary thereof that is a Restricted Subsidiary and (b) the Net Income of any Person that is an Unrestricted Subsidiary shall be included only to the extent of the amount of cash dividends or cash distributions paid to the referent Person or a Restricted Subsidiary thereof. 7 "Continuing Director" means, as of any date of determination, any member of the Board of Directors of the Company or, NFC Castings ACP Holding who (i) was a member of such Board of Directors on the date of this Indenture, (ii) was nominated for election or elected to such Board of Directors with the affirmative vote of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or (iii) was selected by MacKay Shields LLC, Citicorp Mezzanine III, L.P. or the Trust Company of the West. "Covenant Defeasance" shall have the meaning specified in Section 8.3. "Credit Agreement" means the Credit Agreement, dated the date hereof, among the Company, certain of the Subsidiary Guarantors party thereto, the lenders from time to time party to such agreement, Fleet Capital Corporation, as Agent and Fleet Securities, Inc., as Arranger, including any related notes, collateral documents, letters of credit and documentation and guarantees and any appendices, exhibits or schedules to any of the foregoing, as well as any and all of such agreements (and any other agreements that refinance any and all such agreements in accordance with the provisions of Section 4.11(viii) hereof), as may be amended, restated, modified or supplemented from time to time, or renewed, refunded, refinanced, restructured, replaced, repaid or extended from time to time (including increases in principal amount) in accordance with the provisions of Section 4.11(viii) hereof, whether with the original agents and lenders or with other agents or lenders. "Credit Agreement Refinancing Indebtedness" means Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the Credit Agreement. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any of its Restricted Subsidiaries in the ordinary course of business against fluctuation in the values of the currencies of the countries (other than the United States) in which the Company or its Restricted Subsidiaries conduct business each, as may be amended, supplemented or otherwise modified from time to time. "Default" means any event or condition that is, or with the passage of time or the giving of notice, or both, would be, an Event of Default. "Defaulted Interest" shall have the meaning specified in Section 2.12. "Definitive Notes" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.1 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note legend. 8 "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the person specified in Section 2.3 as the Depositary with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depositary" shall mean or include such successor. "Disqualified Stock" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable or is convertible or exchangeable for Indebtedness at the option of the holder thereof, in whole or in part, on or prior to 90 days after the Stated Maturity of the Notes provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the Stated Maturity of the Notes shall not constitute Disqualified Stock if (i) the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions in favor of Holders of Notes set forth under Section 4.20 and Section 4.21, as the case may be, (ii) such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company's repurchase of such Notes as are required to be repurchased pursuant to Section 4.20 and Section 4.21 and (iii) such Capital Stock is redeemable within 90 days of the "asset sale" or "change of control" events applicable to such Capital Stock. "Domestic Restricted Subsidiary" means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of a Foreign Restricted Subsidiary. "DTC" shall have the meaning specified in Section 2.3. "EBITDA" means, for any period, an amount equal to, for the Company and its consolidated Restricted Subsidiaries: (a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: (1) the provision for taxes based on income or profits or utilized in computing net loss, (2) Consolidated Interest Expense, (3) depreciation, (4) amortization of intangibles, and 9 (5) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of, or reserve for, cash expenditures in any future period), minus (b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). Notwithstanding the foregoing clause (a), the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its shareholders. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Event of Default" shall have the meaning specified in Section 6.1. "Excess Proceeds" shall have the meaning specified in Section 4.20. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder. "Fair Market Value" means, with respect to any asset, the price (after taking into account any liabilities relating to such assets) which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction; provided, that, the Fair Market Value of any such asset or assets shall be determined by the Board of Directors of the Company, acting in good faith and by unanimous resolution, and which determination shall be evidenced by an Officers' Certificate delivered to the Trustee. "Foreign Restricted Subsidiary" means any Restricted Subsidiary which is not organized under the laws of the United States of America or any State thereof or the District of Columbia. "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 10 have been approved by a significant segment of the accounting profession, which are in effect in the United States on the date of this Indenture. "Global Note" means a Note substantially in the form of the Note attached hereto as Exhibit A that contains a global note legend. "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, as may be amended, supplemented or otherwise modified from time to time. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) Interest Rate Agreements, (ii) Currency Agreements and (iii) Commodity Agreements. "Holder" or "Noteholder" means the person in whose name a Note is registered on the Registrar's books. "Inactive Subsidiaries" means Cast Alloys, Inc., Belcher Corporation, Peerless Corporation and Dalton Corporation, Ashland Manufacturing Facility. "Indebtedness" means, with respect to any Person, without duplication, 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 reimbursement agreements in respect thereof) or bankers' acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee of any Indebtedness of such Person or any other Person. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Initial Notes" means $100.0 million aggregate principal amount of Notes issued under this Indenture on the date hereof. "Intercompany Indebtedness" shall have the meaning specified in Section 4.11. "Interest Payment Date" means the stated due date of an installment of interest on the Notes. 11 "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement entered into by the Company or any of its Restricted Subsidiaries designed to protect the Company or any of its Restricted Subsidiaries in the ordinary course of business against fluctuations in interest rates each, as may be amended, supplemented or otherwise modified from time to time. "Inventory" means, with respect to the Company and its Restricted Subsidiaries, the consolidated inventory of the Company, determined at the lower of cost or market in accordance with GAAP. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Issue Date" means the date of first issuance of the Notes under this Indenture. "Legal Defeasance" shall have the meaning specified in Section 8.2. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.) "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any sale of assets (including, without limitation, dispositions pursuant to sale/leaseback transactions) or (b) the disposition of any securities or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries, and (ii) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate amount of consideration received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale in the form of cash or Cash Equivalents (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of 12 the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets (including Equity Interests) the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets. "New Credit Facility" means the credit facilities provided under the Credit Agreement. "NFC Castings" means NFC Castings, Inc., a Delaware corporation. "Non-Core Fixed Assets" shall have the meaning specified in the Credit Agreement as in effect on the date hereof. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as guarantor or otherwise), or (c) constitutes the lender; (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Notes" shall have the meaning specified in the second paragraph of this Indenture. "Notice of Default" shall have the meaning specified in Section 6.1(d). "Obligations" means with respect to any Indebtedness, the principal of premium, if any, and interest on (such interest on such Indebtedness, wherever referred to in this Indenture, is deemed to include interest accruing after the filing of a petition initiating any proceeding pursuant to any bankruptcy law in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in any document evidencing such Indebtedness, whether or not the claim for such interest is allowed as a claim after such filing in any proceeding under such bankruptcy law) and other amounts, including, but not limited to, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under any document governing any Indebtedness. 13 "Officer" means, with respect to the Company, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Controller or the Secretary of the Company. "Officers' Certificate" means, with respect to any Person, a certificate signed by (i) the Chief Executive Officer or President and (ii) the Chief Financial Officer or chief accounting officer of such Person. "Opinion of Counsel" means a written opinion from legal counsel which complies with the requirements of Sections 14.4 and 14.5. "Original Issue Date" of any Note (or portion thereof) means the earlier of (a) the date of such Note or (b) the date of any Note (or portion thereof) for which such Note was issued (directly or indirectly) on registration of transfer, exchange or substitution. "Paying Agent" shall have the meaning specified in Section 2.3. "Payment Blockage Period" shall have the meaning specified in Section 11.3. "Payment Default" shall have the meaning specified in Section 6.1(e). "Permitted Holders" means each of MacKay Shields LLC, Citicorp Mezzanine III, L.P., Metropolitan Life Insurance Company, Exis Differential Holdings, Ltd., TCW Shared Opportunity Fund II, L.P., Shared Opportunity Fund IIB LLC, TCW Shared Opportunity Fund IV, L.P., TCW Shared Opportunity Fund IVB, L.P., AIMCO CDO, Series 2000-A, TCW High Income Partners, Ltd. and TCW High Income Partners II, Ltd. and its Related Persons and Affiliates. "Permitted Investments" means (i) any Investment in the Company or in a Restricted Subsidiary; (ii) any Investment in Cash Equivalents; (iii) Investments by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (a) such Person becomes a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary; (iv) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made in compliance with Section 4.20; (v) any Investment solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; and (vi) any Investments received in compromise of obligations of such persons incurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; and (vii) Investments existing on the date hereof. 14 "Permitted Liens" means (i) Liens in favor of the Company or a Restricted Subsidiary; (ii) Liens securing Senior Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred pursuant to this Indenture at the time incurred; (iii) Liens on property of a Person existing at the time such Person is merged into, consolidated with or otherwise acquired by the Company or any Restricted Subsidiary of the Company, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person merged into or consolidated with the Company or such Restricted Subsidiary; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company; provided that such Liens were not created in contemplation of such acquisition and do not extend to any other assets of the Company or any Restricted Subsidiary of the Company; (v) Liens on the property of the Company or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property and which do not in the aggregate impair in any material respect the use of property in the operation of the business of the Company and the Restricted Subsidiaries taken as a whole; (vi) Liens existing on the date of this Indenture; (vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (viii) Liens arising in the ordinary course of business with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, shall be required by GAAP shall have been made therefor; (ix) zoning restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property or minor irregularities of title incident thereto that do not, in the aggregate, materially detract from the value of the property or the assets of the Company or any Restricted Subsidiary or impair the use of such property in the operation of the Company's or any Restricted Subsidiary's business; (x) judgment Liens to the extent that such judgments do not cause or constitute an Event of Default; (xi) Liens to secure the payment of all or a part of the purchase price of property or assets acquired or constructed in the ordinary course of business on or after the date of this Indenture, provided that (a) such property or assets are used in the same or a similar line of business as the Company or the applicable Restricted Subsidiary was engaged in on the date of this Indenture, (b) at the time of incurrence of any such Lien, the aggregate principal amount of the obligations secured by such Lien shall not exceed the cost of the assets or property (or portions thereof) so acquired or constructed, (c) each such Lien shall encumber only the assets or property (or portions thereof) so acquired or constructed and shall attach to such property within 120 days of the purchase or construction thereof and (d) any Indebtedness secured by such Lien shall have been permitted to be incurred under Section 4.11; (xii) precautionary filings of any financial statement under the Uniform Commercial Code (or equivalent 15 statutes) of any jurisdiction made in connection with Capital Lease Obligations permitted to be incurred under Section 4.11; (xiii) liens incurred in the ordinary course of business securing assets having a fair market value not in excess of $500,000 in the aggregate; (xiv) Liens to secure permitted Refinancing Indebtedness incurred to refinance existing Indebtedness or permitted Refinancing Indebtedness which is secured by Liens permitted by this clause (xiv); provided, that such Liens do not extend to any categories of assets other than the categories of assets securing existing Indebtedness as of the date of this Indenture; (xv) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (xvi) Liens incurred in the ordinary course of business in connection with (a) worker's compensation, social security, unemployment insurance and other like laws or (b) sales contracts, leases, statutory obligations, work in progress advances and other similar obligations not incurred in connection with the borrowing of money or the payment of the deferred purchase price of property; (xvii) Liens in favor of customs and revenues authorities which secure payment of customs duties in connection with the importation of inventory; (xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto; (xix) Liens consisting of rights of set-off of a customary nature or banker's liens on amounts on deposit in accounts, whether arising by contract or operation of law, incurred in the ordinary course of business; and (xx) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries. "Permitted Refinancing" shall have the meaning specified in Section 4.11. "Person" or "person" means an individual, limited or general partnership, corporation, limited liability company, association, unincorporated organization, trust, joint stock company or joint venture, or a government or any agency or political subdivision thereof. "principal" of any Indebtedness means the principal of such Indebtedness plus, without duplication, any applicable premium, if any, on such Indebtedness. "property" means any right or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Purchase Money Obligations" of any Person means any obligations of such Person or any of its Restricted Subsidiaries to any seller or any other Person incurred or assumed in connection with the purchase of real or personal property or in the Capital Stock of a Person owning such real or personal property to be used in the business of such Person or any of its subsidiaries within 180 days of such incurrence or assumption. "Qualified Stock" means any Capital Stock of the Company that is not Disqualified Stock. 16 "Receivables" means the consolidated trade receivables of the Company, net of allowance for doubtful accounts, as determined in accordance with GAAP. "Record Date" means a Record Date specified in the Notes whether or not such Record Date is a Business Day. "Redemption Date" means, when used with respect to any Note to be redeemed, the date fixed for such redemption pursuant to Article III of this Indenture and Paragraph 5 in the form of Note. "Redemption Price" means, when used with respect to any Note to be redeemed, the redemption price for such redemption pursuant to Paragraph 5 in the form of Note, which shall include, without duplication, in each case, accrued and unpaid interest, if any, to and including the Redemption Date. "Refinancing Indebtedness" shall have the meaning specified in Section 4.11. "Registrar" shall have the meaning specified in Section 2.3. "Related Business" means any business which is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the date hereof. "Related Person" of any Person means any other Person directly or indirectly owning (a) 5% or more of the outstanding Common Stock of such Person (or, in the case of a Person that is not a corporation, 5% or more of the equity interests in such Person) or (b) 5% or more of the combined voting power of the Voting Stock of such Person. "Representative" means, any trustee, agent or representative (if any) for an issue of Senior Indebtedness of the Company. For purposes of Article XI hereof, the "Representative" of Senior Indebtedness shall be deemed to be solely the agent or similar designee under the Credit Agreement until such time as no Credit Agreement remains in existence; thereafter, the "Representative" shall be deemed to be solely the trustee, agent or similar designee under the Senior Secured Note Indenture. "Repurchase Date" shall have the meaning specified in Section 4.20. "Repurchase Offer Period" shall have the meaning specified in Section 4.20. "Repurchase Price" shall have the meaning specified in Section 4.20. "Restricted Investment" means an Investment other than a Permitted Investment. With respect to Unrestricted Subsidiaries or Restricted Subsidiaries, the amount of Restricted Investments shall be calculated as the greater of (i) the book value 17 of assets contributed by the Company or a Restricted Subsidiary or (ii) the Fair Market Value of the assets contributed by the Company or a Restricted Subsidiary (as certified by a resolution of independent directors of the Company. "Restricted Payment" shall have the meaning specified in Section 4.12. "Restricted Subsidiary" means (i) any Subsidiary of the Company (other than a Subsidiary that is also a Subsidiary of an Unrestricted Subsidiary) organized or acquired after the date of this Indenture, unless such Subsidiary shall have been designated as an Unrestricted Subsidiary by resolution of the Board of Directors as provided in and in compliance with the definition of "Unrestricted Subsidiary" and (ii) any Unrestricted Subsidiary which is designated as a Restricted Subsidiary by the Board of Directors of the Company; provided that immediately after giving effect to the designation referred to in clause (ii), no Default or Event of Default shall have occurred and be continuing and the Company could incur at least $1.00 of additional Indebtedness under Section 4.11. The Company shall evidence any such designation to the Trustee by promptly filing with the Trustee an Officers' Certificate certifying that such designation has been made and stating that such designation complies with the requirements of the immediately preceding sentence. "Revolver" means the revolving credit facility extended to the Company as part of the New Credit Facility under the Credit Agreement. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Senior Indebtedness" means, with respect to the Company and its Restricted Subsidiaries, the Obligations of the Company and its Restricted Subsidiaries under (i) the Credit Agreement, and (ii) the Senior Secured Notes Indenture and the Senior Secured Notes. "Senior Secured Notes" means the Company's 11% Senior Secured Notes due 2010, issued pursuant to the Senior Secured Notes Indenture, and any securities issued in exchange or in substitution therefor. "Senior Secured Notes Change of Control Offer" means an offer to purchase Senior Secured Notes upon a Change of Control pursuant to the provisions of the Senior Secured Notes Indenture. "Senior Secured Notes Indenture" means the Indenture, dated the date hereof, among the Company the Subsidiary Guarantors parties thereto and The Bank of New York, as trustee, relating to the Senior Secured Notes, as may be amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof. 18 "Special Record Date" for payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.12. "Stated Maturity," when used with respect to any Note, means September 30, 2013. "Subordinated Obligations" means, with respect to the Company and its Restricted Subsidiaries, the Obligations of the Company and its Restricted Subsidiaries under the Indenture, the Notes and all related agreements, instruments and documents. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of 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 such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Persons or one or more Subsidiaries of such Person or any combination thereof. "Subsidiary Guarantee" means a guarantee on the terms set forth in this Indenture by a Subsidiary Guarantor of the Company's obligations with respect to the Notes. "Subsidiary Guarantor" means each Domestic Restricted Subsidiary and any other Person that becomes a Subsidiary Guarantor pursuant to the provisions of Section 4.18 hereof or who otherwise exercises and delivers supplemental indenture to the Trustee providing for a Subsidiary Guarantee. "Term Loan" means the term loan made to the Company and certain of the Restricted Subsidiaries as part of the New Credit Facility under the Credit Agreement. "TIA" means the Trust Indenture Act of 1939, as amended and in effect on the date of the execution of this Indenture unless otherwise specified herein. "Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "Trust Officer" means any officer within the corporate trust division (or any successor group) of the Trustee or any other officer of the Trustee customarily performing functions similar to those performed by the Persons who at that time shall be such officers, and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such trust matter is referred because of his knowledge of and familiarity with the particular subject. 19 "Unrestricted Subsidiary" means, until such time as any of the following shall be designated as a Restricted Subsidiary of the Company by the Board of Directors of the Company as provided in and in compliance with the definition of "Restricted Subsidiary," (i) any Subsidiary of the Company or of a Restricted Subsidiary of the Company organized or acquired after the date of this Indenture that is designated concurrently with its organization or acquisition as an Unrestricted Subsidiary by resolution of the Board of Directors of the Company, (ii) any Subsidiary of any Unrestricted Subsidiary and (iii) any Restricted Subsidiary of the Company that is designated as an Unrestricted Subsidiary by resolution of the Board of Directors of the Company, provided that (a) immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing, (b) any such designation shall be deemed, at the election of the Company at the time of such designation, to be either (but not both) (x) the making of a Restricted Payment at the time of such designation in an amount equal to the Investment in such Subsidiary subject to the restrictions contained in Section 4.12 or (y) the making of an Asset Sale at the time of such designation in an amount equal to the Investment in such Subsidiary subject to the restrictions contained in Section 4.20, and (c) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of, or own or hold any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated. A Person may be designated as an Unrestricted Subsidiary only if and for so long as such Person (i) has no Indebtedness other than Non- Recourse Debt; (ii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to make any payment to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (iii) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. The Company shall evidence any designation pursuant to clause (i) or (iii) of the first sentence hereof to the Trustee by filing with the Trustee within 45 days of such designation an Officers' Certificate certifying that such designation has been made and, in the case of clause (iii) of the first sentence hereof, the related election of the Company in respect thereof. "U.S. Government Obligations" means direct non-callable obligations of, or noncallable obligations guaranteed by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers, general partners or trustees of any Person (irrespective of whether or not, at the time, Capital Stock of any other class or classes shall have, or might have, voting power by reasons of the happening of any contingency) or, with respect to a partnership (whether general or limited), any general partner interest in such partnership. 20 "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, 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 payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall be at the time be beneficially owned by such Person either directly or indirectly through Wholly Owned Subsidiaries. SECTION 1.2 INCORPORATION BY REFERENCE OF TIA. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: (1) "indenture securities" means the Notes. (2) "indenture security holder" means a Holder or a Noteholder. (3) "indenture to be qualified" means this Indenture. (4) "indenture trustee" or "institutional trustee" means the Trustee. (5) "obligor" on the indenture securities means the Company and any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them thereby. SECTION 1.3 RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; 21 (5) provisions apply to successive events and transactions; (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (7)references to Sections or Articles means reference to such Section or Article in this Indenture, unless stated otherwise; and (8) terms defined in this Article include the plural as well as the singular. ARTICLE II THE NOTES SECTION 2.1 FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage in addition to those set forth in Exhibit A hereto. The Company shall approve the form of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. To the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (a) Global Notes. Subject to the right of holders to take Definitive Notes, the Notes issued hereunder shall be evidenced by a Global Note, deposited with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Global Note 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. The Global Note shall represent such of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and transfers of interests therein in accordance with the terms of this Indenture. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the principal amount of outstanding Notes 22 represented thereby shall be made by the Trustee or Note Custodian, at the election of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.6 hereof. Except as set forth in Section 2.6 hereof, the Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee. (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to the Global Notes deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with Section 2.2, authenticate and deliver the Global Note, which (i) shall be registered in the name of the Depositary or the nominee of the Depositary and (ii) shall be delivered by the Trustee to the Depositary pursuant to the Depositary's instructions or held by the Trustee as custodian for the Depositary. Agent Members shall have no rights either under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary 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 impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of an owner of a beneficial interest in any Global Note. (c) Definitive Notes. Notes issued in certificated form shall be substantially in the form of Exhibit A attached hereto registered in the name of the Holder thereof, substantially in the form of Exhibit A hereto except that such Notes shall not bear the Global Note legend referred to in footnote 1 thereto. SECTION 2.2 EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be impressed, affixed, imprinted or reproduced on the Notes and may be in facsimile form. 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. The signature shall be conclusive evidence that the Note has been authenticated pursuant to the terms of this Indenture. 23 The Trustee shall, upon written order of the Company signed by two Officers, authenticate Notes for original issue in the aggregate principal amount of up to $100,000,000 in one or more series. The aggregate principal amount of Notes outstanding at any time may not exceed $100,000,000 except as provided in Section 2.8. As of the date of this Indenture, there shall be issued, authenticated and outstanding not more than $100,000,000 aggregate principal amount of Notes. The written order shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company, any Affiliate of the Company, or any of their respective Subsidiaries. SECTION 2.3 REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency, where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes (including principal and interest thereon) and of their transfer and exchange. The Company may have one or more co-Registrars and one or more additional Paying Agents. The term "Registrar" includes any co-Registrars and the term "Paying Agent" includes any additional Paying Agent. The Company or any of its Restricted Subsidiaries may act as Paying Agent or Registrar. The Company shall enter into an appropriate written agency agreement with any Agent not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall promptly notify the Trustee in writing of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be duly compensated therefor in accordance with the Trustee's customary fees for providing such service. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company hereby initially appoints the Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees so to act. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to any Global Notes. 24 The Company initially appoints the Trustee to act as Note Custodian with respect to any Global Notes. SECTION 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of Holders and the Trustee all assets held by the Paying Agent for the payment of principal, premium and interest with respect to the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and shall notify the Trustee in writing of any Default in making any such payment. If either of the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate such assets and hold them as a separate trust fund for the benefit of the Holders and the Trustee. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed, and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the Paying Agent, the Paying Agent (if other than the Company or an Affiliate of the Company) shall have no further liability for such assets. SECTION 2.5 NOTEHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders 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 seven 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 reasonably may require of the names and addresses of Holders (which list may be conclusively relied upon by the Trustee) and the Company shall otherwise comply with Section 312(a) of the TIA. SECTION 2.6 TRANSFER AND EXCHANGE. (a) Transfer and Exchange of Global Notes. (i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture and the procedures of the Depositary therefor. Notwithstanding any other provision in this Indenture, no Global Note may be transferred to, or registered or exchanged for Notes registered in the name of, any Person other than the Depositary for such Global Note or any nominee thereof, and no such transfer may be registered, unless (i) such Depositary (A) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (B) ceases to be a clearing agency registered under the Exchange Act, (ii) the Company delivers to the Trustee an Officers' Certificate stating that such Global Note shall be so transferable, registrable, and exchangeable, and such transfers shall be registrable, or (iii) upon the request of a Holder if there shall have occurred and be continuing an Event of Default with respect to the Notes evidenced by such Global Note. Notwithstanding any other provision in this Indenture, a Global Note to which the restriction set forth in the preceding sentence shall have ceased to apply may be transferred only to, and may be 25 registered and exchanged for Notes registered only in the name or names of, such Person or Persons as the Depositary for such Global Note shall have directed, and no transfer thereof other than such a transfer may be registered. Every Note authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Note to which the restriction set forth in the first sentence of this paragraph shall apply, whether pursuant to this Section 2.6 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note. (ii) When a Global Note is presented to the Registrar with a request (1) to register the transfer of the Global Note or (2) to exchange such Global Note for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer or make the exchange of its requirements for such transactions are met; provided, however, that any Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or by his attorney duly authorized in writing. To permit registrations of transfer and exchanges, the Company shall issue and the Trustee shall authenticate Notes at the Registrar's request, subject to such rules as the Trustee may reasonably require. (b) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented to the Registrar with a request to register the transfer of such Definitive Notes, or to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested only if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes presented and surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the older thereof or his attorney duly authorized in writing. (c) Transfer of a Definitive Note for a Beneficial Interest in the Global Note. A Definitive Note may be exchanged for a beneficial interest in the Global Note only upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate instruments of transfer, in form reasonably satisfactory to the Trustee and the Company, together with written instructions directing the Trustee to make an endorsement on the Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Global Note. (d) Transfer of a Beneficial Interest in a Global Note for a Definitive Note. A beneficial interest in the Global Note may be exchanged for a Definitive Note only under the circumstances described in Section 2.6(g) and upon receipt by the Trustee of written transfer instructions (or such other form of instructions as is customary for the Depositary) from the Depositary (or its nominee) on behalf of any Person having a beneficial interest in a Global Note that such Note is being transferred, in which case the Trustee shall, in accordance with the standing instructions and procedures existing 26 between the Depositary and the Trustee, cause the aggregate principal amount of the Global Note to be reduced accordingly and, following such reduction, the Company shall execute and the Trustee shall authenticate and make available for delivery to the transferee a Definitive Note in the appropriate principal amount. Definitive Notes issued in exchange for a beneficial interest in a Global Note pursuant to subsection (a) this Section 2.6 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive Notes to the persons in whose names such Notes are so registered. (e) Cancellation and/or Adjustment of the Global Note. At such time as all beneficial interests in the Global Note have either been exchanged for Definitive Notes, redeemed, repurchased or canceled, the Global Note shall be returned to or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in the Global Note is exchanged for Definitive Notes, redeemed, repurchased or canceled, the aggregate principal amount of Notes represented by such Global Note shall be reduced accordingly, and an endorsement shall be made on such Global Note by the Trustee to reflect such reduction. (f) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges effected in accordance with this Indenture, the Company shall execute and the Trustee shall authenticate the Global Note and any Definitive Notes at the Registrar's request. The Global Note and any Definitive Notes issued upon any registration of transfer or exchange of beneficial interests in the Global Note or the Definitive Notes shall be legal, valid and binding obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Definitive Notes or Global Note surrendered upon such registration of transfer or exchange. (ii) Neither the Company nor the Registrar shall be required to (a) issue, register the transfer of or exchange Notes during a period beginning at the opening of business on a Business Day 15 days before the day of mailing of any notice of redemption of Notes under Section 3.3 hereof and ending at the close of business on the day of such mailing or (b) register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iii) No service fee shall be charged to any Holder of a Note for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.10, 3.7, 4.20, 4.21 or 9.5 hereof, which shall be paid by the Company). 27 (iv) Prior to due presentment to the Trustee for registration of the transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (v) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2 hereof. (vi) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile. (vii) The Trustee is hereby authorized to enter into a letter of representation with the Depositary in the form provided by the Company and to act in accordance with such letter. (g) Legends. The following legend shall appear on the face of all Global Notes issued under this Indenture: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF SUCH SECURITY ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) AS PERMITTED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE OF THE UNITED 28 STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (F) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF US $250,000, FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF THE SECURITIES IN VIOLATION OF THE SECURITIES ACT OR (G) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION PURSUANT TO CLAUSES (D), (E), (F) OR (G) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO, OR IN SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE 29 HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." SECTION 2.7. REPLACEMENT NOTES. If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims and submits an affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the effect that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Company and the Trustee, to protect the Company, the Trustee or any agent from any loss which any of them may suffer if a Note is replaced. The Company may charge such Holder for its reasonable, out-of-pocket expenses in replacing a Note. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion, may, instead of issuing a new Note, pay such Note, upon satisfaction of the conditions set forth in the preceding paragraph. Every new Note issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and such new Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section 2.7 are exclusive and shall preclude (to the extent lawful) all other rights and remedies of any Holder with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.8. OUTSTANDING NOTES. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee (including any Note represented by a Global Note) except those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee hereunder and those described in this Section 2.8 as not outstanding. A Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note, except as provided in Section 2.9. If a Note is replaced pursuant to Section 2.7 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.7. 30 If on a Redemption Date the Paying Agent (other than the Company or an Affiliate of the Company) holds Cash or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date in accordance with Section 3.6 hereof and payment of the Notes called for redemption is not otherwise prohibited pursuant to Article XI hereof or otherwise, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. SECTION 2.9. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, amendment, supplement, waiver or consent, Notes owned by the Company or an Affiliate of the Company shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, amendment, supplement, waiver or consent, only Notes that a Trust Officer of the Trustee actually knows are so owned shall be disregarded. The Trustee may require an Officer's Certificate listing Notes owned by the Company, a subsidiary of the Company or an Affiliate of the Company. SECTION 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Company may prepare and, upon written order of the Company specifying the amount of temporary Notes and date on which the temporary Notes are to be authenticated, the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company reasonably and in good faith considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as permanent Notes authenticated and delivered hereunder. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent (other than the Company or an Affiliate of the Company), and no one else, shall cancel and, at the written direction of the Company, shall dispose of all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.7, the Company may not issue new Notes to replace Notes that have been paid or delivered to the Trustee for cancellation. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.11, except as expressly permitted in the form of Notes and as permitted by this Indenture. 31 SECTION 2.12. DEFAULTED INTEREST. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Note (or one or more predecessor Notes) is registered at the close of business on the Record Date for such interest. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date plus, to the extent lawful, interest payable on the defaulted interest at the same rate per annum borne by the Notes (collectively, herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Record Date, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of Cash equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such Cash when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as provided in this clause (1). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Note register not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the Notes (or their respective predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such 32 notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 2.12, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. SECTION 2.13. PERSONS DEEMED OWNERS. The Company, the Trustee, any Paying Agent and any authenticating agent may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payments of principal of, premium, if any, or interest on such Note and for all other purposes. None of the Company, the Trustee, any Paying Agent or any authenticating agent shall be affected by any notice to the contrary. SECTION 2.14. ISSUANCE OF ADDITIONAL NOTES . The Company shall be entitled, subject to its compliance with Section 4.11 hereof, to issue Additional Notes under this Indenture which shall have identical terms as the Initial Notes issued on the date hereof, other than with respect to the date of issuance, and issue price. The Initial Notes issued on the date hereof and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including without limitation, directions, waivers, consents, redemptions and Offers to Purchase. With respect to any Additional Notes, the Company shall set forth in a Board Resolution and an Officers' Certificate, a copy of each of which shall be delivered to the Trustee, the following information: (a) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture; (b) the issue price, the issue date and the CUSIP and/or ISIN number of such Additional Notes; and (c) whether such Additional Notes shall be subject to the restrictions on transfer set forth in Section 2.6 hereof relating to Restricted Global Notes and Restricted Definitive Notes. SECTION 2.15. CUSIP NUMBERS. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only 33 on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the "CUSIP" numbers. ARTICLE III REDEMPTION SECTION 3.1. RIGHT OF REDEMPTION. Redemption of Notes, as permitted by any provision of this Indenture, shall be made in accordance with Paragraph 5 of the Notes and this Article III. SECTION 3.2. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.8 hereof and Paragraph 5 of the Notes, it shall notify the Trustee in an Officer's Certificate of the Redemption Date, the Redemption Price, the principal amount of Notes to be redeemed and stating that the redemption will comply with the conditions contained herein and whether it wants the Trustee to give notice of redemption to the Holders. If the Company elects to reduce the principal amount of Notes to be redeemed pursuant to Section 3.8 hereof and Paragraph 5 of the Notes by crediting against any such redemption Notes it has not previously delivered to the Trustee for cancellation, it shall so notify the Trustee of the amount of the reduction and deliver such Notes with such notice. The Company shall give each notice to the Trustee provided for in this Section 3.2 at least 45 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee). Any such notice may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3.3. SELECTION OF NOTES TO BE REDEEMED. If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed in such manner as complies with any applicable depositary, legal and national securities exchange or automated quotation system if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall determine to be fair and appropriate, provided that no Notes of $1,000 principal amount or less shall be redeemed in part. The Trustee shall make the selection from the Notes outstanding and not previously called for redemption and shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial 34 redemption, the principal amount thereof to be redeemed. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Notes that have denominations larger than $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.4. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a Redemption Date, the Company shall send a notice of redemption, by first class mail, to the Trustee and to each Holder whose Notes are to be redeemed. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Each notice for redemption shall identify the Notes to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price, including the amount of accrued and unpaid interest, if any, to be paid upon such redemption; (3) the name, address and telephone number of the Paying Agent; (4) that Notes called for redemption must be surrendered to the Paying Agent at the address specified in such notice to collect the Redemption Price; (5) that, unless (a) the Company defaults in its obligation to deposit Cash with the Paying Agent in accordance with Section 3.6 hereof or (b) such redemption payment is prohibited pursuant to this Indenture or otherwise, Notes called for redemption cease to accrue interest on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price, including accrued and unpaid interest thereon to, but excluding, the Redemption Date, upon surrender to the Paying Agent of the Notes called for redemption and to be redeemed; (6) if any Note is being redeemed in part, the portion of the principal amount, equal to $1,000 or any integral multiple thereof, of such Note to be redeemed and that, after the Redemption Date, and upon surrender of such Note, a new Note or Notes in aggregate principal amount equal to the unredeemed portion thereof will be issued; (7) if less than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of such Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption; 35 (8) the CUSIP number of the Notes to be redeemed; and (9) that the notice is being sent pursuant to this Section 3.4 and pursuant to the redemption provisions of Paragraph 5 of the Notes. SECTION 3.5. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.4, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price, including accrued and unpaid interest, if any, to the Redemption Date. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price, including accrued and unpaid interest, if any, to, but excluding, the Redemption Date; provided that if the Redemption Date is after a regular Record Date and on or prior to the corresponding Interest Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant Record Date; and provided, further, that if a Redemption Date is not a Business Day, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day. SECTION 3.6. DEPOSIT OF REDEMPTION PRICE. On or prior to the Redemption Date, the Company shall deposit with the Paying Agent (other than the Company or an Affiliate of the Company) Cash sufficient to pay the Redemption Price of, including accrued and unpaid interest on all Notes to be redeemed on such Redemption Date (other than Notes or portions thereof called for redemption on that date that have been delivered by the Company to the Trustee for cancellation). The Paying Agent shall promptly return to the Company any Cash so deposited which is not required for that purpose upon the written request of the Company. If the Company complies with the preceding paragraph and the other provisions of this Article III and payment of the Notes called for redemption is not prohibited under this Indenture or otherwise, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. Notwithstanding anything herein to the contrary, if any Note surrendered for redemption in the manner provided in the Notes shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall continue to accrue and be paid from the Redemption Date until such payment is made on the unpaid principal, and, to the extent lawful, on any interest not paid on such unpaid principal, in each case at the rate and in the manner provided in Section 4.1 hereof and the Note. SECTION 3.7. NOTES REDEEMED IN PART. Upon surrender of a Note that is to be redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder, without service 36 charge to the Holder, a new Note or Notes equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.8. OPTIONAL REDEMPTION. The Notes may be redeemed in whole or from time to time in part at any time, at the option of the Company, at the Redemption Prices (expressed as a percentage of principal amount) set forth below with respect to the indicated Redemption Date, in each case, plus any accrued but unpaid interest to, but excluding, the Redemption Date.
If redeemed during the 12-month period beginning September 30, Redemption Price - ----------------------- ---------------- 2003................................................ 103% 2004................................................ 102% 2005................................................ 101% 2006 and thereafter................................. 100%
SECTION 3.9. MANDATORY REDEMPTION. Except as set forth under Sections 4.20 and 4.21 hereof, the Company shall not be required to make mandatory redemption payments with respect to the Notes. ARTICLE IV COVENANTS SECTION 4.1. PAYMENT OF NOTES. The Company shall pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes. An installment of principal of, or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds for the benefit of the Holders, on or before 10:00 a.m. New York City time on that date, Cash deposited and designated for and sufficient to pay the installment. The Company shall pay interest on overdue principal and on overdue installments of interest at the rate specified in the Notes compounded semi-annually, to the extent lawful. SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and 37 where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.2. 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; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby initially designates the corporate trust office of the Trustee as such office. SECTION 4.3. CORPORATE EXISTENCE. Subject to Article V, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate or other existence of each of its Subsidiaries in accordance with the respective organizational documents of each of them and the rights (charter and statutory) and corporate franchises of the Company and each of its Subsidiaries; provided, however, that the Company shall not be required to preserve, with respect to itself, any right or franchise, and with respect to any of its Subsidiaries, any such existence, right or franchise, if (a) the Company shall, in good faith, reasonably determine that the preservation thereof is no longer desirable in the conduct of the business of such entity and (b) the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 4.4. PAYMENT OF TAXES AND OTHER CLAIMS. Except with respect to immaterial items, the Company shall, and shall cause each of its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company or any of its Subsidiaries or any of their respective properties and assets and (ii) all lawful claims, whether for labor, materials, supplies, services or anything else, which have become due and payable and which by law have or may become a Lien upon the property and assets of the Company or any of its Subsidiaries; provided, however, that neither the Company nor any Subsidiary shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which disputed amounts adequate reserves have been established in accordance with GAAP. 38 SECTION 4.5. MAINTENANCE OF PROPERTIES AND INSURANCE. The Company shall cause all material properties used or useful to the conduct of its business and the business of each of its Subsidiaries to be maintained and kept in good condition, repair and working order (reasonable wear and tear excepted) and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in its reasonable good faith judgment may be necessary, so that the business carried on in connection therewith may be properly conducted at all times; provided, however, that nothing in this Section 4.5 shall prevent the Company or any Subsidiary from discontinuing any operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is (a) in the judgment of the Company, desirable in the conduct of the business of such entity and (b) not disadvantageous in any material respect to the Holders. The Company shall provide, or cause to be provided, for itself and each of its Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the reasonable, good faith judgment of the Company is adequate and appropriate for the conduct of the business of the Company and such Subsidiaries in a prudent manner, with (except for self-insurance) reputable insurers or with the government of the United States of America or an agency or instrumentality thereof, in such amounts, with such deductibles, and by such methods as shall be customary, in the reasonable, good faith judgment of the Company and adequate and appropriate for the conduct of the business of the Company and such Subsidiaries in a prudent manner for entities similarly situated in their industry, unless failure to provide such insurance (together with all other such failures) would not have a material adverse effect on the financial condition or results of operations of the Company or such Subsidiary. SECTION 4.6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. (a) The Company shall deliver to the Trustee within 120 days after the end of its fiscal year an Officers' Certificate complying with Section 314(a)(4) of the TIA and stating that a review of its activities and the activities of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, whether or not the signer knows of any failure by the Company or any Subsidiary of the Company to comply with any conditions or covenants in this Indenture and, if such signor does know of such a failure to comply, the certificate shall describe such failure with particularity. The Officers' Certificate shall also notify the Trustee should the relevant fiscal year end on any date other than the current fiscal year end date. (b) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, promptly upon becoming aware of any Default, Event of Default or fact which would prohibit the making of any payment to or by the Trustee in respect of the Notes, an Officers' Certificate specifying such Default, Event of Default or fact and 39 what action the Company is taking or proposes to take with respect thereto. The Trustee shall not be deemed to have knowledge of any Default, any Event of Default or any such fact unless one of its Trust Officers receives notice thereof from the Company or any of the Holders. SECTION 4.7. REPORTS. Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the Trustee and to each Holder and to prospective purchasers of Notes identified to the Company, within 15 days after it is or would have been required to file such with the Commission, annual and quarterly consolidated financial statements substantially equivalent to financial statements that would have been included in reports filed with the Commission if the Company was subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by the Company's certified independent public accountants as such would be required in such reports to the Commission and, in each case, together with a management's discussion and analysis of financial condition and results of operations which would be so required. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 4.8. LIMITATION ON STATUS AS INVESTMENT COMPANY. Neither the Company nor any of its Subsidiaries shall become an "investment company" (as that term is defined in the Investment Company Act of 1940, as amended), or otherwise become subject to regulation under the Investment Company Act. SECTION 4.9. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of, premium of, interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 40 SECTION 4.10. [RESERVED]. SECTION 4.11. LIMITATION ON THE INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, "incur" and, correlatively, "incurred" and "incurrence") any Indebtedness (including, without limitation, Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any preferred stock; provided, however, that the Company and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) if after giving effect to the incurrence of such Indebtedness and the application of the proceeds thereof, the Consolidated Coverage Ratio of the Company and its Restricted Subsidiaries (on a consolidated basis) would not exceed 2.00 to 1.00. The foregoing limitations shall not apply to: (i) Indebtedness incurred by the Company and its Restricted Subsidiaries under the Credit Agreement in an aggregate principal amount at the time incurred equal to the greater of (i) $102 million and (ii) the Borrowing Base Amount; (ii) Indebtedness represented by the Senior Secured Notes; (iii) additional Indebtedness incurred by the Company in respect of Capital Lease Obligations or Purchase Money Obligations in an aggregate principal amount not to exceed $10,000,000 at any time outstanding; (iv) Indebtedness represented by the Notes and this Indenture; (v) Hedging Obligations incurred by the Company pursuant to agreements or other arrangements designed to protect the Company against fluctuations in interest rates and/or currency exchange rate resulting from its borrowings under the Credit Agreement; (vi) additional unsecured Indebtedness which is subordinate in right of payment to the Notes, not to exceed $5,000,000 at any time outstanding; (vii) Indebtedness of the Company to any of its Wholly Owned Subsidiaries that is a Restricted Subsidiary, and Indebtedness of any Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary to the Company or any of its Wholly Owned Subsidiaries that is a Restricted Subsidiary (the Indebtedness incurred pursuant to this clause (vii) being hereinafter referred to as "Intercompany Indebtedness"); provided that in the case of Intercompany 41 Indebtedness of the Company (other than Intercompany Indebtedness pursuant to the Credit Agreement) such obligations shall be unsecured and subordinated in all respects to the Company's obligations pursuant to the Notes; provided, further, that an incurrence of Indebtedness shall be deemed to have occurred upon (a) any sale or other disposition of Intercompany Indebtedness to a Person other than the Company or any of its Restricted Subsidiaries, (b) any sale or other disposition of Equity Interests of any Restricted Subsidiary of the Company which holds Intercompany Indebtedness such that such Restricted Subsidiary ceases to be a Restricted Subsidiary after such sale or other disposition or (c) designation of a Restricted Subsidiary as an Unrestricted Subsidiary; (viii) the incurrence by the Company of Indebtedness issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the Leverage Ratio test set forth in the first paragraph of this covenant or pursuant to clauses (i), (ii) or (iv) of this covenant in whole or in part (the "Refinancing Indebtedness"); provided, however, that (A) (i) the aggregate principal amount of any Refinancing Indebtedness (other than a Credit Agreement Refinancing Indebtedness) shall not exceed the aggregate principal amount of Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded and (ii) the aggregate principal amount of any Credit Agreement Refinancing Indebtedness may exceed the aggregate principal amount of Indebtedness incurred under the Credit Agreement so extended, refinanced, renewed, replaced, defeased or refunded only to the extent permitted under Section 4.11(i) hereof; (B) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (C) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is pari passu with or subordinated in right of payment to the Notes, the Refinancing Indebtedness shall be pari passu with or subordinated, as the case may be, in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded (any such extension, refinancing, renewal, replacement, defeasance or refunding being referred to as a "Permitted Refinancing"); (ix) Indebtedness of the Company or any Restricted Subsidiary consisting of guarantees, indemnities, or obligations in respect of purchase price adjustments, in connection with the acquisition or disposition of any business, assets or Subsidiary of the Company permitted under this Indenture; (x) Indebtedness of the Company or a Restricted Subsidiary owed to any Person in connection with liability insurance provided by such Person to the Company or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business; 42 (xi) Guarantees of Indebtedness permitted to be incurred under this Indenture; (xii) Indebtedness in respect of performance bonds; and (xiii) Indebtedness not included in paragraphs (i) through (xii) above which does not exceed at any time, in the aggregate, $2,000,000. SECTION 4.12. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of Equity Interests, other than (A) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company; or (B) dividends or distributions payable to the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary; (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company (other than any such Equity Interests owned by the Company or a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary); (iii) purchase, redeem, repay, defease or otherwise acquire or retire for value any Indebtedness that is subordinated in right of payment to the Notes except for regularly scheduled payments of interest when due or payment of principal at maturity thereof; (iv) make any Investment (other than a Permitted Investment); (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"); unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been 43 permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Coverage Ratio test set forth in Section 4.11; and (C) such Restricted Payment (the amount of any such payment, if other than cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a resolution in an Officers' Certificate delivered to the Trustee), together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (including Restricted Payments permitted by the next succeeding paragraph, except as set forth therein), shall not exceed the sum of (w) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) commencing on the first day of the Company's first fiscal quarter beginning after the initial issuance of the Notes and ending on the last day of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, 100% of such deficit as a negative number), plus (x) 100% of the aggregate net cash proceeds received by the Company from the issuance or sale since the date of initial issuance of the Notes of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (y) the aggregate cash received by the Company as capital contributions to the Company after the date of initial issuance of the Notes (other than from a Subsidiary), plus (z) any cash received by the Company after the date of initial issuance of the Notes as a dividend or distribution from any of its Unrestricted Subsidiaries or from the sale of any of its Unrestricted Subsidiaries less the cost of disposition and taxes, if any (but in each case excluding any such amounts included in Consolidated Net Income). (b) The foregoing provisions shall not prohibit: (i) the payment of any dividend 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; (ii) the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company, or the defeasance, redemption or repurchase of subordinated Indebtedness in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of Equity Interests of the Company (other than any Disqualified Stock) or out of the net proceeds of a substantially concurrent cash capital contribution received by the Company; provided that the amount of any such proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from Section 4.2(a)(C)(x); 44 (iii) the repayment, defeasance, redemption or repurchase of subordinated Indebtedness with the net proceeds from an incurrence of Refinancing Indebtedness in a Permitted Refinancing; (iv) any Investment made with the proceeds of a substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of Capital Stock of the Company (other than Disqualified Stock); provided, however, the proceeds of such sale shall not be (and have not been) included in Section 4.12(a)(C) hereof; (v) other restricted payments of up to $5,000,000 in the aggregate; (vi) the payment of a dividend or distribution by the Company and its Subsidiaries, directly or indirectly, to ACP Holding in an amount sufficient to permit ACP Holding to pay its consolidated, combined or unitary United States federal, state and local tax liabilities relating to the business of the Company and its Subsidiaries, provided that ACP Holding applies the amount of such dividend or distribution for such purpose at such time; (vii) payments by the Company to NFC Castings or ACP Holding not to exceed an amount necessary to permit NFC Castings or ACP Holding to (A) make payments in respect to its indemnification obligations owing to directors, officers, or other Persons under NFC Castings' or ACP Holding's charter or by-laws or pursuant to written agreements with any such Person, (B) make payments in respect of its other operational expenses (other than taxes) incurred in the ordinary course of business, or (c) make payments in respect of indemnification obligations and costs and expenses incurred by ACP Holding in connection with any offering of common stock of ACP Holding; or (viii) distributions by the Company and the Restricted Subsidiaries in amounts necessary to permit such Person to repurchase securities of such Person from employees of such Person upon the termination of their employment, so long as the aggregate cash amount of all such Distributions by all such Persons, measured at the time when made, does not exceed $250,000 in any fiscal year of the Company. provided, further, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (i), (ii) - (iii), (v) and (viii) no Default or Event of Default shall have occurred and be continuing; provided, further, that the Restricted Payments described in clauses (vi) and (vii), shall not be counted in computing the aggregate amount of all Restricted Payments made pursuant to this Indenture. For purposes of the foregoing calculations, the amount of any Investment that constitutes a Restricted Payment shall be equal to the greater of (i) the net book value of such Investment and (ii) the fair market value of such Investment (in each case as 45 certified by a resolution of the independent directors of the Company if the book value or fair market value of such investment exceeds $1,000,000). 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 this Section 4.12 were computed, which calculations may be based upon the Company's latest available financial statements. SECTION 4.13. LIMITATION ON LIENS. The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Liens on any asset now owned or acquired after the date of this Indenture or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens; provided, that, in the case of Permitted Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes or a Subsidiary Guarantee, the Notes or such Subsidiary Guarantee is secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens. SECTION 4.14. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (a) on its Capital Stock or (b) with respect to any other interest or participation in, or measured by, its profits; (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (iii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iv) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except for such encumbrances or restrictions existing under or by reason of (a) the agreements evidencing the Senior Indebtedness and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that they are not materially more restrictive than the similar restrictions contained in those agreements on the date of this Indenture, (b) this 46 Indenture and the Notes, (c) applicable law, (d) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, (e) customary nonassignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (f) Purchase Money Obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iv) above on the property so acquired; or (g) Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Refinancing Indebtedness are no more restrictive with respect to the provisions set forth in clauses (i), (ii), (iii) and (iv) above than those contained in the agreements governing the Indebtedness being refinanced, (h) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition or (i) restrictions on cash or other deposits or net worth imposed by customers or suppliers under contracts entered into in the ordinary course of business. SECTION 4.15. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit, cause, or suffer any Restricted Subsidiary of the Company to, directly or indirectly, sell, lease, license, 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 arms' length 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 involving aggregate payments in excess of $500,000, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and such Affiliate Transaction is approved by a majority of the disinterested members, if any, of the Board of Directors and (b) with respect to any Affiliate Transaction involving aggregate payments in excess of $20,000,000, an opinion as to the fairness to the Company or such Restricted Subsidiary from a financial point of view issued by a nationally recognized independent financial advisor; provided, however, that the foregoing limitations shall not apply to (i) any reasonable fees, advances and compensation (including incentive compensation) provided to, and indemnity provided on behalf of, officers, directors and employees of NFC Castings, ACP Holding, the Company and its Restricted Subsidiaries as determined in good faith 47 by the Board of Directors of the Company, (ii) transactions between or among the Company and its Wholly Owned Subsidiaries that are Restricted Subsidiaries, (iii) Restricted Payments permitted by Section 4.12, (iv) payment of principal of, and interest on, the Notes or the Senior Subordinated Notes held by Affiliates, (v) payment of the Commitment Fee, (vi) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors; (vii) transactions pursuant to agreements entered into or in effect on the date of this Indenture, including amendments thereto entered into after the date of this Indenture, provided that (A) the terms of any such amendment are not, in the aggregate, less favorable to the Company or such Restricted Subsidiary than the terms of such agreement prior to such amendment and (B) the transactions contemplated by such amendment are otherwise permitted by this Indenture, (viii) Intercompany Indebtedness permitted to be incurred under Section 4.11 hereof or (ix) non-exclusive licenses of intellectual property among the Company and the Restricted Subsidiaries or among the Restricted Subsidiaries. SECTION 4.16. LIMITATION ON LINES OF BUSINESS. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Related Business. SECTION 4.17. LIMITATION ON LAYERING DEBT. Neither the Company nor any Subsidiary Guarantor shall incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness of the Company and senior in any respect in right of payment to the Notes or the Subsidiary Guarantees, as applicable. SECTION 4.18. FUTURE GUARANTORS. The Company shall cause each Person that (a) becomes a Domestic Restricted Subsidiary following the date of this Indenture and (b) guarantees any Indebtedness of the Company or any Subsidiary thereof to execute and deliver to the Trustee a Subsidiary Guarantee at the time such Person becomes obligated under any such Guarantee. SECTION 4.19. PAYMENTS FOR CONSENT. Neither the Company, nor any of the Company's Subsidiaries, shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions hereof or the Notes unless such consideration is offered to be paid or agreed to be paid to all holders of the Notes which so consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. 48 SECTION 4.20. ASSET SALES. Neither the Company nor any of its Restricted Subsidiaries shall engage in any Asset Sale, unless: (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise disposed of; and (ii) at least 20% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of Cash or Cash Equivalents; provided, however, that if the Fair Market Value of the assets sold or otherwise disposed of exceeds $10,000,000, at least 75% of the consideration therefor received by the Company or such Restricted Subsidiaries is in the form of Cash or Cash Equivalents; provided, further, however, that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated in right of payment to the Notes) that are assumed by the transferee of any such assets and (b) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted within 60 days by the Company or such Restricted Subsidiary into cash (to the extent of the cash so received), shall be deemed to be cash for purposes of clause (ii) above. Within 180 days after the receipt of the Net Proceeds from an Asset Sale, the Company shall apply the Net Proceeds from such Asset Sale, to repay the Term Loan, and to the extent such Indebtedness is paid in full, to repay the Revolver (but shall not permanently reduce the commitment thereunder). Pending the final application of any such Net Proceeds, the Company may invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from the Asset Sale that are not applied as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate cumulative amount of Excess Proceeds exceeds $5,000,000, the Company shall make an offer to all Holders of Notes to purchase the maximum principal amount of Notes that may be purchased with the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the date of purchase, in accordance with the procedures set forth in this Section 4.20 (an "Asset Sale Offer"). To the extent that the aggregate principal amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use such deficiency for general corporate purposes in any manner not prohibited by this Indenture. 49 If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. In the event that the Company shall be required to commence an Asset Sale Offer to all Holders to purchase Notes pursuant to this Section 4.20, it shall follow the procedures specified below. The Asset Sale Offer shall be commenced within 30 days following the first date on which the Company has cumulative Excess Proceeds of at least $5,000,000 and remain open for a period of at least 30 and not more than 40 days, except to the extent that a longer period is required by applicable law (the "Repurchase Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Repurchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to this Section 4.20 hereof (the "Repurchase Price") or, if Notes having an aggregate principal amount less than the amount of Excess Proceeds subject to such Asset Sale Offer have been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Repurchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee or to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 4.20 and the length of time the Asset Sale Offer shall remain open; (b) the Asset Sale Offer, the Repurchase Price and the Repurchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Repurchase Date; 50 (e) that Holders electing to have a Note purchased pursuant to a Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note 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 before the Asset Sale Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Repurchase Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Repurchase Price, the Trustee shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Trustee so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Repurchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written order from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Repurchase Date. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws, rules and regulations thereunder to the extent such laws, rules and regulations are applicable in connection with the repurchase of Notes pursuant to Asset Sale Offer. 51 SECTION 4.21. CHANGE OF CONTROL. (a) In the event that a Change of Control occurs, each Holder shall have the right, at such Holder's option, subject to the terms and conditions of this Indenture, to require the Company to repurchase all or any part of such Holder's Notes (provided, that the principal amount of such Notes must be $1,000 or an integral multiple thereof) on a date to be established by the Company (the "Change of Control Payment Date") after the occurrence of such Change of Control, at a cash price (the "Change of Control Repurchase Price") equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon to, but excluding, the Change of Control Payment Date. (b) In the event that, pursuant to this Section 4.21, the Company shall be required to commence an offer to purchase Notes (the "Change of Control Offer"), the Company shall follow the procedures set forth in this Section 4.21 as follows: (1) the Company shall prepare and mail, with a copy to the Trustee, or at the option of the Company and at the expense of the Company, mail by the Trustee, the Change of Control Offer to each Holder of Notes, within 30 days following the completion of the Senior Secured Notes Offer to Purchase, or if no Senior Secured Notes are outstanding at such time, within 30 days following a Change of Control; (2) the Change of Control Offer shall remain open for at least 30 and not more than 40 days (unless otherwise required by applicable law) following its commencement, except to the extent that a longer period is required by applicable law; (3) upon the expiration of a Change of Control Offer, the Company shall purchase all Notes tendered in response to the Change of Control Offer; (4) if the Change of Control Payment Date is on or after an interest payment record date and on or before the related Interest Payment Date, any accrued interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Noteholders who tender Notes pursuant to the Change of Control Offer; (5) the Company shall provide the Trustee with notice of the Change of Control Offer at least five Business Days before the commencement of any Change of Control Offer; and (6) on or before the commencement of any Change of Control Offer, the Company or the Trustee (upon the request and at the expense of the Company) shall send, by first-class mail, a notice to each of the 52 Noteholders, which (to the extent consistent with this Indenture) shall govern the terms of the Change of Control Offer and shall state: (i) that the Change of Control Offer is being made pursuant to such notice and this Section 4.21 and that all Notes, or portions thereof, tendered will be accepted for payment; (ii) the Change of Control Repurchase Price (including the amount of accrued and unpaid interest) the Change of Control Payment Date and the Change of Control Put Date; (iii) that any Note, or portion thereof, not tendered or accepted for payment will continue to accrue interest; (iv) that, unless the Company defaults in depositing Cash with the Paying Agent in accordance with the last paragraph of this clause (b) or such payment is prevented pursuant to Article XI, any Note, or portion thereof, accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (v) that Holders electing to have a Note, or portion thereof, purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent (which may not for purposes of this Section 4.21, notwithstanding anything in this Indenture to the contrary, be the Company or any Affiliate of the Company) at the address specified in the notice prior to the close of business on the earlier of (a) the third Business Day prior to the Change of Control Payment Date and (b) the third Business Day following the expiration of the Change of Control Offer (such earlier date being the "Change of Control Put Date"); (vi) that Holders will be entitled to withdraw their election, in whole or in part, if the Paying Agent (which may not for purposes of this Section 4.21, notwithstanding anything in this Indenture to the contrary, be the Company or any Affiliate of the Company) receives, up to the close of business on the Change of Control Put Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder is withdrawing and a statement that such Holder is withdrawing his election to have such principal amount of Notes purchased; and 53 (vii) a brief description of the events resulting in such Change of Control. On or before the Change of Control Date, the Company shall (i) accept for payment Notes or portions thereof properly tendered pursuant to the Change of Control Offer on or before the Change of Control Payment Date, (ii) deposit with the Paying Agent Cash sufficient to pay the Change of Control Repurchase Price of all Notes or portions thereof so tendered and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate listing the Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to Holders of Notes so accepted payment in an amount equal to the Change of Control Repurchase Price (together with accrued and unpaid interest), and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Note or Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Any Notes not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws, rules and regulations thereunder to the extent such laws, rules and regulations are applicable in connection with the repurchase of Notes pursuant to Change of Control Offer. SECTION 4.22. CALCULATION OF ORIGINAL ISSUE DISCOUNT. The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Notes as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Code from time to time. ARTICLE V SUCCESSORS SECTION 5.1. LIMITATION ON MERGER, CONSOLIDATION OR SALE OF ASSETS. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person or entity unless: (i) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other 54 disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately before or immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing; and (iv) the Company or any Person formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Coverage Ratio test set forth in Section 4.11. The preceding clause (iv) shall not prohibit (A) a merger between the Company or a Subsidiary Guarantor and a Restricted Subsidiary or (B) a merger between the Company and an Affiliate with no substantial assets or liabilities for the sole purpose of incorporating or reincorporating or organizing or reorganizing the Company in another state of the United States, or the District of Columbia. SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.1 hereof. 55 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES SECTION 6.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be caused voluntarily or involuntarily or effected, without limitation, by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) failure to pay any installment of interest on any of the Notes as and when the same becomes due and payable, and the continuance of such failure for a period of 30 days, whether or not such payment is prohibited by Article XI; (b) failure to pay all or any part of the principal of, or premium, if any, on the Notes when and as the same become due and payable at maturity, redemption, repurchase or otherwise, whether or not such payment is prohibited by Article XI; (c) failure by the Company to comply with the provisions of Section 4.20, Section 4.21 or Article V; (d) failure by the Company or any Restricted Subsidiary to observe or perform any covenant or agreement contained in the Notes or this Indenture (other than a default in the performance of any covenant or agreement which is specifically dealt with elsewhere in this Section 6.1), and continuance of such failure for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by Holders of at least 25% in aggregate principal amount of the then outstanding Notes, a written notice specifying such failure, requesting it to be remedied and stating that such notice is a "Notice of Default" hereunder; (e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, which default (a) is caused by a failure to pay principal of such Indebtedness when due and prior to the expiration of the grace period provided in such Indebtedness (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case described in clauses (a) and (b) of this subsection (e), the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5,000,000 or more; 56 (f) failure of the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5,000,000, which judgments have not been paid, stayed, bonded or discharged for a period (during which execution shall not be effectively stayed) of 60 days (or, in the case of any such final judgment which provides for payment over time, which shall so remain unstayed, unbonded or undischarged beyond any applicable payment date provided therein); (g) a decree, judgment, or order by a court of competent jurisdiction shall have been entered adjudging the Company or any of its Restricted Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company or any of its Restricted Subsidiaries under any bankruptcy or similar law, and such decree, judgment, or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of competent jurisdiction over the appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the Company, any of its Restricted Subsidiaries, or of the property of any such Person, or for the winding up or liquidation of the affairs of any such Person, shall have been entered, and such decree, judgment, or order shall have remained in force undischarged and unstayed for a period of 60 days; or (h) the Company or any of its Restricted Subsidiaries shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a Custodian, receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of it or any of its assets or property, or shall make a general assignment for the benefit of creditors; or take any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing; or (i) any Subsidiary Guaranty relating to the Notes ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty), or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty relating to the Notes. Notwithstanding the 30-day period and notice requirement contained in Section 6.1(d) above, with respect to a default under Section 4.21, the 30-day period referred to in Section 6.1(d) shall be deemed to have begun as of the date the Change of Control notice is required to be sent in the event that the Company has not complied with the provisions of Section 4.21 and the Trustee or Holders of at least 25% in principal amount of the outstanding Notes thereafter give the Notice of Default referred to in Section 6.1(d) to the Company and, if applicable, the Trustee; provided, however, that if the breach or default is a result of a default in the payment when due of the Repurchase Price on the Repurchase Date, such Event of Default shall be deemed, for purposes of this Section 6.1, to arise no later than on the last Repurchase Date. 57 SECTION 6.2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT. (a) If an Event of Default (other than an Event of Default specified in Section 6.1(g) or 6.1(h) relating to the Company) occurs and is continuing, then, and in every such case, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of then outstanding Notes, by a notice in writing to the Company (and to the Trustee if given by such Holders) (an "Acceleration Notice"), may declare all of the principal of the Notes (or the Repurchase Price if the Event of Default includes failure to pay the Repurchase Price, determined as set forth below), including in each case accrued and unpaid interest thereon and all other Obligations thereunder, to be due and payable immediately. If an Event of Default specified in Section 6.1(g) or 6.1(h) relating to the Company occurs, all principal, accrued and unpaid interest thereon and all other Obligations thereunder will become immediately due and payable on all outstanding Notes without any other act, declaration or notice on the part of Trustee or the Holders. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article VI, the Holders of no less than a majority in aggregate principal amount of then outstanding Notes, by written notice to the Trustee, may rescind and annul, on behalf of all Holders, any such declaration of acceleration if: (1) Company has paid or deposited with the Trustee Cash sufficient to pay (A) all overdue interest on all Notes, (B) the principal of any Notes which would then be due otherwise than by such declaration of acceleration, and interest thereon at the rate borne by the Notes, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes, and (D) all sums paid or advanced by the Trustee hereunder and the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; (2) all Events of Default, other than the non-payment of the principal of, and premium and interest on Notes that have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.12, including, if applicable, any Event of Default relating to the covenants contained in Section 4.21. Notwithstanding the previous sentence of this Section 6.2, no waiver shall be effective against any Holder for any Event of Default or event which with notice or lapse of time 58 or both would be an Event of Default with respect to any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Note affected thereby, unless all such affected Holders agree, in writing, to waive such Event of Default or other event. No such waiver shall cure or waive any subsequent Default or Event of Default or impair any right consequent thereon. (b) In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of this Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. SECTION 6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if an Event of Default in payment of principal, premium or interest specified in clause (a) or (b) of Section 6.1 occurs and is continuing, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal, premium, interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate borne by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the reasonable costs and expenses of collection, including compensation to, and reasonable expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust in favor of the Holders, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 59 SECTION 6.4. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise to take any and all actions under the TIA, including (1) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same in accordance with Section 6.6; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment, or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust in favor of the Holders, and any recovery of judgment shall, after provision for the payment of compensation to, and expenses, disbursements and advances of the Trustee, its agents and 60 counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. SECTION 6.6. PRIORITIES. Any money collected by the Trustee pursuant to this Article VI shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium or interest upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the Trustee in payment of all amounts due pursuant to Section 7.7; SECOND: To the holders of Senior Indebtedness of the Company to the extent provided in Article XI; THIRD: To the Holders in payment of the amounts then due and unpaid for principal of, and interest on, the Notes in respect or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal, premium and interest, respectively; and FOURTH: The remainder, if any, shall be repaid to the Company. SECTION 6.7. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute or order or direct the Trustee to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (A) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (B) the Holders of not less than 25% in principal amount of then outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (C) such Holder or Holders have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred or reasonably probable to be incurred in compliance with such request; 61 (D) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (E) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of then outstanding Notes; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision of this Indenture but subject to the provisions of Section 6.6 and Article XI, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of, and premium, interest on such Note when due (including, in the case of redemption, the Redemption Price on the applicable Redemption Date, and in the case of the Repurchase Price, on the applicable Repurchase Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 6.9. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 6.10. DELAY OR OMISSION NOT WAIVER. No delay or omission by the Trustee or by any Holder of any Note to exercise any right or remedy arising upon any Event of Default shall impair the exercise of any such right or remedy or constitute a waiver of any such Event of Default. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 62 SECTION 6.11. CONTROL BY HOLDERS. The Holder or Holders of no less than a majority in aggregate principal amount of then outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee, provided, that (1) the Trustee may refuse to follow any direction that conflicts with any rule of law or with this Indenture, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or that may involve the Trustee in personal liability, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. In the event the Trustee takes any action or follows any direction pursuant to this Indenture, the Trustee shall be entitled to indemnification reasonably satisfactory to it against any loss, expense or liability caused by taking such action or following such direction. SECTION 6.12. WAIVER OF PAST DEFAULT. The Holder or Holders of not less than a majority in aggregate principal amount of then outstanding Notes may, on behalf of all Holders, prior to the declaration of acceleration of the maturity of the Notes, waive any past default hereunder and its consequences, except a default (A) in the payment of the principal of, premium, or interest on any Note not yet cured, or (B) in respect of a covenant or provision hereof which, under Article IX, cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair the exercise of any right arising therefrom. In the event of a waiver, the Company shall deliver to the Trustee an Officer's Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents. When a Default or Event of Default is waived, it is cured and ceases. 63 SECTION 6.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted to be taken by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 6.13 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of then outstanding Notes, or to any suit instituted by any Holder for enforcement of the payment of principal of, premium or interest on any Note on or after the respective Stated Maturity of such Note (including, in the case of redemption, on or after the Redemption Date). SECTION 6.14. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. ARTICLE VII TRUSTEE The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and agrees to perform the same, as herein expressed. SECTION 7.1. DUTIES OF TRUSTEE. (a) If a Default or an Event of Default actually known to the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of a Default or an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no others, and no covenants or 64 obligations shall be implied in or read into this Indenture as against the Trustee. (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, with respect to certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.1. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.11 and the Trustee shall be entitled from time to time to request and receive such direction. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or at the request, order or direction of the Holders or in the exercise of any of its rights or powers unless it receives reasonable indemnity satisfactory to it against any loss, liability or expense. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section 7.1. (f) The Trustee shall not be liable for interest on any assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. 65 SECTION 7.2. RIGHTS OF TRUSTEE. Subject to Section 7.1: (a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in any such document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Sections 14.4 and 14.5. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or advice of counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture. (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby. (g) Unless otherwise specifically provided for in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (h) The Trustee shall have no duty to inquire as to the performance of the Company's covenants in Article IV hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 6.1(a) or 6.1(b), or (ii) any Default or Event of Default of which a Trust Officer of the Trustee shall have received written notification or obtained actual knowledge. (i) Subject to Section 9.2 hereof, the Trustee may (but shall not be obligated to), without the consent of the Holders, give any consent, waiver or approval 66 required by the terms hereof. The Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any consent, waiver, approval, amendment or modification shall be deemed to have a material adverse effect on the interest or rights of any Holder. (j) In no event shall the Trustee be responsible or liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. (k) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder. SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any of its Subsidiaries, or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights; however, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.4. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes and it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement in the Notes, other than the Trustee's certificate of authentication, or the use or application of any funds received by a Paying Agent other than the Trustee. SECTION 7.5. NOTICE OF DEFAULT. Except in the case of a Default or an Event of Default in payment of principal, premium or interest to any Note (including the payment of the Repurchase Price on the Repurchase Date and the payment of the Redemption Price on the Redemption Date), the Trustee may withhold the notice if and so long as a Trust Officer in good faith determines that withholding the notice is in the interest of the Noteholders. SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall, if required by TIA Section 313(a), mail to each Noteholder a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b) and 313(c). 67 The Company shall promptly notify the Trustee in writing if the Notes become listed on any stock exchange or automatic quotation system or delisted therefrom. A copy of each report at the time of its mailing to Noteholders shall be mailed to the Company and filed with the Commission, if required by law, and each stock exchange, if any, on which the Notes are listed. SECTION 7.7. COMPENSATION AND INDEMNITY. The Company agrees to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company shall also reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents, accountants, experts and counsel. The Trustee shall not be under any obligation to institute any suit, or take any remedial action under this Indenture, or to enter any appearance or in any way defend any suit in which it may be a defendant, or to take any steps in the execution of the trusts created hereby or thereby or in the enforcement of any rights and powers under this Indenture, until it shall be indemnified to its reasonable satisfaction against any and all expenses, disbursements, advances and other liabilities incurred or made by the Trustee in accordance with any provisions of this Indenture, including compensation for services, costs, expenses, outlays, counsel fees and other disbursements, and against all liability not due to its own negligence or willful misconduct. The Company agrees to indemnify the Trustee (in its capacities as Trustee, Paying Agent, Registrar and Note Custodian) and each of its officers, directors, attorneys-in-fact and agents for, and hold it and each of them harmless against, any claim, demand, expense (including but not limited to reasonable compensation, disbursements and expenses of the Trustee's agents and counsel), loss, damage or liability incurred by it, arising out of or in connection with the administration of this trust and its rights or duties hereunder including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee of which a Trust Officer receives written notice for which it may seek indemnity; however, unless the position of the Company is prejudiced by such failure, the failure of the Trustee to promptly notify the Company shall not limit its right to indemnification. The Company shall defend each such claim. The Trustee may retain separate counsel if the Trustee shall have been reasonably advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Company shall reimburse 68 the Trustee for the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its own negligence, bad faith or willful misconduct. To secure the Company's payment obligations in this Section 7.7, the Company and the Holders agree that the Trustee shall have a lien prior to the Notes on all assets held or collected by the Trustee, in its capacity as Trustee, except assets held in trust to pay principal of, premium or interest on particular Notes pursuant to Article III. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(f) or (g) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The Company's obligations under this Section 7.7 and any lien arising hereunder shall survive the resignation or removal of the Trustee, the discharge of the Company's obligations pursuant to Article VIII of this Indenture and any rejection or termination of this Indenture under any Bankruptcy Law. SECTION 7.8. REPLACEMENT OF TRUSTEE. The Trustee may resign by so notifying the Company in writing. The Holder or Holders of a majority in principal amount of then outstanding Notes may remove the Trustee by so notifying the Company and the Trustee in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10; (b) the Trustee is adjudged bankrupt or insolvent; (c) a receiver, Custodian, or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of this Section 7.8. If the instrument of acceptance by a successor Trustee required by this Section 7.8 shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the removed Trustee may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee. 69 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. At any time within one year after a successor Trustee appointed by the Company takes office, the Holder or Holders of a majority in principal amount of then outstanding Notes may, with the Company's consent, appoint a successor Trustee to replace such successor Trustee as so appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that and provided that all sums owing to the retiring Trustee provided for in Section 7.7 have been paid, the retiring Trustee shall transfer all property held by it as trustee to the successor Trustee, subject to the lien provided in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the Company or any Holder or Holders of at least 10% in principal amount of 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 or Holders of at least 10% in principal amount of then outstanding Notes may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Any successor Trustee shall comply with TIA Section 310(a)(5). Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall continue for the benefit of the retiring Trustee. SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee, provided such corporation shall be otherwise eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and delivery the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. 70 SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus of at least $50,000,000 (or being a member or subsidiary of a bank holding system with aggregate combined capital and surplus of at least $50,000,000) as set forth in its most recent published annual report of condition if such corporation or system publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation or system shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company, as obligor of the Notes. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. SECTION 7.12. "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article VII and in Article X hereof shall in each case (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 VII and in Article X hereof in place of the Trustee. ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII. 71 SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.2, the Company and each of the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.4 hereof, and as more fully set forth in such Section, payments in respect of the principal, premium and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article II and Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article VIII. Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 hereof. SECTION 8.3. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3, the Company and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be released from its obligations under the covenants contained in Sections 4.4, 4.5, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17, 4.18, 4.19, 4.20 and 4.21 hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance") and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and the Subsidiary Guarantees, the Company and the Subsidiary Guarantors, respectively, may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant or Subsidiary Guarantee, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein in a Subsidiary Guarantee or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1 hereof, but, except as specified above, the remainder of this Indenture, such Notes and the Subsidiary Guarantees shall be unaffected thereby. 72 In addition, upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3 hereof, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(c) through 6.1(g) hereof shall not constitute Events of Default. SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.2 or 8.3 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent certified public accountants, to pay the principal, premium and interest on the outstanding Notes on the Stated Maturity thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (b) in the case of an election under Section 8.2 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel from nationally recognized tax counsel reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.3 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel from nationally recognized tax counsel 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 and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or 73 instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; (f) 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 over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; (g) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and (h) the deposit shall not result in the Company, the Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940, as amended. SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.6 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article VII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. 74 SECTION 8.6. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon 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. SECTION 8.7. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Note; shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. SECTION 8.8. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE. When (a)(i) the Company delivers to the Trustee all outstanding Notes for cancellation or (ii) all outstanding Notes have become due and payable, whether at maturity or on a specified redemption date as a result of the mailing of a notice of redemption pursuant to Article III hereof, (b) the Company irrevocably deposits with the Trustee money sufficient to pay at maturity or upon redemption all outstanding Notes, including interest and premium thereon to maturity or such redemption date, and if in either case the Company pays all other sums payable hereunder by the Company, and (c) if the Notes have been called for redemption and the redemption date has not occurred, the Company delivers to the Trustee 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 actions and will be subject to federal income tax on the same amounts, in the same 75 manner and at the same time as would have been the case if such actions had not occurred, then this Indenture shall cease to be of further effect except for (i) the provisions set forth in Article II, Section 4.7, 7.7 and 8.6 hereof and (ii) if the Notes have been called for redemption and the redemption date has not occurred, the Company's obligation to pay the redemption price on such redemption date. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Company. ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.1. WITHOUT CONSENT OF HOLDERS. The Company, the Subsidiary Guarantors and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of Notes: (i) to cure any ambiguity, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to provide for the assumption of the Company's or a Subsidiary Guarantor's Obligations to Holders in the case of a merger or consolidation; (iv) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Notes; (v) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (vi) to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture as of the date hereof; or (vii) to allow any Subsidiary Guarantor to execute a supplemental indenture and/or a Subsidiary Guarantee with respect to the Notes. Upon the request of the Company, accompanied by a resolution of the Board of Directors of the Company, authorizing the execution of any such supplemental indenture or amendment, and upon receipt by the Trustee of the documents described in Section 9.6 hereof required or requested by the Trustee, the Trustee shall join with the Company and the Subsidiary Guarantors in the execution of any supplemental indenture or amendment authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the 76 Trustee shall not be obligated to enter into such supplemental indenture or amendment which affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.2. WITH CONSENT OF HOLDERS. Except as otherwise provided herein, the Company and the Trustee may amend or supplement this Indenture, the Notes or the Subsidiary Guarantees with the written 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). Upon the request of the Company, accompanied by a resolution of the Board of Directors of the Company authorizing the execution of any such supplemental indenture or amendment, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Company and the Subsidiary Guarantors in the execution of such supplemental indenture or amendment unless such supplemental indenture or amendment affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed supplemental indenture or amendment, but it shall be sufficient if such consent approves the substance thereof. After a supplemental indenture or amendment under this Section 9.2 becomes effective, the Company shall mail to the Holders of each Note affected thereby a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture, amendment or waiver. Subject to Sections 6.8 and 6.12 hereof, the Holders of a majority in principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder of Notes affected, an amendment or waiver under this Section may not (with respect to any Notes held by a non-consenting Holder of Notes): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter the optional or mandatory redemption provisions (other than provisions relating to the covenants described in Section 4.20 or 4.21) or reduce the prices at which the Company shall offer to purchase such Notes pursuant to Sections 4.20 or 4.21 hereof; 77 (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or interest on, or redemption payment with respect to, any Note (other than a Default in the payment of an amount due as a result of an acceleration if the Holders of Notes rescind such acceleration pursuant to Section 6.2); (e) make any Note payable in money other than that stated in the Note; (f) make any change in the provisions of this Indenture relating to waiver of past defaults or to the rights of Holders to receive payments of principal, premiums or interest on the Notes or in this sentence of this Section 9.2; (g) waive a redemption payment with respect to any Note; (h) make any change to the subordination provisions of Article XI of this Indenture that adversely affects Holders of Notes; or (i) make any change in the foregoing amendment and waiver provisions. SECTION 9.3. COMPLIANCE WITH TIA. If at the time of an amendment to this Indenture or the Notes, this Indenture shall be qualified under the TIA, every amendment to this Indenture or the Notes shall be set forth in a supplemental indenture that complies with the TIA as then in effect. SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS. Until a supplemental indenture, an amendment 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 debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subsequent Holder may revoke the consent as to such Holder's Note or portion of such Note by notice to the Trustee or the Company received before the date specified in any solicitation or waiver. Subject to Section 9.2 hereof, a supplemental indenture, amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder of Notes. The Company may fix a record date for determining which Holders must consent to such supplemental indenture, amendment or waiver or action permitted by Section 9.2. If the Company fixes a record date, the record date shall be fixed at the later of (i) 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.5, or (ii) such other date as the Company shall designate. 78 SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about a supplemental indenture, amendment 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 or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment or waiver. SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article IX if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be provided with, if requested, an indemnity reasonably satisfactory to it and to receive and, subject to Section 7.1, shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith or therewith, and that it will be valid and binding upon the Company in accordance with its terms. The Company may not sign an amendment or supplemental indenture until the Board of Directors of the Company approves it in writing. ARTICLE X GUARANTEE OF NOTES SECTION 10.1. SUBSIDIARY GUARANTEE. Subject to Section 10.6 hereof, each of the Subsidiary Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes and the Obligations of the Company hereunder and thereunder, that: (a) the principal of and premium and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal, premium, (to the extent permitted by law) interest on the Notes, and all other payment Obligations of the Company to the Holders or to the Trustee hereunder or thereunder will be promptly paid in full and performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount 79 so guaranteed or any performance so guaranteed for whatever reason the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. An Event of Default under this Indenture or the Notes shall constitute an event of default under the Subsidiary Guarantees, and shall entitle the Holders to accelerate, the Obligations of the Subsidiary Guarantors hereunder in the same manner and to the same extent as the Obligations of the Company. The Subsidiary Guarantors hereby agree that their Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary 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 this Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors, or any Note Custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by the Company or any Subsidiary Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor agrees that it shall not be entitled to, and hereby waives, any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (a) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of its Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (b) in the event of any declaration of acceleration of such Obligations as provided in Article VI hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purpose of its Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees. SECTION 10.2. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE. To evidence its Subsidiary Guarantee set forth in Section 10.01 hereof, each Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form of Exhibit B to the Indenture shall be endorsed by manual or facsimile signature by an Officer of such Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on 80 behalf of such Subsidiary Guarantor, by manual or facsimile signature, by an Officer of such Subsidiary Guarantor. After the date of this Indenture, if the Company or any or its Restricted Subsidiaries shall acquire or create a Domestic Restricted Subsidiary, or redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary, then the Company shall cause such Restricted Subsidiary to execute a Subsidiary Guarantee substantially in the form of Exhibit B. Such Subsidiary Guarantee shall be accompanied by an appropriate supplemental Indenture, along with such other opinions, certificates and documents required under this Indenture; provided, however, that any Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with this Indenture need not execute a Subsidiary Guarantee for so long as it continues to constitute an Unrestricted Subsidiary. Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. If an Officer whose signature is on this Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Senior Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors. SECTION 10.3. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. (a) Notwithstanding Articles 4 and 5 hereof, nothing contained in this Indenture shall prohibit (i) a merger between a Subsidiary Guarantor and another Subsidiary Guarantor, (ii) a merger between a Subsidiary Guarantor and the Company, (iii) a liquidation, dissolution or winding up of any Inactive Subsidiary resulting in the transfer or distribution of all the assets and properties of such Inactive Subsidiary to the Company or to any Subsidiary Guarantor, or (iv) a sale, lease, transfer or other disposition of a Non-Core Fixed Asset. (b) No Subsidiary Guarantor shall consolidate or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets (other than the Non-Core Fixed Assets) in one or more related transactions, another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless, other than with respect to a merger between a Subsidiary Guarantor and another Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the Company or a liquidation, dissolution or winding up of an Inactive Subsidiary as permitted under 81 Section 10.3(a)(iii) hereof, (i) the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) subject to the provisions of Section 10.04 hereof, the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made, assumes all the obligations of such Subsidiary Guarantor under the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately before or immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; (iv) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Coverage Ratio test set forth in the first paragraph of Section 4.11 hereof. (c) In the case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Subsidiary Guarantor, such successor Person shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor; provided that, solely for purposes of computing pro forma EBITDA and the Consolidated Coverage Ratio for purposes of Section 4.11 hereof, the pro forma EBITDA of any Person other than the Company and its Restricted Subsidiaries shall only be included for periods subsequent to the effective time of such merger, consolidation, combination or transfer of assets. Such successor Person thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All of the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. SECTION 10.4. RELEASES FOLLOWING SALE OF ASSETS. In the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Subsidiary Guarantor) shall be released and relieved of any obligations under its Subsidiary Guarantee; provided that (i) in the event of an Asset Sale, the Net Proceeds from such sale or other dispositions are treated in accordance with the 82 provisions of Section 4.20 hereof and (ii) the Company is in compliance with all other provisions of this Indenture applicable to such disposition. Upon delivery by the Company to the Trustee of an Officers' Certificate to the effect of the foregoing, the Trustee shall execute any documents reasonably required in order to evidence the release of any Subsidiary Guarantor from its Obligation under its Subsidiary Guarantee. Any Subsidiary Guarantor not released from its Obligations under its Subsidiary Guarantee shall, subject to Section 10.6, remain liable for the full amount of principal of and premium and interest on the Notes and for the other Obligations of such Subsidiary Guarantor under this Indenture as provided in this Article X. SECTION 10.5. RELEASES FOLLOWING DESIGNATION AS AN UNRESTRICTED SUBSIDIARY. In the event that the Company designates a Subsidiary Guarantor to be an Unrestricted Subsidiary, then such Subsidiary Guarantor shall be released and relieved of any obligations under its Subsidiary Guarantee; provided that such designation is conducted in accordance with this Indenture. SECTION 10.6. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY. For purposes hereof, each Subsidiary Guarantor's liability shall be limited to the lesser of (a) the aggregate amount of the Obligations of the Company under the Notes and this Indenture and (b) the amount, if any, which would not have (i) rendered such Subsidiary Guarantor insolvent (as such term is defined in the Bankruptcy Law) or (ii) left such Subsidiary Guarantor with unreasonably small capital at the time its Subsidiary Guarantee of the Notes was entered into; provided that, it will be a presumption in any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in clause (a) above unless any creditor, or representative of creditors of such Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of the Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate liability of the Subsidiary Guarantor is the amount set forth in clause (b) above. In making any determination as to solvency or sufficiency of capital of a Subsidiary Guarantor in accordance with the previous sentence, the right of such Subsidiary Guarantor to contribution from other Subsidiary Guarantors, and any other rights such Subsidiary Guarantor may have, contractual or otherwise, shall be taken into account. SECTION 10.7. SUBORDINATION OF GUARANTEES. The Obligations of each Subsidiary Guarantor under its Subsidiary Guarantee pursuant to this Article X shall be junior and subordinated to the Senior Indebtedness to the extent applicable to such Subsidiary Guarantor on the same basis as the Notes are junior and subordinated to the Senior Indebtedness of the Company. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Subsidiary Guarantors only at such times as 83 they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article X hereof. ARTICLE XI SUBORDINATION SECTION 11.1. AGREEMENT TO SUBORDINATE. The Company agrees and shall cause each Restricted Subsidiary to agree, and each Holder by accepting a Note agrees, that the Subordinated Obligations are subordinated in right of payment, to the extent and in the manner provided in this Article XI, to the prior payment in full of all Senior Indebtedness, and that the subordination and all of the provisions of this Article XI are for the benefit of the holders of Senior Indebtedness. SECTION 11.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or any Restricted Subsidiary or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or any Restricted Subsidiary or its property, an assignment for the benefit of creditors or any marshaling of the Company's or any Restricted Subsidiary's assets and liabilities, in each such case whether voluntary or involuntary, domestic or foreign: (a) the holders of Senior Indebtedness shall be entitled to receive payment in full in cash or Cash Equivalents of all Obligations due in respect of such Senior Indebtedness (including interest after the commencement of any such proceeding) in accordance with the terms of the applicable Senior Indebtedness before Holders shall be entitled to receive any payment or other distribution in respect of the Subordinated Obligations; and (b) until all Obligations with respect to Senior Indebtedness are paid in full in cash or Cash Equivalents, any such distribution to which Holders would be entitled shall be made to the holders of such Senior Indebtedness; provided that notwithstanding the foregoing, Holders may receive: (i) Capital Stock (other than Disqualified Stock); (ii) securities that are subordinated at least to the same extent as the Notes, to Senior Indebtedness and to any securities issued in exchange for such Senior Indebtedness; and (iii) payments made from the trust described in Article VIII hereof to the extent deposited into such trust prior to the commencement of the applicable proceeding. In order to enable the Representative to enforce its rights hereunder in any of the aforesaid actions or proceedings, the Representative is hereby irrevocably authorized in its discretion, to the extent that the Trustee does not do so at least 30 days 84 before the expiration of the time to do so, to file and vote such proofs of claim in respect of the Subordinated Obligations as the Representative deems appropriate, and to collect any and all dividends or other payments or disbursements made thereon in whatever form the same may be paid or issued. The Representative is hereby authorized to demand, sue for, collect and receive each of the aforesaid payments and distributions and give acquittance therefore, and to take such other actions as the Representative deems necessary or advisable to enforce said rights. The Trustee and each Holder agrees not to initiate, prosecute or participate in any claim, action, or other proceeding challenging the enforceability, validity, perfection or priority of the Senior Indebtedness or any liens or security interests securing the Senior Indebtedness. The Trustee and each Holder further agrees that during any such action or proceeding (a) this Article XI shall be applicable and shall govern the relative rights and priorities of the holders of Senior Indebtedness and the Trustee and the Holders of the Subordinated Obligations even if all or part of the Senior Indebtedness or any liens or security interests securing the Senior Indebtedness are subordinated, set aside, avoided, invalidated or disallowed in connection with any such action or proceeding, and Article IX shall be reinstated if at any time any payment of the Senior Indebtedness is rescinded or must otherwise be returned by any holder of Senior Indebtedness, (b) the holders of Senior Indebtedness may consent to the use of cash collateral by the Company or any Restricted Subsidiary or provide financing to the Company or any Restricted Subsidiary on such terms and conditions and in such amounts as they determine, (c) it shall not object to oppose a sale or other disposition of property securing the Senior Indebtedness and (d) any holder of Senior Indebtedness may elect to apply Section 1111(b)(2) of the United States Bankruptcy Code to all or any part of the Senior Indebtedness. SECTION 11.3. DEFAULT ON SENIOR INDEBTEDNESS. Notwithstanding anything to the contrary contained in this Indenture or the Notes, neither the Company nor any Restricted Subsidiary may make, and neither the Trustee or any Holder may accept, any payment with respect to the Subordinated Obligations other than (a) regularly scheduled payments of interest in respect of the Notes on a non-accelerated basis, (b) regularly scheduled payments of principal in respect of the Notes on a non-accelerated basis, (c) payments of indemnities, costs and expenses reimbursable by the Company and the Restricted Subsidiaries pursuant to the terms of the Notes and the Indenture, (d) Note repurchases out of Excess Proceeds as provided in Section 4.20 hereof and (e) payments set forth in Section 11.2(b) hereof (collectively, "Permitted Payments"). Notwithstanding the foregoing, no Permitted Payment may be made by the Company or any Restricted Subsidiary or received by the Trustee or any Holder if: (i) a default in the payment of the principal, premium, if any, or interest on any Senior Indebtedness occurs and is continuing beyond any applicable period of grace; or (ii) any other default occurs and is continuing with respect to Senior Indebtedness or would occur as a consequence of such payment that permits holders of the Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee 85 receives a written notice of such default (a "Payment Blockage Notice") from the Representative of the Senior Indebtedness. The Company may and shall resume payment on the Notes: (1) in the case of a payment default, upon the date on which such default is cured or waived or otherwise has ceased to exist, and (2) in the case of a non-payment default, the earlier of the date on which such other default is cured or waived or otherwise has ceased to exist or 179 days after the date on which the applicable Payment Blockage Notice is received (a "Payment Blockage Period"), unless, in the case of either clause (1) or (2), the maturity of any Senior Indebtedness has been accelerated, and such acceleration remains in full force and effect. Payment Blockage Periods shall not exceed an aggregate of 179 days during any period of 360 consecutive days. No default in respect of Senior Indebtedness shall be deemed to have been waived for purposes of this Section 11.3 unless and until the Company shall have received a written waiver from the holders of such Senior Indebtedness to that effect. No non-payment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice, unless the same shall have ceased to exist for a period of at least 60 consecutive days. Following the expiration of any period during which the Company and the Restricted Subsidiaries are prohibited from making payments on the Notes pursuant to a Payment Blockage Notice, the Company will be obligated to resume making any and all required payments in respect of the Notes, including without limitation any missed payments, unless either a payment default is in existence or the maturity of any Senior Indebtedness has been accelerated, and such acceleration remains in full force and effect. SECTION 11.4. ACCELERATION OF NOTES. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify the holders of Senior Indebtedness and the Representative of the acceleration. SECTION 11.5. WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Trustee receives or is holding, or any Holder receives, any payment of any principal, premium or interest on the Notes at a time when the Trustee or such Holder, as applicable, has actual knowledge (in the case of the Trustee as described in Section 11.11 hereof), that such payment is prohibited by Section 11.2 or 12.3 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness as their interests may appear or to the Representative or agent under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to the Senior Indebtedness remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. 86 With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article XI, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders 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 Senior Indebtedness shall be entitled by virtue of this Article XI, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 11.6. NOTICE BY COMPANY. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article XI, but failure to give such notice shall not affect the subordination of the Notes to the Senior Indebtedness as provided in this Article XI. SECTION 11.7. SUBROGATION. After all Senior Indebtedness is paid in full 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 Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Holders have been applied to the payment of Senior Indebtedness. A distribution made under this Article XI to holders of Senior Indebtedness that otherwise would have been made to Holders is not, as between the Company and Holders, a payment by the Company on the Notes. If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Article XI shall have been applied, pursuant to the provisions of this Article XI, to the payment of all amounts payable under the Senior Indebtedness, then and in such case the Holders shall be entitled to receive from the holders of such Senior Indebtedness at the time outstanding any payments or distributions received by such holders of such Senior Indebtedness in excess of the amount sufficient to pay all amounts payable under or in respect of such Senior Indebtedness in full; provided that such payments or distributions shall be paid first pro rata to Holders that previously paid amounts then pro rata to all Holders. SECTION 11.8. RELATIVE RIGHTS. This Article XI defines the relative rights of the Trustee and the Holders and holders of Senior Indebtedness. Nothing in this Indenture shall: 87 (1) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal, premium and interest on the Notes in accordance with their terms; (2) affect the relative rights of the Trustee and the Holders and creditors of the Company and the Restricted Subsidiaries other than their rights in relation to holders of Senior Indebtedness; or (3) prevent the Trustee or any Holder from exercising its available remedies upon a Default or an Event of Default, subject to the rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to the Trustee and the Holders. If the Company and the Restricted Subsidiaries fail because of this Article XI to pay principal, premium and interest on a Note on the due date, the failure is still a Default or an Event of Default. SECTION 11.9. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company, any Restricted Subsidiary, the Trustee or any Holder or by the failure of the Company, any Restricted Subsidiary, the Trustee or any Holder to comply with this Indenture. SECTION 11.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to the Representative. Upon any payment or distribution of assets of the Company or any Restricted Subsidiary referred to in this Article XI, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of the Representative or of the liquidating trustee or agent or other person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company and the Restricted Subsidiaries, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XI. SECTION 11.11. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding the provisions of this Article XI or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any 88 facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless an authorized Officer of the Trustee shall have received at its office at least two Business Days prior to the due date of such payment written notice of facts that would cause the payment of any principal, premium and interest on the Notes to violate this Article XI. Only the Company or the Representative may give the notice. Nothing in this Article XI shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.7 hereof. The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 11.12. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of a Note by the Holder's acceptance thereof authorizes and directs the Trustee on the Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article XI, and appoints the Trustee to act as the Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.4 hereof at least 30 days before the expiration of the time to file such claim, a Representative of Senior Indebtedness is hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes and the Trustee shall have no liability therefor. SECTION 11.13. AMENDMENT Notwithstanding anything to the contrary contained in Article IX hereof, this Article XI shall not amended without the prior written consent of the holders of the Senior Indebtedness. SECTION 11.14. THIRD PARTY BENEFICIARIES The holders of Senior Indebtedness and the Representative shall be third party beneficiaries of the provisions of this Article XI, with the right and ability to enforce such provisions for their own benefit. SECTION 11.15. LIENS At no time will the Subordinated Obligations be secured by a lien or security interest in any property or assets. If, notwithstanding the foregoing, any such lien or security interest at any time exists, such lien or security interest shall be subordinated to the lien of the holders of Senior Indebtedness, if any, in such property or assets and the Representative shall have the right, and is hereby authorized to, take such action as is required to terminate and release such lien or security interest. 89 ARTICLE XII MISCELLANEOUS SECTION 12.1. TIA CONTROLS. If any provision of this Indenture limits, qualifies, or conflicts with the duties imposed by operation of the TIA, the imposed duties, whether or not this Indenture has been qualified under the TIA, shall control. SECTION 12.2. NOTICES. Any notices or other communications to the Company or the Trustee required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by telecopier, by first class mail postage pre-paid or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company: Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Gary W. LaChey Telecopy: (920) 725-7000 with a copy to: Kirkland & Ellis LLP 153 East 53rd Street New York, NY 10022 Attention: Joshua N. Korff, Esq. Telecopy: (212) 446-4900 if to the Trustee: The Bank of New York 101 Barclay Street, 8th Floor West New York, NY 10286 Attention: Corporate Trust Administration Telecopy: (212) 815-5707 Any party by notice to each other party may designate additional or different addresses as shall be furnished in writing by such party. Any notice or communication to any party shall be deemed to have been given or made as of the date so delivered, if personally delivered; when answered back, if telexed; when receipt is 90 acknowledged, if telecopied; and five Business Days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Noteholder shall be mailed to him or her by first class mail or other equivalent means at his or her address as it appears on the registration books of the Registrar and shall be sufficiently given to him or her if so mailed within the time prescribed. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c). SECTION 12.4. 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 fully complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been fully complied with. SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 91 (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been fully complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been fully complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters and information which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. The Trustee may make reasonable rules for action by or at a meeting of Noteholders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 12.7. BUSINESS DAY. If a payment date is other than a Business Day at such place, payment may be made at such place on the next succeeding Business Day, and no interest shall accrue for the intervening period. 92 SECTION 12.8. GOVERNING LAW. THIS INDENTURE, THE NOTES, THE SUBSIDIARY GUARANTEES AND THE COLLATERAL DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. NO RECOURSE AGAINST OTHERS. No direct or indirect partner, employee, stockholder, director or officer, as such, past, present or future of the Company or any successor corporation, shall have any personal liability in respect of the obligations of the Company under the Notes or this Indenture by reason of his, her or its status as such partner, stockholder, employee, director or officer. Each Noteholder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. SECTION 12.11. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.12. DUPLICATE ORIGINALS. All parties may sign any number of copies or counterparts of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. SECTION 12.13. SEVERABILITY. In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. 93 SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and headings of the Articles and the Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 12.15. QUALIFICATION OF INDENTURE. The Company shall qualify this Indenture under the TIA and shall pay all costs and expenses (including attorneys' fees for the Company and the Trustee) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the Notes and printing this Indenture and the Notes. The Trustee shall be entitled to receive from the Company any such Officers' Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the TIA. 94 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written. NEENAH FOUNDRY COMPANY By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO ADVANCED CAST PRODUCTS, INC. By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO 95 DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO DEETER FOUNDRY, INC. By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO GREGG INDUSTRIES, INC. By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO MERCER FORGE CORPORATION By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO 96 A&M SPECIALTIES, INC. By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO NEENAH TRANSPORT, INC. By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO CAST ALLOYS, INC. By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO BELCHER CORPORATION By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO PEERLESS CORPORATION By: /s/ Gary LaChey ------------------------------------------------ Name: Gary LaChey Title: VP-Finance, Treasurer, Secty. & CFO THE BANK OF NEW YORK By: /s/ Patricia Gallagher ------------------------------------------------ Name: Patricia Gallagher Title: Vice President 97 EXHIBIT A FORM OF NOTE A-1 ["THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF SUCH SECURITY ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) AS PERMITTED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (F) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF US $250,000, FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF THE SECURITIES IN VIOLATION OF THE SECURITIES ACT OR (G) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION PURSUANT TO CLAUSES (D), (E), (F) OR (G) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN A-2 CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO, OR IN SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."(1) THIS NOTE WAS ISSUED AS PART OF AN INVESTMENT UNIT. THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" FOR U.S. FEDERAL INCOME TAX PURPOSES. WITH RESPECT TO THIS INVESTMENT UNIT WITH A PRINCIPAL AMOUNT OF $1,000, THE ISSUE PRICE IS $1,303.59. $1,302.24 OF SUCH ISSUE PRICE WAS ALLOCATED TO THE NOTE PORTION. THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $888.38. THE ISSUE DATE OF THIS SECURITY IS OCTOBER 8, 2003. THE YIELD TO MATURITY OF THIS SECURITY ON THE ISSUE DATE IS 9.81%, COMPOUNDED SEMIANNUALLY. - ---------------- (1) These paragraphs should only be added if the Notes is issued in global form. A-3 (FACE OF NOTE) NEENAH FOUNDRY COMPANY 13% SENIOR SUBORDINATED NOTE DUE 2013 No.__ CUSIP No. ____________ $----------- Neenah Foundry Company, a Wisconsin corporation (hereinafter called the "Company," which term includes any successors under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & Co., Inc., or registered assigns, the principal sum of one hundred million dollars, on September 30, 2013. Interest Payment Dates: January 1 and July 1, commencing January 1, 2004. Record Dates: December 15 and June 15. Reference is made to the further provisions of this Note on the reverse side, which will, for all purposes, have the same effect as if set forth at this place. A-4 IN WITNESS WHEREOF, the Company has caused this Instrument to be duly executed under its corporate seal. NEENAH FOUNDRY COMPANY By: -------------------------------------------------- Name: Title: By: -------------------------------------------------- Name: Title: Attest: ------------------------------------- Secretary A-5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes described in the within-mentioned Indenture. THE BANK OF NEW YORK By ------------------------------------------- Authorized Signatory Dated: October 8, 2003 A-6 (BACK OF NOTE) NEENAH FOUNDRY COMPANY 13% SENIOR SUBORDINATED NOTE DUE 2013 1. Interest. Neenah Foundry Company, a Wisconsin corporation (hereinafter called the "Company," which term includes any successors under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of 13% per annum. To the extent it is lawful, the Company promises to pay interest on any interest payment due but unpaid at the same rate of interest borne by the Notes. The Company will pay interest semi-annually on January 1 and July 1 of each year (each, an "Interest Payment Date"), commencing January 1, 2004. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid on the Notes, from September 30, 2003. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. Notwithstanding the foregoing, on or before any Interest Payment Date, the Company may defer the payment of a portion of the interest due on such Interest Payment Date of up to 8% (the "Deferred Interest Payment"). If the Company elects to defer the payment of the Deferred Interest Payment as aforesaid, interest at a rate of 13% will accrue on the principal amount of the Note and on the accrued but unpaid Deferred Interest Payments. The Company may elect to defer the payment of Deferred Interest Payments on an unlimited number of occasions; provided, that, all unpaid Deferred Interest Payments shall be paid on or before the Stated Maturity of this Note. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. Any such interest not so punctually paid, and defaulted interest relating thereto, may be paid to the Persons who are registered Holders at the close of business on a Special Record Date for the payment of such defaulted interest, as more fully provided in the Indenture referred to below. Except as provided below, the Company shall pay principal and interest in such coin or currency of the United States of America as at the time of payment shall be legal tender for payment of public and private debts ("U.S. Legal Tender"). The Notes will be payable as to principal, premium and interest at the office or agency of the Company maintained for such purpose within the Borough of Manhattan, The City and State of New York, or at the option of the Company, payment of principal, premium and interest may be made by A-7 check mailed to the Holders at their addresses set forth in the registry of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium and interest on Global Notes. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar or co-Registrar. 4. Indenture. The Company issued the Notes under an Indenture, dated as of October 8, 2003 (the "Indenture"), among the Company, the Subsidiary Guarantors party thereto and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act, as in effect on the date of the Indenture. The Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of them. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern. The Notes are general unsecured obligations of the Company limited in aggregate principal amount to $100,000,000, and may be issued in one or more series. 5. Redemption. The Notes may be redeemed in whole or from time to time in part at any time, at the option of the Company, at the Redemption Prices (expressed as a percentage of principal amount) set forth below with respect to the indicated Redemption Date, in each case, plus any accrued but unpaid interest to, but excluding, the Redemption Date.
If redeemed during the 12-month period beginning September 30, Redemption Price - ----------------------- ---------------- 2003................................................ 103% 2004................................................ 102% 2005................................................ 101% 2006 and thereafter................................. 100%
6. Notice of Redemption. Notice of redemption will be sent by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the Redemption Date to the Holder of A-8 each Note to be redeemed at such Holder's last address as then shown upon the registry books of the Registrar. Notes may be redeemed in part in multiples of $1,000 only. Except as set forth in the Indenture, from and after any Redemption Date, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent on such Redemption Date and payment of the Notes called for redemption is not prohibited under Article XI of the Indenture, the Notes called for redemption will cease to bear interest and the only right of the Holders of such Notes will be to receive payment of the Redemption Price, plus any accrued and unpaid interest to, but excluding the Redemption Date. 7. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of, or exchange Notes in accordance with, the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as the owner of it for all purposes. 9. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money back to the Company at its written request. After that, all liability of the Trustee and such Paying Agent(s) with respect to such money shall cease. 10. Amendment; Supplement; Waiver. Subject to certain exceptions and to Section 11.13 of the Indenture, the Indenture or the Notes may be amended or supplemented, and any existing Default or Event of Default or compliance with any provision may be waived, with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, or make any other change that does not adversely affect the rights of any Holder of a Note. A-9 11. Ranking. Payment of principal, premium and interest on the Notes is subordinated, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness. 12. Change of Control. In the event of a Change of Control of the Company, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes, at an offer price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon to the Change of Control Payment Date. 13. Asset Sales. In the event of certain Asset Sales, the Company may be required to make an Asset Sale Offer to purchase the maximum principal amount of Notes that may be purchased out of Excess Proceeds, at an offer price in cash equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to the date of purchase. 14. Successors. When a successor assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 15. Restrictive Covenants. The Indenture imposes certain limitations on, among other things, the ability of the Company to consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, the ability of the Company or its Restricted Subsidiaries to dispose of certain assets, to declare or pay dividends or make certain other distributions and payments, to make certain investments or purchase, redeem, or otherwise acquire or retire for value Equity Interests, to incur additional Indebtedness or incur Liens and to enter into certain transactions with Affiliates, all subject to certain limitations described in the Indenture. 16. Defeasance. The Indenture contains provisions that permit the Company to defease the Notes (and satisfy generally its Obligations under the Indenture or with respect to certain covenants contained therein) under certain circumstances subject to the conditions specified therein. A-10 17. Defaults and Remedies. If an Event of Default occurs and is continuing (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization), then either the Trustee or the Holders of 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable immediately; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of outstanding Notes may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than non-payment of accelerated principal, have been cured or waived as provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest), if it determines that withholding notice is in their interest. 18. 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 the Trustee. 19. No Recourse Against Others. No stockholder, director, officer or employee, as such, past, present or future, of the Company or any successor corporation shall have any personal liability in respect of the obligations of the Company under the Notes or the Indenture by reason of his, her or its status as such stockholder, director, officer or employee. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 20. Authentication. This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on the other side of this Note. 21. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). A-11 22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 23. Additional Rights of Holders of Notes. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54956 Attention: Gary W. LaChey 24. Governing Law. This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed entirely within the State of New York, without regard to principles of conflicts of law. 25. Agreement to Terms. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. A-12 FORM OF ASSIGNMENT I or we assign this Note to - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type name, address and zip code of assignee) Please insert Social Note or other identifying number of assignee - -------------------------------- and irrevocably appoint ______________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Dated: Signed: ----------------------- --------------------------------- - -------------------------------------------------------------------------------- (Sign exactly as name appears on the other side of this Note) Signature Guarantee: ------------------------------------------ NOTICE: Your Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any other guarantee program acceptable to the Trustee. A-13 FORM OF OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.20 or Section 4.21 of the Indenture, check the appropriate box: Section 4.20 { } Section 4.21 { } If you want to have only part of this Note purchased by the Company pursuant to Section 4.20 or Section 4.21 of the Indenture, state the amount (in integral multiples of $1,000): $ ---------------------- Date: ------------------------------- Signature: ---------------------------------------------------- (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ------------------------------------------------------------ NOTICE: Your Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any other guarantee program acceptable to the Trustee. A-14 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(2) The following exchanges of a part of this Global Note for a Definitive Note, or exchange of a Definitive Note for an interest in this Global Note, have been made:
Principal Amount of Amount of increase this Global Note Signature of Amount of decrease in Principal following such authorized officer in Principal Amount Amount of this decrease (or of Trustee or Date of Exchange of this Global Note Global Note increase) Notes Custodian ---------------- ------------------- ------------------ ------------------- -------------------
- --------------- 2 This Schedule should only be added if the Notes is issued in global form. A-15 EXHIBIT B GUARANTEE For value received, each of the undersigned hereby unconditionally guarantees to the Holders of Notes the payments of principal of, premium, if any, and interest on such Notes in the amounts and at the time when due and interest on the overdue principal, premium, if any, and interest, if any, of such Notes, if lawful, and the payment or performance of all other obligations of the Company under the Indenture and the Notes, to the Holders of the Notes and to the Trustee, all in accordance with and subject to the terms and limitations of the Notes, Article X of the Indenture and this Guarantee. This Guarantee will become effective in accordance with Article X of the Indenture and its terms shall be evidenced therein. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. The obligations of the undersigned to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article X of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee and all of the other provisions of the Indenture to which this Guarantee relates. The Indebtedness evidenced by this Guarantee is subordinate and subject in right of payment, to the extent and in the manner provided in the Indenture, and this Guarantee is issued subject to such provisions. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary to appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that such subordination provisions shall cease to affect amounts deposited in accordance with the defeasance provisions of the Indenture upon the terms and conditions set forth therein. B-1 This Guarantee is subject to release upon the terms set forth in the Indenture. Advanced Cast Products, Inc. Dalton Corporation Dalton Corporation, Warsaw Manufacturing Facility Dalton Corporation, Stryker Machining Facility Co. Dalton Corporation, Ashland Manufacturing Facility Dalton Corporation, Kendallville Manufacturing Facility Deeter Foundry, Inc. Gregg Industries, Inc. Mercer Forge Corporation A&M Specialties, Inc. Neenah Transport, Inc. Cast Alloys, Inc. Belcher Corporation Peerless Corporation By: ----------------------------------------- Name: Title: B-2 EX-10.8 20 y92210exv10w8.txt REGISTRATION RIGHTS AGREEMENT EXECUTION VERSION NEENAH FOUNDRY COMPANY 13% SENIOR SUBORDINATED NOTES DUE 2013 REGISTRATION RIGHTS AGREEMENT New York, New York October 8, 2003 Mackay Shields LLC Citicorp Mezzanine III, L.P. TCW Shared Opportunity Fund II, L.P. Shared Opportunity Fund IIB LLC TCW Shared Opportunity Fund IV, L.P. TCW Shared Opportunity Fund IVB, L.P. AIMCO CDO, Series 2000-A TCW High Income Partners, Ltd. TCW High Income Partners II, Ltd. Metropolitan Life Insurance Company Exis Differential Holdings Ltd. Ladies and Gentlemen: Neenah Foundry Company, a company organized under the laws of Wisconsin (the "Company"), proposes to issue its 13% Senior Subordinated Notes due 2013 (the "Notes") pursuant to, and upon the terms set forth in, the Company's Plan of Reorganization (the "Plan") under chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). The Notes will be guaranteed (the "Guarantees" and, together with the Notes, the "Securities") by each of the Company's direct and indirect subsidiaries set forth on the signature page hereto (the "Subsidiary Guarantors"). In accordance with the Plan, the Company and the Subsidiary Guarantors, jointly and severally, agree with you for your benefit and the benefit of the holders from time to time of the Securities (each a "Holder" and, together, the "Holders"), as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Subscription Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Actual Interest Amount" shall mean, with respect to any Note and with respect to any Registration Default Period, an amount equal to the amount of interest accruing on such Note during such Registration Default Period pursuant to the terms of such Note and the Indenture. "Assumed Interest Amount" shall mean, with respect to any Note and with respect to any Registration Default Period, an amount equal to the amount of interest which would accrue on such Note during such Registration Default Period at a rate equal to: (a) during the first 90 days of such Registration Default period, the rate of interest payable on such Note pursuant to the terms of such Note and the Indenture, plus 0.25%, and (b) during each subsequent 90-day period of such Registration Default Period, the rate of interest utilized in calculating the Assumed Interest Amount with respect to the prior 90 days of such Registration Default Period, plus an additional 0.25%. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such other Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "Broker-Dealer" shall mean any broker or dealer registered as such under the Exchange Act. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. "Commission" shall mean the Securities and Exchange Commission. "Company" shall have the meaning set forth in the preamble hereto. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Guarantees" shall have the meaning set forth in the preamble hereto. "Holder" and "Holders" shall have the respective meanings set forth in the preamble hereto. "Indenture" shall mean the Indenture relating to the Securities, dated as of the date hereof, among the Company, the Subsidiary Guarantors and The Bank of New York, as Trustee, as the same may be amended from time to time in accordance with the terms thereof. "Initial Holders" shall mean the persons to whom the Securities are initially issued by the Company pursuant to the Plan. "Liquidated Damages" shall mean with respect to any Note and with respect to any Registration Default Period an amount equal to (a) the Assumed Interest Amount for the duration of such Registration Default Period, minus (b) the Actual Interest Amount for the duration of such Registration Default Period. 2 "Losses" shall have the meaning set forth in Section 6(d) hereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of Securities registered or to be registered under a Registration Statement. "Managing Underwriters" shall mean the investment banker or investment bankers and manager or managers that shall administer an underwritten offering. "Notes" shall have the meaning set forth in the preamble hereto. "Prospectus" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities covered by such Registration Statement, and all amendments and supplements thereto and all material incorporated by reference therein. "Registration Default" shall have the meaning set forth in Section 5 hereof. "Registration Default Period" shall mean the period commencing on the day upon which a Registration Default shall have occurred and concluding on the day upon which such Registration Default shall have been cured, inclusive. "Registration Statement" shall mean any Shelf Registration Statement that covers any of the Securities pursuant to the provisions of this Agreement, any amendments and supplements to such registration statement, including post-effective amendments (in each case including the Prospectus contained therein), all exhibits thereto and all material incorporated by reference therein. "Securities" shall have the meaning set forth in the preamble hereto. "Shelf Registration" shall mean a registration effected pursuant to Section 2 hereof. "Shelf Registration Period" shall have the meaning set forth in Section 2(a)(ii) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and the Subsidiary Guarantors pursuant to the provisions of Section 2 hereof which covers some or all of the Securities, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Subscription Agreement" shall mean the Subscription Agreement, dated as of October 7, 2003, by and among the Investors referred to therein, ACP Holding Company, the Company and the Subsidiary Guarantors listed therein. 3 "Subsidiary Guarantors" shall have the meaning set forth in the preamble hereto. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. "underwriter" shall mean any underwriter of the Securities in connection with an offering thereof under a Shelf Registration Statement. 2. Shelf Registration. (a) (i) The Company shall, as promptly as practicable (but in no event more than 60 days after so required or requested pursuant to this Section 2, or if such 60th day is not a Business Day, the next succeeding Business Day), file with the Commission and thereafter shall use its commercially reasonable best efforts to cause to be declared effective under the Act a Shelf Registration Statement relating to the offer and sale of the Securities, as applicable, by the Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that no Holder (other than an Initial Holder) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder. (ii) The Company shall use its best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for so long as any Holder shall require in order to offer or sell any of its Securities publicly, freely and without restriction (the "Shelf Registration Period"). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities publicly, freely and without restriction during that period, unless (A) such action is required by applicable law; or (B) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets (to the extent permitted by the terms of the Indenture), so long as the Company promptly thereafter complies with the requirements of Section 3(i) hereof, if applicable. (iii) The Company shall cause at all times and from time to time the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, (A) to comply in all material respects with the applicable requirements of the Act; and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4 3. Additional Registration Procedures. In connection with any Shelf Registration Statement, the following provisions shall apply. (a) The Company shall: (i) furnish to you, prior to the filing thereof with the Commission, a copy of the Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein (including, upon reasonable request, all documents incorporated by reference therein after the initial filing) and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as you reasonably propose; (ii) include the names of the Holders that propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders. (b) The Company shall ensure that: (i) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act and the rules and regulations thereunder; and (ii) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto does not, when the Registration Statement becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (c) The Company shall advise you and the Holders of Securities covered by any Shelf Registration Statement, and, if requested by you or any such Holder, shall confirm such advice in writing (which notice pursuant to clauses (ii) through (v) hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the Company shall have remedied the basis for such suspension): (i) when a Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; 5 (iv) of the receipt by the Company or the Subsidiary Guarantors of any notification with respect to the suspension of the qualification of the Securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (v) of the happening of any event that requires any change in the Registration Statement or the Prospectus so that, as of such date, the Registration Statement or the Prospectus does not contain an untrue statement of a material fact and does not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (d) The Company shall use its commercially reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement or the qualification of the securities therein for sale in any jurisdiction at the earliest possible time. (e) The Company shall furnish to each Holder of Securities covered by any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities covered by any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request. The Company and the Subsidiary Guarantors consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Securities in connection with the offering and sale of the Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) Prior to any offering of Securities pursuant to any Registration Statement, the Company and the Subsidiary Guarantors shall arrange, if necessary, for the qualification of the Securities for sale under state securities or blue sky laws of such jurisdictions in the United States as any Holder shall reasonably request and will maintain such qualification in effect so long as required; provided that in no event shall either the Company or any Subsidiary Guarantor be obligated to qualify to do business or as a dealer in securities in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits or taxation, other than suits arising out of the initial placement of the Securities or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where it is not then so subject. (h) The Company and the Subsidiary Guarantors shall cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Securities to be issued or sold pursuant to any 6 Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request. (i) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above during any period of time in which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare a post-effective amendment to the applicable Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the securities included therein, the Prospectus shall not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such circumstances, the period of effectiveness of the Shelf Registration Statement provided for in Section 2(a) shall be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 3(c) hereof to and including the date when the Initial Holders and the Holders of the Securities shall have received such amended or supplemented Prospectus pursuant to this Section 3(i). (j) Not later than the effective date of any Registration Statement, the Company shall provide a CUSIP number for the Securities registered under such Registration Statement and provide the Trustee with printed certificates for such Securities in a form eligible for deposit with The Depository Trust Company. (k) The Company and the Subsidiary Guarantors shall comply in all material respects with all applicable rules and regulations of the Commission and shall make generally available to their security holders no later than 45 days after the end of the 12-month period (or 90 days if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter after the effective date of the applicable Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Act. (l) The Company shall cause the Indenture to be qualified under the Trust Indenture Act in a timely manner. (m) The Company may require each Holder of Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement. The Company may exclude from such Shelf Registration Statement the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (n) The Company and the Subsidiary Guarantors shall enter into such agreements and take all other appropriate actions (including if requested an underwriting agreement in customary form) in order to expedite or facilitate the registration or the disposition of the Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less 7 favorable than those set forth in Section 6 (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 6. (o) The Company and the Subsidiary Guarantors shall: (i) make reasonably available for inspection by the Holders of Securities to be registered thereunder, any underwriter participating in any disposition pursuant to the Shelf Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders by the one firm or counsel designated by the Majority Holders pursuant to Section 4 hereof; provided, further, that any information that is designated in writing by the Company or any Subsidiary Guarantor, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, 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; (ii) cause the Company's and the Subsidiary Guarantors' officers, directors and employees to supply all relevant information reasonably requested by the Holders or any underwriter, attorney, accountant or agent in connection with any Shelf Registration Statement as is customary for similar due diligence examinations; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders by the one firm or counsel designated by the Majority Holders pursuant to Section 4 hereof; provided, further, that any information that is designated in writing by the Company or any Subsidiary Guarantor, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, 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; (iii) make such representations and warranties to the Holders of Securities registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings; (iv) 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 Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are 8 customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (v) obtain "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 for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each selling Holder of Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 3(i) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company and the Subsidiary Guarantors. The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 3(o) shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (p) The Company and the Subsidiary Guarantors shall use their respective best efforts (i) if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities covered by a Registration Statement; or (ii) if the Securities were not previously rated, to cause the Securities covered by a Registration Statement to be rated with at least one nationally recognized statistical rating agency, if so requested by Majority Holders with respect to the related Registration Statement or by any Managing Underwriters. (q) In the event that any Broker-Dealer shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Rules of Fair Practice and the By-Laws of the National Association of Securities Dealers, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company and the Subsidiary Guarantors shall assist such Broker-Dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by: (i) if such Rules or By-Laws shall so require, engaging a "qualified independent underwriter" (as defined in such Rules) to participate in the preparation of the Registration Statement, to exercise usual standards of due diligence with respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities; 9 (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof; and (iii) providing such information to such Broker-Dealer as may be required in order for such Broker-Dealer to comply with the requirements of such Rules. (r) The Company and the Subsidiary Guarantors shall use their respective commercially reasonable best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement. 4. Registration Expenses. The Company shall bear all expenses incurred in connection with the performance of its and the Subsidiary Guarantors' obligations under Sections 2 and 3 hereof, and will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith. 5. Liquidated Damages. If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the date on which such Registration Statement is required by any provision of this Agreement to be so filed, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the date on which such Registration Statement is to be so declared effective pursuant to any provision of this Agreement, or (iii) any Registration Statement required by this Agreement is filed and declared effective, but shall thereafter cease to be effective or fail to be usable for its intended purpose for any reason (including, but not limited to, by reason of the fact that any of the information set forth, or incorporated by reference, therein shall not be true, correct and current in all material respects) (each such event referred to in clauses (i) through (iii) above, a "Registration Default"), then the Company and the Subsidiary Guarantors hereby jointly and severally agree to pay to each Holder of Securities affected thereby Liquidated Damages; provided that the Company and the Subsidiary Guarantors shall in no event be required to pay Liquidated Damages for more than one Registration Default at any given time. All accrued Liquidated Damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture. All obligations of the Company and the Subsidiary Guarantors to pay Liquidated Damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. 6. Indemnification and Contribution. (a) The Company and the Subsidiary Guarantors, jointly and severally, agree to indemnify and hold harmless each Holder of Securities covered by any Registration Statement (including each Initial Holder), the directors, officers, employees and agents of each such Holder and each Person who controls any such Holder within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at 10 common law or otherwise, insofar as such losses, claims, damages or liabilities (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 as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, 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 required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that (i) the Company and the Subsidiary Guarantors will not be liable in any case to the extent that any such loss, claim, damage or liability 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 and the Subsidiary Guarantors by or on behalf of any such Holder specifically for inclusion therein, (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary Prospectus relating to a Shelf Registration Statement, the foregoing indemnity shall not inure to the benefit of any Holder from whom the Person asserting any such loss, claim, damage or liability purchased the Securities to the extent that a final Prospectus relating to such Securities was required to be delivered by such Holder under the Act in connection with such purchase and any such loss, claim, damage or liability of such Holder results from the failure of such Holder to send to such Person, at or prior to the written confirmation of the sale of such Securities, a copy of the final Prospectus if the Company had previously furnished copies thereof to such Holder and (iii) the Company and the Subsidiary Guarantors shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon the use of a Registration Statement after (x) a stop order has been issued in a respect of a Registration Statement or (y) a Registration Statement has been suspended, so long as, in the case of each of (x) and (y), such Holder has received notice of such action in accordance with Section 3(c) hereof. This indemnity agreement will be in addition to any liability which the Company and the Subsidiary Guarantors may otherwise have. The Company and the Subsidiary Guarantors also, jointly and severally, agree to indemnify or contribute as provided in Section 6(d) to Losses of any underwriter of any Securities registered under a Shelf Registration Statement, their directors, officers, employees or agents and each Person who controls such underwriter (within the meaning of the Act or the Exchange Act) on substantially the same basis as that of the indemnification of the selling Holders provided in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 3(n) hereof. (b) Each Holder of Securities covered by a Registration Statement severally agrees to indemnify and hold harmless the Company and the Subsidiary Guarantors, each of their directors, each of their officers who signs such Registration Statement and each Person who controls the Company or any of the Subsidiary Guarantors within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Subsidiary Guarantors to each 11 such Holder, but only with reference to written information furnished to the Company or the Subsidiary Guarantors by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred, as incurred, by them in connection with investigation or defending such loss, claim, liability, damage or action. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 6 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several 12 obligation to contribute to the amount paid or payable by such indemnified party as a result of the aggregate losses, claims, damages and liabilities referred to in subsection (a) or (b), as the case may be, above (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative faults of the indemnified and indemnifying parties. Relative fault shall be determined by reference to, among other things, whether the Losses arose from any alleged untrue statement or omission relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand; the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), 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 6, each Person who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have the same rights to contribution as such Holder, and each Person who controls the Company or any of the Subsidiary Guarantors within the meaning of either the Act or the Exchange Act, each officer of the Company or any of the Subsidiary Guarantors who shall have signed the Registration Statement and each director of the Company or any of the Subsidiary Guarantors shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The provisions of this Section 6 will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Company and the Subsidiary Guarantors or any of the officers, directors or controlling Persons referred to in this Section 6, and will survive the sale by a Holder of Securities covered by a Registration Statement or any termination or cancellation of this Agreement. 7. Underwritten Registrations. (a) If any of the Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders. (b) No Person may participate in any underwritten offering pursuant to any Shelf Registration Statement, unless such Person (i) agrees to sell such Person's Securities on the basis reasonably provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 13 8. No Inconsistent Agreements. The Company and the Subsidiary Guarantors have not, as of the date hereof, entered into, nor shall they, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. 9. Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Majority Holders. Notwithstanding the foregoing (except for the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of some Holders whose Securities (the "affected Securities") are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Holders representing a majority of the aggregate principal amount of the affected Securities, voting together as a single class. 10. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, facsimile transmission or air courier guaranteeing overnight delivery: (a) if to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of this Section, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture; (b) if to you, initially at the respective addresses set forth in the Subscription Agreement; and (c) if to the Company or the Subsidiary Guarantors, initially at the address of the Company set forth in the Subscription Agreement. All such notices and communications shall be deemed to have been duly given when received. The Initial Holders, the Company or the Subsidiary Guarantors by notice to the other parties may designate additional or different addresses for subsequent notices or communications. 11. Successors. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of the Securities. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. 12. Counterparts. This Agreement may be in signed counterparts, each of which shall an original and all of which together shall constitute one and the same agreement. 14 13. Headings. The headings used herein are for convenience only and shall not affect the construction hereof. 14. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York. 15. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 16. Securities Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its Affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 17. Specific Performance. Without limiting or waiving in any respect any rights or remedies of the parties under this Agreement now or hereinafter existing at law or in equity or by statute, each of the parties hereto shall be entitled to seek specific performance of the obligations to be performed by the other(s) in accordance with the provisions of this Agreement. 18. Third Party Beneficiaries. Holders of Securities who are Affiliates of the Company and the other Persons to be indemnified pursuant to Section 6(a) hereof are intended third party beneficiaries of this Agreement, and this Agreement shall inure to the benefit of and may be enforced by, such Persons. Other than as set forth in the preceding sentence, this Agreement shall be binding upon and inure solely to the benefit of each party hereto. 15 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement among the Company, the Subsidiary Guarantors and the Initial Holders. Very truly yours, NEENAH FOUNDRY COMPANY By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: ADVANCED CAST PRODUCTS, INC. By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: DALTON CORPORATION By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: DALTON CORPORATION, WARSAW MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: DALTON CORPORATION, STRYKER MACHINING FACILITY CO. By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: 16 DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: DALTON CORPORATION, KENDALVILLE MANUFACTURING FACILITY By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: DEETER FOUNDRY, INC. By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: GREGG INDUSTRIES, INC. By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: MERCER FORGE CORPORATION By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: A&M SPECIALTIES, INC. By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: 17 NEENAH TRANSPORT, INC. By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: CAST ALLOYS, INC. By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: BELCHER CORPORATION By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: PEERLESS CORPORATION By: /s/ Gary LaChey ------------------------------------- Name: Gary LaChey Title: 18 The foregoing Agreement is hereby confirmed and accepted as of the date first above written. MACKAY SHIELDS LLC By: /s/ Don Morgan III ------------------------------------- Name: Don Morgan III Title: Senior Managing Director CITICORP MEZZANINE III, L.P. By: /s/ Byron Knief ------------------------------------- Name: Byron Knief Title: Senior Vice President TCW Shared Opportunity Fund II, L.P. By: TCW Investment Management Company Its Investment Manager By: /s/ Nicholas W. Tell, Jr. ------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Nicholas W. Tell, Jr. ------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director 19 Shared Opportunity Fund IIB LLC By: TCW Asset Management Company as its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ------------------------------------- Name: Gary A. Hobart Title: Vice President TCW Shared Opportunity Fund IV, L.P. and TCW Shared Opportunity Fund IVB, L.P. By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ------------------------------------- Name: Gary A. Hobart Title: Vice President 20 AIMCO CDO, Series 2000-A By: Allstate Investment Management Company Its Collateral Manager By: TCW Asset Management Company Its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Gary A. Hobart ------------------------------------- Name: Gary A. Hobart Title: Vice President TCW High Income Partners, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director TCW High Income Partners II, Ltd. By: TCW Asset Management Company, its Investment Advisor By: /s/ Nicholas W. Tell, Jr. ------------------------------------- Name: Nicholas W. Tell, Jr. Title: Managing Director METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Jacqueline D. Jenkins ------------------------------------- Name: Jacqueline D. Jenkins Title: Managing Director EXIS DIFFERENTIAL HOLDINGS LTD. By: /s/ Chris Kane ------------------------------------- Name: Chris Kane Title: Portfolio Manager 21 EX-10.18 21 y92210exv10w18.txt 2003 MANAGEMENT ANNUAL INCENTIVE PLAN NEENAH FOUNDRY COMPANY 2003 MANAGEMENT ANNUAL INCENTIVE PLAN 1. Purpose. This plan shall be known as the Neenah Foundry Company 2003 Management Annual Incentive Plan (the "Plan"). The purpose of the Plan shall be to set forth those bonus and other incentive payments, if any, to which an executive of Neenah Foundry Company (the "Company") or any its Subsidiaries will be entitled pursuant to the terms of the Plan. 2. Definitions. For purposes of this Plan, except when the context clearly indicates otherwise, the following terms shall have the meanings set forth below. "ACP" means ACP Holding Company, a Delaware corporation. "Annual Incentive Bonus" has the meaning given to such term in Section 4(c). "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as codified in Title 11 of the United States Code, 11 U.S.C. Section 101, et seq., as amended from time to time. "Base Salary" means, with respect to any Plan Participant, "Base Salary" as defined in such Plan Participant's Employment Agreement. "Board of Directors" and "Board" mean the board of directors of the Company. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the Compensation Committee of the Board or such other committee that consists solely of two or more individuals, each of whom is a Non-Employee Director and an "outside director" within the meaning of Treasury Regulation Section 1.162-27(e)(3). "Company" has the meaning set forth in Section 1 hereof. "Company Group" means ACP, the Company and their respective Subsidiaries. "EBITDA Target" has the meaning given to such term in Section 4(c). "Effective Date" means the effective date of the Plan of Reorganization. "Emergence Bonus" has the meaning given to such term in Section 4(a). "Employment Agreement" means the written agreement between any Plan Participant and the Company or any of its Subsidiaries pursuant to which such Plan Participant is entitled to benefits under the Plan. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fiscal Year End" has the meaning given to such term in Section 4(c). "Incentive Bonus" has the meaning given to such term in Section 4(b). "Non-Employee Director" has the meaning given to such term in Rule 16b-3 under the Exchange Act and any successor thereto. "Person" shall mean an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. "Plan" has the meaning set forth in Section 1 hereof. "Plan Participant" means each of William Barrett, Gary LaChey, Joseph DeRita, Frank Headington, Timothy Koller, William Martin, Joseph Varkoly, Steve Shaffer, John Andrews and any other employee of the Company Group selected by the Board or the Committee. "Plan of Reorganization" means the Joint Prepackaged Plan of Reorganization of ACP, NFC Castings, Inc., the Company and certain of its Subsidiaries under Chapter 11 of the Bankruptcy Code, dated July 1, 2003, including the Plan Supplement and other supplements, appendices and schedules to the Plan, in each case, as amended or supplemented on or before the Effective Date. "Subsidiary" of any Person means a corporation or other entity of which outstanding shares or ownership interests representing 50% or more of the combined voting power of such corporation or other entity entitled to elect the management thereof, or such lesser percentage as may be approved by the Committee, are owned directly or indirectly by such Person. "Target Bonus Amount" means, with respect to any Plan Participant's Annual Incentive Bonus, the product of (i) Base Salary and (ii) Target Bonus Percentage. "Target Bonus Percentage" means, with respect to any Plan Participant, "Target Bonus Percentage" as defined in such Plan Participant's Employment Agreement. 3. Administration. The Plan shall be administered by the Committee; provided, that the Board may, in its discretion, at any time and from time to time, resolve to administer the Plan, in which case the term "Committee" shall be deemed to mean the Board for all purposes herein. Subject to the provisions of the Plan, the Committee shall be authorized to: (i) select persons to participate in the Plan in addition to those entitled to participate in the Plan pursuant to Employment Agreements entered into at or prior to the Effective Date; (ii) determine the form, substance, terms and conditions of each additional grant made under the Plan; (iii) certify that the conditions and restrictions applicable to any grant have been met; (iv) modify the terms of grants made under the Plan; (v) make any adjustments necessary or desirable in connection with grants made under the Plan to eligible participants located outside the United States; (vi) adopt, amend, or rescind rules and regulations for the administration of the Plan, including, but not limited to, 2 correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in any Employment Agreement, in the manner and to the extent it shall deem necessary or advisable, including so that amounts payable under the Plan will be deductible under the Code and the operation of the Plan will comply with Section 162 of the Code to the extent applicable and other applicable law; and (vii) exercise such powers and perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan; provided, that in no event shall any amendment, modification, adjustment, correction or supplement to the Plan pursuant to the foregoing clauses (i) through (vii) adversely affect any Plan Participant without such Plan Participant's consent. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with applicable federal and state laws and rules and regulations promulgated pursuant thereto. No member of the Committee and no officer of the Company shall be liable for any action taken or omitted to be taken by such member, by any other member of the Committee or by any officer of the Company in connection with the performance of duties under the Plan, except for such person's own willful misconduct or as expressly provided by statute. The expenses of administering the Plan shall be borne by the Company. 4. Bonus Awards. (a) Emergence Bonus. On or after the Effective Date, the Company will pay to certain Plan Participants, in accordance with the terms of the Plan, an emergence bonus ("Emergence Bonus"). (b) Incentive Bonus. Any Plan Participant or other employee entitled to an incentive bonus for the fiscal year 2003 under the Company's incentive compensation plan in effect immediately prior to the Effective Date will be paid such bonus ("Incentive Bonus") in cash in the amount set forth in such plan within ten (10) business days of the Board's approval of the Company's audited financial statements. (c) Annual Incentive Bonus. At the end of fiscal year 2004 and each fiscal year thereafter (the "Fiscal Year End"), each Plan Participant and certain other employees of the Company Group will be entitled to receive an annual performance award (an "Annual Incentive Bonus") based on EBITDA targets, debt reduction targets and other criteria, in each case, as established and weighted by the Committee (collectively, the "EBITDA Target"). Each Plan Participant's Annual Incentive Bonus will be calculated as follows: (i) 50% of such Plan Participant's Target Bonus Amount if the Company Group reaches 85% of the EBITDA Target; (ii) 100% of such Plan Participant's Target Bonus Amount if the Company Group reaches 100% of the EBITDA Target; and (iii) 200% of such Plan Participant's Target Bonus Amount if the Company Group reaches 120% of the EBITDA Target. (d) Withholding. The Company will withhold all amounts required to be withheld under the Code and any state or local law from the payment of any Emergence Bonus, Incentive Bonus or Annual Incentive Bonus. 3 5. Amendment under the Plan. The terms of any outstanding award, payment, grant or incentive under the Plan may be amended from time to time by the Committee solely to provide rights under the Plan that are more favorable to any Plan Participant; provided, that if such amendment adversely affects the rights of any Plan Participant, such amendment shall be deemed to affect such Plan Participant only upon such Plan Participant's written consent. 6. Commencement Date; Termination Date. The date of commencement of the Plan shall be the Effective Date. Each Plan Participant shall be paid the awards, payments, grants and incentives to which such Plan Participant is entitled pursuant to the Plan as of the Effective Date, and the Plan shall not be terminated unless and until each Plan Participant receives such awards, payments, grants and incentives. No termination of the Plan shall materially and adversely affect any of the rights or obligations of any Plan Participant, without such Plan Participant's written consent, under any grant of any incentives theretofore granted under the Plan. 7. Severability. Whenever possible, each provision of the Plan shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Plan is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of the Plan. 8. Governing Law. The Plan shall be governed by the corporate laws of the State of Delaware, without giving effect to any choice of law provisions that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. * * * * 4 EX-10.19 22 y92210exv10w19.txt 2003 SEVERANCE AND CHANGE OF CONTROL PLAN NEENAH FOUNDRY COMPANY 2003 SEVERANCE AND CHANGE OF CONTROL PLAN 1. Purpose. This plan shall be known as the Neenah Foundry Company 2003 Severance and Change of Control Plan (the "Plan"). The purpose of the Plan shall be to set forth payments and other benefits, if any, to which an executive of Neenah Foundry Company (the "Company") or any of its Subsidiaries will be entitled upon termination of such person's employment. 2. Definitions. For purposes of this Plan, except when the context clearly indicates otherwise, the following terms shall have the meanings set forth below. "ACP" means ACP Holding Company, a Delaware corporation. "Affiliate" means, in respect of any Person, any other Person who, directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") when used in respect of any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise. "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as codified in Title 11 of the United States Code, 11 U.S.C. Section 101, et seq., as amended from time to time. "Base Salary" means, with respect to any Plan Participant, "Base Salary" as defined in such Plan Participant's Employment Agreement. "Board of Directors" and "Board" mean the board of directors of the Company. "Cause" means, with respect to any Plan Participant, the occurrence of one or more of the following events: (i) such Plan Participant's willful breach of, or gross negligence or malfeasance in the performance of, such Plan Participant's duties under such Plan Participant's Employment Agreement; (ii) any material insubordination by Plan Participant with respect to carrying out the reasonable instructions of the Board; (iii) the conviction for, or the entering of a guilty plea or plea of nolo contendere with respect to, a felony, the equivalent thereof or other crime with respect to which imprisonment of more than one year is a possible punishment or that is expected to result in Significant Injury; (iv) such Plan Participant's breach of a fiduciary obligation to or improper disclosure of a confidence of the Company Group or breach of any other confidentiality or non-competition obligation set forth herein; (v) any act of moral turpitude or willful misconduct by such Plan Participant that (1) is intended to result in personal enrichment of such Plan Participant or any related person at the expense of the Company Group or (2) is reasonably expected to result in Significant Injury. "Change of Control" means, from and after the Effective Date, any transaction or series of related transactions is consummated, the result of which is that: (i) any Person or group (within the meaning of Rule 13d-5 of the Exchange Act), other than the Permitted Holders, shall own directly or indirectly, beneficially or of record, greater than 50% of the equity securities of any member of the Company Group on a fully diluted basis; (ii) a Permitted Holder shall own directly or indirectly, beneficially or of record, 66-2/3% or more of the equity securities of any member of the Company Group on a fully diluted basis; or (iii) after the first fully distributed public offering of voting stock of any member of the Company Group (1) any Person or group (within the meaning of Rule 13d-5 of the Exchange Act), other than the Permitted Holders, shall own directly or indirectly, beneficially or of record, a percentage of the issued and outstanding voting stock of any member of the Company Group on a fully diluted basis, having ordinary voting power in excess of the percentage then owned, directly or indirectly, beneficially and of record, on a fully diluted basis, by the Permitted Holders, or (2) a majority of the seats on the boards of directors of ACP or the Company (except in the case of any vacancy for 30 days or less resulting from the death or resignation of any director) shall at any time be occupied by persons who were neither (A) nominated by the Permitted Holders nor (B) appointed by directors so nominated, in each case, whether as the result of the purchase, issuance or sale of securities of any member of the Company Group or any merger, consolidation, liquidation, dissolution, recapitalization or similar transaction involving any member of the Company Group. "Change of Control Multiple" means, with respect to any Plan Participant, "Change of Control Multiple" as defined in such Plan Participant's Employment Agreement. "Change of Control Payment" has the meaning given to such term in Section 4(b) hereof. "COBRA" means Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended and Section 4980B of the Code. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the Compensation Committee of the Board or such other committee that consists solely of two or more individuals, each of whom is a Non-Employee Director and an "outside director" within the meaning of Treasury Regulation Section 1.162-27(e)(3). "Company" has the meaning set forth in Section 1 hereof. "Company Group" means ACP, the Company and their respective Subsidiaries. "Effective Date" means the effective date of the Plan of Reorganization. "Employment Agreement" means the written agreement between any Plan Participant and the Company or any of its Subsidiaries pursuant to which such Plan Participant is entitled to the benefits under the Plan. "Employment Period" means, with respect to a Plan Participant's employment, the period from the effective date of the Employment Agreement until the date the Plan Participant is no longer employed with the Company. "Exchange Act" means the Securities Exchange Act of 1934, as amended. 2 "Excise Taxes" has the meaning given to such term in Section 4(b) hereof. "Good Reason" means, with respect to any Plan Participant, the termination of such Plan Participant's employment by way of a material change in position, authority, duties, responsibilities or status that results in or reflects (1) a material diminution of scope or importance, reduction in base pay or annual bonus target, material reduction in the aggregate level of benefits, (2) unreasonable relocation of primary employment to a location more than fifty (50) miles from current work location or (3) solely with respect to William Barrett, the failure of the Company to nominate Mr. Barrett to the boards of directors of ACP and each of its Subsidiaries. For avoidance of doubt, a reduction in base pay or annual bonus target and the relocation of primary employment to a location more than fifty (50) miles from current work location, in each case, shall constitute a material change in position, authority, duties, responsibilities or status. "Gross-Up Amount" has the meaning given to such term in Section 4(b) hereof. "Non-Employee Director" has the meaning given to such term in Rule 16b-3 under the Exchange Act and any successor thereto. "Payout Period" means, with respect to any Plan Participant, "Payout Period" as defined in such Plan Participant's Employment Agreement. "Permitted Holders" means each of MacKay Shields LLC, Citicorp Mezzanine III, L.P., Metropolitan Life Insurance Company, Exis Differential Holdings, Ltd. and Trust Company of the West, together with the Affiliates of each of such Persons. "Person" shall mean an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. "Plan" has the meaning set forth in Section 1 hereof. "Plan of Reorganization" means the Joint Prepackaged Plan of Reorganization of ACP, NFC Castings, Inc., the Company and certain of its Subsidiaries under Chapter 11 of the Bankruptcy Code, dated July 1, 2003, including the Plan Supplement and other supplements, appendices and schedules to the Plan, in each case, as amended or supplemented on or before the Effective Date. "Plan Participant" means each of William Barrett, Gary LaChey, Joseph DeRita, Frank Headington, Timothy Koller, William Martin, Joseph Varkoly, Steve Shaffer, John Andrews and any other employee of the Company Group selected by the Board or the Committee. "Severance Multiple" means, with respect to any Plan Participant, "Severance Multiple" as defined in such Plan Participant's Employment Agreement. "Severance Payments" has the meaning given to such term in Section 4(a) hereof. 3 "Significant Injury" means significant economic or reputational injury or both (such determination to be made by the Board in its reasonable judgment) to the Company Group. "Subsidiary" of any Person means a corporation or other entity of which outstanding shares or ownership interests representing 50% or more of the combined voting power of such corporation or other entity entitled to elect the management thereof, or such lesser percentage as may be approved by the Committee, are owned directly or indirectly by such Person. 3. Administration. The Plan shall be administered by the Committee; provided, that the Board may, in its discretion, at any time and from time to time, resolve to administer the Plan, in which case the term "Committee" shall be deemed to mean the Board for all purposes herein. Subject to the provisions of the Plan, the Committee shall be authorized to: (i) select persons to participate in the Plan in addition to those entitled to participate in the Plan pursuant to Employment Agreements entered into at or prior to the Effective Date; (ii) determine the form, substance, terms and conditions of each additional grant made under the Plan; (iii) certify that the conditions and restrictions applicable to any grant have been met; (iv) modify the terms of grants made under the Plan; (v) make any adjustments necessary or desirable in connection with grants made under the Plan to eligible participants located outside the United States; (vi) adopt, amend, or rescind rules and regulations for the administration of the Plan, including, but not limited to, correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in any Employment Agreement, in the manner and to the extent it shall deem necessary or advisable, including so that the Plan and the operation of the Plan complies with the Code to the extent applicable and other applicable law; and (vii) exercise such powers and perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan; provided, that in no event shall any amendment, modification, adjustment, correction or supplement to the Plan pursuant to the foregoing clauses (i) through (vii) adversely affect any Plan Participant without such Plan Participant's consent. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with applicable federal and state laws and rules and regulations promulgated pursuant thereto. No member of the Committee and no officer of the Company shall be liable for any action taken or omitted to be taken by such member, by any other member of the Committee or by any officer of the Company in connection with the performance of duties under the Plan, except for such person's own willful misconduct or as expressly provided by statute. The expenses of administering the Plan shall be borne by the Company. 4. Severance Arrangements; Change of Control Payments. (a) Severance Arrangement. Except as provided in Section 4(b) below, if any Plan Participant's employment with a member of the Company Group is terminated by such Person other than for Cause, or if any Plan Participant resigns from employment with such Person for Good Reason, such Plan Participant shall receive, during the Payout Period, (x) severance payments ("Severance Payments") equal in the aggregate to the product of (1) the Severance Multiple and (2) Base Salary of such Plan Participant and (y) the health benefits, at the 4 Company's cost (subject to satisfying insurability requirements), to which such Plan Participant would otherwise have been entitled pursuant to the Employment Agreement (subject to such Plan Participant's COBRA election) and outplacement services, in each case, for the Payout Period. Severance Payments shall be made bi-weekly, in accordance with normal payroll practices for the Payout Period. The Company's health benefits and outplacement services described above will be made available until the earlier of the end of the Payout Period or the receipt of comparable benefits on re-employment. Severance Payments shall not be reduced as a result of re-employment or otherwise. (b) Termination upon Change of Control. If any Plan Participant's employment with a member of the Company Group is terminated by such Person other than for Cause or if any Plan Participant resigns from employment with such Person for Good Reason, in each case, within 180 days after a Change of Control, such Plan Participant shall receive a lump sum cash payment in an amount equal to the product of (x) the Change of Control Multiple and (y) Base Salary (the "Change of Control Payment"). The Change of Control Payment (i) will be payable by the Company to such Plan Participant in a lump sum within 30 days of such Plan Participant's termination pursuant to the preceding sentence, (ii) is not subject to mitigation or reduction upon re-employment or otherwise and (iii) will be increased to provide for payment of an additional amount (the "Gross-Up Amount") such that the net amount retained by the Plan Participant, after payment of (1) any excise taxes due on the Change of Control Payment under Section 4999 of the Code or any corresponding or applicable state law provision ("Excise Taxes") and (2) any federal, state or local income tax and any Excise Taxes due in respect of the Gross-Up Amount, shall equal the Change of Control Payment. Clauses (i) and (ii) of the immediately preceding sentence shall apply to the Gross-Up Amount. Such Plan Participant shall also be entitled to the continuation of health benefits (subject to satisfying insurability requirements) and outplacement services during the Payout Period on the same basis as provided pursuant to Section 4(a), subject to mitigation upon re-employment and receipt of comparable benefits set forth in Section 4(a). Payments made upon termination following a Change of Control are in lieu of any severance payments described in Section 4(a) above that would otherwise be payable following such termination. 5. Transfer of Employee. Unless there shall otherwise be an event constituting Good Reason, the transfer of an employee from the Company to a Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to another Subsidiary shall not be considered a termination of employment; nor shall it be considered a termination of employment if an employee is placed on military or sick leave or such other leave of absence that is considered by the Committee as continuing intact the employment relationship. 6. Amendment under the Plan. The terms of any outstanding award, payment, grant or incentive under the Plan may be amended from time to time by the Committee solely to provide rights under the Plan that are more favorable to any Plan Participant; provided, that if such amendment adversely affects 5 the rights of any Plan Participant, such amendment shall be deemed to affect such Plan Participant only upon such Plan Participant's written consent. 7. Commencement Date; Termination Date. The date of commencement of the Plan shall be the Effective Date. Each Plan Participant shall be paid the awards, payments, grants and incentives to which such Plan Participant is entitled pursuant to the Plan as of the Effective Date, and the Plan shall not be terminated unless and until each Plan Participant receives such awards, payments, grants and incentives. No termination of the Plan shall materially and adversely affect any of the rights or obligations of any Plan Participant, without such Plan Participant's written consent, under any grant of any incentives theretofore granted under the Plan. 8. Severability. Whenever possible, each provision of the Plan shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Plan is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of the Plan. 9. Governing Law. The Plan shall be governed by the corporate laws of the State of Delaware, without giving effect to any choice of law provisions that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. * * * * 6 EX-21.1 23 y92210exv21w1.txt SUBSIDIARIES OF THE REGISTRANT Exhibit 21.1 SUBSIDIARY JURISDICTION OF ORGANIZATION - ---------- ---------------------------- Gregg Industries, Inc., California Cast Alloys, Inc., California Advanced Cast Products, Inc., Delaware Mercer Forge Corporation Delaware Belcher Corporation Delaware Mercer Forge Corporation Delaware Dalton Corporation Indiana Dalton Corporation, Warsaw Manufacturing Facility Indiana Dalton Corporation, Kendallville Manufacturing Facility Indiana Deeter Foundry, Inc. Nebraska Dalton Corporation, Stryker Machining Facility Co. Ohio Dalton Corporation, Ashland Manufacturing Facility Ohio Peerless Corporation Ohio A&M Specialties, Inc. Pennsylvania Neenah Transport, Inc. Wisconsin EX-23.1 24 y92210exv23w1.txt CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.1 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We have audited the consolidated financial statements of Neenah Foundry Company as of September 30, 2003 and 2002, and for each of the three years in the period ended September 30, 2003, and have issued our report thereon dated November 10, 2003 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Milwaukee, Wisconsin November 10, 2003 EX-24.1 25 y92210exv24w1.txt POWER OF ATTORNEY Exhibit 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of William M. Barrett and Gary W. LaChey, or any one of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, in connection with the Registration Statement on Form S-1 or Form S-4 with respect to the 11% Senior Secured Notes due 2010 or the 13% Senior Subordinated Notes due 2013, as applicable (the "Registration Statement") of Neenah Foundry Company (the "Company"), Advanced Cast Products, Inc., Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility, Dalton Corporation, Stryker Machining Facility Co., Dalton Corporation, Ashland Manufacturing Facility, Dalton Corporation, Kendallville Manufacturing Facility, Deeter Foundry, Inc., Gregg Industries, Inc., Mercer Forge Corporation, A&M Specialties, Inc., Neenah Transport, Inc., Cast Alloys, Inc., Belcher Corporation and Peerless Corporation (collectively, the "Guarantors"), under the Securities Act of 1933, as amended (the "Securities Act"), including, without limiting the generality of the foregoing, to sign the Registration Statement in the name and on behalf of each of the Company and the Guarantors or on behalf of the undersigned as a director or officer of each of the Company and the Guarantors, to sign any amendments and supplements relating thereto (including post-effective amendments) under the Securities Act and to sign any instrument, contract, document or other writing of or in connection with the Registration Statement and any amendments and supplements thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, including this power of attorney, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS HEREOF, the undersigned has signed these presents this 5th day of December, 2003. /s/ William M. Barrett -------------------------- William M. Barrett EX-24.2 26 y92210exv24w2.txt POWER OF ATTORNEY Exhibit 24.2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of William M. Barrett and Gary W. LaChey, or any one of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, in connection with the Registration Statement on Form S-1 or Form S-4 with respect to the 11% Senior Secured Notes due 2010 or the 13% Senior Subordinated Notes due 2013, as applicable (the "Registration Statement") of Neenah Foundry Company (the "Company"), Advanced Cast Products, Inc., Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility, Dalton Corporation, Stryker Machining Facility Co., Dalton Corporation, Ashland Manufacturing Facility, Dalton Corporation, Kendallville Manufacturing Facility, Deeter Foundry, Inc., Gregg Industries, Inc., Mercer Forge Corporation, A&M Specialties, Inc., Neenah Transport, Inc., Cast Alloys, Inc., Belcher Corporation and Peerless Corporation (collectively, the "Guarantors"), under the Securities Act of 1933, as amended (the "Securities Act"), including, without limiting the generality of the foregoing, to sign the Registration Statement in the name and on behalf of each of the Company and the Guarantors or on behalf of the undersigned as a director or officer of each of the Company and the Guarantors, to sign any amendments and supplements relating thereto (including post-effective amendments) under the Securities Act and to sign any instrument, contract, document or other writing of or in connection with the Registration Statement and any amendments and supplements thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, including this power of attorney, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS HEREOF, the undersigned has signed these presents this 4th day of December, 2003. /s/ Gary W. LaChey ------------------------- Gary W. LaChey EX-24.3 27 y92210exv24w3.txt POWER OF ATTORNEY Exhibit 24.3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of William M. Barrett and Gary W. LaChey, or any one of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, in connection with the Registration Statement on Form S-1 or Form S-4 with respect to the 11% Senior Secured Notes due 2010 or the 13% Senior Subordinated Notes due 2013, as applicable (the "Registration Statement") of Neenah Foundry Company (the "Company"), Advanced Cast Products, Inc., Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility, Dalton Corporation, Stryker Machining Facility Co., Dalton Corporation, Ashland Manufacturing Facility, Dalton Corporation, Kendallville Manufacturing Facility, Deeter Foundry, Inc., Gregg Industries, Inc., Mercer Forge Corporation, A&M Specialties, Inc., Neenah Transport, Inc., Cast Alloys, Inc., Belcher Corporation and Peerless Corporation (collectively, the "Guarantors"), under the Securities Act of 1933, as amended (the "Securities Act"), including, without limiting the generality of the foregoing, to sign the Registration Statement in the name and on behalf of each of the Company and the Guarantors or on behalf of the undersigned as a director or officer of each of the Company and the Guarantors, to sign any amendments and supplements relating thereto (including post-effective amendments) under the Securities Act and to sign any instrument, contract, document or other writing of or in connection with the Registration Statement and any amendments and supplements thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, including this power of attorney, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS HEREOF, the undersigned has signed these presents this 4th day of December, 2003. /s/ Andrew Booke Cohen --------------------------- Andrew Booke Cohen EX-24.4 28 y92210exv24w4.txt POWER OF ATTORNEY Exhibit 24.4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of William M. Barrett and Gary W. LaChey, or any one of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, in connection with the Registration Statement on Form S-1 or Form S-4 with respect to the 11% Senior Secured Notes due 2010 or the 13% Senior Subordinated Notes due 2013, as applicable (the "Registration Statement") of Neenah Foundry Company (the "Company"), Advanced Cast Products, Inc., Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility, Dalton Corporation, Stryker Machining Facility Co., Dalton Corporation, Ashland Manufacturing Facility, Dalton Corporation, Kendallville Manufacturing Facility, Deeter Foundry, Inc., Gregg Industries, Inc., Mercer Forge Corporation, A&M Specialties, Inc., Neenah Transport, Inc., Cast Alloys, Inc., Belcher Corporation and Peerless Corporation (collectively, the "Guarantors"), under the Securities Act of 1933, as amended (the "Securities Act"), including, without limiting the generality of the foregoing, to sign the Registration Statement in the name and on behalf of each of the Company and the Guarantors or on behalf of the undersigned as a director or officer of each of the Company and the Guarantors, to sign any amendments and supplements relating thereto (including post-effective amendments) under the Securities Act and to sign any instrument, contract, document or other writing of or in connection with the Registration Statement and any amendments and supplements thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, including this power of attorney, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS HEREOF, the undersigned has signed these presents this 4th day of December, 2003. /s/ Benjamin C. Duster, IV, Esq. -------------------------------- Benjamin C. Duster, IV, Esq. EX-24.5 29 y92210exv24w5.txt POWER OF ATTORNEY Exhibit 24.5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of William M. Barrett and Gary W. LaChey, or any one of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, in connection with the Registration Statement on Form S-1 or Form S-4 with respect to the 11% Senior Secured Notes due 2010 or the 13% Senior Subordinated Notes due 2013, as applicable (the "Registration Statement") of Neenah Foundry Company (the "Company"), Advanced Cast Products, Inc., Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility, Dalton Corporation, Stryker Machining Facility Co., Dalton Corporation, Ashland Manufacturing Facility, Dalton Corporation, Kendallville Manufacturing Facility, Deeter Foundry, Inc., Gregg Industries, Inc., Mercer Forge Corporation, A&M Specialties, Inc., Neenah Transport, Inc., Cast Alloys, Inc., Belcher Corporation and Peerless Corporation (collectively, the "Guarantors"), under the Securities Act of 1933, as amended (the "Securities Act"), including, without limiting the generality of the foregoing, to sign the Registration Statement in the name and on behalf of each of the Company and the Guarantors or on behalf of the undersigned as a director or officer of each of the Company and the Guarantors, to sign any amendments and supplements relating thereto (including post-effective amendments) under the Securities Act and to sign any instrument, contract, document or other writing of or in connection with the Registration Statement and any amendments and supplements thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, including this power of attorney, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS HEREOF, the undersigned has signed these presents this 4th day of December, 2003. /s/ Michael J. Farrell ---------------------------- Michael J. Farrell EX-24.6 30 y92210exv24w6.txt POWER OF ATTORNEY Exhibit 24.6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of William M. Barrett and Gary W. LaChey, or any one of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, in connection with the Registration Statement on Form S-1 or Form S-4 with respect to the 11% Senior Secured Notes due 2010 or the 13% Senior Subordinated Notes due 2013, as applicable (the "Registration Statement") of Neenah Foundry Company (the "Company"), Advanced Cast Products, Inc., Dalton Corporation, Dalton Corporation, Warsaw Manufacturing Facility, Dalton Corporation, Stryker Machining Facility Co., Dalton Corporation, Ashland Manufacturing Facility, Dalton Corporation, Kendallville Manufacturing Facility, Deeter Foundry, Inc., Gregg Industries, Inc., Mercer Forge Corporation, A&M Specialties, Inc., Neenah Transport, Inc., Cast Alloys, Inc., Belcher Corporation and Peerless Corporation (collectively, the "Guarantors"), under the Securities Act of 1933, as amended (the "Securities Act"), including, without limiting the generality of the foregoing, to sign the Registration Statement in the name and on behalf of each of the Company and the Guarantors or on behalf of the undersigned as a director or officer of each of the Company and the Guarantors, to sign any amendments and supplements relating thereto (including post-effective amendments) under the Securities Act and to sign any instrument, contract, document or other writing of or in connection with the Registration Statement and any amendments and supplements thereto (including post-effective amendments) and to file the same, with all exhibits thereto, and other documents in connection therewith, including this power of attorney, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS HEREOF, the undersigned has signed these presents this 4th day of December, 2003. /s/ Jeffrey G. Marshall ------------------------------ Jeffrey G. Marshall EX-25.1 31 y92210exv25w1.txt STATEMENT RE ELIGIBILITY OF TRUSTEE EXHIBIT 25.1 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.) ONE WALL STREET, NEW YORK, N.Y. 10286 (Address of principal executive offices) (Zip code) NEENAH FOUNDRY COMPANY (Exact name of registrant as specified in its charter) WISCONSIN 3220 39-1580331 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) ADVANCED CAST PRODUCTS, INC. (Exact name of registrant as specified in its charter) DELAWARE 3321 25-1607691 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) DALTON CORPORATION (Exact name of registrant as specified in its charter) INDIANA 3321 35-0259770 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) DALTON CORPORATION, WARSAW MANUFACTURING FACILITY (Exact name of registrant as specified in its charter) INDIANA 3321 35-2054775 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) DALTON CORPORATION, STRYKER MACHINING FACILITY CO. (Exact name of registrant as specified in its charter) OHIO 3599 34-1873080 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) DALTON CORPORATION, ASHLAND MANUFACTURING FACILITY (Exact name of registrant as specified in its charter) OHIO 3321 34-1873079 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) DALTON CORPORATION, KENDALLVILLE MANUFACTURING FACILITY (Exact name of registrant as specified in its charter) INDIANA 3321 35-2054777 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) -2- DEETER FOUNDRY, INC. (Exact name of registrant as specified in its charter) NEBRASKA 3321 47-0355148 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) GREGG INDUSTRIES, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 3321 95-1498664 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) MERCER FORGE CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 3462 25-1511711 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) A&M SPECIALTIES, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 3599 25-1741756 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) NEENAH TRANSPORT, INC. (Exact name of registrant as specified in its charter) WISCONSIN 4213 39-1378433 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) CAST ALLOYS, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 3365 33-0071223 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) -3- BELCHER CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 3321 52-1643193 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) PEERLESS CORPORATION (Exact name of registrant as specified in its charter) OHIO 3321 52-1644462 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation Code Number) or organization) 11% SENIOR SECURED NOTES DUE 2010 (Title of the indenture securities) -4- 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 New York 2 Rector Street, 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.) 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. -5- 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 3rd day of December, 2003. THE BANK OF NEW YORK By: /S/ PATRICIA GALLAGHER --------------------------- Name: PATRICIA GALLAGHER Title: VICE PRESIDENT -6- EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One 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, 2003, 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 ...................... $ 3,688.426 Interest-bearing balances ............................................... 4,380,259 Securities: Held-to-maturity securities ............................................. 270,396 Available-for-sale securities ........................................... 21,509.356 Federal funds sold in domestic offices ..................................... 1,269,945 Securities purchased under agreements to resell ............................ 5,320,737 Loans and lease financing receivables: Loans and leases held for sale .......................................... 629,178 Loans and leases, net of unearned income ..................... 38,241,326 LESS: Allowance for loan and lease losses ....................... 813,502 Loans and leases, net of unearned income and allowance .................. 37,427,824 Trading Assets ............................................................. 6,323,529 Premises and fixed assets (including capitalized leases) ................... 938,488 Other real estate owned .................................................... 431 Investments in unconsolidated subsidiaries and associated companies ........ 256,230 Customers' liability to this bank on acceptances outstanding ............... 191,307 Intangible assets Goodwill ................................................................ 2,562,478 Other intangible assets ................................................. 798,536 Other assets ............................................................... 6,636,012 ----------- Total assets ............................................................... $92,203,132 ===========
LIABILITIES Deposits: In domestic offices ..................................................... $35,637,801 Noninterest-bearing .......................................... 15,795,823 Interest-bearing ............................................. 19,841,978 In foreign offices, Edge and Agreement subsidiaries, and IBFs ........... 23,759,599 Noninterest-bearing ............................................. 599,397 Interest-bearing ............................................. 23,160,202 Federal funds purchased in domestic offices ................................ 464,907 Securities sold under agreements to repurchase ............................. 693,638 Trading liabilities ........................................................ 2,634,445 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases) 11,168,402 Bank's liability on acceptances executed and outstanding ................... 193,690 Subordinated notes and debentures .......................................... 2,390,000 Other liabilities .......................................................... 6,573,955 ----------- Total liabilities .......................................................... $83,516,437 =========== Minority interest in consolidated subsidiaries ............................. 519,418 EQUITY CAPITAL Perpetual preferred stock and related surplus .............................. 0 Common stock ............................................................... 1,135,284 Surplus .................................................................... 2,057,234 Retained earnings .......................................................... 4,892,597 Accumulated other comprehensive income ..................................... 82,162 Other equity capital components ............................................ 0 ----------- Total equity capital ....................................................... 8,167,277 ----------- Total liabilities minority interest and equity capital ..................... $92,203,132 ===========
-2- I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We 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 and is true and correct. Thomas A. Renyi Gerald L. Hassell Directors Alan R. Griffith -3- EX-99.1 32 y92210exv99w1.txt LETTER OF ELECTION & INSTRUCTIONS TO BROKER/BANK EXHIBIT 99.1 CUSIP NUMBER: 640071AK2 LETTER OF ELECTION AND INSTRUCTIONS TO BROKER OR BANK WITH RESPECT TO THE EXCHANGE OFFER REGARDING THE 11% SENIOR SECURED NOTES DUE 2010 ISSUED BY NEENAH FOUNDRY COMPANY THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM, NEW YORK CITY TIME, ON , 2004 To My Broker or Account Representative: I, the undersigned, hereby acknowledge receipt of the Prospectus, dated , 2003 (the "Prospectus") of Neenah Foundry Company, a Wisconsin corporation (the "Company") with respect to the Company's exchange offer set forth therein (the "Exchange Offer"). I have read the Prospectus and agree to be bound by the terms and conditions set forth therein. I understand that the exchange offer must be accepted on or prior to 5:00 PM, New York City Time, on , 2004. This letter instructs you as to action to be taken by you relating to the Exchange Offer with respect to the 11% Senior Secured Notes due 2010 (the "Existing Notes") held by you for the account of the undersigned. The aggregate face amount of the Existing Notes held by you for the account of the undersigned is (FILL IN AMOUNT): $ of the 11% Senior Secured Notes due 2010 With respect to the Exchange Offer, the undersigned hereby instructs you (CHECK APPROPRIATE BOX): [ ] TO TENDER the following Existing Notes held by you for the account of the undersigned (INSERT PRINCIPAL AMOUNT AT MATURITY OF EXISTING NOTES TO BE TENDERED, IF ANY): $ - -------------------------------------------------------------------------------- [ ] NOT TO TENDER any Existing Notes held by you for the account of the undersigned. If the undersigned instructs you to tender the Existing Notes held by you for the account of the undersigned, it is understood that you are authorized (a) to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representation and warranties contained in the Prospectus that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations that (i) the undersigned's principal residence is in the state of (FILL IN STATE), (ii) the undersigned is acquiring the Exchange Notes in the ordinary course of business of the undersigned, (iii) the undersigned is not participating, does not participate, and has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes, (iv) the undersigned acknowledges that any person participating in the Exchange Offer for the purpose of distributing the Exchange Notes must comply with the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the "Act") in connection with a secondary resale transaction of the Exchange Notes acquired by such person and cannot rely on the position of the Staff of the Securities and Exchange Commission set forth in no-action letters that are discussed in the section of the Prospectus entitled "The Exchange Offer," and (v) the undersigned is not an "affiliate," as defined in Rule 405 under the Act, of the Company; (b) to agree, on behalf of the undersigned, as set forth in the Prospectus; and (c) to take such other action as necessary under the Prospectus to effect the valid tender of such Existing Notes. Name of beneficial owner(s): - -------------------------------------------------------------------------------- Signatures: - -------------------------------------------------------------------------------- Name (please print): - -------------------------------------------------------------------------------- Address: - -------------------------------------------------------------------------------- Telephone number: - -------------------------------------------------------------------------------- Taxpayer Identification or Social Security Number: - ---------------------------------------------------------- Date: - -------------------------------------------------------------------------------- 2 -----END PRIVACY-ENHANCED MESSAGE-----