AMENDED PAYMENT AND SECURITY AGREEMENT
This AMENDED PAYMENT AND SECURITY AGREEMENT is made this 14th day of
October, 1997, by and between LADISH CO., INC., a Wisconsin corporation
(the "Company"), and the PENSION BENEFIT GUARANTY CORPORATION ("PBGC"),
acting on behalf of itself and on behalf of the defined benefit plans
sponsored by the Company and listed in Exhibit A hereto (the "Plans").
WITNESSETH:
WHEREAS, the Company is the sponsor of the defined benefit pension
plans set forth in Exhibit A hereto, which plans are covered by Title IV
of the Employee Retirement Security Act of 1974, as amended ("ERISA"); and
WHEREAS, the Company applied for and received conditional waivers of
the minimum funding standards for the Plans ("Funding Waivers") for plan
year 1995 from the United States Internal Revenue Service ("IRS") under
section 412(d) of the Internal Revenue Code of 1986, as amended (the
"Code"), and section 303 of ERISA.
WHEREAS, as a condition of those Funding Waivers the Company was
required to provide security to the Plans and entered into that Payment
and Security Agreement, dated June 17, 1997, with the PBGC (the "Prior
Agreement").
WHEREAS, the Company has applied under section 412(d) of the Code and
section 303 of ERISA to the IRS for Funding Waivers for plan year 1996;
and
WHEREAS, the Company and PBGC have reached an understanding on
additional funding payments to the Plans during the 1997 calendar year and
for the 1996 and 1997 plan years, which payments will satisfy Company's
obligations under the Prior Agreement, satisfy minimum funding for the
1996 and 1997 plan years, and allow the Company to withdraw its
application for Funding Waivers for plan year 1996.
NOW, THEREFORE, IT IS AGREED THAT:
1. Definitions.
(a) Unless otherwise defined herein, the following terms, which are
defined in the Prior Agreement, have the meaning given them in the Prior
Agreement: "Collateral", "Intercreditor Agreement", "PBGC Liens", "Senior
Liens", and "Secured Obligations". Further, the following terms which are
defined in the Intercreditor Agreement and used herein shall have the
meaning given to them in that document: Lender Agent; Noteholder Agent.
(b) In addition, the following terms shall have the following
meanings, unless the context otherwise requires:
"Agreement": this Amended Payment and Security Agreement as the
same may from time to time be amended or supplemented.
"Event of Default": an Event of Default as defined in section 8
of this Agreement.
"1998 Funding Goal": minimum funding requirements for the 1998
plan year for Plans 001,006 and 013 of zero, and for Plans 004 and
016 of $6,000,000 and $900,000, respectively.
"Plan 003": the Xxxxxx Hourly Employees Plan.
"Plan 014": the Xxxxxx Kentucky Steelworkers Local No. 7513 and
8054 Plan.
"Required Credit Balance": for each of the Plans, as of the end
of the plan year ending after December 31, 1997, the credit balance
in the funding standard account maintained for each such plan
pursuant to section 412 of the Code and 302 of ERISA as of December
31, 1997, adjusted for interest to the end of the plan year.
2. Grant of Security Interest.
The security interests under the Uniform Commercial Code in and to
certain of the Collateral, in favor of the Plans and the PBGC, granted by
the Company under the Prior Agreement to secure the timely payment of the
Secured Obligations, shall continue after the execution of this Agreement.
As provided in the Prior Agreement and the Intercreditor Agreement, these
PBGC Liens are subordinate to the Senior Liens, and PBGC's rights with
respect to the Collateral are subject to the terms of that Intercreditor
Agreement.
3. Actions by the Company with respect to the Plans.
(a) Payments. The Company agrees to make the following contributions
to the Plans:
(i) During calendar year 1997, the Company will contribute
Three Million One Hundred Ninety-Seven Thousand Seven Hundred
and Seventy-Two Dollars ($3,197,772) to the Plans;
(ii) In addition to the above payments, during the fourth
quarter of calendar year 1997, the Company will contribute Ten
Million Dollars ($10,000,000) to the Plans; and
(iii) On or before January 15, 1998, the Company will contribute
an additional Seven Hundred Fourteen Thousand Five Hundred and
Fifty-One Dollars ($714,551) to the Plans.
(b) Plan Mergers. Before December 31, 1997, the Company will merge
certain of the Plans as follows:
(i) Plan 006 and Plan 019 will merge with Plan 003. (Plan 006
will be the surviving plan)
(ii) Plan 001 will merge with Plan 014. (Plan 001 will be the
surviving plan)
(c) Allocation of Payments. The payments described in (a), above,
shall be allocated among the Plans (including the merged plans as
described in (b)) as determined by the Company in order to meet its 1998
Funding Goal.
4. PBGC Release.
Upon completion of the actions contemplated in section 3(a) and (b),
and the receipt by PBGC of a certified statement from the Plans' actuary
stating that the minimum funding requirements for 1998 will meet the 1998
Funding Goal, PBGC agrees to release the PBGC Liens on the Collateral,
including the Third Mortgage and Security Agreement PBGC filed against the
real property of the Company in Milwaukee County in the State of
Wisconsin. PBGC will execute and deliver to the Company all termination
statements and mortgage releases as the Company deems necessary to effect
said release.
5. Intercreditor Agreement.
In conjunction with the Company and PBGC entering into the Prior
Agreement, PBGC entered into the Intercreditor Agreement with the Lender
Agent and the Noteholder Agent. The Company, though not a party to the
Intercreditor Agreement, agreed to be bound by its terms. The
Intercreditor Agreement set forth the respective positions and rights of
the parties thereto to the Collateral. Upon release of the PBGC Lien, PBGC
agrees (a) that the Intercreditor Agreement is no longer necessary; (b)
that the Intercreditor Agreement should be terminated; and (c) that PBGC
will take all actions necessary to terminate that agreement. The Company
agrees to obtain the consent of the Lender Agent and Noteholder Agent to
the termination of the Intercreditor Agreement.
6. Representations and Warranties of the Company.
The Company represents and warrants, to the best of its knowledge,
that:
(a) the Company is duly organized and validly existing under the law
of the State of Wisconsin, and the chief place of business of the Company
is located within the State of Wisconsin;
(b) the Company has all necessary corporate authority to execute,
deliver and perform the obligations under this Agreement;
(c) the Company is the lawful owner of all of the Collateral and had
complete authority to grant a security interest in this Collateral;
(d) all information supplied and statements made in any financial or
credit statements or application for credit prior to the execution of this
Agreement are true and correct as of the date furnished and as of the date
hereof in all material respects.
7. Covenants of the Company.
(a) Credit Balance Requirements. The Company agrees that it will
preserve the Required Credit Balance for each of the Plans for four
consecutive plan years, starting with the plan year ending December 31,
1998, provided, however, that the Required Credit Balance may be taken
into account for purposes of calculating the "deficit reduction
contribution" described in section 412(l) of the Code.
(b) Annual Informational Requirements. The Company will furnish to
PBGC annual audited financial statements (including a balance sheet,
income statement, statement of operation and cash flow, and statement of
retained earnings) of the Company, accompanied by the opinion thereon of
its independent certified public accountant, within 120 days after the
close of each fiscal year. The Company also will provide PBGC with annual
actuarial valuation reports for all defined benefit pension plans
sponsored by the Company within 60 days after becoming available, and the
annual Form 5500's with all schedules and attachments for each Plan when
available.
(c) Other Informational Requirements. The Company shall furnish to
PBGC copies of quarterly financial statements (unaudited). Additionally,
the Company will notify' PBGC whether it has made required contributions
for its two largest plans, such notice to be given within 10 days of the
date the contribution is due. The Company also will furnish to PBGC such
other financial statements or reports it has generated as PBGC may
reasonably request.
8. Events of Default.
If one or more of the following events or conditions shall occur,
PBGC shall have the remedies provided below in section 9:
(a) the Company fails to make any payment required under this
Agreement, and such failure continues for 5 days;
(b) the Company otherwise fails to satisfy any term or condition of
this Agreement;
(c) the Company becomes insolvent or goes out of business;
(d) there is a material and adverse change in the business or
financial condition of the Company;
(e) a trustee, receiver or custodian is appointed over all or
substantially all of the property of the Company;
(f) any proceeding in bankruptcy or reorganization is instituted by
or against the Company;
(g) the Company makes a general assignment for the benefit of
creditors;
(h) any representation, warranty or certification made by the
Company, in this Agreement, or in any document furnished in connection
therewith by the Company, shall prove to have been materially false or
misleading as of the time made or furnished in any materially adverse
respect; and
(i) PBGC shall have instituted proceedings under Section 4042 of
ERISA seeking termination or appointment of a trustee in respect of any
defined benefit plan sponsored by the Company; or the Company shall have
furnished to PBGC or any participant in the Plans a notice of intent to
terminate the Plan under Section 4041(c) of ERISA;
9. Rights and Remedies.
PBGC, in its sole discretion, may elect to pursue one or more of the
following remedies. PBGC may waive any default, or remedy any default in
any reasonable manner, without waiving any other prior or subsequent
default.
(a) General Remedies. If one or more of the Events of Default
occurs, PBGC may pursue any remedy available in law or equity;
(b) Specific Remedies. Should an Event of Default described in
subsection (a) or (b) of Section 8 occur, a lien in the Collateral of the
Company in favor of PBGC shall arise on the date said default occurs in
the amount of any missed payment or due contribution.
(c) No remedy recited in this Agreement shall limit PBGC in any
manner from pursuing any and all additional remedies provided by
applicable law.
10. Indemnity.
The Company assumes liability for, and agrees to indemnify the Plans
and PBGC against, and on written demand to pay, or to reimburse the Plans
and PBGC (and each of their employees, directors, and agents) against the
payment of any or all liabilities, obligations, losses, damages,
penalties, claims, suits, actions, costs, expenses and disbursements,
including legal fees and expenses of any kind and nature imposed on,
incurred by, or asserted against the Plans or PBGC relating to or arising
out of this Agreement.
11. Termination.
This Agreement shall terminate upon receipt by PBGC of a
certification from the actuary for the Plans that the Required Credit
Balance has been preserved, as provided in section 7(a), for each of the
Plans through the end of the plan year that ends during the calendar year
2001.
12. Miscellaneous.
(a) Amendments. The Company understands that this Agreement cannot
be changed or terminated orally, can only be modified upon the written
consent of the parties hereto, and that it is for the benefit of and
binding upon the Company and its respective successors and assigns.
(b) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the
same instrument.
(c) Governing Law. This Agreement, and the rights and obligations of
the parties hereunder shall be governed by and construed in accordance
with the laws of the State of Wisconsin except to the extent such laws are
superseded by Federal law.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be delivered to the intended recipient at the Address
for Notices specified below or at such other address as shall be
designated by any of them in a notice to each other party set forth
therein. All notices and other communications shall be deemed to have been
duly given, in the case of transmission by telecopy, when sent; in the
case of hand delivery, when received; or in the case of mail, three
business days after the date deposited in the mail addressed as described
above.
Address for Notices:
If to the Company: Ladish Co. Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
If to PBGC: Pension Benefit Guaranty Corp.
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Executive Director
(With a copy to the Office of the General Counsel)
(e) Anti-waiver and severability. PBGC's failure to exercise any
right, remedy or option under this Agreement, or any delay by PBGC in
exercising any of them, will not operate as a waiver. The Company
understands that the only way PBGC may waive its rights is in writing
signed by an authorized agent of PBGC. All of PBGC's rights and remedies
under this Agreement are cumulative and not exclusive of each other. If
any provision of this Agreement is unenforceable for any reason, it shall
not affect the enforceability of the other provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day stated above.
PENSION BENEFIT GUARANTY CORPORATION
By: /s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Deputy Executive Director and Chief
Negotiator
XXXXXX CO., INC.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Vice President of Law/Finance & Secretary
EXHIBIT A
LADISH PENSION PLANS
Plan 004 International Association of Machinists and Aerospace Workers,
Local #1862
Plan 001 Blacksmiths Subordinate Lodge No. 1509
Plan 006 International Brotherhood of Firemen and Oilers, Local #125
Plan 013 International Brotherhood of Electrical Workers, Local #633
Plan 016 International Die Sinkers Conference, Local #140
Plan 019 Blacksmiths Subordinate Lodge No. 1510
