EXHIBIT 99.3
MACKAY SHIELDS LLC CITICORP MEZZANINE III, L.P.
9 WEST 57TH STREET, 33RD FLOOR CITICORP CAPITAL INVESTORS, LTD.
NEW YORK, NY 10019 CVC CAPITAL FUNDING, LP
399 PARK AVENUE NEW YORK,
NY 10043
May 19, 2006
ACP Holding Company
2121 Brooks Avenue
Neenah, WI 54956
Attention: William M. Barrett
RE: TRANSFER NOTICE AND FIRST OPTION
Dear Bill:
Reference is made to the Stockholders Agreement, dated as of October 8,
2003 (the "Stockholders Agreement"), among ACP Holding Company ("ACP"), the
Management Stockholders (as defined therein), MacKay Shields LLC ("MacKay"),
Citicorp Mezzanine III, L.P. ("CM-III"), and Trust Company of the West ("TCW").
Terms used in this letter and not otherwise defined herein shall have the
meanings ascribed to such terms in the Stockholders Agreement.
Certain accounts for which MacKay is the investment advisor beneficially
own, in the aggregate, 9,886,045 shares of Common Stock and 9,812,706 New
Warrants (the "MacKay/ACP Securities"). Citicorp Capital Investors, Ltd. ("CCI")
and CVC Capital Funding, LP (collectively with CM-III and CCI, the "Citicorp
Stockholders") beneficially own 3,436,169 and 606,383 shares of Common Stock,
respectively, and CM-III beneficially owns 7,848,141 New Warrants (collectively
such Common Stock and New Warrants, the "Citicorp/ACP Securities"). Each of
MacKay and the Citicorp Stockholders desires to Transfer all of the MacKay/ACP
Securities and Citicorp/ACP Securities, as applicable, to Tontine Capital
Partners, L.P. ("Tontine"). The purpose of this letter is for each of MacKay and
the Citicorp Stockholders to (i) provide ACP with the Transfer Notice in
accordance with Section 3.2(a) of the Stockholders Agreement and (ii) make a
First Option in accordance with Section 3.2(b) of the Stockholders Agreement.
Tontine has offered to purchase, among other things, all of the MacKay/ACP
Securities and Citicorp/ACP Securities for an amount in cash equal to $1.80 per
share of Common Stock and $1.79 per New Warrant, as more fully described in the
Securities Purchase Agreement, dated May 19, 2006, attached hereto as Exhibit A
(the "SPA"), the terms of which are incorporated by reference herein. Pursuant
to Section 3.2(b) of the Stockholders Agreement (i) MacKay hereby offers a First
Option to ACP to purchase all of the MacKay/ACP Securities and (ii) the Citicorp
Stockholders hereby offer a First Option to ACP to purchase all of the
Citicorp/ACP Securities, in each case for the same consideration offered to be
paid to such party by Tontine. Pursuant to Section 3.2(b) of the Stockholders
Agreement, the decision of whether or not ACP will accept a First Option shall
be made by the Board of Directors, and ACP is required to give each of MacKay
and the Citicorp Stockholders written notice (the "ACP Response") of such
determination on or prior to the tenth Business Day after receipt of this
letter. However, if ACP does not desire to accept either First Option described
above, MacKay and the Citicorp
Stockholders would appreciate receipt of the applicable ACP Response as soon as
possible after such determination is made.
If ACP fails to respond to a First Option within the Election Period or
declines to exercise such First Option, MacKay Shields and/or the Citicorp
Stockholders, as applicable, intend to provide a Transfer Notice and Second
Option to all 5% Stockholders who are not party to the SPA, if any. Any such
Transfer Notice and Second Option shall also include a copy of the SPA and a
Participation Offer, which will be joined by TCW, in accordance with Section 3.4
of the Stockholders Agreement However, the Stockholders Agreement does not
specifically state whether Tag-Along Participating Stockholders are required to
comply with Section 3.2 of the Stockholders Agreement and make a First Option to
ACP prior to being permitted to participate in a Tag-Along Transaction. Each of
MacKay and the Citicorp Stockholders believes that this was neither the intent
of the parties to the Stockholders Agreement nor would this interpretation be
appropriate or rational since ACP would have to reject a First Option before any
such Tag-Along Transaction (which would be for the same consideration and on the
same terms and conditions as such First Option) could become a possibility.
However, to avoid any misunderstandings, MacKay and the Citicorp Stockholders
request that ACP acknowledge in the ACP Response that it has no right to receive
from a Tag-Along Participating Stockholder, and no Tag-Along Participating
Stockholder is obligated to provide ACP with, a First Option prior to
consummating any Tag-Along Transaction offered by MacKay or the Citicorp
Stockholders in connection with the transactions described herein. MacKay and
the Citicorp Stockholders also request that ACP, in the ACP Response, confirm if
it is aware of any 5% Stockholders other than MacKay, the Citicorp Stockholders
and TCW.
Please contact us if you have any questions regarding this letter. Thank
you for your prompt attention to this matter.
Sincerely,
MACKAY SHIELDS LLC,
as investment advisor for certain accounts
By: /s/ Lucille Protas
--------------------------------------
Name: Lucille Protas
Title: Chief Administrative Officer
CITICORP MEZZANINE III, L.P.
By: /s/ Richard E. Mayberry, Jr.
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Name: Richard E. Mayberry, Jr.
------------------------------------
Title: Managing Director
-----------------------------------
Citicorp Capital Investors, Ltd.
399 Park/14th FL/2nd
(212) 559-2651
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CITICORP CAPITAL INVESTORS, LTD.
By: /s/ RICHARD E. MAYBERRY, JR.
--------------------------------------
Name: RICHARD E. MAYBERRY, JR.
Title: Managing Director
Citicorp Capital Investors, Ltd.
399 Park/14th FL/Zn. 4
(212) 559-2651
CVC CAPITAL FUNDING LP
By: /s/ RICHARD E. MAYBERRY, JR.
--------------------------------------
Name: RICHARD E. MAYBERRY, JR.
Title: Managing Director
Citicorp Capital Investors, Ltd.
399 Park/14th FL/Zn. 4
(212) 559-2651
cc: Geoffrey W. Levin (Kirkland & Ellis LLP)
Bruce C. Davidson (Quarles & Brady LLP)
Ronald R. Jewell (Dechert LLP)
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