NOTE MODIFICATION AGREEMENT
Exhibit
99.1
This Note
Modification Agreement (“Agreement”), dated this 15th day
of September, 2009, is entered into by PENSION BENEFIT GUARANTY CORPORATION
(“PBGC”), JPMorgan Investment Management Inc. (“JPMorgan”), as agent for PBGC,
and FANSTEEL INC. (“Fansteel”).
RECITALS:
WHEREAS,
PBGC and Fansteel are parties to a Promissory Note dated January 23, 2004 with
an original balance of $9,500,000.00 and a current balance, as of the date of
execution of this Agreement, of $6,500,000.00;
WHEREAS,
the Promissory Note is secured by the pledged assets set forth in a certain
Pledge Agreement between PBGC, Fansteel, and Fansteel de Mexico, S. de ▇.▇. de
C.V. (the “Pledge Agreement”);
WHEREAS,
Fansteel desires to effectuate a reverse stock split and subsequent repurchases
of fractional shares to reduce the number of beneficial shareholders as part of
a plan to deregister is shares of Common Stock under the Securities Exchange Act
of 1934 (the “Deregistration Transaction”);
WHEREAS,
Fansteel has requested that ▇▇ ▇▇▇▇▇▇ and PBGC modify the Promissory Note as set
forth herein;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each party to this Agreement to the other, the
parties hereto agree as follows:
1.0
Modification of
Promissory Note. The Promissory Note shall be modified as
follows:
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1.1
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January 23, 2009
Payment. Section 2(a) of the Promissory Note shall be
deleted and replaced in its entirety with the following: “Five (5)
consecutive annual installment payments by Fansteel to PBGC of $750,000,
commencing on January 23, 2005 (“Annual Payment Date”), and continuing
thereafter on each of the first, second, third, and fourth anniversaries
of such date, provided, however, that the payment due on January 23, 2009
shall not be due until October 1, 2009;
and”
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1.2
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Restricted Payment
Default. Section 6(e) of the Promissory Note shall be
deleted and replaced in its entirety with the following: Fansteel makes a
Restricted Payment. Restricted Payment shall mean (i) any
dividend or other distribution on account of any shares of Fansteel’s
capital stock or unit of ownership interest or any security convertible
into or right to acquire such capital stock or other ownership interest
(other than dividends payable solely in shares of capital stock), (ii) any
payment
on account of the principal of or premium, if any, on any indebtedness
convertible into shares of the capital stock or (iii) any payment
on account of any purchase, redemption, retirement, exchange or conversion
of any of the Borrower's capital stock; provided, however, the payment
made to repurchase fractional shares as part of the Deregistration
Transaction shall not be considered a Restricted Payment provided such
payment is made before November 1, 2009. For the
purposes of this definition a “payment” shall include the
transfer of any asset or the issuance of any indebtedness or other
obligation (the amount of any such payment
to be the fair market value of such asset or the amount of such
obligation, respectively) but shall not include the issuance of any
capital stock.”
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1.3
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Financial
Reporting. The following Section 13 shall be added after
Section 12 of the Promissory Note: Fansteel covenants that it
shall keep books of account and prepare financial statements and furnish
to PBGC and JPMorgan the following (all of the foregoing and following to
be kept and prepared in accordance with generally accepted account
principles (“GAAP”) applied on a consistent basis, unless Fansteel’s
independent certified public accountants concur in any changes therein and
such changes are disclosed to PBGC and JPMorgan and are consistent with
GAAP); (i) as soon as available, but not later than ninety (90) days after
the close of each fiscal year of Fansteel, audited financial statements of
Fansteel (including a consolidated balance sheet and profit and loss
statement with supporting footnotes and operating expense detail) as of
the end of such year and for the year then ended issued by a firm of
independent certified public accountants of recognized standing. In
addition, Fansteel shall provide a copy of the management letter, if any,
delivered to Fansteel by such certified public accounting firm; (ii) as
soon as available, but not later than forty-five (45) days after the end
of each fiscal quarter hereafter, an internally-prepared consolidated and
consolidating financial statements of Fansteel as at the end of the
portion of Fansteel’s fiscal year then elapsed, fairly presenting the
financial position and results of operations of Fansteel for such
period.
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2.0 Continuing Effect.
Except as modified herein, nothing contained in this Agreement shall be
construed to affect, modify or cure in any manner or effect a waiver of the
occurrence and/or continuance of, any default or breach of any term, condition,
covenant or agreement contained in the Promissory Note, the Pledge Agreement,
the Loan Documents (as defined in the Pledge Agreement) or any document securing
the Note or any other agreement executed in connection
therewith.
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3.0 Conditions to
Effectiveness. This Amendment shall be effective as of the
date first above written but shall not become effective as of such date until
the date (the “Effective Date”) that each of the following conditions shall have
been satisfied:
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3.1
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JPMorgan
and PBGC shall have received this Agreement duly executed by
Fansteel;
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3.2
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JPMorgan
and PBGC shall have received such other documents and agreements as
JPMorgan may reasonably request;
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3.3
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Each
of the representations and warranties of Fansteel contained in this
Amendment shall be true and correct on and as of the Effective
Date.
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3.4
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Fansteel
shall have paid all fees and expenses incurred by JPMorgan and PBGC in
connection with the negotiation, execution and delivery of this Agreement
and any other documents or agreements executed in connection herewith
(including the fees and expenses of counsel to ▇▇ ▇▇▇▇▇▇ and
PBGC).
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4.0 Representations and
Warranties. In order to induce JPMorgan and PBGC to enter into
this Agreement, Fansteel represents and warrants as follows:
Each of
the representations and warranties of Fansteel set forth in the Promissory Note,
the Pledge Agreement, and the Loan Documents (as defined in the Pledge
Agreement) is true and correct on and as of the Effective Date both before and
after giving effect to this Agreement and no Default or Event of Default has
occurred and is continuing on and as of the Effective Date.
5.0 Loan Document. The
parties each acknowledge and agree that this Agreement constitutes a Loan
Document (as defined in the Pledge Agreement).
6.0 Governing Law. This
Agreement shall be governed by, and shall be construed and enforced in
accordance with federal law, and where federal law is not applicable, by the
laws of the state of Delaware without regard to conflicts of law
principles.
7.0 Counterparts. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.
8.0 Construction. Each
party hereto acknowledges that it has been represented by its own legal counsel
in connection with its execution of this Agreement, that it has exercised
independent judgment with respect to this Agreement, that it has been given the
opportunity to consult with its own legal counsel regarding the terms of this
Agreement, that it has done so, and that it has entered into this Agreement
freely, knowingly, and voluntarily.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the date first set forth above, by their respective duly authorized
officers.
(Signature
page follows.)
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IN
WITNESS WHEREOF the parties have entered into this Note Modification Agreement
effective the day and year first above written.
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PENSION BENEFIT GUARANTY
CORPORATION:
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By:
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Title:
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Date:
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JPMORGAN CHASE COMPANY, as agent for
PBGC
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By:
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Title:
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Date:
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By:
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Title:
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Date:
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