Exhibit 99.1
RESTRUCTURING AGREEMENT
This Restructuring Agreement (the "Agreement"), is dated as of April 6,
2000, by and among Safety Components International, Inc. ("SCI"), a Delaware
corporation (and collectively with its nine direct and indirect subsidiaries and
affiliates(1) ("Safety Components"), Xxxxxx X. Xxxxx ("Xx. Xxxxx"), and each of
the undersigned holders or investment managers or advisors for certain
discretionary accounts that are holders or beneficial owners (each, a
"Consenting Holder") of SCI's 10 1/8% Senior Subordinated Notes due 2007, Series
B (the "Notes") issued under that certain indenture (the "Indenture") dated as
of July 24, 1997, between SCI, several SCI direct and indirect subsidiaries, and
IBJ Xxxxxxxx Bank & Trust Company, as Trustee.(2)
WHEREAS, Safety Components, Xx. Xxxxx, and an unofficial committee of
certain holders of the Notes (the "Noteholders Committee") have engaged in good
faith negotiations with the objective of reaching an agreement with regard to a
financial restructuring of Safety Components, including the indebtedness
outstanding under the Notes;
WHEREAS, Safety Components, Xx. Xxxxx, and the Noteholders Committee have
agreed to implement a financial restructuring (the "Financial Restructuring") of
Safety Components on the terms and subject to the conditions set forth on the
revised term sheet dated April 6, 2000 (the "Term Sheet") attached hereto as
Exhibit A and incorporated herein by reference;(3)
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(1) These entities are: Safety Components Fabric Technologies, Inc., Automotive
Safety Components International, Inc., ASCI Germany (DE) Inc., ASCI
Holdings UK (DE) Inc., XXXX Xxxxxxxx Xxxxxx (XX) Xxx., XXXX Xxxxxxxx Xxxxx
(XX) Inc. (collectively, the "Core Subsidiaries"); Valentec International
Corporation LLC, Valentec Systems, Inc., and Galion, Inc.
(2) Bank of New York, has since succeeded IBJ Shroder Bank & Trust Company as
indenture trustee, and hereinafter is referred to in this Agreement as the
"Indenture Trustee."
(3) All capitalized terms not defined herein shall have the meanings ascribed
to them in the Term Sheet.
WHEREAS, to expedite and ensure the implementation of the Financial
Restructuring, each of the Consenting Holders is prepared to commit, on the
terms and subject to the conditions of this Agreement to, if and when solicited
to do so, vote (or, in the case of managed accounts, instruct its custodial
agents to vote) to accept the Plan (as defined below), to support its
confirmation, and to perform its other obligations hereunder.
NOW THEREFORE, in consideration of the promises and mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Safety Components and
each Consenting Holder hereby agree as follows:
1. Means For Effectuating the Restructuring. To implement the Financial
Restructuring, Safety Components hereby agrees, on the terms and subject to the
conditions set forth herein, to consummate the Financial Restructuring through a
plan of reorganization (the "Plan"), the requisite acceptances of which will be
solicited after Safety Components commences a reorganization case (collectively,
the "Chapter 11 Cases") for each of SCI and the Core Subsidiaries (the "Filing
Entities") by filing a voluntary petition (collectively, the "Petitions") under
chapter 11 of title 11 of the United States Code, 11 U.S.C. xx.xx. 101-1330 (as
amended, the "Bankruptcy Code"), and to use its best efforts to have such Plan
confirmed by the United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court"), as expeditiously as possible under the Bankruptcy
Code, the Federal Rules of Bankruptcy Procedure, and the local bankruptcy rules
of the Bankruptcy Court (the federal and local rules being, the "Bankruptcy
Rules").
2. Conduct of Business Pending the Consummation Date of Plan. Safety
Components agrees that, prior to the consummation date of the Plan, unless
otherwise expressly permitted by this Agreement:
(a) it shall not directly or indirectly do or permit to occur any of
the following: (i) issue, sell, pledge, dispose of or encumber any
additional shares of, or any options, warrants, conversion privileges or
rights of any kind to acquire any shares of, any of its equity interests
including without limitation partnership interests or capital stock; (ii)
amend or propose to amend its respective articles of incorporation,
partnership agreement or comparable organizational documents; (iii) split,
combine or
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reclassify any outstanding shares of its capital stock or other equity
interests, or declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to any of its
equity interests including without limitation partnership interests or
capital stock; (iv) redeem, purchase or acquire or offer to acquire any of
its equity interests including without limitation partnership interests or
capital stock; (v) acquire (by merger, exchange, consolidation, acquisition
of stock or assets or otherwise) any corporation, partnership, joint
venture or other business organization or division or material assets
thereof; (vi) incur any indebtedness for borrowed money or issue any debt
securities outside the ordinary course of business, except in connection
with any restructuring or satisfaction of existing indebtedness under the
particular credit agreement, dated as of May 21, 1997 (as amended from time
to time, the "Credit Agreement"), among SCI, Automotive Safety Components
International GmbH & Co. KG, f/k/a Phoenix Airbag Gmbh & Co. KG, and
Automotive Safety Components International Limited, as Borrowers, and
KeyBank National Association ("KeyBank"), as Administrative Agent for
KeyBank and Fleet Bank, including any debtor-in-possession financing
obtained by the Filing Entities as part of or in connection with the
Chapter 11 Cases, which financing shall only be obtained on terms and
subject to conditions satisfactory to the Noteholders Committee; provided,
however, that each Consenting Holder agrees that the terms and conditions
of the proposed debtor-in-possession financing that is annexed to this
Restructuring Agreement as Exhibit B (such credit agreement, the "Senior
DIP Credit Agreement"), the proposed treatment of claims under the Term
Sheet, and the proposed subordinated debtor-in-possession financing
agreement that is annexed to this Restructuring Agreement as Exhibit C
(such credit agreement, the "Subordinated DIP Credit Agreement") are
satisfactory and acceptable to the Noteholders Committee; (vii) amend the
Senior DIP Credit Agreement or the Subordinated DIP Credit Agreement
without the consent of the Consenting Holders; or (viii) enter into or
propose to enter into, or modify or propose to modify, any agreement,
arrangement or understanding with respect to any of the matters set forth
in this Section 2(a); and
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(b) it shall (i) maintain its good standing under the laws of the
particular State or other jurisdiction in which it is incorporated or
organized, and (ii) notify the Consenting Holders of any governmental or
third party complaints, investigations or hearings (or communications
indicating that the same may be contemplated or threatened) which could
reasonably be anticipated to materially adversely affect the business,
property, or financial condition of Safety Components.
3. Forbearance; Restrictions on Transfers. For a period commencing as of
the effective date hereof until the earlier to occur of (i) the occurrence of a
Consenting Holders Termination Event (as defined below) and (ii) termination of
this Agreement by Safety Components after the occurrence of a Safety Components
Termination Event (each as defined below) (such period, the "Forbearance
Period"), each of the Consenting Holders hereby agrees (a) to forbear (and
agrees not to give instructions to the Indenture Trustee that are inconsistent
with the terms and conditions of this Agreement) from the exercise of any rights
or remedies it may have under the Indenture, applicable law, or otherwise with
respect to any default existing as of the date hereof or arising hereafter under
the Indenture; and (b) not to sell, assign, transfer, hypothecate or otherwise
dispose of, directly or indirectly (i) any Notes beneficially owned by it or as
to which it has investment authority or discretion (including Notes acquired
after the date hereof), (ii) any claim (as that term is defined in section
101(5) of the Bankruptcy Code) arising from, based on or related to the Notes,
or (iii) any option, interest in, or right to acquire any Notes or claim
referred to in clauses (i) or (ii) above, unless the transferee agrees in
writing to assume and be bound by the terms of this Agreement; provided that
nothing therein will be deemed to limit the effectiveness of the consents and
waivers set forth in Section 20 of this Agreement against any transferee of a
Consenting Holder notwithstanding the occurrence of a Consenting Holders
Termination Event. This Agreement shall in no way be construed to preclude the
Consenting Holders from acquiring additional Notes; provided, however, that any
additional Notes so acquired shall automatically be deemed to be subject to all
of the terms and conditions of this Agreement for so long as this Agreement
remains in effect.
4. Voting. Each of the Consenting Holders represents that, as of the date
hereof, it is the beneficial
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owner of, and/or the investment adviser or manager (with the power to vote and
dispose of all or substantially all of the Notes on behalf of their beneficial
owners) of discretionary accounts for the holders or beneficial owners of, the
aggregate principal amount of the Notes, as set forth on its signature page.
Each of the Consenting Holders agrees that, subject to the conditions that (i)
the material terms of any applicable agreements, including without limitation
the Plan, implementing the Financial Restructuring embody the terms set forth in
the Term Sheet, (ii) all final documents, including, without limitation, the
Chapter 11 Documents (as defined below), are in form and substance reasonably
satisfactory to each Consenting Holder and all agreements have been entered into
by all applicable parties and have become valid, binding and enforceable, (iii)
no Consenting Holders Termination Event shall have occurred and be continuing,
and (iv) Safety Components has not terminated this Agreement after the
occurrence of a Safety Components Termination Event, it shall, when solicited,
(a) vote to accept the Plan, (b) not object to confirmation of the Plan, and (c)
refrain from supporting directly or indirectly any other proposed plan of
reorganization for the Filing Entities; provided, however, that no Consenting
Holder shall be barred from objecting to compliance with Bankruptcy Code section
1125 or other applicable law relating to disclosure, if it reasonably believes
the Disclosure Statement or other document received by such Consenting Holder
lacks adequate information (as defined in section 1125(a)(1) of the Bankruptcy
Code).
5. Preparation of Restructuring Documents. Promptly upon the execution of
this Agreement, Safety Components shall instruct its counsel promptly and
diligently to prepare for the review by and approval of the parties hereto of
the following documents: (a) the Petitions; (b) a disclosure statement (the
"Disclosure Statement") pursuant to section 1125 of the Bankruptcy Code; (c) the
Plan, which shall incorporate the terms and provisions of the Term Sheet, (d)
all schedules, motions, pleadings, and other papers necessary or useful in
connection with the filing of the Petitions or the motions to be presented to
the court on or shortly after the date of the Petitions; (e) any additional
documents that Safety Components or the Consenting Holders deem(s) reasonably
necessary or appropriate to consummate the Financial Restructuring; and (f) all
other restructuring agreements and documents including, without limitation, all
financing documents, exit financing documents, new bank agreements, new or
amended certificates of incorporation, to implement the Plan according to the
Term Sheet (all provisions and documents referred to in this section 5, the
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"Chapter 11 Documents"). All parties shall coordinate with one another in
preparation of the Chapter 11 Documents.
Each of the Chapter 11 Documents, including without limitation the Plan,
must be reasonably acceptable in form and substance to the Noteholders
Committee.
6. Safety Components Undertakings. Safety Components hereby agrees to use
its reasonable best efforts to, as applicable, (i) take all acts reasonably
necessary to effectuate and consummate the Financial Restructuring and the Plan
and (ii) implement all reasonable steps necessary and desirable to obtain an
order of the Bankruptcy Court confirming the Plan, in each case, as
expeditiously as possible under the Bankruptcy Code and the Bankruptcy Rules.
7. Alternative Restructuring Transaction. Safety Components hereby agrees
to provide to the Noteholders Committee prompt written notice of, and disclosure
of the substance of, any discussion, negotiations or communications with third
parties concerning a restructuring transaction for Safety Components (other than
the Restructuring Transaction)(an "Alternative Restructuring Transaction").
8. Third Party Approvals; Support of the Financial Restructuring. Safety
Components shall use its reasonable best efforts to obtain all regulatory,
governmental, administrative, and third party approvals of the Financial
Restructuring or confirmation of the Plan, and to promptly consummate the
Financial Restructuring. Each Consenting Holder and Safety Components will take
all necessary and appropriate actions to achieve the Financial Restructuring on
the terms and subject to the conditions set forth herein. If the Filing Entities
are unable to obtain reasonable exit financing in connection with the Financial
Restructuring on terms satisfactory to the Consenting Holders, Safety Components
shall be required, subject to its fiduciary duties as reasonably determined by
the Board of Directors of Safety Components in accordance with applicable law,
to enter into exit financing in connection with the Financial Restructuring
identified by or proposed by one or more of the Consenting Holders; provided
that any such alternative debtor-in-possession or exit financing identified by
or proposed by one or more of the Consenting Holders shall satisfy all the
material terms and conditions of the Senior DIP Credit Agreement and the
Subordinated DIP Credit Agreement. Nothing contained herein shall obligate or
require the Consenting Holders to propose or provide such financing.
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9. Representations and Warranties. Safety Components and each of the
Consenting Holders, as to itself, represent and warrant, to each other that the
following statements are true, correct and complete as of the date hereof:
(a) Governmental Consents. The execution, delivery and performance by
it of this Agreement do not and shall not require any registration or
filing with, consent or approval of, or notice to, or other action to, with
or by, any federal, state or other governmental authority or regulatory
body, except such filings and notice as may be necessary and/or required
under the federal securities laws and, in connection with the commencement
of the Chapter 11 Cases, the approval of the Disclosure Statement and
confirmation of Plan;
(b) Binding Obligation. This Agreement is a legally valid and binding
obligation of each of the undersigned, enforceable against it in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
limiting creditor's rights generally or by equitable principles relating to
enforceability; and
(c) Representation by Counsel. Each party hereto acknowledges that it
has been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the intent
of the parties hereto.
10. Termination of Agreement. This Agreement and the Forbearance Period
shall terminate without the act of any party upon the expiration of three
business days after the occurrence of any Consenting Holders Termination Event
(each as hereinafter defined), unless the occurrence of such Consenting Holders
Termination Event is waived in writing within three (3) business days of its
occurrence by Consenting Holders holding or managing more than two-thirds of the
face amount of the Notes. If any Consenting Holders Termination Event occurs
(and has not been waived) or Safety Components terminates this Agreement after
the occurrence of a Safety Components Termination Event at a time when
permission of the Bankruptcy Court shall be required for a Consenting Holder to
change or withdraw (or cause to be changed or withdrawn) its votes to accept the
Plan, Safety Components shall not oppose any attempt by such Consenting Holder
to change
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or withdraw (or cause to be changed or withdrawn) such votes at such time. Upon
the occurrence of a Consenting Holders Termination Event or a termination of
this Agreement by Safety Components after the occurrence of a Safety Components
Termination Event, each of the Consenting Holders shall have all rights and
remedies available to it under the Indenture, other documents relating to the
Notes, as the case may be, applicable law, or otherwise, with respect to any
default under the Indenture that may have occurred at any time prior to such
event and which default has not been waived or otherwise cured.
A "Consenting Holders Termination Event" shall mean any of the following:
(a) the Petitions shall not have been filed on or before April 7, 2000
(the date of such filings, the "Petition Date");
(b) the Plan shall not have been filed within twenty five (25)
business days after the commencement of the Chapter 11 Cases; or
(c) the Plan shall not have been confirmed by the Bankruptcy Court in
accordance with its terms on or before July 31, 2000;
(d) the Plan shall not have been consummated in accordance with its
terms on or before August 31, 2000;
(e) Safety Components shall have breached any material provision of
this Agreement, including but not limited to, ceasing to use its best
efforts to obtain approval of the Disclosure Statement and/or confirmation
of the Plan;
(f) the Plan provides or is modified to provide for any terms that are
materially inconsistent to the terms set forth in the Term Sheet and this
Agreement, it being understood that (i) any improvement in the distribution
to Consenting Holders under the Plan shall not be deemed to be materially
inconsistent (so long as such improvement does not impair the recovery of
other Consenting Holders), and (ii) any material transaction consummated in
the Chapter 11 Cases or through the Plan that is consented to, or approved
by, the Consenting Holders shall not be deemed to be materially
inconsistent;
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(g) The Bankruptcy Court grants relief that is materially inconsistent
with the Term Sheet and this Agreement including without limitation a
motion to vacate or modify the automatic stay contained in section 362 of
the Bankruptcy Code;
(h) the members or composition of the Board of Directors of SCI shall
change in a manner so that current members of SCI's Board of Directors
cease to represent at least two-thirds of the members of SCI's Board of
Directors;
(i) Xxxx Xxxxx, the Chief Operating Officer of SCI, shall have been
dismissed or replaced other than for cause;
(j) an examiner with expanded powers or a trustee shall have been
appointed in the Chapter 11 Cases;
(k) any one or more of the Chapter 11 Cases shall have been converted
to a case under chapter 7 of the Bankruptcy Code;
(l) Safety Components shall publicly announce its intention not to
pursue the Restructuring Transaction, including, without limitation, the
Plan;
(m) The Filing Entities' exclusive right, as debtors in possession,
pursuant to section 1121 of the Bankruptcy Code, to propose and solicit
acceptances of a chapter 11 plan, shall terminate; and
(n) Safety Components shall determine to pursue an Alternative
Restructuring Transaction.
The foregoing Consenting Holders Termination Events are intended solely for the
benefit of the Consenting Holders. Safety Components shall advise the Consenting
Holders of any breach of this Agreement by or on behalf of Safety Components or
of the occurrence of any Consenting Holders Termination Event. Any approval or
waiver by the Consenting Holders shall be in writing. The waiver by the
Consenting Holders of any condition or the occurrence of any Consenting Holders
Termination Event shall not relieve any other party of any liability or
obligation with respect to any covenant or agreement set forth in this
Agreement.
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In addition, Safety Components shall have the right to terminate (a "Safety
Components Termination Event") this Agreement, by the giving of written notice
thereof to each of the Consenting Holders, if (i) this Agreement is materially
breached by the holder(s) of a majority of the face amount of the Notes, or (ii)
the fiduciary duties of Safety Components, as reasonably determined by the Board
of Directors of Safety Components in accordance with applicable law, require the
termination of this Agreement to implement another restructuring transaction
that provides enhanced recoveries to the creditors and shareholders of Safety
Components.
Upon the occurrence of any Consenting Holders Termination Event, unless
such Consenting Holders Termination Event is waived in accordance with the terms
hereof, or upon the declaration by Safety Components of the occurrence of a
Safety Components Termination Event, this Agreement shall terminate and no party
hereto shall have any continuing liability or obligation to any other party
hereunder; provided, that, no such termination shall relieve any party from
liability for its breach or non-performance of its obligations hereunder prior
to the date of such termination.
11. Conditions to Consenting Holders' Obligation to Consummate Financial
Restructuring. The obligations of the Consenting Holders to consummate the
Financial Restructuring shall be subject to the satisfaction, as of the
effective date of the transactions contemplated by the Financial Restructuring
and the Plan, of each of the following conditions relating to the Chapter 11
Cases and this Agreement:
(a) No Consenting Holders Termination Event shall have occurred;
(b) This Agreement shall not otherwise have been terminated in
accordance with its terms;
(c) The Plan and the confirmation order and all other Chapter 11
Documents shall be in form and substance reasonably acceptable to the
Noteholders Committee;
(d) The Bankruptcy Court shall have entered a final order confirming
the Plan under section 1129 of the Bankruptcy Code;
(e) All claims of creditors (whether secured or unsecured) and all
interests of equity security
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holders shall be treated in a fashion consistent with the terms of the Term
Sheet and the Plan;
(f) There shall not be in force any order, decree or ruling by any
court or governmental body having jurisdiction, or any threatened or
pending complaint of a governmental body or any person praying for an
order, decree or ruling of a court, restraining or enjoining the
consummation of or rendering illegal the transactions contemplated by this
Agreement or the Plan;
(g) Safety Components shall represent to the Consenting Holders that
there has not been instituted, is not pending or threatened, any action,
proceeding, claim or counterclaim by any government or governmental
regulatory or administrative agency or authority or tribunal, or any other
person, domestic or foreign, before any court, authority, agency or
tribunal, domestic or foreign, that, in the reasonable judgment of the
Consenting Holders, materially and adversely affects the business condition
(financial or otherwise), income, operations or prospects of Safety
Components or materially impairs the contemplated benefits of the Financial
Restructuring to the Consenting Holders;
(h) any representation or warranty of Safety Components or Xx. Xxxxx
in this Agreement or the Term Sheet shall prove to have been false in any
material respect upon the date when made or deemed to have been made or
repeated; and
(i) there shall not have occurred after the execution of this
Agreement, any event or events, other than the commencement of the Chapter
11 Cases and consequences flowing from such commencement, that shall have
resulted in a material adverse change in the business condition (financial
or otherwise), income, operations or prospects of Safety Components, or
materially impairs the contemplated benefits of the Financial Restructuring
to the Consenting Holders.
The above conditions may be waived in writing by the holder(s) of a
majority in face amount of the Notes.
12. Conditions to Obligation of Safety Components to Consummate Financial
Restructuring. The obligations of Safety
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Components to consummate the Financial Restructuring shall be subject to the
satisfaction, as of the effective date of the transactions contemplated by the
Financial Restructuring and the Plan, of each of the following conditions
relating to the Chapter 11 Cases and this Agreement:
(a) This Agreement shall not have been terminated in accordance with
its terms;
(b) The Bankruptcy Court shall have entered an order confirming the
Plan under section 1129 of the Bankruptcy Code; and
(c) There shall not be in force any order, decree or ruling by any
court or governmental body having jurisdiction restraining or enjoining the
consummation of or rendering illegal the transactions contemplated by this
Agreement or the Plan.
13. Xxxxx Representations, Warranties and Obligations. Xx. Xxxxx hereby
represents and warrants to the Consenting Holders, or agrees, that as of the
date of this Agreement:
(a) Neither Xx. Xxxxx nor any affiliates of Xx. Xxxxx (other than a
Safety Components' affiliate, including SCI or any direct or indirect
subsidiary of SCI) (together, the "Xxxxx Affiliates") have any claims (as
that term is defined in section 101(5) of the Bankruptcy Code) against
Safety Components, other than the claims listed on Schedule 13(a);
(b) All factual information furnished to the Consenting Holders or
Safety Components by or on behalf of Xx. Xxxxx or the Xxxxx Affiliates for
purposes of or in connection with this Agreement, the Term Sheet, and any
transaction contemplated herein or therein is, and all other such
information hereafter furnished by or on behalf of Xx. Xxxxx or the Xxxxx
Affiliates to the Consenting Holders or Safety Components will be true and
accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact
necessary to make such information not misleading in any material respect
at such time in light of the circumstances under which such information was
provided;
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(c) Subject to the conditions that (i) the material terms of any
applicable agreements, including without limitation the Plan, implementing
the Financial Restructuring, embody the terms set forth in the Term Sheet,
(ii) no Consenting Holders Termination Event shall have occurred and be
continuing, and (iii) Safety Components has not terminated this Agreement
after the occurrence of an Safety Components Termination Event, Xx. Xxxxx
shall, when and if solicited (x) vote to accept the Plan, (y) not object to
confirmation of the Plan, and (z) refrain from supporting directly or
indirectly any other proposed plan of reorganization for Safety Components;
(d) Neither Xx. Xxxxx nor any Xxxxx Affiliate shall have entered into
material, undisclosed transactions with Safety Components, other than
transactions made at arm's length in the ordinary course of business upon
terms no less favorable than could be obtained from third parties;
(e) To the best of his knowledge, there are no actions, suits,
proceedings or investigations of any kind pending or threatened against Xx.
Xxxxx or the Xxxxx Affiliates before any court, tribunal or administrative
agency or board or other dispute resolution body, other than those listed
on Schedule 13(e) hereof, which, if adversely determined, might, either
individually or in the aggregate, impair the benefits of the Financial
Restructuring to the Consenting Noteholders;
(f) This Agreement is a legally valid and binding obligation on him,
enforceable against him in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or limiting creditor's rights generally or
by equitable principles relating to enforceability; and
(g) He has been represented by counsel in connection with this
Agreement and the transactions contemplated by this Agreement. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intent of the parties hereto.
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14. Good Faith Negotiations of Financial Restructuring Documents. Safety
Components and each Consenting Holder hereby further covenant and agree to
negotiate the definitive documents relating to the Financial Restructuring,
including, without limitation, the Chapter 11 Documents, in good faith. Safety
Components shall keep the Noteholders Committee apprised of and use its
reasonable best efforts to permit the Noteholders Committee's participation in
any discussions, negotiations or meetings with the lenders under the Senior DIP
Credit Agreement (including any replacement or successor lenders including,
without limitation, any debtor-in-possession or exit lender(s)).
15. Acknowledgment. This Agreement and the terms of the Financial
Restructuring are the product of negotiations between Safety Components and the
Consenting Holders and their respective representatives. This Agreement is not
and shall not be deemed to be a solicitation of votes for the acceptance of the
Plan. Each of the Consenting Holders' acceptance of the Plan will not be
solicited until it has received a Disclosure Statement approved by the
Bankruptcy Court.
16. Effectiveness; Amendments; Consenting Holders. This Agreement shall not
become effective and binding on the parties hereto unless and until counterpart
signature pages hereto shall have been executed and delivered by Safety
Components and Consenting Holders holding or managing Notes which constitute in
the aggregate two-thirds of the face amount of the Notes. Once effective, this
Agreement may not be modified (except as provided in sections 9 and 10),
amended, or supplemented as to any Consenting Holder except in writing signed by
Safety Components and such Consenting Holder.
17. Disclosure of Individual Holdings. Unless required by lawful subpoena
issued by a court of competent jurisdiction or applicable statute, rule, or
regulation, Safety Components shall not disclose the amount of any Consenting
Holder's holdings of Notes; and, if such announcement or disclosure is so
required, Safety Components shall afford the Consenting Holders a reasonable
opportunity to review and comment upon any such announcement or disclosure prior
to the applicable announcement or disclosure.
18. Impact of Appointment to Creditors' Committee. Notwithstanding anything
herein to the contrary, if any Consenting Holder is appointed to and serves on
an official committee of creditors in the Chapter 11 Cases, the terms of this
Agreement shall not be construed so as to limit such
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Consenting Holder's exercise (in its sole discretion) of its fiduciary duties to
any person arising from its service on such committee, and any such exercise (in
the sole discretion of such Consenting Holder) of such fiduciary duties shall
not be deemed to constitute a breach of the terms of this Agreement (but the
fact of such service on such committee shall not otherwise affect the continuing
validity or enforceability of this Agreement).
19. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to any conflicts of law provision which would require the application of
the law of any other jurisdiction. By its execution and delivery of this
Agreement, each of the parties hereto hereby irrevocably and unconditionally
agrees for itself that any legal action, suit or proceeding against it with
respect to any matter under or arising out of or in connection with this
Agreement or for recognition or enforcement of any judgment rendered in any such
action, suit or proceeding, may be brought in any federal court of competent
jurisdiction in the District of New York.
By execution and delivery of this Agreement, each of the parties hereto
hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction
of such court, generally and unconditionally, with respect to any such action,
suit or proceeding. Notwithstanding the foregoing consent to New York
jurisdiction, upon the commencement of the Chapter 11 Cases, each of the parties
hereto hereby agrees that the Bankruptcy Court shall have exclusive jurisdiction
of all matters arising out of or in connection with this Agreement.
20. Consents Relating to Debtor-in-Possession Financing. Each of the
Consenting Holders and each transferee, successor and assignee thereof hereby
(a) consents to the terms of the Senior DIP Facility Documents (as defined in
the Senior DIP Credit Agreement) and the Subordinated DIP Facility Documents (as
defined in the Subordinated DIP Credit Agreement) and the transactions
contemplated thereunder, including, without limitation, the Closing Date
Repayment (as defined in the Subordinated DIP Credit Agreement), (b) waives any
right to (i) challenge the validity, enforceability and allowance of the claims
of the Lenders (as defined in the Subordinated DIP Credit Agreement) (as claims
against Safety Components under the Bankruptcy Code free of defense, offset or
counterclaim), as described in, and in the amounts set forth in, the
Subordinated
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DIP Credit Agreement, and any prepetition payments made to the Lenders (as
defined in the Subordinated DIP Credit Agreement), (ii) challenge the validity,
enforceability, perfection and priority of the liens and security interests of
the Lenders (as defined in the Subordinated DIP Credit Agreement), (iii)
challenge the superpriority claim status of the claims, liens and security
interests to be granted to the Lenders (as defined in the Subordinated DIP
Credit Agreement) under the Subordinated DIP Facility Documents, and (iv)
challenge the Closing Date Repayment, and (c) agrees to support the transactions
described in the Subordinated DIP Facility Documents and the Senior DIP Facility
Documents and not to take any actions inconsistent therewith. The foregoing
waivers will become effective upon the closing and final approval of the
Subordinated DIP Credit Agreement and the Senior DIP Facility and, subject to
the occurrence of such closing and Bankruptcy Court approval, will remain
effective notwithstanding the occurrence, if any, of a Consenting Holders
Termination Event or a Safety Components Termination Event.
21. Intended Third Party Beneficiaries. The Lenders (as defined in the
Subordinated DIP Credit Agreement) are intended third party beneficiaries with
respect to the consents and waivers set forth in Section 20 above and shall have
the right to enforce the same against the Consenting Holders to the same extent
as if they were signatories to this Agreement.
22. Specific Performance. It is understood and agreed by each of the
parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any party and each non-breaching party shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy of any such breach.
23. Reservation of Rights. This Agreement and the Plan are part of a
proposed settlement of disputes among the parties hereto. Except as expressly
provided in this Agreement, nothing herein is intended to, or does, in any
manner waive, limit, impair, or restrict the ability of each of the Consenting
Holders to protect and preserve its rights, remedies and interests, including
without limitation, its claims against Safety Components or its full
participation in any bankruptcy case filed by Safety Components. If the
transaction contemplated herein or in the Plan are not consummated, or if this
Agreement is terminated for any reason, the parties hereto fully reserve any and
all of their rights. Pursuant to Federal Rule of Evidence 408 and any applicable
state rules of evidence,
16
this Agreement shall not be admitted into evidence in any proceeding other than
a proceeding to enforce its terms.
24. No Oral Amendments. No modification or amendment of the terms of this
Agreement shall be valid unless such modification or amendment is in writing and
has been signed by Safety Components and the Consenting Noteholders.
25. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
26. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of the parties and their respective successors, assigns, heirs,
executors, administrators and representatives. The agreements, representations
and obligations of the Consenting Holders under this Agreement are, in all
respects, several and not joint.
27. Notice. Notices given under this agreement shall be provided by
telecopier and overnight courier to:
If to Safety Components:
Safety Components International, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Telecopier: (000) 000-0000
-and-
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
If to Xxxxxx X. Xxxxx:
Xxxxxx X. Xxxxx
Safety Components International, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
-and-
00
Xxxxxx Xxxxx XXX
0000 Xxxx Xxxxxx Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
Telecopier: (000) 000-0000
If to Any Consenting Holder or the Noteholders Committee:
Well, Gotshal & Xxxxxx LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
Xxxx Xxxx, Esq.
Xxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
-and-
Xxxxxx Capital Partners LLC
00 Xxxx 00x Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Xxx X. Xxxxxxxx
Telecopier: (000) 000-0000
28. Prior Negotiations. This Agreement and Exhibit A supersede all prior
negotiations with respect to the subject matter hereof.
29. Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile copy, each of which shall be deemed an original
and all of which shall constitute one and the same Agreement.
30. No Third Party Beneficiaries. Unless as expressly set forth in Section
20 above or as otherwise expressly stated herein, this Agreement shall be solely
for the benefit of the parties hereto and no other person or entity.
31. Consideration. It is hereby acknowledged by the parties hereto that no
consideration shall be due or paid to the Consenting Holders for their agreement
to vote to accept the Plan in accordance with the terms and conditions of this
Agreement other than the agreement by Safety Components to
18
commence the Chapter 11 Cases, to use its best efforts to obtain approval of the
Disclosure Statement, and to take all steps necessary and desirable to confirm,
consummate, and implement the Plan in accordance with the terms and conditions
of the transaction contemplated by the Financial Restructuring and this
Agreement.
* * *
19
IN WITNESS WHEREOF, each of the parties below has caused a counterpart of
this Agreement to be executed and delivered by its duly authorized officer as of
the date first above written.
Safety Components International, Inc., on behalf of itself and each of its
affiliates and subsidiaries,
By:
--------------------------
Name: Xxxx X. Xxxxx
Title: Chief Operating Officer
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
------------------------------
Name: Xxxxxx X. Xxxxx
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
20
CONSENTING HOLDER:
SUN AMERICA INVESTMENTS on behalf of the following holders of Notes:
SunAmerica Inc.;
Anchor National Life Insurance Company;
SunAmerica Life Insurance Company;
First SunAmerica Life Insurance Company:
By:____________________________
Name: Xxxxx Buckle
Title: Authorized Agent
0 Xxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
21
CONSENTING HOLDER:
AIG on behalf of the following holders of Notes:
America Home Assurance Company;
Commerce and Industry Insurance Company; And
National Union Fire Insurance Company of Louisiana:
By:____________________________
Name:
Title:
Telephone:
Facsimile:
CONSENTING HOLDER:
WAYLAND INVESTMENT FUND, LLC,
By: CSFC Wayland Advisors, Inc., its Manager
By:____________________________
Name:
Title:
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx
Telephone:
Facsimile:
22
CONSENTING HOLDER:
Xxxxxx Fiduciary Trust Company on behalf of the following holder of Notes:
Xxxxxx High Yield Managed Trust
By:____________________________
Name:
Title:
X/X Xxxxxxxxx Xxxxxxx Xxxx.
Xxxxxx Xxxxxxxxxxx
00 Xxxxxxxxx Xxxx Office Park
Mailstop H-1-D
Braintree, MA 02184
Attention Xxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
23
CONSENTING HOLDER:
The Xxxxxx Advisory Company, Inc. on behalf of the following holders of
Notes:
Strategic Global Fund-High Yield Fixed Income (Xxxxxx) Fund; and
Xxxxxx CBO II, Limited:
By:____________________________
Name:
Title:
X/X Xxxxxxxxx Xxxxxxx Xxxx.
Xxxxxx Xxxxxxxxxxx
00 Xxxxxxxxx Xxxx Office Park
Mailstop H-1-D
Braintree, MA 02184
Attention Xxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
24
CONSENTING HOLDER:
Xxxxxx Investment Management, Inc. on behalf of the following holders of
Notes:
Xxxxxx High Yield Trust;
Xxxxxx High Yield Advantage Trust;
Xxxxxx Variable Trust-Xxxxxx VT Income Fund;
Xxxxxx Variable Trust-Xxxxxx VT Global Asset Allocation Fund;
Xxxxxx Master Income Trust;
Xxxxxx Premier Income Trust;
Xxxxxx Master Intermediate Income Trust;
Xxxxxx Diversified Income Trust;
Xxxxxx Asset Allocation Funds-Growth Portfolio;
Xxxxxx Asset Allocation Funds-Conservative Portfolio;
Xxxxxx Funds Trust-Xxxxxx High Yield Trust II;
Travelers Series Fund Inc.-Xxxxxx Diversified Income Portfolio; and
Lincoln National Global Asset Allocation Fund, Inc.:
By:____________________________
Name:
Title:
X/X Xxxxxxxxx Xxxxxxx Xxxx.
Xxxxxx Xxxxxxxxxxx
00 Xxxxxxxxx Xxxx Office Park
Mailstop X-0-X
Xxxxxxxxx, XX 00000
Attention Xxx Xxxxxxxx
25
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
26
SCHEDULE 13(a)
Pursuant to Paragraph 13 of the Restructuring Agreement dated April 6, 2000
(the "Agreement") the following is a list of all claims which Xx. Xxxxx has
against Safety Components, as of the date of the Agreement:
1. All rights and interests of Xx. Xxxxx pursuant to that certain Safety
Components employment contract dated April 19, 1999;
2. All rights to reimbursement of business expenses incurred on behalf of
Safety Components;
3. All rights to indemnification, contribution and reimbursement which
Xx. Xxxxx has an officer and director of Safety Components;
4. All rights to 401(k), pension and other retirement benefits to which
Xx. Xxxxx is entitled as an employee, officer or director of Safety
Components; and
5. All other rights under the Agreement, including the Revised Term
Sheet.
all as such rights are modified by the Term Sheet.
27
SCHEDULE 13E
Class Action Litigation
In November and December 1999 and January 2000, the following eight
complaints were filed against the Company, among others, in the United States
District Court for the District of New Jersey:
Xxxx Xxxxxx, M.D. v. Safety Components International, Inc., et al., Case
No. 99-CV-5316 (WGB)(D.N.J. Nov. 12, 1999);
Xxxxxx Xxxxx v. Safety Components International, Inc., et al., Case No.
99-CV-5502 (AJL) (D.N.J. Nov. 23, 1999);
Xxxxxx Xxxxxx, et al. v. Safety Components International, Inc., et al.,
Case No. 99-CV-5563 (WGB)(D.N.J. Nov. 24, 1999);
Xxxxxxx X. Xxxxxx v. Safety Components International, Inc., et al.,
99-CV-5587 (WGB)(D.N.J. Nov. 30, 1999);
Xxxxxxxx Xxxxxxxxxxxx v. Safety Components International, Inc., et al.,
Case No. 99-CV-5604 (NHP) (D.N.J. Dec. 1, 1999);
Xxxx X. Xxxxxx v. Safety Components International, Inc., et al., Case No.
99-CV-5984 (JAG)(D.N.J. Dec. 17, 1999);
Xxx Xxxxxxxxx v. Safety Components International, Inc., et al., Case No.
99-CV-5723 (NHP)(D.N.J. Dec. 7, 1999);
Xxxxxxxxxxxxx Xxxxx, et al. v. Safety Components International, Inc., et
al., Case No. 00-CV-0082 (FSH) (D.N.J. Jan. 7, 2000).
The complaints were filed by alleged shareholders of the company,
purportedly on behalf of themselves and others similarly situated, against the
company, Xxxxxx X. Xxxxxxxxxxxx, Xxxx X. Xxxxx, Xxxxxx X. Xxxxx and Xxxxxxx X.
Xxxxxx.
On February 25, 2000, the court consolidated the actions, In re Safety
Components International, Inc. Sec. Litig., Civil Action No. 00-0082 (AJL), and
established a schedule for further pleadings. On March 21, 2000, plaintiffs
filed a consolidated amended class action complaint for violation of the federal
securities laws (the "amended complaint"), which dropped Xxxx Xxxxx as a
defendant, added Xxxxxxx X. Xxxxxx as a defendant, and amplified the allegations
of the original complaints in numerous respects.
28
EXHIBIT A
REVISED TERM SHEET FOR PROPOSED RESTRUCTURING OF
SAFETY COMPONENTS INTERNATIONAL, INC. 10 1/8% SENIOR
SUBORDINATED NOTES DUE 2007 SERIES B (THE "NOTES")
This revised term sheet, dated April 6, 2000, which supersedes all prior
term sheets, is the product of negotiations by and among Safety Components
International, Inc. ("SCI") and certain holders of the Notes (the "Noteholders
Committee") and is entitled to the protections from use or disclosure afforded
by Fed. R. Evid. 408 and any similar applicable rule of evidence. Subject to
execution and documentation of a definitive restructuring agreement based on the
terms set forth below, SCI, on its own behalf and on behalf of its direct and
indirect subsidiaries (collectively, "Safety Components"), and the Noteholders
Committee have agreed to the following material terms of a restructuring plan:
A. UNSECURED CLAIMS AGAINST SAFETY COMPONENTS
The Notes: Outstanding debt owed to holders of the Notes , inclusive
of accrued and unpaid interest as of the date of the commencement of the
chapter 11 cases, to be converted to 96.8% of fully diluted pro forma
common stock ("Common Stock") of the restructured SCI, "New Safety Co.",
outstanding on the effective date of a plan of reorganization (the
"Effective Date").
Other Unsecured Claims: Safety Components intends that claims of other
unsecured creditors of Safety Components will be (a) paid in full on the
Effective Date, (b) otherwise rendered unimpaired under the plan of
reorganization or (c) accorded such other treatment as Safety Components
and the Noteholders Committee agree. Promptly after the filing of chapter
11 cases, the Filing Entities (as defined below) shall seek entry of an
order fixing the last date for prepetition unsecured creditors of the
Filing Entities to file proofs of claim. Safety Components shall represent
to the Noteholders that the total liabilities of Safety Components, other
than the liabilities (fixed or contingent) which (a) were disclosed in the
particular 10-Q report dated as of December 25, 1999 and the particular
10-K report dated as of June 25, 1999, both of which were filed with the
Securities and Exchange Commission, and (b) are listed on Exhibit 1 to this
Term Sheet, does not exceed $5 million (the "Liability Representation").
The obligations of the Noteholders to proceed with the restructuring shall
be conditioned on the Liability Representation being true as of the
Effective Date. Safety Components shall give full access to Xxxxxx Capital
Partners ("Xxxxxx") and Xxxx, Gotshal & Xxxxxx LLP ("WGM") to allow them to
determine the veracity of the Liability Representation.
29
Shareholder Litigation Claimants: Claims, if any, of the plaintiffs in
the ongoing shareholder suits will share pari passu with existing equity
interest holders in the Common Stock of New Safety Co., unless a consensual
resolution is achieved whereby such claims are satisfied from proceeds of
the D & O insurance policy.
B. EXISTING EQUITY INTERESTS IN SCI
Existing equity interests of SCI will be cancelled and holders, other
than Xxxxxx Xxxxx, will receive:
Common Stock 3.2% of fully diluted Common Stock outstanding on
the Effective Date, subject to pro-rata dilution by
management options.
Warrants Amount. Warrants to acquire shares of Common Stock in
an amount equal to 12% on a fully diluted basis,
subject to pro-rata dilution by management options, of
the total outstanding Common Stock.
Expiration Date: Warrants will expire on the third
anniversary of the Petition Date (as defined in the
Lockup Agreement).
Exercise Conditions. The Warrants will be
exercisable at a strike price that assumes a valuation
of the Common Stock that would give Noteholders a 100%
recovery on their allowed claim (principal and
interest) as of the Petition Date on account of the
Common Stock they receive on the Effective Date.
C. SECURED BANK DEBT
To be refinanced, in part, either upon entry of an Order approving a
DIP facility, or on the Effective Date. Refinancing and treatment of
Secured Bank Debt shall be on terms acceptable to Safety Components and the
Noteholders Committee.
Prior to the Chapter 11 filings, Safety Components shall have arranged
a debtor-in-possession financing facility on terms satisfactory to
Noteholders Committee and Safety Components.
D. BOARD REPRESENTATION
New Board Initial composition of board of directors of New Safety
Co. and its subsidiaries to be designated by the
Noteholders Committee.
E. MISCELLANEOUS
30
Timing Definitive and binding term sheet shall be approved by
the boards of directors of Safety Components and a
restructuring agreement (the "Lockup Agreement"),
acceptable to the Noteholders Committee and Safety
Components and to be executed by all parties, including
certain insiders and stockholders, by April 7, 2000.
Filing Entities Safety Components International, Inc.; Safety
Components Fabric Technologies, Inc.; Automotive Safety
Components International, Inc.; ASCI Holdings Germany
(DE) Inc.; ASCI Holdings UK (DE) Inc.; XXXX Xxxxxxxx
Xxxxxx (XX) Xxx.; xxx XXXX Xxxxxxxx Xxxxx (XX) Inc.
Management Management Incentive/Retention Program - shall be
adopted on terms satisfactory to the Noteholders.
Anticipated to include incentive options based on
reorganization value and performance bonus program in
line with comparable companies.
Xxxxxx Xxxxx Safety Components will continue to pay only
compensation and health/insurance benefits (other than
bonuses) provided for in, and according to the terms
of, the April 19, 1999 employment contract (the
"Employment Agreement") for a period of two years from
the Effective Date, payable over twenty-four months,
provided, however, that any amount which SCI is
entitled to receive from Xx. Xxxxx as a result of the
payment of past compensation to Xx. Xxxxx by an
affiliate of SCI shall reduce the payments to Xx. Xxxxx
under his Employment Agreement. Any reduction referred
to in the preceding sentence shall be made ratably over
a twenty-four month period commencing on or about March
1, 2000; after that twenty-four month period, the
amounts payable to Xx. Xxxxx shall be restored to the
original amount due under the Employment Agreement.
After the Effective Date, Xx. Xxxxx will serve as a
business consultant to Safety Components. From the
Petition Date through the Effective Date, Xx. Xxxxx'x
role will be limited to assisting, to the extent
requested by the board of directors of SCI, SCI in
achieving an orderly transition of the business to the
new chief executive officer of New Safety Co. Xx. Xxxxx
will (i) waive the right to receive a distribution on
account of all equity securities or interests that he
owns in any SCI entity, and such interests shall be
cancelled, (ii) release any and all claims that he and
any affiliated companies have against SCI, other than
claims that are listed on Schedule 13(a) to the Lockup
Agreement, (iii) cause a U.K. company of which he is
the controlling shareholder, Valentec International
Limited ("VIL"), to grant SCI a first-priority,
security interest in an account receivable owing by the
Saudi Arabian government to VIL in the amount of
$564,000 (the "Saudi Receivable"). Upon payment to SCI
of the Saudi Receivable, SCI will release VIL from all
further obligations
31
related to its $1.2 million debt to SCI. If the Saudi
Receivable is not paid to SCI on or before July 1,
2001, SCI shall reduce any payments due Xx. Xxxxx under
the Employment Agreement by the full amount of the
Saudi Receivable. Xx. Xxxxx shall continue to abide by
all of the terms of non-competition agreement set forth
in section 9 of the Employment Agreement, except that
notwithstanding section 9.4 of the Employment
Agreement, Xx. Xxxxx'x obligation not to compete shall
terminate on the second anniversary of the Effective
Date. Xx. Xxxxx will agree to vote in favor of the
Plan.
Documentation Form and substance of all agreements to be acceptable
to the Noteholders Committee and Safety Components.
Professional Fees Safety Components shall pay the reasonable fees and
expenses of professional advisors to the Noteholders
Committee, subject to the execution of the Lock-Up
Agreement. Any payment shall be in accordance with the
current letter agreements by and among the respective
professionals, the Noteholders Committee, and Safety
Components.
Releases Execution of mutual releases by all parties (including
Xx. Xxxxx and Noteholders) on the Effective Date in
form and substance substantially similar to the draft
release annexed to this Term Sheet as Exhibit 2.
Third-party releases subject to Bankruptcy Court
approval.
Access Open access for Xxxxxx and WGM to (i) books and records
of Safety Components, and (ii) officers and directors
of Safety Components.
32
Exhibit 1 to Revised Term Sheet
-------------------------------------------------------------------------------------------------------------------------
Company Plaintiff/Claimants Amounts claimed Liability range
-------------------------------------------------------------------------------------------------------------------------
Valentec-California J&R Coating Specialists (Lawsuit) $310,000 $100,000-$150,000
-------------------------------------------------------------------------------------------------------------------------
Valentec-California Xxxxx Xxxxxxx (Lawsuit) $10,000,000 $0-$100,000
(Former sales agent asserting
claim for lost earnings potential
on a terminated sales agency
contract)
-------------------------------------------------------------------------------------------------------------------------
SCI Banc Of America, Securities $855,000 $0-$855,000
(Former Company Financial
Consultant asserting claim for
"success" fees earned re debt
restructuring)
-------------------------------------------------------------------------------------------------------------------------
SCI Maxima Group $215,000 $0
(Consultant claiming fees for
services based on an "oral"
agreement with the Company's
Chairman and CEO)
-------------------------------------------------------------------------------------------------------------------------
SCI and all its subsidiaries Various trade and services entities Unknown/missed $750,000-$3,895,000
Accruals/claims, etc.
-------------------------------------------------------------------------------------------------------------------------
TOTAL $850,000-$5,000,000
-------------------------------------------------------------------------------------------------------------------------
33
Exhibit 2 to Revised Term Sheet
MUTUAL RELEASE
THIS MUTUAL RELEASE is entered into as of this _____ day of ________, 2000,
by and among (i) Safety Components International, Inc., a Delaware Corporation,
individually and collectively with its direct and indirect subsidiaries and
affiliates ("Safety Components"), (ii) the authorized representative of each of
the holders or investment managers or advisors for certain discretionary
accounts that are holders or beneficial owners of SCI's 10 1/8 % Senior
Subordinated Notes due 2007, Series B issued under that certain indenture dated
as of July 24, 1997, between SCI, several SCI direct and indirect subsidiaries,
and The Bank of New York as Trustee (the "Noteholders"), and (iii) Xxxxxx X.
Xxxxx ("Xxxxx").
R E C I T A L S:
A. The parties have reached a settlement of certain claims and
controversies between them pursuant to the terms of the Restructuring Agreement
dated as of April 7, 2000 (the "Restructuring Agreement") and of the Revised
Term Sheet for Proposed Restructuring of SCI (the "Term Sheet").
B. Pursuant to the Restructuring Agreement and Term Sheet, the parties are
to execute the Mutual Release.
C. This Mutual Release shall be effective upon and subject to the
occurrence of the effective date of the Plan (as defined in the Restructuring
Agreement).
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual agreements and
releases hereinafter contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree, and
effective upon and subject to the occurrence of the effective date of the Plan,
as follows:
1. Definition of Claims. The term "Claims" as used in this Mutual Release
means any and all claims, demands, losses, debts, costs, expenses, liabilities,
obligations, deficiencies, contracts, agreements, demands, accounts, defenses,
suits, judgments, actions, causes of action, damages of every kind and nature
whatsoever, and other claims for relief of whatever kind or nature, whether
known or unknown, suspected or unsuspected, matured or unmatured, at law or at
equity, which any releasing party or parties may have, or have had, or which may
hereafter accrue against any party being released, for or by reason of any
matter, cause or thing whatsoever, and any and all acts, conduct, transactions,
events and occurrences of the parties related thereto which originated in whole
or in part on or before the date that the Release is executed by the parties,
but excluding the claims expressly reserved in this Mutual Release, the
Restructuring Agreement or the Term Sheet. The term "Claims" shall not, however,
include intentional acts which result in the conviction of a felony and claims
based upon breaches of representations, warranties and obligations under the
Restructuring Agreement.
34
2. Release of SCI. The Noteholders and Xxxxx for themselves and their
successors and assigns, fully, unconditionally and without reserve, hereby
remise, release, acquit and forever discharge SCI, and its officers, directors,
attorneys, agents and employees from any and all Claims which they may hold
against SCI other than the claims of Xxxxx that are listed in Schedule 13(a) to
the Restructuring Agreement and other obligations provided in the Restructuring
Agreement and Term Sheet.
3. Release of Noteholders. SCI and Xxxxx for themselves and their
successors and assigns, fully, unconditionally, and without reserve, hereby
remise, release, acquit and forever discharge the Noteholders and their agents,
attorneys, and employees, from any and all Claims which they may hold against
the Noteholders other than as provided in the Restructuring Agreement and Term
Sheet.
4. Release of Xxxxx. SCI and the Noteholders for themselves and their
successors and assigns, fully, unconditionally, and without reserve, hereby
remise, release, acquit and forever discharge Xxxxx and his agents, attorneys,
and employees, heirs, successors and assigns from any and all Claims which they
may have against him except those obligations undertaken by Xx. Xxxxx in
connection with the Restructuring Agreement and Term Sheet.
5. Agreements. The parties hereto understand and agree (a) that the
consideration for this Release Agreement is contractual and not a mere recital,
(b) that neither this Mutual Release, nor any part hereof, shall be used or
construed as an admission of liability on the part of any party, (c) that
neither this Mutual Release, nor any part hereby, shall be used as evidence by
or against any party hereto for any purpose, (d) that each party hereto has had
the opportunity to engage counsel to review this Mutual Release and advise such
party with respect thereto, and (e) that this Mutual Release and the releases
and agreements contained herein are binding upon, and inure to the benefit of,
the parties hereto, their respective heirs, successors and assigns, and all
parties and entities claiming by or through such parties.
6. Ownership of Claims. Each party hereto warrants and represents that it
is currently the owner of all Claims it has released hereby, and that the same
have not been assigned, pledged, or made subject to any contract to or with any
other person or entity.
7. Voiding of Releases. If the releases granted by any party pursuant to
Section 2, Section 3 or Section 4 above are voided in any legal or equitable
proceeding after the date that this Mutual Release is executed by the parties,
all releases granted to such party pursuant to Section 2, Section 3 or Section 4
above shall thereupon immediately be deemed to be ineffective and void.
8. Miscellaneous.
35
(a) No Other Release. Except as set forth in Section 3, nothing contained
herein shall release any party's rights or obligations with respect to
any person or party who is not specifically named herein.
(b) Entire Agreement. This Mutual Release constitutes the entire
understanding and agreement between the parties with respect to the
matters set forth herein and can be amended, supplemented or changed
only by written instrument signed by all of the parties hereto.
(c) Governing Law. This Mutual Release shall be governed by and construed
in accordance with the laws of the State of _______.
(d) Counterparts. This Mutual Release may be executed in any number of
counterparts, each of which shall be deemed an original, and all of
which when taken together shall constitute one and the same
instrument.
36
IN WITNESS WHEREOF, the parties have caused this Mutual Release to be duly
executed as of the date first written above.
DATED: _________ __, 2000 SAFETY COMPONENTS INTERNATIONAL, INC., on
behalf of itself and each of its affiliates
and subsidiaries
BY: ___________________________________
TITLE: _________________________________
DATED: _________ __, 0000 XXX XXXXXXX XXXXXXXXXXX, XXX XXXXXXX
INVESTMENTS on behalf of the following
holders of Notes:
SunAmerica Inc.;
Anchor National Life Insurance Company;
SunAmerica Life Insurance Company;
First SunAmerica Life Insurance Company:
BY: _______________________________________
TITLE: ____________________________________
37
DATED: _________ __, 2000 AIG on behalf of the following holders of
Notes:
America Home Assurance Company;
Commerce and Industry Insurance Company;
and
National Union Fire Insurance Company of
Louisiana:
BY: _______________________________________
TITLE: ____________________________________
38
DATED: _________ __, 2000 WAYLAND INVESTMENT FUND, LLC
By: CSFC Wayland Advisors, Inc.,
its Manager
BY: _______________________________________
TITLE: ____________________________________
DATED: _________ __, 2000 Xxxxxx Fiduciary Trust Company on behalf of
the following holder of Notes: Xxxxxx High
Yield Managed Trust
BY: _______________________________________
TITLE: ____________________________________
39
DATED: _________ __, 2000 The Xxxxxx Advisory Company, Inc. on behalf
of the following holders of Notes:
Strategic Global Fund-High Yield Fixed
Income (Xxxxxx) Fund; and
Xxxxxx CBO II, Limited:
BY: _______________________________________
TITLE: ____________________________________
DATED: _________ __, 2000 Xxxxxx Investment Management, Inc. on
behalf of the following holders of Notes:
Xxxxxx High Yield Trust;
Xxxxxx High Yield Advantage Trust;
Xxxxxx Variable Trust-Xxxxxx VT Income
Fund;
Xxxxxx Variable Trust-Xxxxxx VT Global
Asset Allocation Fund;
Xxxxxx Master Income Trust;
Xxxxxx Premier Income Trust;
Xxxxxx Master Intermediate Income
Trust;
Xxxxxx Diversified Income Trust;
Xxxxxx Asset Allocation Funds-Growth
Portfolio;
40
Xxxxxx Asset Allocation Funds-
Conservative Portfolio;
Xxxxxx Funds Trust-Xxxxxx High Yield
Trust II;
Travelers Series Fund Inc.-Xxxxxx
Diversified Income Portfolio; and
Lincoln National Global Asset
Allocation Fund, Inc.:
BY: _______________________________________
TITLE: ____________________________________
DATED: _________ __, 2000 XXXXXX X. XXXXX
------------------------------------
41
STATE OF ________ }
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
_________, the _____________ of Safety Components International, Inc., known to
me to be the person whose name is subscribed to the foregoing Mutual Release and
acknowledged to me that he executed the same in the capacity of __________ of
Safety Components International, Inc., for the purposes and considerations
therein expressed.
Subscribed and sworn to before me this ____ day of _____________, 2000.
My Commission Expires: __________ __, 20__
Notary Public in and for the State of ______
------------------------------------------
42
STATE OF ________ }
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
_________, the _____________ of Sun America Investments, known to me to be the
person whose name is subscribed to the foregoing Mutual Release and acknowledged
to me that he executed the same in the capacity of __________ of Sun America
Investments for the purposes and considerations therein expressed.
Subscribed and sworn to before me this ____ day of _____________, 2000.
My Commission Expires: __________ __, 20__
Notary Public in and for the State of ______
------------------------------------------
43
STATE OF ________ }
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
_________, the _____________ of CSFC Wayland Advisors, Inc., the manager of
Wayland Investment Fund, LLC known to me to be the person whose name is
subscribed to the foregoing Mutual Release and acknowledged to me that he
executed the same in the capacity of __________ of CSFC Wayland Advisors, Inc.
for the purposes and considerations therein expressed.
Subscribed and sworn to before me this ____ day of _____________, 2000.
My Commission Expires: __________ __, 20__
Notary Public in and for the State of ______
------------------------------------------
44
STATE OF ________ }
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
_________, the _____________ of Xxxxxx Fiduciary Trust Company on behalf of
Xxxxxx High Yield Managed Trust, ______________, known to me to be the person
whose name is subscribed to the foregoing Mutual Release and acknowledged to me
that he executed the same in the capacity of __________ of Xxxxxx Fiduciary
Trust Company for the purposes and considerations therein expressed.
Subscribed and sworn to before me this ____ day of _____________, 2000.
My Commission Expires: __________ __, 20__
Notary Public in and for the State of ______
------------------------------------------
45
STATE OF ________ }
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
_________, the _____________ of The Xxxxxx Advisory Company, Inc. on behalf of
Strategic Global Fund-High Yield Fixed Income (Xxxxxx) Fund and Xxxxxx CBO II,
Limited, known to me to be the person whose name is subscribed to the foregoing
Mutual Release and acknowledged to me that he executed the same in the capacity
of __________ of The Xxxxxx Advisory Company, Inc. for the purposes and
considerations therein expressed.
Subscribed and sworn to before me this ____ day of _____________, 2000.
My Commission Expires: __________ __, 20__
Notary Public in and for the State of ______
------------------------------------------
46
STATE OF ________ }
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
_________, the _____________ of Xxxxxx Investment Management, Inc. on behalf of
Xxxxxx High Yield Trust, Xxxxxx High Yield Advantage Trust, Xxxxxx Variable
Trust-Xxxxxx VT Income Fund, Xxxxxx Variable Trust-Xxxxxx VT Global Asset
Allocation Fund, Xxxxxx Master Income Trust, Xxxxxx Premier Income Trust, Xxxxxx
Master Intermediate Income Trust, Xxxxxx Diversified Income Trust, Xxxxxx Asset
Allocation Funds-Growth Portfolio, Xxxxxx Asset Allocation Funds-Conservative
Portfolio, Xxxxxx Funds Trust-Xxxxxx High Yield Trust II, Travelers Series Fund
Inc.-Xxxxxx Diversified Income Portfolio, and Lincoln National Global Asset
Allocation Fund, Inc., known to me to be the person whose name is subscribed to
the foregoing Mutual Release and acknowledged to me that he executed the same in
the capacity of ______________ of Xxxxxx Investment Management, Inc., for the
purposes and considerations therein expressed.
Subscribed and sworn to before me this ____ day of _____________, 2000.
My Commission Expires: __________ __, 20__
Notary Public in and for the State of ______
------------------------------------------
47
STATE OF ________ }
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
Xxxxxx X. Xxxxx, known to me to be the person whose name is subscribed to the
foregoing Mutual Release and acknowledged to me that he executed the same for
the purposes and considerations therein expressed.
Subscribed and sworn to before me this ____ day of _____________, 2000.
My Commission Expires: __________ __, 20__
Notary Public in and for the State of ______
------------------------------------------
48
EXHIBIT B
DEBTOR-IN-POSSESSION FINANCING
Credit Agreement
49
EXHIBIT C
SUBORDINATED-IN-POSSESSION FINANCING
Credit Agreement
50
