EXHIBIT 4
LOCK-UP AGREEMENT
This Lock-Up Agreement ("Agreement"), dated as of March 21, 2005, is
entered into by and among FV Steel and Wire Company, a Wisconsin corporation,
Keystone Consolidated Industries, Inc., a publicly listed Delaware corporation,
DeSoto Environmental Management, Inc., a Delaware corporation; X.X. Xxxxxxxx
Company, a New Jersey corporation; Xxxxxxx Wire Company (f/k/a DeSoto, Inc.), a
Delaware corporation; and Xxxxxxx Wire of Xxxxxxxx, Inc., a Nevada corporation
(collectively, the "Debtors" and each, individually, a "Debtor"), Contran
Corporation, a Delaware corporation (together with its affiliates, including
without limitation, EWP Financial, LLC "EWP Financial," "Contran"), the
"authorized representatives" (the "Retiree Representatives"), as such term is
defined in ss. 1114(b)(1) of the Bankruptcy Code, for the Affected Retirees (as
defined in the 1114 Agreement (defined below)), the Independent Steel Workers
Alliance (the "ISWA")(1), the Official Committee of Unsecured Creditors of the
Debtors (the "Committee"), and Ameren Cilco, the Bank of New York, not
individually but as indenture trustee (the "Indenture Trustee"), Midwest Mill
Service and Peoria Disposal Company, each of whom, in a direct or representative
capacity, holds or controls a claim classified as a General Unsecured Claim in
Class A6 under the Debtors' Joint Plan of Reorganization Pursuant to Chapter 11
of the United States Bankruptcy Code filed October 4, 2004 (the "Debtors' Plan")
and is a member of the Committee (collectively, the "Committee Members").
RECITALS
WHEREAS, on February 26, 2004 (the "Petition Date"), each of the Debtors
filed a voluntary petition for relief (the "Proceedings") pursuant to Title 11
of the United States Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Eastern District of Wisconsin (the "Bankruptcy Court")
to facilitate a reorganization of the Debtors and a reduction of their debt
levels and accompanying debt service payments;
WHEREAS, each of the Committee Members holds an allowed claim against the
Debtors in the Proceedings or, in the case of the Indenture Trustee, acts as
authorized representative of the Holders of allowed claims against the Debtors
in the Proceedings, in the following amounts (collectively, the "CM Claims" and
individually, a "CM Claim"):
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Committee Member CM Claim Amount
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Ameren Energy Marketing Co. (Cilco) $3,052,408.75
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Bank of New York $6,487,075.52
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Midwest Mill Service $313,031.79
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Peoria Disposal Company $682,866.58
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(1) The ISWA represents both the active employees of the Independent Steel
Workers Alliance and a group of retirees from the Independent Steel Workers
Alliance as one of the Retiree Representatives. Accordingly, the term "ISWA" as
used in this Agreement refers only to the ISWA as representative of active
employees pursuant to Section 1113 of the Bankruptcy Code.
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WHEREAS, Contran has asserted claims against the Debtors in the Proceedings
in the following amounts (the "Contran Claims"):
1. The EWP Financial DIP Claim (as defined in the Debtors' Plan),
including, for purposes of this Agreement, EWP Financial's contingent
claim on account of a $250,000 prepetition letter of credit issued by
EWP Financial for the benefit of the Debtors;
2. Unsecured, prepetition claims related to the ISA (defined below) in the
approximate amount of $3,259,448.22, excluding any post-petition
payments thereon and subject to reductions to the extent of
post-petition payments thereon (the "ISA Prepetition Claims");
3. Subordinated, unsecured, prepetition claims related to dividends on
account of Old Preferred Stock (as defined in the Debtors' Plan) in the
approximate amount of $10,747,952.13 (the "Prepetition Dividend
Claims");
4. Post-petition, administrative claims and all other claims, excluding the
post-petition amounts payable under the DIP Loan Participation, the
Notes Secured Claim, the L/C Claims and any Insurance Program Claims
(each as defined below), in the approximate amount of $1,000,000
including but not limited to claims related to the Intercorporate
Services Agreement dated January 1, 2001 (the "ISA") but not including
amounts paid to Contran under the ISA in the ordinary course of the
Debtors' businesses during the pendency of the Proceedings (the "Contran
Administrative Claims");
5. The $2 million principal participation by EWP Financial in the Congress
DIP Facility (as defined in the Debtors' Plan) (the "DIP Loan
Participation"); and
6. That portion of the 8% subordinated secured notes due 2009 issued by KCI
(the "8% Notes") owned by Contran in the approximate principal amount of
$18,318,750 together with accrued interest through the Petition Date of
approximately $1,754,529 plus post-petition interest at eight percent
(8%) thereafter (the "Notes Secured Claim").
WHEREAS, Contran has also asserted an unsecured, unliquidated, contingent,
prepetition claim in the amount of $4,391,229 in connection with certain undrawn
letters of credit issued by Contran for the benefit of the Debtors (the "L/C
Claims"), which, together with any Insurance Program Claims, are not, for
purposes of this Agreement, included among the Contran Claims (as defined
herein);
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WHEREAS, the Retiree Representatives represent the interests of Affected
Retirees in the Proceedings including, inter alia, with respect to: (1) an
allowed claim against the Debtors in the amount of $5,000,000 only in the event
of confirmation of the Consensual Plan that, pursuant to the 1114 Agreement, is
held by the Affected Retirees (the "Retiree Claim"); or (2) an allowed claim
against the Debtors in the amount of $116,000,000 (the "$116,000,000 Claim")
only in the event that (A) a Qualified Alternative Plan is confirmed and (B) the
Retiree Representatives collectively and unanimously make the $116,000,000 Claim
Election (as defined below); provided however, that nothing in this paragraph
shall impair the Parties' rights under and in connection with the 1114
Agreement;
WHEREAS, the ISWA represents the interests of active ISWA employees in the
Proceedings including, inter alia, with respect to an allowed claim against the
Debtors in the amount of $9,000,000 (the "Union Claim") that the ISWA holds
pursuant to the 1113 Agreement (as defined below);
WHEREAS, on October 4, 2004, the Debtors filed the Debtors' Plan (terms
used, but not defined, herein shall have the meanings set forth in the Debtors'
Plan);
WHEREAS, on October 14, 2004, the Committee filed a motion to terminate the
Debtors' exclusive right to file a plan or seek acceptances thereof in
accordance with Section 1121 of the Bankruptcy Code (the "Exclusivity Motion");
WHEREAS, each of the Debtors, the Committee Members, Contran, the Retiree
Representatives, the Committee and the ISWA has engaged in good faith
negotiations with the objective of reaching an agreement with regard to a
consensual resolution of the Proceedings that would include proposing and
seeking confirmation of an amended plan of reorganization for the Debtors (the
"Consensual Plan") and a simultaneous process to consider unsolicited offers to
obtain ownership and/or control of the Debtors' businesses and assets and, if
appropriate, approve binding agreements related thereto in connection with a
Qualified Alternative Plan (as defined below);
WHEREAS, each of the Debtors, the Committee Members, Contran, the Retiree
Representatives, the Committee and the ISWA now desires to evidence their
agreement regarding the Consensual Plan and the Qualified Alternative Plan
process on the terms and conditions set forth in this Agreement and in the
exhibits attached hereto; and
WHEREAS, subject to approval of the Bankruptcy Court, each of the Debtors,
the Committee Members, the Committee, the Retiree Representatives, Contran and
the ISWA (collectively, the "Parties" and individually, a "Party") has due
authority to enter into and agree to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
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1. Recitals. Each of the Recitals set forth above is hereby incorporated
as fully set forth herein.
2. Agreements of the Debtors. The Debtors hereby agree to the following:
(a) within five (5) business days of execution hereof by all Parties,
the Debtors shall file a motion in the Proceedings seeking
authority from the Bankruptcy Court to enter into this Agreement;
provided however, that, in connection with such motion, the
Debtors shall use their reasonable best efforts to file this
Agreement under seal, and the Parties shall use their reasonable
best efforts to agree upon a summary of this Agreement for
inclusion in the motion;
(b) the Debtors shall in good faith negotiate with the Committee, the
Retiree Representatives, the ISWA and Contran the terms and
provisions of the Consensual Plan and, if and as applicable,
negotiate in good faith with the Committee, the Retiree
Representatives and/or the ISWA the terms and provisions of any
Offer, Qualified Offer and the Qualified Alternative Plan (each
as defined below), in each case consistent with the terms and
provisions of this Agreement;
(c) the Debtors shall file the Consensual Plan in form and substance
reasonably acceptable to the Committee and Contran and in
accordance with the provisions of Section 17 hereof. The
acceptance by the Committee and Contran of the Consensual Plan
shall not be unreasonably withheld or delayed. The Debtors shall
not (i) amend the Debtors' Plan other than by filing the
Consensual Plan, (ii) file any other plan of reorganization or
liquidation other than the Consensual Plan without the express
written consent of the Committee or (iii) make any material
amendments to the Consensual Plan, once filed, without the
consent of the Committee and Contran (which consents shall not be
unreasonably withheld or delayed); provided however, that in the
event of a dispute between the Parties regarding whether a
consent has been unreasonably withheld or delayed, the Parties
consent to seeking resolution of such dispute by the Bankruptcy
Court on an expedited basis of not less than two (2) business
days notice, subject to the Bankruptcy Court's availability;
(d) with respect to provisions relating to the 1114 Agreement
(including without limitation, the treatment of Class A4 or Class
A6 Claims), the Debtors shall file the Consensual Plan in form
and substance reasonably acceptable to the Retiree
Representatives, Contran and the Committee and in accordance with
the provisions of Section 17 hereof. The acceptance of the
Retiree Representatives, Contran and the Committee shall not be
unreasonably withheld or delayed. With respect to provisions
relating to the 1114 Agreement (including without limitation, the
treatment of Class A4 or Class A6 Claims), the Debtors shall not
(i) amend the Debtors' Plan other than by filing the Consensual
Plan, (ii) file any other plan of reorganization or liquidation
other than the Consensual Plan without the express written
consent of the Committee or (iii) make any material amendments to
the Consensual Plan, once filed, without the consent of the
Retiree Representatives, Contran and the Committee (which
consents shall not be unreasonably withheld or delayed); provided
however, that in the event of a dispute between the Parties
regarding whether a consent has been unreasonably withheld or
delayed, the Parties consent to seeking resolution of such
dispute by the Bankruptcy Court on an expedited basis of not less
than two (2) business days notice, subject to the Bankruptcy
Court's availability;
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(e) with respect to provisions relating to the 1113 Agreement, the
Debtors shall file the Consensual Plan in form and substance
reasonably acceptable to the ISWA, Contran and the Committee and
in accordance with the provisions of Section 17 hereof. The
acceptance of the ISWA, Contran and the Committee shall not be
unreasonably withheld or delayed. With respect to provisions
relating to the 1113 Agreement, the Debtors shall not make any
material amendments to the Consensual Plan, once filed, without
the consent of the ISWA, Contran and the Committee (which
consents shall not be unreasonably withheld or delayed); provided
however, that in the event of a dispute between the Parties
regarding whether a consent has been unreasonably withheld or
delayed, the Parties consent to seeking resolution of such
dispute by the Bankruptcy Court on an expedited basis of not less
than two (2) business days notice, subject to the Bankruptcy
Court's availability;
(f) except as otherwise provided herein, the Debtors shall not
initiate or participate in any discovery concerning matters
arising prior to the date hereof related to the Committee, the
Committee Members, Contran, the Retiree Representatives or the
ISWA;
(g) the Debtors shall not object to or seek to subordinate,
recharacterize, reclassify or otherwise adversely affect the CM
Claims, the Contran Claims, the Retiree Claim, the Union Claim
or, as set forth in the 1114 Agreement, the $116,000,000 Claim;
provided however, that the Parties agree that except in the event
of confirmation of the Consensual Plan, the Prepetition Dividend
Claim shall be (i) subordinated to all allowed general unsecured
claims against the Debtors; (ii) separately classified from all
general unsecured claims against the Debtors; and (iii) not paid
until all allowed general unsecured claims against the Debtors
are fully paid and satisfied;
(h) the Debtors shall in good faith take all reasonably necessary
steps to support (i) the confirmation, consummation and
effectiveness of the Consensual Plan; (ii) the consummation and
effectiveness of the Qualified Alternative Plan (if confirmed);
and (iii) approval of a combined disclosure statement related to
the Consensual Plan and, if applicable, the Qualified Alternative
Plan;
(i) the Debtors shall seek approval of the 1114 Agreement only at the
time of and in conjunction with obtaining confirmation of the
Consensual Plan and shall seek approval of the 1114 Agreement in
conjunction with obtaining confirmation of the Qualified
Alternative Plan only with the express written consent of the
Retiree Representatives, the Committee and the Potential Bidder
(as defined below); provided however, that in the event that
neither the Consensual Plan nor the Qualified Alternative Plan is
confirmed, no Party shall seek approval of the 1114 Agreement
without providing for a new and separate notice and hearing
thereon;
(j) the Debtors and their legal and financial advisors shall
cooperate in good faith with the Committee, the Retiree
Representatives and/or the ISWA in connection with any Offer or
Qualified Offer, including without limitation, providing any
Potential Bidder that has executed a confidentiality agreement
with reasonably requested diligence information (not including
competitively sensitive information if the Potential Bidder is a
competitor of the Debtors or EWP) and access to the Debtors'
facilities and management personnel and actively participating in
the negotiation and drafting of any Definitive Agreement (as
defined below), Qualified Alternative Plan or other related
document or agreement as necessary or appropriate under the
circumstances or as may reasonably be requested by any Party
and/or Potential Bidder; and
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(k) the Debtors shall provide information reasonably requested by
each of the Retiree Representatives, the ISWA and the Committee
that is necessary for the Retiree Representatives, the ISWA and
the Committee to fulfill their respective duties to their
respective constituencies.
3. Agreements of the Committee . The Committee hereby agrees to:
(a) withdraw the Exclusivity Motion;
(b) negotiate in good faith with the Debtors, the Retiree
Representatives, the ISWA and Contran the terms and provisions of
the Consensual Plan and, if and as applicable, negotiate in good
faith with the Debtors, the Retiree Representatives and the ISWA
regarding the terms and provisions of a Qualified Alternative
Plan, in each case consistent with the terms and provisions of
this Agreement;
(c) issue a letter recommending that all Holders of all unsecured
claims against the Debtors, including Class A6 General Unsecured
Claims, vote to accept their respective treatment under the
Consensual Plan (the "Support Letter"); provided however, that if
any Party has proposed a Qualified Alternative Plan, the
Committee may indicate a preference (and the reasons therefor) as
to the Consensual Plan or the Qualified Alternative Plan in the
Support Letter and at the confirmation hearing related to the
Consensual Plan and the Qualified Alternative Plan;
(d) not object to or seek to subordinate, recharacterize, reclassify
or otherwise adversely affect the Contran Claims, the Retiree
Claim, the CM Claims or the Union Claim; provided however, that
the Parties agree that except in the event of confirmation of the
Consensual Plan, the Prepetition Dividend Claim shall be (i)
subordinated to all allowed general unsecured claims against the
Debtors; (ii) separately classified from all general unsecured
claims against the Debtors; and (iii) not paid until all allowed
general unsecured claims against the Debtors are fully paid and
satisfied;
(e) not object to the $116,000,000 Claim only if either the
Consensual Plan is confirmed or the Qualified Alternative Plan is
confirmed under which the Retiree Representatives make the
$116,000,000 Claim Election;
(f) so long as the Committee is not a sponsor of a Qualified
Alternative Plan, in good faith, take all reasonably necessary
steps to support the confirmation, consummation and effectiveness
of the Consensual Plan and, in any event, support the approval of
a disclosure statement related to the Consensual Plan and, if
applicable, the Qualified Alternative Plan;
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(g) not object or take any other action in opposition to the
confirmation of the Consensual Plan; provided however, that if
the Committee supports or is the sponsor of the Qualified
Alternative Plan, the Committee may object to confirmation of the
Consensual Plan except as otherwise provided herein;
(h) except as otherwise provided herein, adjourn and suspend all
discovery and/or not initiate, continue or participate in any
discovery concerning matters arising prior to the date hereof
related to the Debtors, Contran, the Retiree Representatives or
the ISWA; and
(i) not file or support any further motions seeking to modify or
terminate the Debtors' exclusive right to file a plan or seek
acceptances thereof in accordance with Section 1121 of the
Bankruptcy Code ("Exclusivity") and support the Debtors'
request(s) for extension of Exclusivity in accordance with this
Agreement.
4. Agreements of the Committee Members. Each Committee Member hereby
agrees to:
(a) support the Committee in its agreement to:
(i) withdraw the Exclusivity Motion;
(ii) execute and issue the Support Letter; and
(iii) so long as the Committee is not a sponsor of a
Qualified Alternative Plan, in good faith, take all
reasonably necessary steps to support the confirmation,
consummation and effectiveness of the Consensual Plan
and, in any event, support the approval of a disclosure
statement related to the Consensual Plan and, if
applicable, the Qualified Alternative Plan;
(b) negotiate in good faith with the Debtors, the Retiree
Representatives, the ISWA and Contran the terms and provisions of
the Consensual Plan and, if and as applicable, negotiate in good
faith with the Debtors, the Retiree Representatives and the ISWA
regarding the terms and provisions of a Qualified Alternative
Plan, in each case consistent with the terms and provisions of
this Agreement;
(c) not object to or seek to subordinate, recharacterize, reclassify
or otherwise adversely affect the Contran Claims, the Retiree
Claim or the Union Claim; provided however, that the Parties
agree that except in the event of confirmation of the Consensual
Plan, the Prepetition Dividend Claim shall be (i) subordinated to
all allowed general unsecured claims against the Debtors; (ii)
separately classified from all general unsecured claims against
the Debtors; and (iii) not paid until all allowed general
unsecured claims against the Debtors are fully paid and
satisfied;
(d) not object to the $116,000,000 Claim only if either the
Consensual Plan is confirmed or the Qualified Alternative Plan is
confirmed under which the Retiree Representatives make the
$116,000,000 Claim Election;
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(e) subject to approval of a disclosure statement relating to the
Consensual Plan, vote to accept treatment of their respective
Class A6 General Unsecured Claims under the Consensual Plan;
provided however, that if any Party has proposed a Qualified
Alternative Plan, the Committee Members may indicate a preference
as to the Consensual Plan or the Qualified Alternative Plan in
connection with their vote and at the confirmation hearing
related to the Consensual Plan and the Qualified Alternative
Plan;
(f) not object or take any other action in opposition to the
Consensual Plan; provided however, that if the Committee supports
or is the sponsor of the Qualified Alternative Plan, the
Committee Members may object to confirmation of the Consensual
Plan except as otherwise provided herein;
(g) except as otherwise provided herein, adjourn and suspend all
discovery and/or not initiate, continue or participate in any
discovery concerning matters arising prior to the date hereof
related to the Debtors, Contran, the Retiree Representatives or
the ISWA; and
(h) not file or support any motions seeking to modify or terminate
the Debtors' Exclusivity and support the Debtors' request(s) for
extension of Exclusivity in accordance with this Agreement.
5. Agreements of Contran. Contran hereby agrees to:
(a) negotiate in good faith with the Committee, the Committee
Members, the Retiree Representatives, the ISWA and the Debtors
the terms and provisions of the Consensual Plan consistent with
the terms and provisions of this Agreement;
(b) subject to approval of a disclosure statement relating to the
Consensual Plan, vote to accept the treatment accorded under the
Consensual Plan for the Contran Claims;
(c) in good faith, take all reasonably necessary steps to support the
confirmation, consummation and effectiveness of the Consensual
Plan and approval of a disclosure statement related thereto;
(d) not object or take any other action in opposition to confirmation
of the Consensual Plan;
(e) except as otherwise provided herein, not initiate or participate
in any discovery concerning matters arising prior to the date
hereof related to the Committee, the Committee Members, the
Debtors, the Retiree Representatives or the ISWA;
(f) not object to or seek to subordinate, recharacterize, reclassify
or otherwise adversely affect the CM Claims, the Retiree Claim,
the Union Claim or, as set forth in the 1114 Agreement, the
$116,000,000 Claim;
(g) in the event of a Qualified Alternative Plan or a Termination
that does not result in confirmation of the Consensual Plan, not
object to or otherwise oppose (i) subordination of the
Prepetition Dividend Claim to all allowed general unsecured
claims against the Debtors; (ii) separate classification of the
Prepetition Dividend Claim from all general unsecured claims
against the Debtors; and (iii) treatment that affords no payments
on account of the Prepetition Dividend Claim until all allowed
general unsecured claims against the Debtors are fully paid and
satisfied;
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(h) cause EWP Financial to extend the maturity of the EWP Financial
DIP Facility until the earlier of July 31, 2005 or the maturity
date of the Congress DIP Facility including any extension
thereof;
(i) not take any action to enforce rights or remedies under or in
connection with the Contran Claims until, if at all, a
Termination pursuant to Section 18 hereof has occurred; and
(j) not terminate or cease performance under the ISA (as such may be
modified pursuant to its terms), except as a result of a material
breach thereof by the Debtors, until the effective date of either
the Consensual Plan or the Qualified Alternative Plan.
6. Agreements of Retiree Representatives. The Retiree Representatives
hereby agree to:
(a) negotiate in good faith with the Committee, the Committee
Members, Contran and the Debtors the terms and provisions of the
Consensual Plan relating to the 1114 Agreement consistent with
the terms and provisions of this Agreement;
(b) subject to approval of a disclosure statement relating to the
Consensual Plan, vote to accept the treatment accorded under the
Consensual Plan for the Retiree Claim; provided however, that if
any Party has proposed a Qualified Alternative Plan, each Retiree
Representative may indicate a preference (and the reasons
therefor) as to the Consensual Plan or the Qualified Alternative
Plan in connection with their vote and at the confirmation
hearing related to the Consensual Plan and the Qualified
Alternative Plan;
(c) so long as the Retiree Representatives are not a sponsor of a
Qualified Alternative Plan, in good faith, take all reasonably
necessary steps to support the confirmation, consummation and
effectiveness of the Consensual Plan and, in any event, support
the approval of a disclosure statement related to the Consensual
Plan and, if applicable, the Qualified Alternative Plan;
(d) not object or take any other action in opposition to the
Consensual Plan; provided however, that if the Retiree
Representatives support or are the sponsor of the Qualified
Alternative Plan, the Retiree Representatives may object to
confirmation of the Consensual Plan except as otherwise provided
herein;
(e) except as otherwise provided herein, not initiate or participate
in any discovery concerning matters arising prior to the date
hereof related to the Debtors, Contran, the Committee, the
Committee Members or the ISWA;
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(f) not object to or seek to subordinate, recharacterize, reclassify
or otherwise adversely affect the CM Claims, the Contran Claims
or the Union Claim; provided however, that the Parties agree that
except in the event of confirmation of the Consensual Plan, the
Prepetition Dividend Claim shall be (i) subordinated to all
allowed general unsecured claims against the Debtors; (ii)
separately classified from all general unsecured claims against
the Debtors; and (iii) not paid until all allowed general
unsecured claims against the Debtors are fully paid and
satisfied;
(g) not file or support any motions seeking to modify or terminate
the Debtors' Exclusivity and support the Debtors' request(s) for
extension of Exclusivity in accordance with this Agreement; and
(h) seek approval of the 1114 Agreement only at the time of and in
conjunction with obtaining confirmation of the Consensual Plan
and seek approval of the 1114 Agreement in conjunction with
obtaining confirmation of the Qualified Alternative Plan only
with the express written consent of the Committee and the
Potential Bidder provided however, that in the event that neither
the Consensual Plan nor the Qualified Alternative Plan is
confirmed, no Party shall seek approval of the 1114 Agreement
without providing for a new and separate notice and hearing
thereon;.
7. Agreements of ISWA. The ISWA hereby agrees to:
(a) negotiate in good faith with the Committee, the Committee
Members, Contran, the Retiree Representatives and the Debtors the
terms and provisions of the Consensual Plan relating to the 1113
Agreement consistent with the terms and provisions of this
Agreement;
(b) negotiate in good faith with a Potential Bidder and, as
applicable, the Committee and/or the Retiree Representatives
concerning any Offer, Qualified Offer and/or the Qualified
Alternative Plan;
(c) subject to approval of a disclosure statement relating to the
Consensual Plan, vote to accept the treatment accorded under the
Consensual Plan for the Union Claim; provided however, that if
any Party has proposed a Qualified Alternative Plan, the ISWA may
indicate a preference (and the reasons therefor) as to the
Consensual Plan or the Qualified Alternative Plan in connection
with its vote and at the confirmation hearing related to the
Consensual Plan and the Qualified Alternative Plan;
(d) so long as the ISWA is not a sponsor of a Qualified Alternative
Plan, in good faith, take all reasonably necessary steps to
support the confirmation, consummation and effectiveness of the
Consensual Plan and, in any event, support the approval of a
disclosure statement related to the Consensual Plan and, if
applicable, the Qualified Alternative Plan;
(e) not object or take any other action in opposition to the
Consensual Plan; provided however, that if the ISWA supports or
is the sponsor of the Qualified Alternative Plan, the ISWA may
object to confirmation of the Consensual Plan except as otherwise
provided herein;
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(f) except with respect to workers' compensation claims and
grievances, and except as otherwise provided herein, not initiate
or participate in any discovery concerning matters arising prior
to the date hereof related to the Debtors, Contran, the
Committee, the Committee Members or the Retiree Representatives;
(g) not object to or seek to subordinate, recharacterize, reclassify
or otherwise adversely affect the CM Claims, the Contran Claims,
the Retiree Claim or the $116,000,000 Claim; provided however,
that the Parties agree that except in the event of confirmation
of the Consensual Plan, the Prepetition Dividend Claim shall be
(i) subordinated to all allowed general unsecured claims against
the Debtors; (ii) separately classified from all general
unsecured claims against the Debtors; and (iii) not paid until
all allowed general unsecured claims against the Debtors are
fully paid and satisfied;
(h) not file or support any motions seeking to modify or terminate
the Debtors' Exclusivity and support the Debtors' request(s) for
extension of Exclusivity in accordance with this Agreement.
8. Certain Provisions of the Consensual Plan. Each Party agrees that the
Consensual Plan, inter alia, shall contain provisions to the effect of
the following:
(a) Class A3 Union Claim. The "Modifications" (as defined in the
Tentative Agreement dated July 16, 2004 (the "1113 Agreement"))
shall (without further modification except as expressly set forth
herein) be incorporated into the Consensual Plan, including
without limitation, the provisions of Paragraph 2 of the 1113
Agreement under "Effective Date;" provided however, that if the
Committee and the Committee Members issue the Support Letter and
Class A6 votes to accept treatment under the Consensual Plan,
then the $9,000,000 unsecured Union Claim referenced in such
Paragraph 2 of the 1113 Agreement shall be extinguished, and
there shall be no distributions or allocations on account of such
$9,000,000 Union Claim.
(b) Class A4 Retiree Claims. The 1114 Agreement (executed on October
22, 2004 by and among the Debtors and the Retiree
Representatives, a copy of which is attached hereto as Exhibit A
and by this reference made a part hereof, as modified by the
terms hereof, including without limitation, Section 9 hereof (the
"1114 Agreement")), shall be submitted to the Bankruptcy Court
for approval in connection with confirmation of the Consensual
Plan, and the Parties shall, in good faith, take all reasonably
necessary steps to support such approval. Upon approval of the
1114 Agreement and confirmation of the Consensual Plan, the 1114
Agreement, including without limitation, Paragraph 1 thereof,
shall be and become an integral part of the Consensual Plan, and,
pursuant thereto, the Retiree Claim shall receive payments from
the Debtors as provided in the 1114 Agreement and the Consensual
Plan.
(c) Class A3, A4 and A6 Claims Treatment.
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(i) Except as otherwise provided herein, each Holder of an
Allowed Class A3 Claim, an Allowed Class A4 Claim (i.e.
the Retiree Claim) and an Allowed Class A6 Claim will
receive its Pro Rata Share of the consideration as
described in clauses (A), (B) and (C) below, in each
case subject to adjustment pursuant to Section 8(c)(ii)
below, with the consideration described in clause (C)
being held in the Creditor Trust (as defined below) for
the benefit of Holders of the Allowed Class A3 Union
Claim (if applicable) and Allowed Class A6 General
Unsecured Claims. Notwithstanding the foregoing, (a)
the Holders of Class A4 Claims shall not receive any of
the consideration described in clause (C) below (such
consideration to be distributed on a pro rata basis to
Holders of Allowed Class A6 Claims (assuming the
Committee and the Committee Members issue the Support
Letter and Class A6 votes to accept treatment under the
Consensual Plan, and, if not, pro rata to Holders of
Allowed Class A3 Claims and Allowed A6 Claims)) and (b)
if the Committee and the Committee Members issue the
Support Letter and Class A6 votes to accept treatment
under the Consensual Plan, then (x) the Class A3 Claim
shall be extinguished, (y) there shall be no
distributions on account thereof, and (z) the full
amount of consideration in clause (C) below shall be
distributed to the Holders of Allowed Class A6 Claims.
(A) Cash Payment: $5,200,000 of the cash to be
distributed on the Effective Date of the
Consensual Plan.
(B) Stock Issuance: Forty-nine percent (49%) of the
New Common Stock. The New Common Stock shall be
issued free and clear of all liens and shall not
be subject to any contractual transfer
restrictions, other than to the extent necessary
to preserve KCI's I.R.C. ss. 382(l)(5) NOL
treatment. By no later than the second anniversary
of the Effective Date, there shall be no
tax-related transfer restrictions of the New
Common Stock held by the Holders of Allowed Class
A3, A4 and A6 Claims.
(C) Secured Note Issuance: A secured promissory note
issued jointly and severally by the Reorganized
Debtors in the original principal amount of
$4,800,000 (the "Secured Note"), which Secured
Note will have the following terms:
(1) The Secured Note will be due and payable on
the date that is the fourth anniversary of
the Effective Date of the Consensual Plan
(the "Maturity Date"). The Secured Note
(including accrued interest) may be prepaid,
in whole or in part, at any time without
premium or penalty.
(2) Interest will accrue on the outstanding
principal amount of the Secured Note at a
rate per annum equal to twelve percent (12%)
(computed on the basis of a 360-day year and
the actual number of days elapsed in any
year), which interest will accrue and
compound on the first Business Day of each
July, October, January and April commencing
on the Effective Date and ending on September
30, 2006. Commencing with the quarter
beginning on October 1, 2006 and continuing
thereafter, cash pay interest will accrue on
the outstanding principal amount of the
Secured Note at a rate per annum equal to
eight percent (8%) (computed on the basis of
a 360-day year and the actual number of days
elapsed in any year), which interest will
accrue and be payable in arrears on the first
Business Day of each July, October, January
and April together with the principal
payments set forth below and on the date the
obligations under the Secured Note have been
paid in full.
-12-
(3) Principal payments on the Secured Note shall
commence on January 1, 2007. On October 1,
2006 (the "Conversion Date"), KCI will
convert all accrued and unpaid principal and
interest on the Secured Note into an
amortizing loan. The initial principal
payment (the "Initial Principal Payment")
shall be due on January 1, 2007 and shall be
equal to the cash payments that would have
resulted under the Base Structure (as defined
below) from the issuance date of the Secured
Note through January 1, 2007. The "Base
Structure" assumes that the terms of the
Secured Note were modified as follows: (a)
the Secured Note principal amortization and
cash interest payments commence on May 1,
2006; (b) principal payments would be paid in
equal quarterly payments on the first day of
each of May, August, November and February
starting with May 1, 2006 through the
Maturity Date; and (c) in the event that the
Maturity Date did not coincide with a
principal payment date, the principal payment
required to be made on the Maturity Date
would be equal to the pro rata portion of
such quarterly payment amount. For purposes
of determining the Initial Principal Payment,
the portion of the quarterly payment due on
February 1, 2007 under the Base Structure
shall be prorated through January 1, 2007
(i.e., two thirds included). Principal
payments subsequent to the Initial Principal
Payment shall be made on the first day of
each April, July, October and January
thereafter, in equal quarterly amounts which
in aggregate shall be equal to the principal
amount of the Secured Note on January 1, 2007
after giving effect to the Initial Principal
Payment. To the extent that the Maturity Date
does not coincide with a principal payment
date, the principal payment due on the
Maturity Date shall be equal to the pro rata
portion of each principal payment (other than
the Initial Principal Payment) and shall
fully repay the outstanding balance of the
Secured Note.
For example, if: (a) the amount of the
Secured Note is equal to $4,800,000; (b) the
Secured Note is issued on July 1, 2005; and
(c) no Default (as defined below) occurs
during the life of the Secured Note, the
principal payments shall be as follows:
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---------------- --------------------------
Amount of Principal
Date of Payment Payment
---------------- --------------------------
1/1/07 $1,572,255.52
---------------- --------------------------
4/1/07 $399,226.00
---------------- --------------------------
7/1/07 $399,226.00
---------------- --------------------------
10/1/07 $399,226.00
---------------- --------------------------
1/1/08 $399,226.00
---------------- --------------------------
4/1/08 $399,226.00
---------------- --------------------------
7/1/08 $399,226.00
---------------- --------------------------
10/1/08 $399,226.00
---------------- --------------------------
1/1/09 $399,226.00
---------------- --------------------------
4/1/09 $399,226.00
---------------- --------------------------
7/1/09 $399,226.00
---------------- --------------------------
In the case of a Default occurring prior to
January 1, 2007, the additional Default PIK
interest shall be incorporated into the
principal amount of the Secured Note and the
payments determined as described above. In
the case of a payment Default subsequent to
January 1, 2007, the additional PIK interest
(as described in Section 8(c)(i)(C)(4)),
shall be spread pro rata over the remaining
Principal Payments of the Secured Note.
(4) While a Default under the Secured Note
exists, interest on the obligations under the
Secured Note shall accrue at a rate per annum
which is determined by adding four percent
(4%) per annum to the interest rate then in
effect (the "Default Rate"). The Default Rate
shall commence on the date of occurrence of
such Default and continue until such Default
is cured or waived in the manner described in
clause (5) below, at which time the interest
rate on the obligations under the Secured
Note shall revert to the non-Default rate.
Upon the occurrence of a payment Default
after December 31, 2006, interest will accrue
and compound quarterly at a rate of sixteen
percent (16%) per annum until such payment
default is cured, at which time the interest
rate on the obligations under the Secured
Note shall revert to the non-Default rate.
(5) The Secured Note will contain customary
events of default no more restrictive than
the events of default under the Exit
Financing and any refinancing thereof (the
"Senior Bank Debt") and will provide that a
default under the Senior Bank Debt or the 8%
Notes or the failure to pay principal and
interest under the Secured Note after the
Conversion Date shall constitute a default
under the Secured Note (each, a "Default").
If a Default based on a cross default to the
Senior Bank Debt or the 8% Notes occurs, the
Default will continue until it is either
cured (to the extent curable) or waived by
the Creditor Trustee (as defined in Section
8(f) below). The waiver of a Default under
the indebtedness that triggered such Default
will not constitute a waiver of the
corresponding Default under the Secured Note.
The sole remedy for any Default shall be the
accrual or payment of interest at the Default
Rate and the holder of the Secured Note will
not be entitled to accelerate the Secured
Note except as permitted by the subordination
terms described in clause (7) below.
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(6) The initial covenants in the Secured Note
will be identical to those contained in the
documents evidencing the Senior Bank Debt
that becomes effective on the Effective Date,
but only so long as the Senior Bank Debt is
provided by unaffiliated third parties on an
arms-length basis. If there is no Senior Bank
Debt on the Effective Date, or if the Senior
Bank Debt is provided by an affiliated entity
of Contran, the holder of the Secured Note
may impose reasonable covenants based on the
Debtors' business plan projections (to be
provided through the Maturity Date). The
initial covenants in the Secured Note will
not be required to be modified upon execution
of any new, or any amendment, modification or
refinancing to any existing, Senior Bank Debt
documentation if that documentation contains
covenants less restrictive to the Debtors.
If, however, the Debtors become party to any
Senior Bank Debt documentation having
covenants that are more restrictive, the
Secured Note shall be deemed to be amended to
incorporate the more restrictive covenants.
Breach of a covenant will be deemed cured as
and when KCI complies with such covenant in a
subsequent reporting period.
(7) The obligations under the Secured Note will
be secured by a lien (the "Secured Note
Lien") on all of the equity interests (the
"EWP Stock") in Engineered Wire Products,
Inc. ("EWP"), and the proceeds thereof. The
obligations under the Secured Note and the
Secured Note Lien will be contractually
subordinated to any Senior Bank Debt and all
valid and duly perfected liens duly and
voluntarily granted thereon by the Debtors
securing the Senior Bank Debt, any
refinancings thereof, and any other post
Effective Date debt and liens approved by the
New Board (as defined below), which
contractual terms at a minimum will provide
the following:
o The holder of the Secured Note may not
exercise any of its rights and remedies
under applicable law including, without
limitation, part 6 of Article 9 of the
Uniform Commercial Code, until the
earliest to occur of (i) the sale of all
or substantially all of the EWP Stock or
the assets of EWP, (ii) the sale of all
or substantially all of the equity
interests or assets of KCI, (iii) the
institution of bankruptcy or other
insolvency proceedings with respect to
KCI or EWP; and (iv) the maturity of the
Secured Note;
-15-
o The holder of the Secured Note may not
accelerate the obligations under the
Secured Note prior to maturity thereof
unless one of the following occur: (i)
all or substantially all of the EWP
Stock or the assets of EWP are sold,
(ii) all or substantially all of the
equity interests or assets of KCI are
sold, (iii) bankruptcy or other
insolvency proceedings with respect to
KCI or EWP are instituted, or (iv) the
Senior Bank Debt is accelerated; and
o The enforcement of any remedies under
the Secured Note shall be subject to
customary standstill periods and
provisions under the subordination
and/or intercreditor agreement relating
to the Senior Bank Debt and any other
post-Effective Date debt approved by the
New Board.
The Secured Note will not contain any
restrictions on the ability of KCI to, upon
approval of the New Board, enter into
additional debt facilities and grant
additional (including senior) liens on the
EWP Stock.
(ii) Increase in the Cash and Secured Note. The treatment of each
Allowed Class A3, A4 and A6 Claim described in Section
8(c)(i) above is premised on the total amount of Allowed
Class A4 Claims plus the total amount of Allowed Class A6
Claims not exceeding $53,500,000. At least six (6) days
prior to the date first scheduled for commencement of the
hearing to approve a disclosure statement for the Consensual
Plan, the Committee, Contran and the Debtors will attempt to
agree upon a reasonable estimate of the total amount of
Class A6 Claims (including claims of Xxxxxxx Wire Company
and environmental claims). If any of the Committee, Contran
or the Debtors reasonably believe, in good faith, on the
basis of information shared with the Parties, that the
estimated amount of Allowed Class A4 Claims plus Allowed
Class A6 Claims (including claims of Xxxxxxx Wire Company
and environmental claims) exceeds $68,000,000, and, by six
(6) days prior to the date first scheduled for commencement
of the hearing to approve a disclosure statement for the
Consensual Plan, (a) no Party has agreed to absorb the
financial impact of the increase in estimated Class A6
General Unsecured Claims, (b) the Committee and Contran have
failed to reach agreement on amending this Agreement and/or
the Consensual Plan to adjust for the increase in estimated
Class A6 General Unsecured Claims and (c) the Bankruptcy
Court has not entered an order estimating the Class A4 and
Class A6 Claims in an aggregate amount equal to or less than
$68,000,000, this Agreement shall terminate in accordance
with Section 18 hereof. To the extent that the estimated
amount of Allowed Class A4 Claims plus Allowed Class A6
Claims exceeds $53,500,000, but is equal to or less than
$68,000,000:
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(A) Up to $12,000,000 (excluding any Allowed Class A4
Claim) of such incremental unsecured claims will
be included in Class A6 and receive treatment as
described in Section 8(c)(i) hereof;
(B) The Debtors shall increase the amount described in
Section 8(c)(i)(A) hereof in an amount equal to
the product of (x) the amount by which the
aggregate amount of Allowed Class A4 Claims plus
Allowed Class A6 Claims exceeds $53,500,000 and
(y) 5.2%; and
(C) The Debtors shall increase the amount described in
Section 8(c)(i)(C) hereof in an amount equal to
the product of (x) the amount by which the
aggregate amount of Allowed Class A6 Claims
exceeds $51,000,000 and (y) 4.8%.
By way of illustration, if the total amount of the
Allowed Class A4 Claim is $5,000,000 and the total
amount of the Allowed Class A6 Claims is
$54,500,000, the increase in cash consideration
described in Section 8(c)(i)(A) would be $312,000
(5.2% of $6,000,000) and the increase in the face
amount of the Secured Note described in Section
8(c)(i)(C) would be $168,000 (4.8% of $3,500,000).
(iii) Notwithstanding anything to the contrary herein, if the
Class A3 Claim is not extinguished: (a) there shall be
no increase in consideration pursuant to Section
8(c)(ii) hereof on account thereof; (b) the Holder of
the Class A3 Claim shall share pro rata in the
distribution provided for in Section 8(c) hereof; and
(c) the Class A3 Claim shall not cause a Termination
pursuant to Section 18(a)(i)(G) hereof.
(d) Contran Claims and the L/C Claims. With respect to the Contran
Claims and the L/C Claims, the Consensual Plan will provide as
follows:
(i) Conversion of Certain Contran Claims. The EWP Financial
DIP Claim, the ISA Prepetition Claims, the Prepetition
Dividend Claims and the Contran Administrative Claims
shall not be paid, and shall, together with other
intangible benefits provided to the Debtors by Contran,
be converted into fifty-one percent (51%) of the New
Common Stock. Contran's fifty-one percent (51%) of the
New Common Stock shall be issued free and clear of all
liens and shall be subject to transfer restrictions to
the extent necessary, in the first instance without
imposing any transfer restrictions on the forty-nine
percent (49%) of the New Common Stock issued to the
Holders of Class A3, A4 and A6 Claims, to preserve
KCI's I.R.C. ss. 386(l)(5) NOL treatment.
(ii) The DIP Loan Participation. The DIP Loan Participation
shall be paid in full, in cash, on the Effective Date
of the Consensual Plan.
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(iii) The Notes Secured Claim. The Notes Secured Claim, and
the rights thereunder, shall be unimpaired in
accordance with 11 U.S.C. ss. 1124(1).
(iv) The L/C Claims. Unless the Parties reach an agreement
on the form and substance of the specific treatment of
L/C Claims in the Consensual Plan (or the Qualified
Alternative Plan, if applicable), the Parties hereby
agree as follows:
(A) The L/C Claims will not be or be deemed allowed
claims in the Proceedings and Contran will receive
no distribution on account thereof, unless and
until a final order of the Bankruptcy Court is
entered in connection with the Proceedings (the
"L/C Claims Allowance Order"), after notice to the
Parties and a hearing is conducted with respect
thereto.
(B) If Contran seeks entry of an L/C Claims Allowance
Order after confirmation of any plan in the
Proceedings, the creditor representative(s)
appointed in conjunction with such plan (and in
the case of confirmation of the Consensual Plan,
the Creditor Trustee) shall be deemed a Party for
purposes of this Section 8(d)(iv).
(e) Contran Intercorporate Services Agreement. Contran will enter
into a new contract to provide intercorporate services (the "New
ISA"), which New ISA will be on substantially the same terms as
the ISA. KCI and Contran shall only be entitled to amend the
terms of the New ISA with the approval of the New Board. In the
event that prior to the Effective Date of the Consensual Plan,
Contran and the Debtors determine that the New ISA will not be on
substantially the same terms as the ISA, Contran and the Debtors
will obtain the consent of the Committee, which consent will not
be unreasonably withheld or delayed, to the terms of the New ISA.
(f) Formation of the Creditor Trust. The Committee shall establish a
trust (the "Creditor Trust") to receive on the Effective Date of
the Consensual Plan the Secured Note from the Debtors under the
Consensual Plan for the benefit of the Holders of the Allowed
Class A3 Claim (if not extinguished) and Allowed Class A6 Claims
and to administer and liquidate the assets of the Creditor Trust
for ultimate distribution to such Holders on a pro rata basis (as
applicable). The Creditor Trust will qualify as a liquidating
trust as described in Treasury Regulation ss.301.7701-4(d) and
shall be treated as a grantor trust for United States federal
income tax purposes. The Committee shall appoint a trustee (the
"Creditor Trustee"), which Creditor Trustee shall have the
authority to manage the day to day operations of the trust
including making decisions with respect to the Secured Note,
appearing as a party in interest, calculating distributions,
paying taxes and such other matters as more particularly
described a Creditor Trust Agreement, the form of which will be
acceptable to the Committee and the Debtors, whose acceptance
shall not be unreasonably withheld. KCI shall pay the Creditor
Trust fees in an amount not to exceed $10,000 per year plus the
reasonable expenses actually incurred by the Creditor Trust; such
fees and expenses first shall be payable ninety (90) days after
the Effective Date and shall be payable quarterly thereafter
until the Secured Note is fully paid and satisfied. The Committee
and/or the Committee Members shall cause the Creditor Trustee to
enter into the subordination and/or intercreditor agreement(s)
relating to any Senior Bank Debt, any refinancings thereof, and
any other post Effective Date debt approved by the New Board, in
accordance with Section 8(c)(i)(C)(7) above.
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(g) Miscellaneous:
(i) The Consensual Plan shall provide for the issuance of
New Common Stock, as set forth herein, and shall not
provide for the issuance of any other class of equity
or convertible securities.
(ii) The Consensual Plan shall not provide for the payment
of cash or issuance or reinstatement of debt
inconsistent with the terms of the Debtors' Plan as
modified by the terms of this Agreement.
9. Modifications to 1114 Agreement. The Parties hereby agree to the
following modifications to the 1114 Agreement in the context of a
Consensual Plan and, if a Definitive Agreement assumes the 1114
Agreement, in the context of a Qualified Alternative Plan:
(a) Elimination of $30,000,000 Claim. The $30,000,000 claim
referenced in Paragraph 1 of the 1114 Agreement shall be
eliminated and there shall be no distribution under the
Consensual Plan on account thereof.
(b) Treatment of $5,000,000 Claim. The $5,000,000 claim referenced in
Paragraph 1 of the 1114 Agreement shall be treated as set forth
in Section 8(c) above.
(c) Secured Note Deduction from Free Cash Flow. Fifty percent (50%)
of the cash payments under the Secured Note described in Section
8(c)(i)(C) above will qualify as a deduction from Free Cash Flow
(as defined in the 1114 Agreement); provided however, that with
respect to determining the amount of payments to Affected
Retirees in 2009 and thereafter, that portion of the deduction
from Free Cash Flow on account of the Secured Note payments
necessary to prevent Free Cash Flow from being less than
$6,000,000, if any, shall be disallowed.
(d) Definition of Material Event. Provision (2) in the definition of
"Material Event" in Paragraph 4(a) of the 1114 Agreement shall be
modified to eliminate "the sale or disposition of greater than
50% of the Company's New Preferred Stock" and substitute, in lieu
thereof, "a change in the composition of the Company's board of
directors such that less than half of the directors have been
named or elected by Contran or Contran's appointees."
(e) Affected Retiree Payments in 2005. Effective immediately upon
execution of this Agreement by all Parties, the monthly
contributions payable to Affected Retirees under Paragraph 3(d)
of the 1114 Agreement in 2005 shall be $150 per month per
participant, retroactive to January 1, 2005, and there shall be
no increase to such contributions under the Additional
Contribution Grid (as defined in the 1114 Agreement) in 2005;
provided however, that in the event of confirmation of a
Qualified Alternative Plan that assumes the 1114 Agreement
(including application of Schedule C thereof), the monthly
contributions payable to Affected Retirees shall comply with
Schedule C as of the Effective Date of such plan and,
accordingly, such monthly contributions for the balance of 2005
shall be $130.
-19-
(f) Administrative Claim for Counsel to ISWA. Paragraph 9 of the 1114
Agreement shall be modified to eliminate the "$40,000" figure
therein and substitute, in lieu thereof, "$100,000." In the event
of confirmation of a Qualified Alternative Plan that does not
assume the 1114 Agreement, counsel for the ISWA shall hold an
allowed administrative claim for fees and expenses incurred in
making a substantial contribution to the Proceedings in an amount
not to exceed $100,000.
(g) Payment of Pipeline Claims. The Debtors' agreement to pay
pipeline claims in Paragraph 3(e) of the 1114 Agreement shall
include pipeline claims of all retirees of the Debtors. Pipeline
claims shall be paid within ten (10) days after execution of the
Agreement by all Parties and Bankruptcy Court approval of this
Agreement.
10. Modifications to 1113 Agreement. In addition to Section 8(a) hereof,
the Parties hereby agree to the following modifications to the 1113
Agreement:
(a) Post-1993 Retirees. ISWA employees retiring between the Petition
Date and May 2, 2006 shall be considered Affected Retirees for
all purposes.
(b) Healthcare Premiums. Commencing in January, 2005, KCI shall
implement the healthcare premiums for active ISWA employees
presented to the ISWA in November, 2004 (the "Presumed
Premiums"). In August, 2005, KCI will obtain an actuarial
estimate of the healthcare premiums for active ISWA employees for
the then-current plan year (the "Calculated Premiums"). If the
Calculated Premiums exceed the Presumed Premiums, the Presumed
Premiums shall remain in effect through December 31, 2005. If the
Calculated Premiums are less than the Presumed Premiums, such
Calculated Premiums shall be implemented as soon as reasonably
practicable, and KCI and the ISWA shall negotiate in good faith
to effect the method of reimbursement of any premium amounts
above the Calculated Premiums paid by active ISWA employees from
January through the implementation date of the Calculated
Premiums.
(c) Health Benefits. The ISWA and KCI shall cooperate in good faith
to achieve comparable or better health benefits to those
currently offered to active ISWA employees at less cost and with
no reduction in subsidy by KCI.
(d) Premium Payments During Lay Off. Active ISWA employees who are
laid off between the Petition Date and May 2, 2006 and would
otherwise be required to pay healthcare premiums during their lay
off period shall not be required to pay healthcare premiums
during such lay off period. For purposes of this policy, an
employee on lay off, who, during such lay off period, elects to
take paid vacation, shall not be required to pay healthcare
premiums as a result of electing to take such paid vacation.
-20-
11. KCI Documents. To the extent not set forth in the Consensual Plan and
related Confirmation Order, or as may be otherwise required under
applicable law, each of the Parties agrees to execute such documents
as necessary to implement the following:
(a) Restriction on KCI's Ability to Issue Additional Equity. KCI will
be restricted from issuing New Common Stock or other equity
securities or equity-convertible securities for less than the
then current market value of New Common Stock on a fully-diluted
basis to any insider of the reorganized Debtors (including
Contran) during a five-year period following the Effective Date.
(b) Composition of KCI's Board of Directors. The initial board of
directors of Reorganized KCI (the "New Board") shall consist of
seven (7) members to be selected as follows:
(i) Contran will name two representatives to the New Board.
(ii) The Committee will name two representatives to the New
Board.
(iii) Three (3) directors who will qualify as independent
directors in accordance with NASDAQ standards shall be
selected as follows:
(A) Contran will name two of the independent directors
(subject to the consent of the Committee, which
consent shall not be unreasonably withheld or
delayed)
(1) Initially, Xxxx Xxxx will be one of the two
independent directors, and the Committee
consents to Xxxx Xxxx; and
(2) Contran agrees that its second independent
director will be unrelated to Contran and
will qualify as a financial expert for audit
committee purposes.
(B) The Committee will name one director (subject to
the consent of Contran, which consent shall not be
unreasonably withheld or delayed).
(iv) Contran and the Committee shall use their reasonable
best efforts to agree upon nominees for the New Board
prior to a hearing to approve a disclosure statement
for the Consensual Plan and, if applicable, the
Qualified Alternative Plan.
(c) So long as the Secured Note is outstanding, but in no event less
than three (3) years after the Effective Date:
(i) If a vacancy is created by any of the directors
appointed in Section 11(b)(i) or 11(b)(iii)(A) above or
their successors, the vacancy shall be filled by the
remaining directors appointed in Section 11(b)(i) or
11(b)(iii)(A) or their successors. If a vacancy is
created by any of the directors appointed in Section
11(b)(ii) or 11(b)(iii)(B) above or their successors,
the vacancy shall be filled by the remaining directors
appointed in Section 11(b)(ii) or 11(b)(iii)(B) or
their successors with the consent of the Creditor
Trustee, if the Creditor Trust is still in existence;
and
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(ii) The New Board shall select the boards of directors of
the other Reorganized Debtors and the subsidiaries and
affiliates of all of the Reorganized Debtors, including
EWP.
12. Restriction on Transfer. Each Party agrees that, so long as this
Agreement has not been terminated in accordance with Section 18
hereof, it shall not sell, transfer or assign any of its claims or any
option thereon or any right or interest (voting or otherwise and
including any participation interest) therein, unless the transferee
thereof agrees in writing to be bound by all of the terms of this
Agreement by executing a counterpart signature page of this Agreement,
and the transferor provides the other Parties with a copy thereof, in
which event the other Parties shall be deemed to have acknowledged
that its obligations to the transferring Party under this Agreement
shall be deemed to constitute obligations in favor of such transferee,
and the other Parties shall confirm that acknowledgment in writing
upon the request of such transferee. Upon a transferee's joining this
Agreement, the transferor shall have no further liability under this
Agreement with respect to the claims transferred, except for breaches
occurring prior to such transfer.
13. Additional Covenants and Agreements.
(a) The Committee shall have the right to participate in negotiations
and decisions regarding the Consensual Plan, including without
limitation, exit financing sought in connection therewith,
allowance of the Xxxxxxx Wire Company claims and allowance of
environmental claims. The Debtors shall keep the Committee and
the Retiree Representatives timely apprised as to the status of
the solicitation of consents to the Consensual Plan and, if
applicable, the Qualified Alternative Plan and all negotiations
related thereto.
(b) Subject to Section 13(i) hereof, the Committee, the Retiree
Representatives and/or the ISWA shall have the right to engage in
negotiations and discussions with any Potential Bidder, without
disclosing confidential information (unless such Potential Bidder
has executed a confidentiality agreement), concerning any Offer,
Qualified Offer and/or the Qualified Alternative Plan and shall
each further have the right to sponsor, file and pursue
confirmation of a Qualified Alternative Plan in accordance with
the provisions of Sections 17 and 18 hereof. The Debtors shall
have the right to participate in negotiations and decisions
regarding any Qualified Alternative Plan.
(c) The Debtors agree to consult with the Committee and the Retiree
Representatives prior to taking any significant action in the
Proceedings or in connection with any threatened or pending
litigation or governmental action relating to, referring to or
involving XXX.
-00-
(x) Xxxx of the Committee, any of its members, the Retiree
Representatives, the ISWA, Contran or the Debtors shall initiate
or participate in a sale process for or market test of the value
of the Debtors, EWP or their respective assets, except as
provided in Section 17 hereof.
(e) The Debtors will use their reasonable best efforts to obtain
Bankruptcy Court approval of this Agreement on or before twenty
(20) days after filing a motion to approve the Agreement.
(f) The Debtors, Contran and the Committee shall (i) meet and confer
on or before six (6) days prior to the date first scheduled for
commencement of the hearing to approve a disclosure statement for
the Consensual Plan in an effort to estimate anticipated allowed
Class A6 Claims; (ii) in good faith thereafter, as necessary or
appropriate, meet and confer in furtherance thereof; and (iii)
timely keep the ISWA and the Retiree Representatives apprised of
the progress of such meetings.
(g) Any Proposing Party (as defined below) shall use its reasonable
best efforts to negotiate a Definitive Agreement that does not
provide for any bid protection, including, but not limited to,
breakup fees or related expense reimbursements. If, despite the
Proposing Party's reasonable best efforts, a Definitive Agreement
provides for any form of bid protection, such provision shall be
subject to separate Bankruptcy Court approval, and the Parties
reserve all rights under the Bankruptcy Code or other applicable
law to contest such a provision.
(h) In order to maintain stability in the Debtors' business in
connection with the Qualified Alternative Plan process, the
Parties agree to support approval of a key employee retention
plan ("KERP") on terms and conditions substantially similar to
those outlined in Exhibit B hereto. The Debtors will seek
Bankruptcy Court approval of the KERP contemporaneously with
seeking Bankruptcy Court approval of this Agreement.
(i) Prior to the filing of a disclosure statement for the Consensual
Plan and, if applicable, the Qualified Alternative Plan and
except as set forth in the summary of this Agreement to be filed
pursuant to Section 2(a) hereof, the Parties shall keep the terms
and provisions of this Agreement confidential and shall not,
without the prior written consent of each of the Parties,
disclose such terms and provisions to any third party; provided
however, that notwithstanding a Potential Bidder's execution of a
confidentiality agreement, the Parties shall not disclose to any
Potential Bidder the terms and provisions of the Consensual Plan.
(j) All Parties shall act in good faith in honoring their obligations
and in performing under this Agreement.
(k) In connection with the proposal and confirmation of a Qualified
Alternative Plan, the Parties agree as follows:
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(i) If the Definitive Agreement provides for assumption of
the 1114 Agreement (which, pursuant to the 1114
Agreement, would trigger Schedule C thereof, including
for purposes of reducing monthly contributions to
Affected Retirees to $130 for the balance of 2005,
effective as of the Effective Date of the applicable
Qualified Alternative Plan), as modified pursuant to
Section 9 hereof, the Retiree Representatives may, in
their collective and unanimous discretion prior to
commencement of the hearing on the Dual Plan Disclosure
Statement: (A) withdraw from the 1114 Agreement
(effective as of the effective date of a confirmed
Qualified Alternative Plan); (B) on behalf of the
Affected Retirees, forego all payments and benefits
thereunder (the "1114 Stream of Payments"); and (C) in
lieu thereof, receive payments, pro rata with other
general unsecured creditors, on account of the
$116,000,000 Claim (the "$116,000,000 Claim Election");
provided however, that if the Retiree Representatives
make the $116,000,000 Claim Election and the Committee
determines, in its sole discretion, that the 1114
Stream of Payments is of higher and/or better value
than the additional consideration, if any, offered by
the Qualified Bidder in lieu of the 1114 Stream of
Payments, the amount of the 1114 Stream of Payments
payable by the Qualified Bidder under the Definitive
Agreement (in connection with the intent to assume the
1114 Agreement) shall be paid, pro rata, to all general
unsecured creditors including without limitation, the
Affected Retirees (on account of the $116,000,000
Claim); provided further, that if the Retiree
Representatives make the $116,000,000 Claim Election,
the Affected Retirees shall have, and be deemed to
have, received a prepayment on account of the
$116,000,000 Claim in an amount equal to the aggregate
payments that each Affected Retiree received during the
pendency of the Proceedings (approximately $3,600,000
as of March 31, 2005) under and pursuant to orders of
the Bankruptcy Court (the "Interim 1114 Payments") such
that the holders of allowed general unsecured claims,
other than the Affected Retirees, shall receive
payments under the Qualified Alternative Plan in the
same pro rata amount as the Affected Retirees receive
thereunder after giving effect to the $116,000,000
Claim and the Interim 1114 Payments, as illustrated in
the schedule attached hereto as Exhibit C.
(ii) If the Definitive Agreement does not provide for
assumption of the 1114 Agreement, the Affected Retirees
shall receive, on account of the $116,000,000 Claim,
pro rata treatment with the holders of other allowed
general unsecured (non-subordinated) claims against the
Debtors; provided however, that the Affected Retirees
shall have, and be deemed to have, received a
prepayment on account of the $116,000,000 Claim in an
amount equal to the Interim 1114 Payments such that the
holders of allowed general unsecured claims, other than
the Affected Retirees, shall receive payments under the
Qualified Alternative Plan in the same pro rata amount
as the Affected Retirees receive thereunder after
giving effect to the $116,000,000 Claim and the Interim
1114 Payments, as illustrated in the schedule attached
hereto as Exhibit C.
(iii) Distributions to the Affected Retirees on account of
the $116,000,000 Claim shall be allocated to Affected
Retirees as follows:
(A) ISWA Affected Retirees: 59.0%;
(B) UAW Affected Retirees: 26.5%; and
(C) Management Affected Retirees: 14.5%.
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(l) In the event that a Qualified Alternative Plan is confirmed, all
accrued, unpaid Contran Administrative Claims arising under the
ISA shall be paid on the effective date of such Qualified
Alternative Plan.
(m) The L/C Claims shall be allowed or disallowed, in whole or in
part, in connection with the claims allowance process in the
Proceedings. The Parties reserve all rights, remedies and
defenses in respect of the L/C Claims and all other rights,
claims, remedies and defenses that may arise under or in
connection with the intercompany insurance program maintained by
Contran and the Debtors, including, without limitation, all
rights, claims, remedies and defenses related to any
administrative expense priority claims that may be asserted by
Contran in respect of such intercompany insurance program (the
"Insurance Program Claims").
(n) The Debtors and Contran shall, at their respective option, be
relieved of their respective obligations under Sections 2, 5 and
8 of this Agreement (excluding Section 8(d)(iv) hereof) relating
specifically and only to negotiating, supporting and seeking
confirmation of the Consensual Plan upon the occurrence of a
Material Adverse Change; provided, however, that the Debtors and
Contran shall not thereupon be relieved of any of their other
respective obligations under this Agreement, and the occurrence
of a Material Adverse Change shall not be deemed to cause a
Termination. For purposes of this Agreement, a Material Adverse
Change shall mean (i) a determination by the Court that the
Consensual Plan is not feasible or may not be confirmed for other
reasons, (ii) a material adverse change in, or a material adverse
effect upon, the operations, business, prospects, properties or
condition (financial or otherwise) of the Debtors, taken as a
whole, or (iii) an inability of the Debtors to perform the terms
and provisions of the Consensual Plan applicable to them;
provided, however, that a Material Adverse Change shall not
include an adverse change, effect or event attributable to (A)
any adverse change in general economic conditions affecting the
U.S. economy as a whole or the industry in which the Debtors
operate, or (B) any adverse change in regulatory conditions in
the industry in which the Debtors operate. The occurrence of a
Material Adverse Change shall not affect the survival of certain
provisions of this Agreement pursuant to Section 18(b) hereof.
14. Authority Concerning Committee Member and Contran Claims.
(a) Each Committee Member represents and warrants to the Debtors and
Contran that, as of the date hereof, it is the Holder (with power
to vote and dispose of such claims, and any and all rights and
claims relating thereto) of, or is the person with investment
discretion for, its CM Claim.
(b) Contran represents and warrants to the Debtors, the Committee and
the Committee Members that, as of the date hereof, it is the
Holder (with power to vote and dispose of such claims, and any
and all rights and claims relating thereto) of, or is the person
with investment discretion for, the Contran Claims.
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15. Releases and Preferences.
(a) Plan Releases. The Consensual Plan and, if applicable, the
Qualified Alternative Plan will provide for releases and
exculpations for the Debtors, the Committee, the Committee
Members, the Retiree Representatives, the ISWA and Contran,
including without limitation, their respective officers,
directors, members, attorneys, advisors, representatives and
employees.
(b) Limited Mutual Releases. Each Party on behalf of itself and its
successors, assigns, advisors, representatives, agents and
counsel hereby releases all other Parties including their
successors, assigns, advisors, representatives, agents and
counsel with respect to any debts, liabilities, claims or causes
of action arising from or related to any act or omission
occurring prior to the date hereof; provided however, that the
foregoing release shall not apply to, and each Party shall retain
all rights with respect to: (i) any claim or cause of action on
account of any loan by such Party, money owed to such Party or
executory contract between the Debtors and such Party; (ii) any
employee grievance arising under a collective bargaining
agreement; (iii) any workers' compensation claim; and (iv) any
claim arising under or related to the Keystone Employees'
Retirement Plan.
(c) Preferences. The Consensual Plan and, if applicable, the
Qualified Alternative Plan will provide that (i) neither the
Debtors nor any authorized creditor representative will commence
any adversary proceedings or otherwise pursue recovery of
preferences under 11 U.S.C. ss. 547 against any Party and (ii)
with respect to other creditors, except as hereinafter provided,
the Debtors will not commence any adversary proceedings or
otherwise pursue recovery of preferences under 11 U.S.C. ss. 547
without the consent of the Committee, the Creditor Trustee or
other authorized creditor representative, as applicable (which
consents shall not be unreasonably withheld or delayed).
Notwithstanding anything herein to the contrary, the Debtors may
take any action necessary to seek disallowance of a claim of any
non-Party creditor pursuant to Section 502(d) of the Bankruptcy
Code.
16. Committee Existence. The Committee shall exist and participate as a
party-in-interest in the Proceedings until the effective date of the
Consensual Plan or, if applicable, the Qualified Alternative Plan.
17. The Qualified Alternative Plan Process and Provisions.
(a) The Qualified Alternative Plan Process. Notwithstanding anything
to the contrary herein, upon execution of this Agreement by all
Parties, the Parties shall consider unsolicited expressions of
interest by third parties (each, a "Potential Bidder") to obtain
possession, ownership and/or control of all or substantially all
of the businesses or assets of the Debtors (a "Transaction") in
accordance with the following provisions:
(i) Upon receipt of an unsolicited expression of interest
from a Potential Bidder (a "Bid") on or before
fifty-two (52) days after execution of this Agreement
by all Parties:
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(A) The Party receiving such Bid shall immediately
distribute it to all of the other Parties (other
than Contran);
(B) Upon the written request of any Party (other than
Contran), after a determination in such Party's
reasonable judgment that the Potential Bidder is a
party that realistically could close a Transaction
under the process set forth below that would be a
Qualified Offer, the Debtors shall, within one (1)
business day of receipt of such request, send a
confidentiality agreement (in the form attached
hereto as Exhibit D) to the Potential Bidder, with
a copy to each of the Parties (other than
Contran); and
(C) Upon receipt of the confidentiality agreement duly
executed by the Potential Bidder, the Debtors
shall, within a reasonable period of time under
the circumstances, but in no event more than three
(3) business days thereafter, send to the
Potential Bidder reasonably requested diligence
information (not including competitively sensitive
information if the Potential Bidder is a
competitor of the Debtors or EWP). The Parties
agree that the information specified in the
request attached hereto as Exhibit E (to the
extent maintained by the Debtors in the ordinary
course of business) describes what the Parties
consider to be reasonably requested initial
diligence information. The Debtors shall also duly
provide the Potential Bidder reasonably requested
additional diligence information, documents and
schedules as well as reasonable access to the
Debtors' facilities and management personnel. The
Debtors shall keep the Parties (other than
Contran) apprised of the status of all diligence
requests and visits.
(ii) Any of the Parties (other than Contran) may negotiate a
letter of intent with a Potential Bidder which, upon
completion, shall be circulated to the other Parties
(other than Contran); provided however, that the
Debtors shall have the right to participate in
negotiations regarding such letter of intent and the
other Parties (other than Contran) shall be informed of
the status, progress and terms thereof on a timely and
regular basis.
(iii) If a letter of intent is submitted by a Party to the
other Parties (other than Contran) for consideration in
compliance with subparagraph (ii) above (an "Offer"),
the Parties (other than Contran) shall meet and confer
to discuss and analyze the merits and benefits of the
Transaction set forth in the letter of intent and to
determine which of the Parties (other than Contran) is
in the overall best position to negotiate a definitive
agreement (i.e. an asset purchase agreement, a plan
sponsorship agreement or some other similar agreement)
with the Potential Bidder (a "Definitive Agreement")
that will form the basis of a Qualified Alternative
Plan.
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(iv) In the event that the Parties (other than Contran)
cannot agree on the Party in the overall best position
to negotiate a Definitive Agreement, the Committee
shall be deemed so designated and shall keep the other
Parties (other than Contran) advised of the terms,
status and progress of negotiations of the Definitive
Agreement; provided however, that, in any event, the
Debtors shall be obligated, and the Party submitting
the Offer for consideration shall have the right, to
participate directly in the negotiation of the related
Definitive Agreement.
(v) Prior to the filing of the Qualified Alternative Plan,
none of the Parties, without the consent of the
Committee and any other Proposing Party, shall disclose
information to Contran, or involve Contran in
negotiations, concerning a Bid, letter of intent, or
Definitive Agreement. Promptly following the filing of
the Qualified Alternative Plan, or upon the failure to
execute a Definitive Agreement within the time period
set forth in Section 17(b)(i) hereof, Contran shall be
entitled to receive, and the other Parties shall
provide to Contran, complete information concerning the
identities of all Potential Bidders, the terms and
conditions of all Bids and letters of intent received
from Potential Bidders, the names of all persons who
have expressed indications of interest in a transaction
involving any of the Debtors or their assets or
received confidential information concerning the
Debtors, and copies of all confidentiality agreements
executed by and all confidential information provided
to such persons; provided however, that in the event of
a dispute among the Parties with respect to the failure
to execute a Definitive Agreement within the time
period set forth in Section 17(b)(i) hereof, Contran
shall not be entitled to receive any of the foregoing
information until such dispute has been resolved either
by the Parties or the Bankruptcy Court.
(vi) A Definitive Agreement will be deemed a "Qualified
Offer" if the Definitive Agreement satisfies the
following requirements:
(A) The Definitive Agreement has been executed by the
Potential Bidder by the later of fifty (50) days
after delivery by the Debtors of the first set of
diligence materials reasonably requested by the
first Potential Bidder and fifty-two (52) days
after the execution of this Agreement by all
Parties;
(B) Consummation of the Definitive Agreement is not
contingent upon further due diligence by the
Potential Bidder or the availability of financing;
(C) The Potential Bidder recognizes a duty to
negotiate in good faith with the ISWA;
(D) As security for performance of its obligations
under the Definitive Agreement, the Potential
Bidder has made a deposit of a material amount;
(E) Any Party (the "Proposing Party") believes, with
the advice of its professionals, that the
consummation of the Definitive Agreement is in the
best interests of the Debtors' estates, taking
into account the value and benefits of the
Consensual Plan on the terms set forth herein,
including without limitation, Section 8 hereof.
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(vii) The Proposing Party shall be principally responsible
for drafting and negotiating with the Potential Bidder
that is submitting the Qualified Offer (the "Qualified
Bidder") a plan to implement such Qualified Offer (a
"Qualified Alternative Plan"); provided however, that
the Debtors shall participate in negotiations and
decisions regarding the Qualified Alternative Plan and
the other Parties (other than Contran) shall be
informed of and provide input to the status, progress
and terms thereof on a timely and regular basis.
(viii) The Parties shall work cooperatively on a single
disclosure statement for both the Consensual Plan and
the Qualified Alternative Plan (the "Dual Plan
Disclosure Statement"), and the Debtors shall, with
input from the other Parties, be principally
responsible for the drafting of the Dual Plan
Disclosure Statement, related exhibits and schedules,
voting ballots, notices and a scheduling motion,
including joint solicitation materials explaining that
the voting and confirmation processes relating to both
plans will proceed simultaneously and only one
confirmation hearing will be held for both plans.
(ix) Subject to approval of the Dual Plan Disclosure
Statement, the Proposing Party (or the Committee
Members, if the Committee is the Proposing Party) shall
vote to accept both the Consensual Plan and the
Qualified Alternative Plan; provided however, that any
Party, including a Proposing Party, may indicate a
preference for and argue in favor of confirmation of
one plan over the other.
(x) All Parties agree that the Consensual Plan does not
discriminate unfairly, and is fair and equitable, with
respect to each class of claims or interests that is
impaired under the Consensual Plan, and no Party shall
object to confirmation of the Consensual Plan under
Section 1129(b) of the Bankruptcy Code if the
Consensual Plan otherwise satisfies the requirements of
Section 1129(a) of the Bankruptcy Code.
(b) Timing and Process for the Qualified Alternative Plan, the
Consensual Plan and Other Related Matters.
(i) If (a) no Qualified Offer exists by the later of fifty
(50) days after delivery by the Debtors of the first
set of diligence materials reasonably requested by the
first Potential Bidder and fifty-two (52) days after
the execution of this Agreement (and there is no
pending bona fide dispute related thereto) or (b) prior
to such time the Committee, the Retiree Representatives
and the ISWA each advise the Debtors in writing that
they are no longer pursuing a Qualified Alternative
Plan, the Debtors shall promptly file the Consensual
Plan and a disclosure statement related thereto,
together with a motion requesting a schedule for a
hearing on the disclosure statement and a confirmation
hearing for the Consensual Plan.
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(ii) If a Qualified Offer exists within the timeframe set
forth in Section 17(b)(i) above, the Debtors and the
Proposing Party shall simultaneously file the
Consensual Plan and the Qualified Alternative Plan, and
the Debtors shall also file the Dual Plan Disclosure
Statement and a motion requesting a schedule for a
hearing on the Dual Plan Disclosure Statement and
simultaneous confirmation hearings for the Consensual
Plan and the Qualified Alternative Plan.
(iii) The confirmation hearings for the Consensual Plan and
the Qualified Alternative Plan shall occur on the same
schedule.
(iv) The Parties shall use their reasonable best efforts to
obtain an order approving a disclosure statement
related to the Consensual Plan or, if applicable, the
Dual Plan Disclosure Statement as soon as reasonably
practicable, but in any event, on or before June 15,
2005.
(v) The Parties shall use their reasonable best efforts to
commence a confirmation hearing on the Consensual Plan
and, if applicable, the Qualified Alternative Plan as
soon as reasonably practicable, but in any event, on or
before July 29, 2005.
(vi) The Qualified Alternative Plan may provide a mechanism
for receiving and approving "overbids" to the Qualified
Offer; provided however, that no Party shall
affirmatively seek additional Bids or Potential
Bidders.
18. Termination of Agreement; Survival of Certain Provisions;
Inadmissibility of Evidence.
(a) Termination of Agreement.
(i) An "Agreement Termination Event" shall mean any of the
following:
(A) Any Party (the "Breaching Party") commits a
material breach of this Agreement which has not
been waived by all Parties or, if curable, cured
within five (5) business days after the Parties'
receipt of written notice of the occurrence of
such breach; provided however, that the Breaching
Party shall not be permitted to cause a
Termination related to its own breach or, if the
Breaching Party is the Committee or any Committee
Member, neither the Committee nor any of the
Committee Members shall be permitted to cause a
Termination related to such breach;
(B) The Chapter 11 Case of KCI is dismissed or
converted to a case under chapter 7 of the
Bankruptcy Code;
(C) An examiner with expanded powers or chapter 11
trustee is appointed in the Chapter 11 Case of
KCI;
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(D) There shall have been commenced any proceedings in
bankruptcy by or against EWP, or alleging that EWP
is insolvent or unable to pay its debts as they
mature, or for the readjustment or arrangement of
EWP's debts or the appointment of a receiver,
receiver-manager or trustee over a substantial
portion of the assets of EWP;
(E) The Consensual Plan and, if applicable, the
Qualified Alternative Plan are both rejected by
the Holders of any non-insider impaired class of
claims thereunder pursuant to Sections 1126 and
1129(a) of the Bankruptcy Code and are not
subsequently confirmed pursuant to Section 1129(b)
of the Bankruptcy Code;
(F) The Bankruptcy Court declines to confirm both the
Consensual Plan and, if applicable, the Qualified
Alternative Plan;
(G) Any of the Committee, Contran or the Debtors
reasonably believe, in good faith, on the basis of
information shared with the Parties, that the
estimated amount of Allowed Class A4 Claims plus
Allowed Class A6 Claims (including claims of
Xxxxxxx Wire Company and environmental claims)
exceeds $68,000,000, and, by six (6) days prior to
the date first scheduled for commencement of the
hearing to approve a disclosure statement for the
Consensual Plan, (i) no Party has agreed to absorb
the financial impact of the increase in estimated
Class A6 General Unsecured Claims, (ii) the
Committee and Contran have failed to reach
agreement on amending this Agreement and/or the
Consensual Plan to adjust for the increase in
estimated Class A6 General Unsecured Claims and
(iii) the Bankruptcy Court has not entered an
order estimating the Class A4 and Class A6 Claims
in an aggregate amount equal to or less than
$68,000,000;
(H) A Final Order approving a disclosure statement for
the Consensual Plan or, if applicable, the Dual
Plan Disclosure Statement has not been entered in
the Proceedings by July 29, 2005 (unless the
Parties agree to a later date); or
(I) A Final Order confirming the Consensual Plan or,
if applicable, the Qualified Alternative Plan, has
not been entered in the Proceedings by September
15, 2005 (unless the Parties agree to a later
date).
(ii) Upon the occurrence of any Agreement Termination Event,
any Party may give written notice to the other Parties
of the occurrence of such Agreement Termination Event.
If such Agreement Termination Event is not waived by
all Parties or cured (including through enforcement of
specific performance under Section 19 hereof) within
ten (10) business days after the Parties' receipt of
such written notice, this Agreement shall terminate
(the "Termination").
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(iii) If a Termination occurs prior to the filing of the
Consensual Plan and, if applicable, the Qualified
Alternative Plan, the Debtors and Contran shall not in
any manner proceed in seeking any orders in connection
with confirmation of the Consensual Plan (or any other
plan), including without limitation, scheduling orders,
orders approving a disclosure statement and orders
approving notices and balloting procedures, for a
period of twenty-one (21) days after such Termination;
provided however, that this provision shall not apply
where the Termination is a result of a breach of this
Agreement by the Committee or any of the Committee
Members.
(iv) If a Termination occurs after the filing of the
Consensual Plan and, if applicable, the Qualified
Alternative Plan, any Proposing Party (or any other
Party) may proceed in seeking confirmation of the
Qualified Alternative Plan, and the Debtors and Contran
may proceed in seeking confirmation of the Consensual
Plan.
(b) Survival of Certain Provisions. Upon Termination, each of the
Debtors, Contran, the Committee, the Committee Members, the
Retiree Representatives and the ISWA shall have all rights that
are available to each of them under applicable law or otherwise;
provided however, that the provisions of Sections 2(f), 2(g),
3(d), 3(h), 4(c), 4(g), 5(e), 5(f), 5(g), 6(e), 6(f), 7(f), 7(g),
8(d)(iv), 13(m), 15(b), 15(c), 18 and 19(b) hereof shall survive
Termination and none of the Debtors, Contran, the Committee, the
Committee Members, the Retiree Representatives and the ISWA shall
be relieved of their rights or obligations thereunder, except
that the Parties shall be permitted to engage in discovery and
assert claims and causes of action relating to the Agreement
Termination Event and/or the Termination and otherwise pursue
rights or remedies under the Bankruptcy Code or other applicable
law, including seeking to terminate exclusivity under Section
1121 of the Bankruptcy Code.
(c) Inadmissibility of Evidence. All Parties agree that upon
Termination, this Agreement, all drafts thereof and all related
communications, discussions and correspondence are settlement
communications protected under Rule 408 of the Federal Rules of
Evidence other than those provisions of this Agreement that
survive Termination as provided in Section 18(b) hereof.
19. Specific Performance.
(a) It is understood and agreed by each of the Parties 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 the remedy of specific performance and injunctive or
other equitable relief as a remedy for any such breach, without
the necessity of securing or posting a bond or other security in
connection with such remedy.
(b) No Party shall have any monetary liability to any other Party for
any breach of this Agreement.
20. Representations and Warranties. Subject to approval of the Bankruptcy
Court, each of the Debtors, Contran, the Committee Members, the
Committee, the Retiree Representatives and the ISWA represents and
warrants to the other that the following statements are true, correct
and complete as of the date hereof:
(a) Corporate Power and Authority. It has all requisite power and
authority to enter into this Agreement and to carry out the
transactions contemplated by, and perform its respective
obligations under, this Agreement, including, as to each
Committee Member, that as of the date hereof, it is the
beneficial owner of, and/or the investment adviser or manager for
the beneficial owners of (with the power to vote and dispose of),
or acts in a representative capacity with respect to the CM
Claims;
(b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly
authorized by all necessary action on its part; and
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(c) Binding Obligation. This Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance
with its terms.
21. Effectiveness; Amendments. This Agreement shall not become effective
and binding on the Parties unless and until counterpart signature
pages to this Agreement have been executed and delivered by each
Debtor, Contran, the Committee, each Committee Member, each Retiree
Representative and the ISWA. Once effective, this Agreement may not be
modified, amended or supplemented except in writing signed by each
Debtor, Contran, the Committee, each Committee Member, each Retiree
Representative and the ISWA.
22. Accredited Investors. Each Committee Member represents that (a) it is
a sophisticated investor with respect to the transactions described
herein with sufficient knowledge and experience in owning and
investing in securities similar to the Secured Note described herein
to evaluate properly the transactions contemplated by this Agreement
and it has made its own analysis and decision to enter in this
Agreement; and (b) it is an "accredited investor" within the meaning
of Section 2(15) of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
23. Creditors Committee. Nothing contained herein shall limit or restrict
the Committee or the Committee Members from acting in a manner
consistent with their fiduciary duties; provided however, that
Sections 13(d) and 17 hereof shall govern the Parties' actions with
respect to any Bid.
24. Debtors' Fiduciary Duties. Nothing contained herein shall limit or
restrict the Debtors from acting in a manner consistent with their
fiduciary duties; provided however, that Sections 13(d) and 17 hereof
shall govern the Parties' actions with respect to any Bid.
25. Limited Right of Withdrawal. The Parties acknowledge and agree that,
in entering into this Agreement, the Indenture Trustee is not acting
in its individual capacity but, rather, is acting in its capacity as
the duly authorized, qualified and acting indenture trustee for the
holders (the "Noteholders") of those certain 9-5/8% Subordinated
Unsecured Notes due 2007 (the "Notes"). Notwithstanding any other
provision of this Agreement, in the event that the Indenture Trustee
receives written direction from Noteholders constituting a majority in
principal amount of the Notes to withdraw from this Agreement (a
"Majority Direction"), the Indenture Trustee shall have the right,
exercisable in its sole discretion and upon written notice to each of
the other Parties, to voluntarily withdraw from this Agreement without
incurring any penalty or liability to any other Party. Upon such
withdrawal, this Agreement shall be deemed null and void as to the
Indenture Trustee, and the Indenture Trustee shall be released from
any duties or obligations hereunder.
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26. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Illinois, without regard to any conflicts of law provision that would
require the application of the law of any other jurisdiction. By its
execution and delivery of this Agreement, each of the Parties 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 the Bankruptcy Court,
which shall have exclusive jurisdiction of all matters arising out of
or in connection with this Agreement.
27. Notices. All notices and consents hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered by
courier service, messenger, or telecopy or initially deposited in the
mails, by certified or registered mail, postage prepaid return receipt
requested, to the following addresses, or such other addresses as may
be furnished hereafter by notice in writing, to the following parties:
(a) if to the Debtors, to:
----------------------
Keystone Consolidated Industries, Inc.
0000 XX Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Keystone Consolidated Industries, Inc.
0000 XXX Xxx., Xxx. 0000
0 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxx, Xx.
With a copy to:
--------------
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Xxxx X. Xxxxx
(b) if to any Committee Member, to:
-------------------------------
such Committee Member at the address shown
for such entity on the applicable signature
page hereto, to the attention of the person
who has signed this Agreement on behalf of
such entity.
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(c) if to the Committee, to:
------------------------
Jenner & Block LLP
Xxx XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
(d) if to Contran, to:
------------------
Contran Corporation
0000 XXX Xxx., Xxx. 0000
0 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxx X. X'Xxxxx
With a copy to:
--------------
Xxxxxx & Xxxxxx LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
(e) if to the Retiree Representatives, to:
--------------------------------------
Cusack, Fleming, Xxxxxxxxx & O'Day
000 Xxxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. O'Day
Schoenberg, Fisher, Xxxxxx & Xxxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx
Xxx Xxxxx
International Union, United Automobile,
Aerospace & Agricultural Implement Workers
of America - UAW
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
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(f) if to the ISWA, to:
-------------------
Cusack, Fleming, Xxxxxxxxx & O'Day
000 Xxxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. O'Day
28. Reservation of Rights. This is part of a proposed settlement of a
dispute among the Parties. Except as expressly provided in this
Agreement: (A) nothing herein is intended to, or does, in any manner
waive, limit, impair or restrict the ability of each Debtor, Contran,
the Committee, each Committee Member, each Retiree Representative and
the ISWA to protect and preserve its rights, remedies and interests,
including without limitation, its claims against the other; (B)
nothing herein shall be deemed an admission of any kind; (C) nothing
contained herein effects a modification of the rights of the Debtors,
Contran, the Committee, the Committee Members, the Retiree
Representatives or the ISWA unless and until any plan is confirmed;
and (D) nothing contained herein is intended to, or does, in any
manner waive, limit, impair or restrict the ability of any Party to
object to any motion for relief by any other party during the
Proceedings. If the transactions contemplated herein are not
consummated, or if this Agreement is terminated for any reason, the
Parties fully reserve any and all of their rights. Federal Rule of
Evidence 408 and any applicable state rules of evidence apply to this
Agreement and all negotiations relating thereto.
29. Consideration. The Parties hereby acknowledge that, other than each
Debtor's agreements, covenants, representations and warranties, as
more particularly set forth herein, no consideration shall be due or
paid to the Committee Members for their agreement, subject to approval
of a disclosure statement, to vote their Claims to accept the
Consensual Plan in accordance with the terms and conditions of this
Agreement.
30. Acknowledgment. This Agreement is not and shall not be deemed to be a
solicitation for consents to any plan. The acceptance of Contran, the
Committee Members, the Retiree Representatives and the ISWA will not
be solicited until they have received the disclosure statement for the
Consensual Plan and related ballots, as approved by the Bankruptcy
Court.
31. Headings. The headings of the paragraphs and subparagraphs of this
Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
32. 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.
33. Several, Not Joint, Obligations. The agreements, representations and
obligations of the Committee Members under this Agreement are, in all
respects, several and not joint.
34. Prior Negotiations. This Agreement supersedes all prior negotiations
with respect to the subject matter hereof.
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35. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same Agreement. This Agreement may
be executed by facsimile and facsimile signatures shall have the same
effect as original signatures.
36. No Third-Party Beneficiaries. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the Parties, and no other
person or entity shall be a third party beneficiary hereof.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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AGREED TO:
FV Steel and Wire Company
By:_________________________________
Title:______________________________
Keystone Consolidated Industries, Inc.
By:_________________________________
Title:______________________________
DeSoto Environmental Management, Inc.
By:_________________________________
Title:______________________________
X.X. Xxxxxxxx Company
By:_________________________________
Title:______________________________
Xxxxxxx Wire Company (f/k/a DeSoto, Inc.)
By:_________________________________
Title:______________________________
Xxxxxxx Wire of Xxxxxxxx, Inc.
By:_________________________________
Title:______________________________
-00-
Xxxxxxx Xxxxxxxxxxx
By:_________________________________
Title:______________________________
-39-
Independent Steel Workers Alliance, as "authorized
representative" under 11 U.S.C ss. 1114
------------------------ ------------------------ ------------------------
President Vice President Secretary-Treasurer
Wages & Rules Committee Grievance Committee
------------------------ ------------------------
Chairman Chairman
------------------------ ------------------------
------------------------ ------------------------
------------------------ ------------------------
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International Union, United Automobile, Aerospace &
Agricultural Implement Workers of America - UAW
By:_________________________________
Title:______________________________
-41-
Management Retirees Committee
By:_________________________________
Title:______________________________
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Independent Steel Workers Alliance, as "authorized
representative" under 11 U.S.C ss. 1113
------------------------ ------------------------ ------------------------
President Vice President Secretary-Treasurer
Wages & Rules Committee Grievance Committee
------------------------ ------------------------
Chairman Chairman
------------------------ ------------------------
------------------------ ------------------------
------------------------ ------------------------
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Official Committee of Unsecured Creditors
By:_________________________________
Title:______________________________
-44-
Ameren Cilco
By:_________________________________
Title:______________________________
-00-
Xxxx xx Xxx Xxxx, as indenture trustee
By:_________________________________
Title:______________________________
-00-
Xxxxxxx Xxxx Service
By:_________________________________
Title:______________________________
-00-
Xxxxxx Xxxxxxxx Company
By:_________________________________
Title:______________________________
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