ANNEX A
ASSUMPTION AGREEMENT AND
AMENDMENT TO FINANCING AGREEMENTS
THIS ASSUMPTION AGREEMENT AND AMENDMENT TO FINANCING AGREEMENTS (this
"Amendment") is made and entered into as of _____________, 2004, by and between
KEYSTONE CONSOLIDATED INDUSTRIES, INC. ("Keystone"), DESOTO ENVIRONMENTAL
MANAGEMENT, INC., FV STEEL AND WIRE COMPANY, J.L. PRESCOTT COMPANY, SHERMAN WIRE
COMPANY (f/k/a DESOTO, INC.), and SHERMAN WIRE OF CALDWELL, INC., each as a
debtor and debtor-in-possession in the Cases (defined below) (each a "Debtor,"
and, collectively, the "Debtors"), and CONGRESS FINANCIAL CORPORATION (CENTRAL),
as lender ("Lender"). Unless otherwise specified, the capitalized terms used
herein shall have the meanings ascribed to them in the Pre-Petition Credit
Agreement (defined below).
RECITALS
A. Keystone, as pre-petition debtor, and Lender are parties to (i) that
certain Amended and Restated Revolving Loan and Security Agreement, dated as of
December 29, 1995 (as amended, modified, restated or supplemented prior to the
date hereof, the "Pre-Petition Credit Agreement"), and (ii) the other Financing
Agreements, as defined in the Pre-Petition Credit Agreement (all such Financing
Agreements, together with the Pre-Petition Credit Agreement, in each case as
amended, modified, restated or supplemented prior to the date hereof or by any
other amendment executed on or after the date hereof, collectively, the
"Original Financing Agreements").
B. Debtors have filed petitions for relief under chapter 11 of title 11 of
the United States Code, 11 U.S.C. ss.ss. 101, et seq. (the "Bankruptcy Code"),
in the United States Bankruptcy Court for the Eastern District of Wisconsin (the
"Bankruptcy Court"), on ___________, 2004 (the "Petition Date"), Jointly
Administered Case No. ________________ (the "Cases").
C. The commencement of the Cases constituted an Event of Default under
Section 10.1(g) the Pre-Petition Credit Agreement.
D. In order to continue their operations as debtors-in-possession under the
Bankruptcy Code, Debtors have requested that Lender make certain postpetition
secured loans to Keystone (the "DIP Financing"). Lender is willing to provide
such DIP Financing to Keystone on and after the Petition Date only if, among
other things, the Original Financing Agreements are amended as hereinafter set
forth and the Bankruptcy Court enters interim and final orders approving this
Amendment and otherwise in form and substance satisfactory to Lender in Lender's
sole discretion (the "Interim Order" and the "Final Order," respectively).
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments. The parties hereby amend the Original Financing Agreements
as follows:
(a) From and after the date hereof, all references in the Original
Financing Agreements to "Keystone Consolidated Industries, Inc.,"
"Borrower," "the "Company," and all other references to Keystone
in any capacity shall be deemed to be references to Keystone both
before the Petition Date, as pre-petition obligor, and on and
after the Petition Date, as a debtor and debtor-in-possession in
the Cases.
(b) Section 1 of the Pre-Petition Credit Agreement is hereby amended
by adding in their proper alphabetical order the definitions of
"Bankruptcy Code," "Bankruptcy Court," "Cases," "DIP Financing,"
"Original Financing Agreements," "Petition Date" and
"Pre-Petition Credit Agreement" set forth in the recitals of this
Amendment.
(c) Section 1 of the Pre-Petition Credit Agreement is hereby further
amended by adding the following definitions in their proper
alphabetical order (to the extent such terms are not already
defined in the Pre-Petition Credit Agreement) and by substituting
the following definitions for the existing definitions of such
terms (to the extent such terms are currently defined in the
Pre-Petition Credit Agreement):
"Agreement" shall mean the Amended and Restated Revolving Loan
and Security Agreement, dated as of December 29, 1995, as
amended, modified, restated or supplemented from time to time,
including, without limitation, (a) by the Assumption Agreement
and (b) by the Interim Order, the Final Order or any other
applicable order of the Bankruptcy Court.
"Assumption Agreement" shall mean the Assumption Agreement and
Amendment to Financing Agreements, dated as of _____________,
2004, by and between Keystone Consolidated Industries, Inc.,
Desoto Environmental Management, Inc., FV Steel and Wire Company,
J.L. Prescott Company, Sherman Wire Company (f/k/a Desoto, Inc.),
and Sherman Wire of Caldwell, Inc. as debtors and
debtors-in-possession in the Cases, and Congress Financial
Corporation (Central), as lender.
"Budget" shall have the meaning ascribed to such term in Section
7.1 hereof.
"Debtors" shall mean Keystone Consolidated Industries, Inc.,
Desoto Environmental Management, Inc., FV Steel and Wire Company,
J.L. Prescott Company, Sherman Wire Company (f/k/a Desoto, Inc.),
and Sherman Wire of Caldwell, Inc. as debtors and
debtors-in-possession in the Cases under the Bankruptcy Code.
"DIP Financing" shall mean the advance of funds by Congress to
Debtors on and/or after the Petition Date in the form of
Revolving Loans and in the form of a Term Loan under the terms
and conditions set forth herein.
"DIP Indebtedness" shall mean all indebtedness and obligations
incurred on or after the Petition Date by Debtors to Congress
pursuant to the Financing Agreements (including, without
limitation, principal, accrued and unpaid interest and costs and
expenses, including reasonable attorneys' fees and expenses).
"DIP Term Loan" shall mean the $2,000,000 principal amount of the
Term Loan funded by Lender to Borrower during the Cases pursuant
to the Interim Order and/or the Final Order.
"EWP DIP Credit Agreement" shall mean the Debtor-In-Possession
Credit Agreement between the Debtors and EWP Financial
"EWP Financial" shall mean EWP Financial LLC, a Delaware limited
liability company.
"EWP Collateral" shall mean (i) the stock of Engineered Wire
Products, Inc. and all substitutions therefor and distributions
with respect thereto, (ii) the account maintained on Keystone's
books and records styled Loan Account - EWP, Account Number
46009, (iii) the Separate Loan Proceeds Account and (iv) all
proceeds of the foregoing.
"Final Order" shall mean an order of the Bankruptcy Court entered
in the Cases after the Final Hearing as defined in the Interim
Order, inter alia, authorizing Debtors, as debtors-in-possession,
to incur secured indebtedness pursuant to section 364 of the
Bankruptcy Code, which order shall be in form and substance
satisfactory to Lender in its sole discretion.
"Financing Agreements" shall mean, collectively, this Agreement,
the Assumption Agreement, the Interim Order, the Final Order, the
DIP Credit Documents and all notes, guarantees, security
agreements, trademark security agreements, lockbox and/or blocked
account agreements, mortgages, deeds of trust, pledge agreements,
letters of credit and other agreements, documents and written
indicia of contractual obligations between Debtors and Lender,
any Affiliate of Debtors and Lender, any Person owning Collateral
and Lender, and/or any Person guaranteeing all or any portion of
the Obligations and Lender, in connection with the transactions
contemplated hereby, whether pre-petition or post-petition, as
each such document has been and may from time to time be amended,
modified, supplemented, extended, renewed, restated or replaced.
"Interim Order" shall mean the order of the Bankruptcy Court
entered in the Cases on ___________, 2004 pursuant to sections
363 and 364 of the Bankruptcy Code, inter alia, authorizing
Debtors, as debtors-in-possession, to enter into the Assumption
Agreement, which order shall be in form and substance
satisfactory to Lender in its sole discretion.
"Loans" shall mean any loan or extension of credit, whether made
before, on or after the Petition Date, by Lender pursuant to the
Financing Agreements, including the Revolving Loans, the Term
Loan and the DIP Financing.
"Maturity Date" shall mean the date on which this Agreement
ceases to continue in full force and effect pursuant to Section
12.1(a) hereof.
"Maximum Credit" shall mean the amount of $55,000,000; provided,
however, that such amount shall decrease when each payment of
principal on the Term Loan is received by Lender and applied to
the Term Loan, by an amount equal to the amount of such principal
reduction in the Term Loan.
"Participation Agreement" shall mean that certain Participation
Agreement dated as of February ___, 2004 between Lender and EWP
Financial.
"Participation" shall have the meaning set forth in the
Participation Agreement.
"Revolving Loans" shall mean any Revolving Loans, whether made
before, on or after the Petition Date, by Lender pursuant to the
Financing Agreements and/or the Interim or Final Order.
"Separate Loan Proceeds Account" shall have the meaning set forth
in Section 4.1(i)(d) of this Amendment.
(d) In subsection 1.49 of the Pre-Petition Credit Agreement, the
phrase "provided, that, the Interest Rate shall mean the rate of
two and one-half percent (2.5%) per annum . . .," where it
appears, is hereby amended to read "provided, that, the Interest
Rate shall mean the rate of three percent (3.0%) per annum . . .
."
(e) Subsection 2.3 of the Pre-Petition Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"2.3 Availability Reserves. All Revolving Loans otherwise
available to Borrower pursuant to the lending formulas and
subject to the Maximum Credit and other applicable limits
hereunder shall be subject to Lender's continuing right to
establish and revise Availability Reserves in its discretion,
upon not less than five (5) days prior written notice to Borrower
identifying the new or revised Availability Reserve and the
reason for the establishment or revision thereof."
(f) The Term Loan under subsection 2.4 of the Pre-Petition Credit
Agreement shall be increased: (i) upon the effective date of this
Amendment, by a principal amount of $2,042,812; (ii) upon the later to
occur of the following: (y) the effective date of this Amendment and
(z) the date that is one Business Day after Lender has received a
$2,000,000 payment from EWP Financial to purchase an initial
Participation pursuant to Section 4.1(a) of the Participation
Agreement, by an additional principal amount of $2,000,000; provided,
however, that if, on the date on which the Lender receives the
$2,000,000 payment -------- ------- from EWP Financial to purchase an
initial Participation pursuant to Section 4.1(a) of the Participation
Agreement, such $2,000,000 is received by Lender from EWP Financial
prior to 2:00 p.m. Eastern time, then Congress shall use its best
efforts to effect such $2,000,000 increase in the principal amount of
the Term Loan on such same date rather than on the next Business Day;
and (iii) upon the date that is one Business Day after Lender has
received a $3,000,000 payment from EWP to purchase an additional
Participation (for a total Participation of $5,000,000) pursuant to
Section 4.1(b) of the Participation Agreement, by an additional
principal amount of $3,000,000; provided, however, that if, on the
date on -------- ------- which the Lender receives the $3,000,000
payment from EWP Financial to purchase an initial Participation
pursuant to Section 4.1(b) of the Participation Agreement, such
$3,000,000 is received by Lender from EWP Financial prior to 2:00 p.m.
Eastern time, then Congress shall use its best efforts to effect such
$3,000,000 increase in the principal amount of the Term Loan on such
same date rather than on the next Business Day. Such increase(s) in
the Term Loan shall be deemed added to the Term Loan existing on the
Petition Date under the Pre-Petition Credit Agreement and shall be
deemed to be a "Term Loan" under the Agreement. The Debtors expressly
acknowledge and agree that Lender shall have no liability whatsoever
to the Debtors arising from or related to any failure of EWP to
purchase or fund any Participation at any time.
(g) Notwithstanding anything set forth in the Pre-Petition Credit
Agreement, from and after the effective date of this Amendment, the
outstanding principal balance of the Term Loan shall be amortized as
follows: A monthly installment in the amount of the lesser of $100,000
and the entire remaining unpaid balance of the Term Loan shall be due
and payable on the first day of each calendar month, commencing on
April 1, 2004, until the Term Loan has been repaid in full.
(h) Subsection 5.1 of the Pre-Petition Credit Agreement is amended by
adding the following language to the first sentence of such subsection
5.1 immediately after the phrase "and wherever located" and
immediately prior to the first parenthetical in such subsection 5.1:
", whether arising or acquired before, on or after the Petition Date"
(i) Subsection 5.2(d) of the Pre-Petition Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"(d) Borrower does not have any lockbox or other deposit accounts
(where payments on Receivables or other proceeds of Inventory or other
Collateral are deposited) as of the date hereof, except as set forth
in the Information Certificate. Borrower shall not, directly or
indirectly, after the date hereof open, establish or maintain any
lockbox or other deposit account (where payments on Receivables or
other proceeds of Inventory or other Collateral are deposited) unless
each of the following conditions is satisfied: (i) Lender shall have
received not less than five (5) Business Days prior written notice of
the intention of Borrower to open or establish such account which
notice shall specify in reasonable detail and specificity acceptable
to Lender the name of the account, the owner of the account, the name
and address of the bank at which such account is to be opened or
established, the individual at such bank with whom Borrower is dealing
and the purpose of the account, (ii) the bank where such account is
opened or maintained shall be acceptable to Lender, and (iii) on or
before the opening of such deposit account, Borrower shall as Lender
may specify either (A) deliver to Lender a Deposit Account Control
Agreement with respect to such deposit account duly authorized,
executed and delivered by Borrower and the bank at which such deposit
account is opened and maintained or (B) arrange for Lender to become
the customer of the bank with respect to the deposit account on terms
and conditions acceptable to Lender. The terms of this subsection (d)
shall not apply to deposit accounts specifically and exclusively used
for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower's salaried or hourly wage
employees. The terms of this subsection (d) shall also not apply to
the Borrower's account at U.S. Bank, Routing number: 123000220,
Account number: 153656080931, Account name: Keystone Consolidated
Industries, Inc. (the "Separate Loan Proceeds Account"); provided,
however, that notwithstanding any of the foregoing to the contrary,
the Separate Loan Proceeds Account shall at no time contain any funds
other than the proceeds of funding from EWP Financial to the Borrower
pursuant to the EWP DIP Credit Agreement and the proceeds of the DIP
Term Loan."
(j) Subsection 6.3(a) of the Pre-Petition Credit Agreement is hereby
amended and restated in its entirety to read as follows:
6.3 Collection of Accounts. (a) Borrower shall establish and maintain, at
its expense, blocked accounts or lockboxes and related blocked accounts (in
either case, "Blocked Accounts"), as Lender may specify, with such banks as are
acceptable to Lender into which Borrower shall promptly deposit and direct its
account debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. Borrower
shall deliver, or cause to be delivered to Lender, a Depository Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2 hereof or at any time and from
time to time Lender may become bank's customer with respect to the Blocked
Accounts and promptly upon Lender's request, Borrower shall execute and deliver
such agreements or documents as Lender may require in connection therewith.
Borrower agrees that all payments made to such Blocked Accounts or other funds
received and collected by Lender, whether in respect of the Receivables, as
proceeds of Inventory or other Collateral or otherwise shall be treated as
payments to Lender in respect of the Obligations and therefore shall constitute
the property of Lender to the extent of the then outstanding Obligations.
Notwithstanding any of the foregoing, the Separate Loan Proceeds Account is not
a Blocked Account, and no payments on Receivables or payments constituting
proceeds of Inventory or other Collateral shall be deposited into or held in the
Separate Loan Proceeds Account at any time."
(k) Section 6 of the Pre-Petition Credit Agreement is amended by adding the
following as subsection 6.7 thereof, immediately following the existing
subsection 6.6:
"6.7 Application of Payments. Debtors irrevocably waive the right to direct
the application of any and all payments at any time or times hereafter received
by Lender from or on behalf of Debtors, and Debtors hereby expressly agree that
Lender may apply all such amounts received by Lender on or after the Petition
Date to payment of the Obligations arising before the Petition Date before
applying any such amounts to Obligations arising on or after the Petition Date.
Debtors hereby irrevocably agree that Lender shall have the continuing exclusive
right to apply and to reverse and reapply any and all payments received at any
time or times hereafter against the Obligations and the DIP Indebtedness in such
manner as Lender may deem advisable notwithstanding any entry by Lender upon any
of its books and records. Provided that the DIP Financing has not been
terminated, all proceeds of sales of Inventory and collections of Accounts
received on or after the Petition Date shall be presumed to constitute proceeds
of Collateral that arose or was acquired before the Petition Date and shall be
applied first to Revolving Loans and then to Term Loans. Lender will apply the
proceeds of its Collateral as set forth in the Interim Order and, if and when a
Final Order is entered by the Bankruptcy Court, the Final Order. Lender may
effect permanent paydowns of the Revolving Loans as set forth in the Interim
Order and the Final Order. Congress shall be under no obligation to marshal any
assets in favor of Debtors or any other party or against or in payment of any or
all of the Indebtedness."
(l) Subsection 7.1 of the Pre-Petition Credit Agreement is amended by
adding the following at the end thereof:
"Debtor shall furnish Lender on each Friday of each week (or if any
such Friday is not a Business Day, the next Business Day) a report
setting forth (i) daily cash flow results for each day in the four
week period ending on the immediately preceding Friday and also a
reconciliation comparing actual expenses paid to the Budget as
contemplated by ordering paragraph 15 of the Interim Order (the
"Budget"), (ii) daily cash flow projections for the four week period
beginning on the immediately preceding Saturday, (iii) the actual and
projected aggregate, as of the immediately preceding Friday, of (A)
the Net Amount of Eligible Borrower Accounts, (B) the Eligible
Caldwell Accounts, (C) the Eligible Fox Valley Accounts, (D) the
Eligible Borrower Inventory, (E) the Eligible Caldwell Inventory, and
(F) the Eligible Fox Valley Inventory; (iv) in the case of each such
report required to be delivered on the last Friday of each month,
monthly cash flow projections for each of the next 13 weeks and (v)
such other financial and operating information as Lender may
reasonably request."
(m) Section 8.4 of the Pre-Petition Credit Agreement is amended by adding
the following at the end thereof:
"The Interim Order and the Final Order will each grant to Lender (i)
as security for all of the Obligations, a legal, valid, binding Lien
on all Collateral having first priority on all Collateral other than
the EWP Collateral and (ii) as security for any increased portion of
the Term Loan pursuant to clauses (ii) and (iii) of Section 1(f) of
the Assumption Agreement, a Lien on the EWP Collateral, subordinate to
the Liens in favor of EWP Financial."
(n) Section 9 of the Pre-Petition Credit Agreement is amended by deleting
existing subsection 9.13 ("Working Capital") in its entirety and
replacing such existing subsection 9.13 with the following:
"9.13 [Intentionally Deleted.]"
(o) Section 9 of the Pre-Petition Credit Agreement is amended by deleting
existing subsection 9.14 ("Tangible Net Worth") in its entirety and
replacing such existing subsection 9.14 with the following:
"9.14 [Intentionally Deleted.]"
(p) Subsection 9.15 of the Pre-Petition Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"9.15 Costs and Expenses. Borrower shall pay to Lender on demand all
costs, expenses, filing fees and taxes paid or payable in connection with
the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof
and thereof, including, but not limited to: (a) all costs and expenses of
filing or recording (including Uniform Commercial Code financing statement
filing taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable); (b) all title insurance and other
insurance premiums, appraisal fees and search fees; (c) costs and expenses
of remitting loan proceeds, collecting checks and other items of payment,
and establishing and maintaining the Blocked Accounts, together with
Lender's customary charges and fees with respect thereto; (d) charges, fees
or expenses charged by any bank or issuer in connection with the Letter of
Credit Accommodations; (e) costs and expenses of preserving and protecting
the Collateral; (f) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other
Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations
concerning any such matters, and including, without limitation, the fees
and costs of any consultants or advisors retained by Lender in Lender's
sole discretion to assist Lender during the Cases); (g) from and after an
Event of Default, all out-of-pocket expenses and costs heretofore and from
time to time hereafter incurred by Lender during the course of periodic
field examinations of the Collateral and Borrower's operations, and (h) the
fees and disbursements of counsel (including legal assistants) to Lender in
connection with any of the foregoing."
(q) Section 9 of the Pre-Petition Credit Agreement is amended by deleting
existing subsection 9.21 ("Minimum Fixed Charge Coverage Ratio") in
its entirety and replacing such existing subsection 9.21 with the
following:
"9.21 [Intentionally Deleted.]"
(r) Section 9 of the Pre-Petition Credit Agreement is amended by deleting
existing subsection 9.22 ("Minimum EBITDA") in its entirety and
replacing such existing subsection 9.22 with the following:
"9.22 [Intentionally Deleted.]"
(s) Section 9 of the Pre-Petition Credit Agreement is amended by deleting
existing subsection 9.23 ("Minimum EBITDA") in its entirety and
replacing such existing subsection 9.23 with the following:
"9.23 [Intentionally Deleted.]"
(t) Section 9 of the Pre-Petition Credit Agreement is amended by adding
the following as subsection 9.26 thereof, immediately following the
existing subsection 9.25:
"9.26 Payoff Order. At such time as all Obligations have been
indefeasibly paid in full in cash, the Debtors shall use their reasonable
best efforts to obtain, as promptly as possible, an order of the Bankruptcy
Court in form and substance reasonably satisfactory to Lender (such order,
the "Payoff Order") that provides for final allowance for all purposes in
the Cases of Lender's secured claim as set forth in the proof of claim
filed by Lender, and approves on a final basis all payments made on account
of the Obligations, and which reflects that all funding commitments or
other obligations of the Lender under this Agreement and the Interim Order
and the Final Order are terminated. Pending entry of the Payoff Order,
Lender shall be entitled to retain all liens and security interests to
secure the Borrower's indemnification obligations under subsection 11.5 of
this Agreement."
(u) Section 9 of the Pre-Petition Credit Agreement is amended by adding
the following as subsection 9.27 thereof, immediately following the
new subsection 9.26:
"9.27 Restructuring Consultant. Until all Obligations have been
indefeasibly paid in full in cash, the Debtors shall continue to retain FTI
Consulting, or such other individual or entity as is acceptable to the
Lender in the Lender's sole discretion, as restructuring consultant to the
Debtors."
(v) Section 10 of the Pre-Petition Credit Agreement is amended by
replacing Section 10.1 thereof with the following:
"10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an
"Event of Default," and collectively as "Events of Default":
(a) Any Debtor fails to pay when due any of the Obligations in
accordance with the terms of the Financing Agreements or fails to
perform any or all of the terms, covenants, conditions or
provisions contained in the Financing Agreements;
(b) any representation, warranty or statement of fact made by any
Debtor to Lender in this Agreement, the Assumption Agreement, the
other Financing Agreements or any other agreement, schedule,
confirmatory assignment or otherwise shall when made or deemed
made be false or misleading in any material respect;
(c) any Obligor or Debtor revokes, terminates or fails to perform any
of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor
of Lender;
(d) any judgment for the payment of money is rendered against any
Debtor or any Obligor in excess of $100,000 in any one case or in
excess of $500,000 in the aggregate and shall remain undischarged
or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any
judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against any
Debtor or any Obligor or any of their assets;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Debtor or any
Obligor, which is a partnership or corporation, dissolves or
suspends or discontinues doing business;
(f) conversion of any of the Cases to a case under chapter 7 of the
Bankruptcy Code;
(g) appointment of a trustee or an examiner with expanded powers in
any of the Cases or any Debtor's application for, consent to, or
acquiescence in, any such appointment;
(h) failure of Debtors to obtain a Final Order (in form and substance
satisfactory to Lender in Lender's sole discretion) by March 15,
2004, or such later date as Lender may consent to in writing
after the date hereof;
(i) except as expressly permitted in the Interim Order or the Final
Order, the filing by any Debtor of any application for approval
or allowance of, or the entry of any order approving or allowing,
any administrative expense claim in any of the Cases having any
priority over, or being pari passu with, the administrative
priority of the DIP Indebtedness;
(j) the entry of an order in any of the Cases granting relief from
the automatic stay of section 362 of the Bankruptcy Code to any
holder or holders of a lien or security interest on any
Collateral with a value of more than $75,000, and allowing such
holder or holders to foreclose or otherwise realize upon such
liens and security interests;
(k) any stay, reversal, modification or other amendment in any
respect (except to the extent acceptable to Lender) of the
Interim Order or the Final Order;
(l) any of the Financing Agreements shall cease to be in full force
and effect, or any liens and security interests granted to Lender
under the Financing Agreements shall cease to be in full force
and effect (to the extent perfection can be accomplished by
filing of UCC financial statements or possession), or any liens
and security interests granted to Lender under the Financing
Agreements shall cease to be valid;
(m) (i) the filing of any motion or proceeding with the Bankruptcy
Court, which is not dismissed, denied with prejudice or otherwise
resolved to the satisfaction of Lender within thirty (30) days of
such filing, challenging or seeking otherwise to modify, limit,
subordinate or avoid the priority of any Obligations or the
perfection or priority of Lender's pre-petition or post-petition
liens and security interests on any Collateral, or seeking to
impose, surcharge or assess against Lender, its claims or the
Collateral any costs or expenses, whether pursuant to section
506(c) of the Bankruptcy Code or otherwise, or (ii) the entry of
any order having any such effect;
(n) any failure by Debtor to timely comply with any term or provision
of the Interim Order or the Final Order;
(o) the filing of any motion or application with the Bankruptcy Court
seeking the entry of, or the entry of, an order approving any
subsequent debtor-in-possession facility for borrowed money
unless such subsequent facility and such court order expressly
provide for the payment in full to Lender of all Obligations
prior to any initial borrowings under such subsequent facility;
(p) any event or circumstance shall occur or exist and such event or
circumstance is likely, in Lender's reasonable judgment, to have
a material adverse effect on the business, assets or prospects of
Debtor or any Obligor (other than the commencement and
continuation of the Cases); or
(q) the occurrence and continuation of a Default or an Event of
Default, in each case as defined in and pursuant to the EWP DIP
Credit Agreement."
(w) Section 12 of the Pre-Petition Credit Agreement is amended by
replacing subsection 12.1(a) thereof with the following:
"(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and
shall continue in full force and effect until the earliest to occur of
the following, at which time (and except as Lender may otherwise agree
in writing in its sole discretion) this Agreement shall immediately
and automatically terminate and all Obligations shall be immediately
due and payable (such date of termination being the "Maturity Date"):
(i) March 15, 2004, unless a Final Order (in form and substance
satisfactory to Lender) has been entered by such date, in
which event the Final Order shall identify a later
applicable date;
(ii) the date of final payment and satisfaction in full of the
Obligations and termination of the DIP Financing pursuant to
this Agreement;
(iii) the effective date of any confirmed plan of reorganization
in any of the Cases;
(iv) the dismissal of any of the Cases;
(v) a material breach by any of the Debtors of any provision of
the Interim Order or the Final Order; or
(vi) Lender's election, in its sole discretion (subject to the
terms hereof), to terminate this Agreement upon the
occurrence and during the continuation of any Event of
Default.
The parties agree that Lender shall have the right in its sole
discretion to determine whether to grant any extensions of the
Maturity Date set forth in subparagraph (i) above. No termination
of this Agreement shall relieve or discharge Debtors of their
duties, obligations and covenants hereunder and under the Interim
Order and the Final Order until all Obligations have been
indefeasibly paid and satisfied in full in cash, and Lender's
continuing security interest in the Collateral shall remain in
effect until such duties, obligations, and covenants have been
fully discharged. Upon the effective date of termination or
non-renewal of the Financing Agreements, Borrower shall pay to
Lender, in full, all outstanding and unpaid Obligations and shall
furnish cash collateral to Lender in such amounts as Lender
determines are reasonably necessary to secure Lender from loss,
cost, damage or expense, including attorneys' fees and legal
expenses, in connection with any or all contingent Obligations,
including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final
and indefeasible payment. Such cash collateral shall be remitted
by wire transfer in Federal Funds to such bank account of Lender
as Lender may, in its discretion, designate in writing to
Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by
Borrower to the bank account designated by Lender are received in
such bank account later than 12:00 noon, Chicago time. Lender
shall have no obligation to release any of its liens and security
interests on the Collateral unless and until Lender's claims
shall have been fully, finally and indefeasibly paid and such
payment shall have been approved by an order of the Bankruptcy
Court."
2. Debtors' Agreement to Assume Certain Obligations and be Bound; Confirmation
of Liens and Security Interests; Cross-Guarantees. Each Debtor hereby (a)
agrees to be bound by the terms of the Financing Agreements, (b)
specifically confirms that the security interests described in the Original
Financing Agreements include a duly authorized grant by it of security
interests in its assets, whether arising or acquired before, on or after
the Petition Date, to secure payment of the Obligations arising before, on
and after the Petition Date, (c) grants first priority liens and security
interests in favor of Lender on all the post-petition assets of such
Debtor, including all types of assets in which Lender was granted a
pre-petition security interest under the Original Financing Agreements, as
well as all causes of action and claims of such Debtor's estate against
third parties, including, without limitation, claims of such Debtor under
sections 542, 543, 544, 545, 547, 548, 549, 550 and/or 553 of the
Bankruptcy Code (collectively, "Avoidance Actions"); provided, however,
Lender's lien on Avoidance Actions shall be limited as provided in ordering
paragraphs 6 and 7(b) of the Interim Order, and (d) the Debtors agree and
acknowledge that the DIP Indebtedness Obligations are joint and several
obligations of each of the Debtors, and may be allocated by the Debtors
between and among the Debtors in any fashion the Lender deems to be
appropriate, but no Debtors shall have any right to be subrogated for
Lender by virtue of making any such payment, and (e) each Debtor
unconditionally guarantees the repayment to Lender of the DIP Indebtedness
Obligations of each of the other Debtors, and such guarantee is secured by
all of the assets of each of the Debtors as set forth in the Interim Order
and the Final Order.
3. Amendment Subject to Interim Order and Final Order; Entire Agreement and
Acknowledgements of the Parties. Lender and Debtors agree that this
Amendment is qualified in its entirety by the terms of the Interim Order
and the Final Order, and in the event of any conflict between any term of
this Amendment and any term of the Interim Order or the Final Order, the
applicable term of the Interim Order or Final Order, as applicable, shall
govern. Lender and Debtors agree that the amendments set forth in this
Amendment (as modified by the Interim Order and the Final Order, as
provided above) constitute the entire agreement of the parties with respect
to the matters set forth herein, shall be limited precisely as written and
shall not be deemed to be a consent to any waiver, amendment or
modification of any other term or condition of any of the Financing
Agreements.
4. Conditions Precedent. The effectiveness of this Amendment shall be subject
to satisfaction of the following conditions (any one or all of which may be
waived in writing by Lender in its sole discretion):
(a) Receipt by Lender of executed counterparts to this Amendment, duly
executed by each Debtor;
(b) Entry by the Bankruptcy Court of the Interim Order in form and
substance satisfactory to Lender in Lender's sole discretion; and
(c) Receipt by Lender of any and all further agreements, certificates or
documents as Lender shall reasonably request together with any
consents from third party creditors of Debtors deemed necessary by
Lender.
5. References in Other Documents. All references to any of the Original
Financing Agreements shall be deemed to be a reference to such Financing
Agreement as amended.
6. Miscellaneous
(a) To induce Lender to enter into this Amendment, each Debtor hereby
represents and warrants to Lender that such Debtor has full corporate
power and authority to enter into this Amendment, that this Amendment
has been duly authorized, executed and delivered by such Debtor, and
that this Amendment constitutes a legal, valid and binding obligation
of such Debtor, enforceable against such Debtor in accordance with its
terms.
(b) This Amendment may be executed by original signature or by facsimile
transmission, and in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which,
taken together, shall constitute one and the same instrument.
(c) It is the parties' intention that this Amendment be interpreted in
such a way that it is valid and effective under applicable law;
however, if one or more of the provisions of this Amendment shall for
any reason be found to be invalid or unenforceable, the remaining
provisions of this Amendment shall be unimpaired.
7. Choice of Law and Jurisdiction. Any dispute between Lender and Debtors
arising out of, connected with, related to, or incidental to the
relationship established between them in connection with this Amendment,
and whether arising in contract, tort, equity or otherwise, shall be
resolved in accordance with the internal laws (and not the conflicts of law
provisions) of the State of Illinois.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Amendment as of the day and year first above written.
KEYSTONE CONSOLIDATED INDUSTRIES, INC., as
debtor-in-possession
By:
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Name:
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Title:
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DESOTO ENVIRONMENTAL MANAGEMENT, INC., as
debtor-in-possession
By:
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Name:
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Title:
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FV STEEL AND WIRE COMPANY, as debtor-in-possession
By:
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Name:
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Title:
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J.L. PRESCOTT COMPANY, as
debtor-in-possession
By:
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Name:
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Title:
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SHERMAN WIRE COMPANY (f/k/a DESOTO, INC.), as
debtor-in-possession
By:
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Name:
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Title:
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SHERMAN WIRE OF CALDWELL, INC., as debtor-in-possession
By:
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Name:
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Title:
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CONGRESS FINANCIAL CORPORATION (CENTRAL), as Lender
By:
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Name:
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Title:
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