EXHIBIT 10.AP
EXECUTION COPY
FORBEARANCE, LOCK-UP AND VOTING AGREEMENT
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This FORBEARANCE, LOCK-UP AND VOTING AGREEMENT (this "Agreement") is made
and entered into as of March 31, 1999 by and among Zenith Electronics
Corporation, a Delaware corporation ("Zenith" or the "Company"), LG Electronics
Inc., a corporation existing under the laws of the Republic of Korea ("LGE"),
Xxxxxx, Xxxxxx & Company, L.P., a Delaware limited partnership ("Xxxxxx"),
Mariner Investment Group, a Delaware limited liability partnership ("Mariner")
and Caspian Capital Partners, L.L.P., a Delaware limited liability partnership
("Caspian"; and together with Xxxxxx and Mariner, collectively the "Consenting
Holders"). Capitalized terms used herein but not otherwise defined herein shall
have the meanings given such terms in that certain January 29, 1999 Amendment
No. 2 ("Amendment No. 2") to Form S-4 Registration Statement, Disclosure
Statement and Proxy Statement - Prospectus for the Solicitation of Votes for the
Prepackaged Plan of Reorganization of Zenith Electronics Corporation (as amended
from time to time, the "Registration Statement/Disclosure Statement"). The
Company, LGE, and the Consenting Holders are collectively referred to herein as
the "Parties" and individually as a "Party."
RECITALS
WHEREAS, Zenith, LGE and the Consenting Holders have engaged in good faith
negotiations with the objective of reaching an agreement with regard to
restructuring the indebtedness outstanding under the Old Subordinated
Debentures;
WHEREAS, Zenith, LGE and the Consenting Holders now desire to implement a
financial restructuring (the "Financial Restructuring") of Zenith substantially
on the terms set forth in the Registration Statement/Disclosure Statement, but
as modified pursuant to the terms of this Agreement and the Term Sheet attached
as Exhibit A hereto (the "Term Sheet");
WHEREAS, in order to implement the Financial Restructuring, Zenith intends,
subject to the terms and conditions of this Agreement, to prepare and file (i)
the Registration Statement/Disclosure Statement and (ii) a plan of
reorganization (the "Prepackaged Plan") implementing the terms of the Financial
Restructuring in a case (the "Chapter 11 Proceedings") filed under chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code"), and Zenith intends
to use its reasonable best efforts to have such Registration
Statement/Disclosure Statement approved and such Prepackaged Plan confirmed by
the Bankruptcy Court for such U.S. Judicial District as may be selected by
Zenith (so long as venue in such District is proper) (the "Bankruptcy Court"),
in each case as expeditiously as possible under the Bankruptcy Code and the
Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules");
WHEREAS, in order to facilitate the implementation of the Financial
Restructuring, each of the Consenting Holders is prepared to commit, as set
forth in more detail herein, during the period commencing on the date hereof and
ending on the date a Termination Event (as defined herein) first
occurs, and no longer (i) to forbear from exercising remedies in respect of the
Old Subordinated Debentures and (ii) not to sell, transfer or assign any of the
Old Subordinated Debentures except as permitted herein;
WHEREAS, each of the Consenting Holders is prepared to commit, on the terms
and subject to the conditions of this Agreement, to vote to accept a Prepackaged
Plan that satisfies the Conditions (as defined herein).
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, Zenith, LGE and
the Consenting Holders hereby agree as follows:
1. Forbearance. During the period commencing on the date hereof and
ending on the date that a Termination Event first occurs, and no longer, each
Consenting Holder hereby agrees to forebear (and agrees not to give any
instructions to the trustee under the Old Subordinated Debenture Indenture
inconsistent with such forbearance) from the exercise of any rights or remedies
it may have under the Old Subordinated Debentures or the Old Subordinated
Debenture Indenture (the "Existing Agreements"), applicable law or otherwise,
with respect to any default in existence or arising under the Existing
Agreements; provided, however, during such period, Zenith and LGE shall have
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continued to comply with their obligations under the terms and conditions of
this Agreement. In the event that this Agreement shall terminate, each
Consenting Holder shall have, and shall be entitled to exercise, each of its
rights or remedies under the Existing Agreements and applicable law, as if this
Agreement was never executed (and shall not be deemed to have waived any such
rights or remedies by virtue of executing this Agreement).
2. Voting. Each of the Consenting Holders represents that, as of the
date hereof, it is the beneficial owner, and/or the investment adviser or
manager for the beneficial owner (with the power to vote and dispose of Old
Subordinated Debentures on behalf of such beneficial owner) of Old Subordinated
Debentures set forth on the schedule attached to its signature page (for each
such Party, the "Relevant Claims"). Each of the Consenting Holders agrees that,
subject to the conditions (the "Conditions") that (i) the Registration
Statement/Disclosure Statement shall have been declared effective by the
Securities and Exchange Commission and/or approved by the Bankruptcy Court; (ii)
the terms of the Prepackaged Plan and all documents attendant thereto,
including, without limitation, the terms, financial instruments, and security
documents (if any) to be provided to the holders of the Old Subordinated
Debentures (collectively, the "Attendant Documents"), contained in such
Registration Statement/Disclosure Statement relating to the Old Subordinated
Debentures include and/or are consistent with the terms set forth in the Term
Sheet; and (iii) except as may be modified pursuant to the terms of this
Agreement, all other terms of the Prepackaged Plan shall be, in all material
respects, the same as the terms contained in Amendment No. 2, or, any material
changes shall be reasonably acceptable to the Consenting Holders, it shall
timely vote (including instructing custodial agents to vote, as the case may be)
its Relevant Claims (and not revoke or withdraw such vote except as permitted
hereunder) to accept such Prepackaged Plan.
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3. Restriction on Transfer. Each of the Consenting Holders hereby
agrees that, during the period commencing on the date hereof and ending on the
date that a Termination Event first occurs, and no longer, it shall not sell,
transfer or assign any of the Relevant Claims or any option thereon or any right
or interest (voting or otherwise) therein, unless the transferee thereof agrees
in writing to be bound by all the terms of this Agreement by executing a
counterpart signature page of this Agreement and the transferor provides Zenith
with a copy thereof, in which event Zenith shall be deemed to have acknowledged
that its obligations to the Consenting Holders hereunder shall be deemed to
constitute obligations in favor of such transferee, and Zenith shall confirm
that acknowledgment in writing.
4. Zenith Agreements. Zenith hereby agrees to use its reasonable best
efforts to have the Registration Statement/Disclosure Statement declared
effective by the Securities and Exchange Commission and/or approved by the
Bankruptcy Court, and thereafter to take all reasonable steps necessary and
desirable to obtain an order of the Bankruptcy Court confirming the Prepackaged
Plan, in each case, as expeditiously as possible under the rules and regulations
of the Securities and Exchange Commission, the Bankruptcy Code and the
Bankruptcy Rules; provided, however, that notwithstanding anything contained
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herein to the contrary, the commitments and obligations of the Parties hereunder
shall not be affected or modified by the commencement of a voluntary or
involuntary bankruptcy case prior to the completion of a solicitation of
consents to the Prepackaged Plan.
5. Support of the Plan. Zenith and LGE will use their reasonable best
efforts to obtain confirmation of the Prepackaged Plan in accordance with the
Bankruptcy Code as expeditiously as possible. The Consenting Holders will take
all necessary and appropriate actions to support confirmation. No Consenting
Holder shall (a) object to confirmation of a Prepackaged Plan that satisfies the
Conditions or otherwise commence any proceeding to oppose or alter a Prepackaged
Plan that satisfies the Conditions or any other reorganization documents
containing terms that satisfy the Conditions, (b) vote for, consent to, support
or participate in the formulation of any other plan of reorganization or
liquidation proposed or filed or to be proposed or filed in any chapter 11 or
chapter 7 case commenced in respect of the Company provided that Zenith files
and is supporting a Prepackaged Plan that satisfies the Conditions, (c) directly
or indirectly seek, solicit, support or encourage any other plan, proposal or
offer of dissolution, winding up, liquidation, reorganization, merger or
restructuring of the Company or any of its subsidiaries that could reasonably be
expected to prevent, delay or impede the successful restructuring of the Company
as contemplated by the Prepackaged Plan, provided that the Prepackaged Plan
satisfies the Conditions, (d) object to the Registration Statement/Disclosure
Statement or the solicitation of consents to the Prepackaged Plan, provided that
the Prepackaged Plan satisfies the Conditions, or (e) take any other action that
is inconsistent with, or that would delay confirmation of, the Prepackaged Plan,
provided that the Prepackaged Plan satisfies the Conditions.
6. Acknowledgment. This Agreement is not and shall not be deemed to be a
solicitation for consents to the Prepackaged Plan. The acceptances of the
Consenting Holders will not be solicited until the Consenting Holders have
received the Registration Statement/Disclosure Statement and related ballot.
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7. Termination of this Agreement and Consenting Holders' Obligations.
Each Consenting Holder may terminate its obligations hereunder and rescind any
vote on the Prepackaged Plan by such Consenting Holder (which vote shall be null
and void and have no further force and effect) and this Agreement shall
terminate if any of the following events (any such event, a "Termination Event")
occurs: (i) a Prepackaged Plan that satisfies the Conditions has not been filed
with the Bankruptcy Court on or prior to September 15, 1999; (ii) a Prepackaged
Plan that satisfies the Conditions has not been confirmed by the Bankruptcy
Court on or prior to December 31, 1999; (iii) Zenith or LGE withdraw (and do not
promptly refile) from consideration by the Bankruptcy Court any Prepackaged Plan
that satisfies the Conditions; (iv) Zenith or LGE file, propound or otherwise
support any Prepackaged Plan or other plan of reorganization or liquidation that
does not satisfy the Conditions; (v) the Prepackaged Plan is modified or
replaced such that it (or any such replacement) at any time does not satisfy the
Conditions or (vi) LGE shall not support the Prepackaged Plan.
8. Good Faith Negotiation of New Subordinated Debentures. Zenith, LGE
and each Consenting Holder hereby further covenants and agrees to negotiate the
definitive documents relating to the New Subordinated Debentures in good faith.
Zenith shall not terminate (or cause to be rejected) its fee agreements with
Xxxx & Xxxxxx, a Professional Corporation or Crossroads Capital Partners LLC
(together, the "Advisors") prior to the earlier to occur of (i) a Termination
Event or (ii) the date a Prepackaged Plan that satisfies the Conditions is
confirmed by the Bankruptcy Court, becomes effective, and a final closing has
occurred. In any event, so long as the Consenting Holders are in compliance
with the terms of this Agreement, Zenith shall cause all amounts due to the
Advisors to be received by them immediately prior to the commencement by Zenith
of Chapter 11 Proceedings. The obligations of Zenith set forth in the
immediately preceding sentence shall survive the termination of this Agreement.
9. Releases. The Consenting Holders agree, provided that the Releases
(as defined herein) are contained in a Prepackaged Plan that satisfies the
Conditions (i) to grant the releases and exculpation provided in the
Registration Statement/Disclosure Statement and Prepackaged Plan (the
"Releases") (and to take such action as Zenith or LGE shall reasonably request
to evidence such grant), (ii) not to object to the entry of an order by the
Bankruptcy Court approving the Releases, and (iii) not to make any election with
respect to the Relevant Claims not to grant the Releases. The Releases shall be
null and void if a Prepackaged Plan that satisfies the Conditions is not
confirmed by the Bankruptcy Court prior to the termination of this Agreement.
10. Representations and Warranties. Zenith, LGE and each of the
Consenting Holders, represents and warrants to each other the following
statements are true, correct and complete as of the date hereof:
(a) Corporate Power and Authority. It has all requisite corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated by, and perform its respective obligations under,
this Agreement.
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(b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by
all necessary corporate, partnership or LLC action on its part.
(c) No Conflicts. The execution, delivery and performance by it of
this Agreement do not and shall not (i) violate any provision of law, rule
or regulation applicable to it or any of its subsidiaries or its
Certificate of Incorporation or bylaws or other organizational documents or
those of any of its subsidiaries or (ii) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under
any material contractual obligation to which it or any of its subsidiaries
is a party.
(d) Governmental Consents. The execution, delivery and performance
by it of this Agreement do not and shall not require any registration or
filing with, consent or approval of, or notice to, or other action to, with
or by, any federal, state or other governmental authority or regulatory
body, except such filings as may be necessary and/or required for
disclosure by the Securities and Exchange Commission and in connection with
the commencement of the Chapter 11 Proceedings, the approval of the
Registration Statement/Disclosure Statement and confirmation of the
Prepackaged Plan.
(e) Binding Obligation. This Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
11. Restructuring Agreement. Notwithstanding anything contained in this
Agreement to the contrary, LGE's obligations, undertakings, representations and
warranties hereunder are subject to the terms and conditions of the
Restructuring Agreement.
12. Further Acquisition of Securities. This Agreement shall in no way be
construed to preclude the Consenting Holders from acquiring additional Claims.
However, any such additional Claims so acquired shall automatically be deemed to
be Relevant Claims and to be subject to the terms of this Agreement.
13. Indemnification. (a) Zenith hereby agrees to indemnify and hold the
Consenting Holders and their officers, directors, partners, agents, employees
and advisors, and each of their respective successors and assigns, harmless from
and against any and all claims, actions, suits, liabilities, and judgments, and
costs and expenses directly related thereto (including reasonable costs of
defense on an as-incurred basis), arising by reason of or resulting from the
Consenting Holders' execution of this Agreement and performance of their
obligations hereunder, but expressly excluding any liability, cost or expense
arising from or related to the gross negligence, fraud or willful misconduct of
the Consenting Holders. In the event that any of the Consenting Holders
terminate their obligations under this Agreement in accordance with Section 7
hereof, the terms of this Section 13 shall survive, but solely for the period
commencing from the date hereof through the date of such termination.
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(b) In the event that a third party commences any action to which any
person (an "Indemnified Party") is entitled to indemnification under this
Agreement, the Indemnified Party shall provide written notice of such
commencement to Zenith. Zenith may, at its election and at its own expense and
without limiting its obligation to indemnify the Indemnified Party, assume
control of the defense of such action with counsel reasonably satisfactory to
the Indemnified Party; provided, however, that if Zenith assumes control of the
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defense, the Indemnified Party may retain separate counsel of its choice at its
own cost and expense. The Indemnified Party will cooperate with Zenith in the
defense of any such action. Zenith shall provide the other party with copies of
all notices, pleadings, and other papers filed or received in connection with
such action, and in no event shall either the Indemnified Party or Zenith
consent or agree to a settlement of any such action without the prior written
consent of the other; provided; however; that if Zenith obtains a settlement of
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such action that includes an unconditional release of the Indemnified Party as
to the claims set forth in such action, Zenith shall not require the consent of
the Indemnified Party to settle such action.
14. Amendments. This Agreement may not be modified, amended or
supplemented except in writing signed by Zenith, LGE and each of the Consenting
Holders.
15. Disclosure. Unless required by applicable law or regulation, neither
Zenith nor LGE shall disclose any Consenting Holder's holdings of Relevant
Claims without the prior written consent of such Consenting Holder, and if such
announcement or disclosure is so required by law or regulation, Zenith and LGE
shall afford such Consenting Holder a reasonable opportunity to review and
comment upon any such announcement or disclosure prior to such announcement or
disclosure. The foregoing shall not prohibit Zenith and LGE from disclosing
names of the Consenting Holders, the approximate aggregate holdings of Claims by
the Consenting Holders as a group, or the existence and terms of this Agreement;
provided, however, that any press release of Zenith naming the Consenting
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Holders (individually or as an ad hoc committee) shall be acceptable to the
Consenting Holders, such approval not to be unreasonably withheld, delayed or
denied.
16. Impact of Appointment to Creditors Committee. If an official
committee of unsecured creditors or of holders of Old Subordinated Debentures is
appointed by the United States Trustee in the Chapter 11 Proceedings, to the
extent that any Consenting Holder wishes, in its sole and absolute discretion,
to be appointed to any official committee of unsecured creditors or holders of
Old Subordinated Debentures, Zenith and LGE shall cooperate with the Consenting
Holders in seeking to cause the United States Trustee to appoint the Consenting
Holders to be members of such official committee pursuant to Section 1102 of the
Bankruptcy Code. Notwithstanding anything herein to the contrary, in the event
that any Consenting Holder is appointed to and serves on a committee of
creditors or holders of Old Subordinated Debentures in the Chapter 11
Proceedings, the terms of this Agreement shall not be construed so as to limit
such Consenting Holder's exercise (in its sole and absolute discretion) of its
fiduciary duties to any person arising from its service on such committee, and
any such exercise (in the sole and absolute discretion of such Consenting
Holder) of such fiduciary duties shall not be deemed to constitute a breach of
the terms of this Agreement (but the fact of such service on such committee
shall not otherwise affect the continuing validity or enforceability of this
Agreement).
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17. 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 which would require the application of
the law of any other jurisdiction. By its execution and delivery of this
Agreement, each of the Parties hereto hereby irrevocably and unconditionally
agrees for itself that any legal action, suit or proceeding against it with
respect to any matter under or arising out of or in connection with this
Agreement or for recognition or enforcement of any judgment rendered in any such
action, suit or proceeding, may be brought in the U.S. District Court for the
Northern District of Illinois. By execution and delivery of this Agreement,
each of the parties hereto hereby irrevocably accepts and submits itself to the
nonexclusive jurisdiction of each such court, generally and unconditionally,
with respect to any such action, suit or proceeding. Notwithstanding the
foregoing consent to Illinois jurisdiction, upon the commencement of the
Chapter 11 Proceedings, each of the Parties hereto hereby agrees that the
Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of
or in connection with this Agreement.
18. Specific Performance. It is understood and agreed by each of the
Parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any Party and each non-breaching Party shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy of any such breach.
19. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
20. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of the Parties and their respective successors, assigns, heirs,
executors, administrators and representatives. The agreements, representations
and obligations of the Consenting Holders under this Agreement are, in all
respects, several and not joint.
21. Prior Negotiations. This Agreement and the Term Sheet supersede all
prior negotiations with respect to the subject matter hereof.
22. 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.
23. No Third-Party Beneficiaries. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the Parties hereto and no other
person or entity shall be a third-party beneficiary hereof.
24. Consideration. It is hereby acknowledged by the Parties hereto that
no consideration shall be due or paid to the Consenting Holders for their
agreement to vote to accept the Prepackaged Plan in accordance with the terms
and conditions of this Agreement other than Zenith's agreement to use its
reasonable best efforts to obtain approval of the Registration
Statement/Disclosure Statement and to take all steps necessary and desirable to
confirm the Prepackaged Plan in accordance with the terms and conditions of this
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered by its duly authorized officer as of the date first
above written.
ZENITH ELECTRONICS CORPORATION
By: /s/ Xxxxxx X. XxXxxxx
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Name: Xxxxxx X. XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
LG ELECTRONICS INC.
By: /s/ Xxxx Xxx
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Name: Xxxx Xxx
Title:
XXXXXX XXXXXX & COMPANY, L.P.
By: XXXXXX, XXXXXX & COMPANY,
INCORPORATED, ITS GENERAL PARTNER
By: /s/ Xxxxxx X. Day
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Name: Xxxxxx X. Day
Title: Vice-President
Old Subordinated Debentures Owned or Controlled
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$ 52,050,000 Face Amount
MARINER LDC
By: MARINER INVESTMENT GROUP, INC.
By: /s/ X. Xxxx XX
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Name: X. Xxxx XX
Title: Treasurer
CASPIAN CAPITAL PARTNERS, L.L.P.
By: /s/ X. Xxxx XX
_______________________________
Name: X. Xxxx XX
Title: Treasurer of G.P.
Old Subordinated Debentures Owned or Controlled
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Caspian Capital Partners, L.P. $1,683,500
Mariner LDC $1,992,500
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EXHIBIT A
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TERM SHEET
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In satisfaction of all amounts owed with respect to the Old
Subordinated Debentures, the Company will issue New Subordinated Debentures
("New Subordinated Debentures") pursuant to an indenture (the "New Indenture")
dated as of the Effective Date.
Aggregate Principal Amount........... $50 million
Maturity Date........................ November 1, 2009
Interest............................. 8.19% per annum, payable in cash
semiannually
Redemption........................... may be redeemed at the option of the
Company, at any time, in whole or in
part, at par
Conversion........................... not convertible
Ranking; Security.................... pari passu with the LGE New
Restructured Senior Note; to the extent
secured, the New Subordinated
Debentures receive a silent lien or inter-
creditor agreement to share collateral
(other than the leveraged lease assets)
upon liquidation of the Company
Sinking Fund......................... none
Events of Default.................... same as Old Subordinated Debenture
Indenture
Remedies............................. same as Old Subordinated Debenture
Indenture
Covenants............................ same as Old Subordinated Debenture
Indenture
Releases............................. each holder of Old Subordinated
Debentures shall grant the releases
provided in the Registration
Statement/Disclosure Statement unless
such holder affirmatively indicates its
determination not to grant such releases
on its respective ballot; LGE's
commitment contingent on not more
than 5% of holders electing not to grant
releases
Other Terms.......................... provisions in favour of the Consenting
Holders and their professional advisors
from the Company relating to
indemnification (on the terms set forth
in the Agreement), releases,
exculpation, pre and post-petition
professional advisor fees (whether in
the context of committee or individual
bondholder representation) and
expenses
Co-Terminus.......................... the Maturity Date of the LGE New
Restructured Senior Note shall be
co-terminus with the Maturity Date of
the New Subordinated Debentures
