EXHIBIT 10.1
R2 INVESTMENTS, LDC STANFIELD CAPITAL PARTNERS LLC
June 21, 2005
INTERMET Corporation
5445 Corporate Drive, Suite 200
Troy, Michigan 48098
Attention: Gary F. Ruff
President and Chief Executive Officer
Ladies and Gentlemen:
The undersigned, on behalf of one or more of their related or
associated entities to be designated by them (collectively, the "Initial
Committed Purchasers"), in accordance with the terms and subject to the
conditions set forth in this commitment letter and the restructuring term sheet
attached hereto as Annex "A" (the "Term Sheet"), the terms and conditions of
which are incorporated by reference herein (collectively, the "Commitment
Letter"), are pleased to provide, on a standby basis:
(a) a commitment to INTERMET Corporation ("Intermet") to purchase
7,500,000 shares of the common stock (the "New Common Stock") of Reorganized
Intermet, at a purchase price of $10.00 per share, in accordance with the terms
and subject to the conditions set forth in the Term Sheet opposite the caption
"Private Placement Purchase Agreement" (the "Private Placement Backstop
Investment"); and
(b) a commitment to Intermet to purchase the Cash-Out Shares, at a
purchase price of $10.00 per share, in accordance with the terms and subject to
the conditions set forth in the Term Sheet opposite the captions "Cash-Out
Purchase Agreement" and "Unsecured Claims" (the "Cash-Out Backstop Investment"
and, together with the Private Placement Backstop Investment, the "Backstop
Investment").
Capitalized terms used in this Commitment Letter and not defined herein
shall have the meanings assigned to such terms in the Term Sheet.
The proceeds of the Backstop Investment are to be used by the
Reorganized Company for general working capital and corporate purposes and to
make certain specified payments in connection with and to facilitate the
consummation of a plan of reorganization (the "Plan") that shall be filed by the
Company with the United States Bankruptcy Court for the Eastern District of
Michigan, Southern Division (the "Bankruptcy Court"), in connection with the
Company's chapter 11 proceedings (the "Chapter 11 Cases") initiated pursuant to
chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections 101-1330,
as amended (the "Bankruptcy Code"). The Plan shall be in form and substance
consistent with the terms and conditions of this Commitment Letter.
The Initial Committed Purchasers are willing to provide the Backstop
Investment, on a several but not joint basis, to Reorganized Intermet,
substantially on the terms and conditions set forth in this Commitment Letter.
Intermet Corporation
June 21, 2005
Page 2
The aggregate purchase price (the "Purchase Price") for the foregoing
shares of New Common Stock will be payable in cash, by wire transfer of
immediately available funds, to Reorganized Intermet on the Effective Date.
In accordance with the terms and subject to the conditions set forth in
this Commitment Letter:
(a) R2 Investments, LDC, on behalf of one or more of its related or
associated entities to be designated by it (collectively, "R2 Investments"),
shall be obligated to purchase 50% of the shares of New Common Stock issued by
Reorganized Intermet in connection with the Private Placement Backstop
Investment, and 50% of the shares of New Common Stock issued by Reorganized
Intermet in connection with the Cash-Out Backstop Investment; and
(b) Stanfield Capital Partners, on behalf of one or more of its related
or associated entities to be designated by it (collectively, "Stanfield
Capital"), shall be obligated to purchase 50% of the shares of New Common Stock
issued by Reorganized Intermet in connection with the Private Placement Backstop
Investment, and 50% of the shares of New Common Stock issued by Reorganized
Intermet in connection with the Cash-Out Backstop Investment.
Neither of the Initial Committed Purchasers shall be obligated to pay
or fund any part of the other Initial Committed Purchaser's portion of the
Purchase Price.
Set forth in detail in the Term Sheet are: (a) the conditions precedent
to the obligations of the Initial Committed Purchasers to make the Backstop
Investment; and (b) the provisions relating to the obligation of Intermet to pay
the Commitment Amount and the Reimbursable Expenses.
Each of the Initial Committed Purchaser's commitment to make the
Backstop Investment is subject to, among other things, the satisfaction (or the
written waiver by each of the Initial Committed Purchasers) of the conditions
precedent set forth in the Term Sheet opposite the caption "Initial Committed
Purchasers Conditions Precedent".
The definitive investment documents, including, without limitation, the
Restructuring Documents (collectively, the "Definitive Investment Documents")
shall contain representations, warranties, and covenants customarily included in
subscription and related agreements for similar standby underwriting investments
or financings.
On the Effective Date, Reorganized Intermet and the Initial Committed
Purchasers shall enter into the Registration Rights Agreement. A summary of the
terms and conditions of the Registration Rights Agreement is set forth on Annex
"B" to this Commitment Letter.
On the Effective Date, Reorganized Intermet will complete the Key
Employees Rights Offering, in connection with which the Key Employees shall be
afforded the opportunity to purchase, on a pro rata basis, up to 181,249 shares
of New Common Stock, at a purchase price of $10.00 per share. The names of the
Key Employees and the number of shares of New Common
Intermet Corporation
June 21, 2005
Page 3
Stock that may be purchased by each Key Employee are set forth on Annex "C" to
this Commitment Letter.
Upon reasonable notice and during normal business hours, Intermet will
afford the Initial Committed Purchasers and their counsel, accountants and other
representatives (collectively, the "Representatives") full and complete access
to the books, records and properties of the Company and the opportunity to
discuss the business, affairs and finances of the Company with the officers,
employees, accountants, attorneys and representatives of the Company in order to
enable the Initial Committed Purchasers and their Representatives to make such
investigations of the Company and its business as they deem reasonably
appropriate. Intermet agrees that it will cause the officers and employees of
the Company, and will request their respective legal counsel and accountants, to
cooperate so that the Initial Committed Purchasers can complete such review,
including promptly disclosing to the Initial Committed Purchasers any material
facts known to such parties which have resulted in, or could be expected to
result in, a Material Adverse Change.
Excluding any Indemnity Claim (as defined herein) arising solely from
an Indemnified Party's (as defined herein) breach of this Commitment Letter or
breach of any other agreements between an Indemnified Party and Intermet, or
among an Indemnified Party and the Reorganized Company, Intermet agrees to
indemnify and hold harmless the Initial Committed Purchasers and their
respective affiliates, directors, officers, partners, members, employees,
attorneys, agents and assignees (including affiliates thereof) (each an
"Indemnified Party") from and against any and all losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) or other expenses to which such Indemnified Party may become subject
(each an "Indemnity Claim"), insofar as such losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) or other expenses arise out of or in any way relate to or result from
this Commitment Letter or the proceeds of the Backstop Investment, and Intermet
agrees to reimburse (on an as incurred monthly basis) each Indemnified Party for
any legal or other out-of-pocket expenses incurred in connection with
investigating, defending or participating in any such loss, claim, damage,
liability or action or other proceeding (whether or not such Indemnified Party
is a party to any action or proceeding out of which such indemnified expenses
arise), but excluding therefrom all losses, claims, damages, liabilities and
expenses that are finally determined in a non-appealable decision of a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Indemnified Party. In the event of any litigation or
dispute involving this Commitment Letter, the Initial Committed Purchasers shall
not be responsible or liable to Intermet or any other person or entity for any
special, indirect, consequential, incidental or punitive damages. The
obligations of Intermet under this paragraph (the "Indemnification Obligations")
shall remain effective whether or not any of the transactions contemplated in
this Commitment Letter are consummated, any Definitive Investment Documents with
respect to the Backstop Investment are executed and notwithstanding any
termination of this Commitment Letter, and shall be binding upon Reorganized
Intermet in the event that any plan of reorganization of Intermet is
consummated.
Except as provided herein, Intermet agrees that, once paid, the fees or
any part thereof payable hereunder shall not be refundable or form the basis of
any defense, setoff, or recoupment claim under any circumstances, regardless of
whether the transactions contemplated by this
Intermet Corporation
June 21, 2005
Page 4
Commitment Letter are consummated. All fees payable hereunder shall be paid in
immediately available funds.
Intermet represents and warrants that: (i) all written information and
other materials concerning the Company and the Plan (the "Information") which
has been, or is hereafter, prepared by, or on behalf of, Intermet and delivered
to the Initial Committed Purchasers were or will be, when delivered, when
considered as a whole, complete and correct in all material respects and did
not, or will not when delivered, contain any untrue statement of material fact
or omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statements have been made; and (ii) to the extent that any such Information
contains projections, such projections were prepared in good faith on the basis
of (A) assumptions, methods and tests which are believed by Intermet to be
reasonable at the time made and (B) information believed by Intermet to have
been accurate based upon the information available to Intermet at the time such
projections were furnished to the Initial Committed Purchasers.
Except as otherwise required by law, Intermet shall not issue any press
release or make any other announcement that refers to the Initial Committed
Purchasers or the Backstop Investment without the prior written consent of the
Initial Committed Purchasers. Notwithstanding the sentence immediately
preceding, in no event shall Intermet issue any such press release or make any
such announcement without providing each of the Initial Committed Purchasers at
least one business day to review the proposed press release or announcement and
provide their written comments or suggested revisions with respect thereto.
This Commitment Letter (a) supersedes all prior discussions,
agreements, commitments, arrangements, negotiations or understandings, whether
oral or written, of the parties with respect thereto, (b) shall be governed,
except to the extent that the Bankruptcy Code is applicable, by the laws of the
State of New York, without giving effect to the conflict of laws provisions
thereof; (c) shall not be assignable by Intermet or the Initial Committed
Purchasers; (d) is intended to be solely for the benefit of the parties hereto
and is not intended to confer any benefits upon, or create any rights in favor
of, any person other than the parties hereto; and (e) may not be amended or
waived except by an instrument in writing signed by Intermet and the Initial
Committed Purchasers.
This Commitment Letter may be executed in any number of counterparts,
each of which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.
Notwithstanding anything herein to the contrary, all of the obligations
of Intermet hereunder are subject to the approval of the Bankruptcy Court.
Intermet shall file a motion seeking Bankruptcy Court approval of this
Commitment Letter (including the Indemnification Obligations and the payment of
the Commitment Amount (plus the Alternate Transaction Amount specified in the
Term Sheet, upon the occurrence of the events set forth therein, as a result of
which such Alternate Transaction Amount shall be payable) and Reimbursable
Expenses) as administrative expenses and obligations of the Intermet estates
within four business
Intermet Corporation
June 21, 2005
Page 5
days of the execution of this Commitment Letter by Intermet and the Initial
Committed Purchasers.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof by returning to the Initial Committed
Purchasers executed counterparts hereof not later than 5:00 p.m., New York City
time, on June 21, 2005. This Commitment Letter will become effective upon the
mutual exchange of executed counterparts hereof. This Commitment Letter shall
expire at 5:00 p.m., New York City time, on June 21, 2005, unless it has
previously become effective.
Very truly yours,
R2 INVESTMENTS, LDC
(on behalf of certain of its related
or associated entities)
By: Amalgamated Gadget, L.P., as
its Investment Manager
By: Scepter Holdings, Inc., its
General Partner
By: /s/ Rob McCormick
--------------------------------
Name: Rob McCormick
-------------------------
Title: Vice President
-------------------------
STANFIELD CAPITAL PARTNERS LLC
(on behalf of certain of its related
or associated entities)
By: /s/ Christopher Pucillo
--------------------------------
Name: Christopher Pucillo
-------------------------
Title: Partner
------------------------
Agreed and accepted on this
21 day of June, 2005
INTERMET Corporation
By: /s/ Gary F. Ruff
--------------------------------
Name: Gary F. Ruff
------------
Title: President and Chief Executive Officer
-------------------------------------
ANNEX "A"
Restructuring Term Sheet
INTERMET CORPORATION
RESTRUCTURING TERM SHEET
JUNE 21, 2005
The terms and conditions described herein are part of a comprehensive
compromise, each element of which is consideration for the other elements and an
integral aspect of the proposed restructuring. This term sheet does not
constitute an offer or a legally binding obligation of the Company (as defined
below), the Initial Committed Purchasers (as defined below) or any other party
in interest, nor does it constitute an offer of securities or a solicitation of
the acceptance or rejection of a chapter 11 plan for the Company. The
transactions contemplated by this term sheet are subject to conditions to be set
forth in definitive documents. This term sheet is part of the commitment letter
(the "Commitment Letter"), dated June 21, 2005, addressed to Intermet (as
defined below) by the Initial Committed Purchasers and is subject to the terms
thereof. This term sheet is proffered in the nature of a settlement proposal in
furtherance of settlement discussions and is entitled to protection from any use
or disclosure to any party or person pursuant to Federal Rule of Evidence 408
and any other rule of similar import.
Until publicly disclosed by INTERMET Corporation, with the prior written consent
of the Initial Committed Purchasers, this term sheet and the information
contained herein is strictly confidential and may not be shared with any person
other than the DIP Lenders (as defined below), the Senior Credit Lenders (as
defined below), the Exit Facility Lenders (as defined below), the Official
Committee of Unsecured Creditors (the "Creditors' Committee") appointed in the
Chapter 11 Cases (as defined below), the Official Committee of Equity Holders
(the "Equity Committee") appointed in the Chapter 11 Cases, the Ad Hoc Committee
of Trade Claimants (the "Ad Hoc Trade Committee") and each such party's
professionals and other advisors.
<Table>
COMPANY: INTERMET Corporation ("Intermet" and, as reorganized, "Reorganized
Intermet"), and certain of its subsidiaries (together with Intermet, the
"Company" and, as reorganized with Reorganized Intermet, the "Reorganized
Company").
NOTEHOLDERS: The entities (the "Noteholders") that hold 9.75% Senior Notes due 2009
issued by Intermet and guaranteed by certain subsidiaries of Intermet
(collectively, the "Notes"). The claims held by the Noteholders (inclusive
of principal and interest accrued as of the petition date of the Chapter 11
Cases) against Intermet and all of the guaranty claims held by the
Noteholders against Intermet's debtor subsidiaries shall be collectively
referred to herein as the "Noteholder Claims".
OTHER UNSECURED CLAIMANTS: Holders of all unsecured obligations (the "GUC Claims") other than (i) the
Notes; and (ii) such obligations which qualify or elect to be treated in a
convenience class (the "Convenience Class Claims") of Intermet and its
debtor subsidiaries (the "GUC Holders", together with the Noteholders, the
"Unsecured Holders").
INITIAL COMMITTED PURCHASERS: R2 Investments, LDC and/or one or more of its related or associated entities
(collectively, "R2 Investments") and Stanfield Capital Partners and/or one
or more of its related or associated entities (collectively, "Stanfield
Capital" and, together with R2 Investments, the "Initial
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Committed Purchasers").
RESTRUCTURING TRANSACTION: Subject to the terms of the Commitment Letter, Intermet shall restructure
its capital structure (the "Restructuring") through a chapter 11 plan of
reorganization (the "Plan") filed with the United States Bankruptcy Court
for the Eastern District of Michigan, Southern Division (the "Bankruptcy
Court"), in cases commenced by the Company on September 29, 2004 under
chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases"), the material
terms and conditions of which are set forth in this term sheet.
PRIVATE PLACEMENT PURCHASE AGREEMENT: In accordance with the terms and subject to the conditions of a purchase
agreement (the "Private Placement Purchase Agreement"), the Initial
Committed Purchasers shall commit (the "Funding Commitment") to purchase, on
a pro rata basis, on the Effective Date (as defined below), 7,500,000 shares
(the "Private Placement Shares") of newly-issued shares of common stock (the
"New Common Stock") of Reorganized Intermet, at a purchase price of $10.00
per share, to the extent not otherwise purchased in the Rights Offering (as
defined below). The Funding Commitment shall be subject to the right of the
Unsecured Holders, including the Initial Committed Purchasers, pursuant to
an election to be made in conjunction with voting on the Plan, to purchase,
on a ratable basis, the full amount of the Private Placement Shares (the
"Rights Offering"). The Private Placement Shares shall be subject to
dilution by the Unsecured Shares (as defined below), the Key Employees
Rights Offering (as defined below), the Management Incentive Plan (as
defined below) and the Alternate Subscription Shares (as defined below). In
no event shall any Unsecured Holder have any right of over-subscription with
respect to the Rights Offering. Moreover, the rights afforded to all
Unsecured Holders to purchase the New Common Stock shall be
non-transferable. The Private Placement Purchase Agreement, which shall
reflect the agreement of the Initial Committed Purchasers to purchase the
Private Placement Shares to be issued by Reorganized Intermet in connection
with the Plan, shall include representations, warranties and covenants
customary for transactions of similar type and monetary amount and otherwise
acceptable to the parties thereto. The Private Placement Purchase Agreement
(and the Plan with respect to items (i) and (ii) below) shall, among other
things, specifically contain:
(i) a provision specifying that Reorganized Intermet shall obtain
and maintain in full force tail insurance covering such risks as are
presently covered for a period of not less than 5 years after the Effective
Date in favor of the former and current officers and directors of the
Company on terms and conditions acceptable to the Company and the Initial
Committed Purchasers; provided, however, that the aggregate cost of such
tail insurance shall not exceed $1.5 million;
(ii) a provision specifying that Reorganized Intermet shall
indemnify all officers and directors of the Company who served in such
capacity at any time prior to the Effective Date (as defined
2
below) for any amounts such officers and directors are required to pay as a
result of any retentions or deductibles applicable under policies of insurance
in effect on the date hereof or as contemplated by paragraph (i) above,
which policies (or extensions thereof having terms no less favorable to the
officers and directors) shall be assumed by Reorganized Intermet in the Plan.
The indemnity described in the preceding sentence shall not include liability
relating to any action, omission, transaction, event, occurrence or other
circumstance that would constitute an exclusion under the applicable policies
of insurance or liability in excess of the limits of such policies. The
provision shall specify that amounts payable by Reorganized Intermet pursuant
to this provision shall be paid on a current basis on behalf of the officers
and directors, without requiring the officers and directors to first pay such
amounts from their own funds and then seek reimbursement from Reorganized
Intermet, so long as Reorganized Intermet shall have received a written
undertaking by each such officer and director to repay such amounts to
Reorganized Intermet if it shall be determined by a court of competent
jurisdiction pursuant to a final, non-appealable order that such officer
or director is not entitled to coverage under such policies of insurance;
(iii) a provision that the Private Placement Purchase Agreement and
the Cash-Out Purchase Agreement (as defined below) shall terminate
automatically upon the termination of the Commitment Letter. Upon any such
termination, the obligations of the parties to the Private Placement
Purchase Agreement and the Cash-Out Purchase Agreement shall be of no
further force or effect, except as otherwise expressly set forth therein; and
(iv) a representation and warranty stating that the Initial
Committed Purchasers hold, as of the date of the Commitment Letter,
collectively, on behalf of certain funds and managed accounts, in excess of
$58.0 million in face amount of the Notes.
CASH-OUT PURCHASE The detailed terms and conditions pursuant to which the Initial Committed
AGREEMENT: Purchasers shall purchase the Cash-Out Shares (as defined below) shall be
set forth in a purchase agreement (the "Cash-Out Purchase Agreement") by and
among Intermet and the Initial Committed Purchasers. The Cash-Out Purchase
Agreement shall include representations, warranties and covenants customary
for transactions of similar type and monetary amount and otherwise
acceptable to the parties.
TREATMENT OF CLAIMS AND INTERESTS:
ADMINISTRATIVE, PRIORITY TAX, On or as soon as practicable after the effective date of the Plan (the
AND OTHER PRIORITY CLAIMS: "Effective Date"), each holder of an administrative, priority tax or other
priority claim, including, without limitation, the administrative claim, if
any, of the Pension Benefit Guaranty Corporation, shall receive cash equal
to the full amount of its claim or otherwise be left
3
unimpaired, unless otherwise agreed to by such holder or permitted by the
Bankruptcy Code.
DIP CREDIT FACILITY: On the Effective Date, the loans made and letters of credit issued in
connection with the $60.0 million DIP Credit Facility (the "DIP Credit
Facility") made available to the Company by Deutsche Bank Trust Company
Americas, The Bank of Nova Scotia and certain other lenders (collectively,
the "DIP Lenders") shall be refinanced in full by the Exit Facility (as
defined below).
SENIOR CREDIT FACILITY LOANS: On the Effective Date, the loans made and letters of credit issued in
connection with the $210.0 million Senior Secured Credit Facility (the
"Senior Credit Facility Loans") made available to the Company by The Bank of
Nova Scotia (the "Senior Credit Agent") and certain other pre-petition
lenders (collectively, the "Senior Credit Lenders") shall be refinanced in
part by the Exit Facility, with the balance paid in cash applied from the
proceeds realized from the issuance and sale of the Private Placement Shares
or the Rights Offering.
CAPITAL LEASES On or as soon as reasonably practicable after the Effective Date, the
capital leases to which the Company is a party shall be, at the option of
the Company with the approval of the Initial Committed Purchasers and in
consultation with the Creditors' Committee: (i) reinstated; (ii) reinstated
and assigned to a Debtor other than the existing Debtor obligor; or (iii)
restructured on terms acceptable to the lessors thereunder, the Company and
the Initial Committed Purchasers.
UNSECURED CLAIMS: The Plan shall provide for a separate class of unsecured creditors for each
of the Debtors, which class shall, except as otherwise agreed by the Initial
Committed Purchasers and the Company in consultation with the Creditors'
Committee, include all unsecured claims against such Debtor, other than
Convenience Class Claims, including GUC Claims and Noteholder Claims (each
an "Unsecured Class"). On or as soon as reasonably practicable after the
Effective Date, in exchange for their allowed Noteholder Claims and GUC
Claims, U.S. Bank N.A., acting in its capacity as indenture trustee (the
"Indenture Trustee"), on behalf of the Noteholders, and the GUC Holders
shall, except as otherwise agreed by the Initial Committed Purchasers and
the Company in consultation with the Creditors' Committee, receive: (a)(i)
a pro rata portion of 2,500,000 newly issued shares of New Common Stock
allocated to the applicable Debtor (the "Unsecured Shares") at a defined
ratio per $1,000 of Allowed Claim, which allocation shall be acceptable to
the Initial Committed Purchasers. The Unsecured Shares shall be subject to
dilution by the issuance of the Private Placement Shares, the Key Employees
Rights Offering, the Management Incentive Plan, and the issuance of the
Alternate Subscription Shares and (ii) the right (the "Rights ") to purchase
three (3) shares of New Common Stock in the Rights Offering for every
Unsecured Share issuable to an Unsecured Holder at a price of $10.00 per
share, 7,500,000 shares in the aggregate, allocated to the applicable
Debtor, which allocation shall be acceptable to the Initial
4
Committed Purchasers; or (b) at the option of each such Unsecured Holder and
in lieu of such Unsecured Shares, (i) cash in the amount of $10.00 per share
of New Common Stock (the "Cash-Out Amount") or (ii) to the extent that such
Unsecured Holder has agreed to seek recovery from the Debtor that is the
primary obligor according to the Debtors' books and records with respect to
its allowed unsecured claim (each an "Allowed Unsecured Claim"), has agreed to
waive its right to seek recovery from any additional Debtor against whom it
has a claim as an obligor or otherwise for such Allowed Unsecured Claim, and
votes in favor of the Plan, the lesser of (x) cash in an amount equal to a
fixed percentage of its Allowed Unsecured Claims against such Debtors, which
percentage will be in the range of 0% and 5% - which percentage will vary from
Debtor to Debtor but in all cases shall yield a recovery which is greater than
or equal to the recovery to which such Unsecured Holder would have been
entitled in clause (a) of this paragraph (except as otherwise mutually agreed
upon by the Debtors and the Initial Committed Purchasers, in consultation with
the Creditors' Committee) (the "Inducement Cash Amount") or (y) its pro rata
share of a fixed amount of cash (the "Inducement Cash Pool") allocated under
the Plan to pay all Inducement Cash Amounts (the "Inducement Cash Election"),
which Inducement Cash Pool shall be acceptable to the Initial Committed
Purchasers, in consultation with the Creditors' Committee.
To the extent that an Unsecured Holder does not make an election in
connection with the Plan, such Unsecured Holder shall be deemed to have
elected the Cash-Out Amount.
Unsecured Holders that elect to receive the Cash-Out Amount in lieu of
Unsecured Shares are referred to herein collectively as the "Cash-Out
Creditors". The Unsecured Shares that otherwise would have been distributed
to the Cash-Out Creditors in exchange for their unsecured claims, absent
their election to receive cash in lieu of such Unsecured Shares, are
referred to herein as the "Cash-Out Shares".
The Rights shall be deemed issued on the date that ballots for voting on the
Plan and subscription forms (the "Subscription Forms") are mailed to the
Unsecured Holders (the "Subscription Commencement Date"), which shall be the
date of issuance of the Rights if issued under the Section 1145 Offering (as
defined below) and shall expire on the date that is the deadline established
by the Bankruptcy Court for voting on the Plan (the "Subscription Expiration
Date"). The Rights shall be exercisable by each qualified Unsecured Holder
by (i) execution and delivery to a subscription agent to be retained by the
Debtors (the "Subscription Agent") of a Subscription Form; and (ii) payment
in full in cash of the Exercise Price for the number of Private Placement
Shares proposed to be purchased by such Unsecured Holder in the Rights
Offering on or before the Subscription Expiration Date.
The Rights Offering shall be effectuated either (i) pursuant to section
1145(a) of the Bankruptcy Code (the "Section 1145 Offering"); or (ii)
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in connection with a direct private placement of the Rights Offering to be
conducted in compliance with section 4(2) of the Securities Act. To the extent
possible, the issuance of the Rights and the sale of Private Placement Shares
to the holders of the Rights upon the exercise thereof shall be deemed to have
occurred pursuant to the exemption from Securities Act registration granted by
section 1145(a) of the Bankruptcy Code.
In the event that counsel to the Debtors determine that the exemption
granted by section 1145(a) of the Bankruptcy Code is unavailable to exempt
the issuance and sale of the Private Placement Shares from Securities Act
registration, (i) the issuance and sale of the Private Placement Shares
shall be effected in a direct private placement to the Unsecured Holders
pursuant to Section 4(2) of the Securities Act (the "Private Placement");
(ii) the Rights shall be deemed issued only to Unsecured Holders who are
"accredited investors" within the meaning of the applicable provisions of
the securities laws, (iii)each Unsecured Holder's election to participate in
the Rights Offering , as reflected on its Subscription Form, shall remain
binding as to participation in the Private Placement or as reflected on the
ballot shall remain binding as to participants in the Section 1145 Offering;
(iv) all funds tendered upon exercise of the Subscription Rights in
connection with the Section 1145 Offering shall be applied to the payment of
the aggregate Exercise Price in connection with the Private Placement or the
Section 1145 Offering; and (v) the Private Placement or the Section 1145
Offering shall be consummated by distribution of the Private Placement
Shares to the Unsecured Holders on the Effective Date.
DISPUTED CLAIMS: In the event that any Debtor or party in interest disputes the amount of an
Unsecured Holder's claim, the Company shall, with respect to each disputed
claim, reserve out of the Unsecured Shares an amount of New Common Stock
equal to the lesser of: (i) the amount estimated by the Bankruptcy Court
pursuant to Bankruptcy Rule 3018(A), which amount shall be the maximum
amount of such Unsecured Holder's claim and (ii) the amount asserted by such
Unsecured Holder. An Unsecured Holder that disputes the amount of its claim
shall only be able to exercise the rights allocable in the Rights Offering
with respect to the undisputed portion of such claim, if any; provided,
however, that the Company and the Initial Committed Purchasers shall agree,
in consultation with the Creditors' Committee, to a mechanism to determine
the undisputed portion of a disputed claim.
INDENTURE TRUSTEE FEES: In connection with the allocation of value among the Debtors' estates, up to
$500,000 in cash will be allocated as treatment to Unsecured Creditors,
substantially all of which shall be Noteholders, to SUDM, Inc. or another
subsidiary, which cash shall be used to pay the reasonable fees and
out-of-pocket expenses of the Indenture Trustee and its counsel in
connection with the Chapter 11 Cases.
CONVENIENCE CLAIMS: Pursuant to this class, an Unsecured Holder holding one or more Allowed
Unsecured Claims against a particular Debtor in an aggregate
6
amount equal to or less than $125,000 or that elects to reduce the aggregate
amount of its Allowed Unsecured Claims to $125,000 shall, in exchange for its
Allowed Unsecured Claims, receive cash equal to a fixed percent of its Allowed
Unsecured Claims to be agreed upon by the Debtors and the Initial Committed
Purchasers, in consultation with the Creditors' Committee, which percentage
recovery would be greater than or equal to the percentage recovery applicable
with respect to the Inducement Cash Amount for such Debtor; provided, however,
that the aggregate amount of distributions to holders of claims in these
convenience classes shall not exceed $5 million.
EXISTING EQUITY: The holders of the existing Intermet common stock and the holders of any
options, warrants or rights to acquire any equity securities of Intermet
will not receive any distributions or retain any property on account of
their equity interests in Intermet.
SETTLEMENT: All distributions to be made pursuant to the Plan in treatment of claims
will be in full satisfaction of such claims, including but not limited to
satisfaction of all intercreditor agreements and interests of and between
the parties receiving such distributions, including, without limitation, any
litigation claims, whether known or unknown, which could be asserted by such
claimants against the Company or its directors, officers, employees or
agents.
RELEASES: On the Effective Date, effective as of date on which the Bankruptcy Court
confirms the Plan (the "Confirmation Date"), and except as otherwise
provided herein or in the Confirmation Order (as defined below), Intermet,
Reorganized Intermet, the Company, the Reorganized Company, each Initial
Committed Purchaser, the Senior Credit Agent on its own behalf and on behalf
of the Senior Credit Lenders who consent to such release (the "Consenting
Senior Credit Lenders")), the Creditors' Committee and its members, and the
Indenture Trustee shall waive, release, and discharge each of the Company's
former and current directors and officers, employees, agents, managers,
advisors, attorneys or representatives (in their capacity as such and in no
other capacity) from all liability based upon any act or omission related to
pre-petition service or post-petition service with, for, or on behalf of the
Company or its affiliates through and including the Effective Date, subject
to a carve-out for intentional fraud and willful misconduct as determined by
a final order of the Bankruptcy Court.
On the Effective Date, effective as of the Confirmation Date, and except as
otherwise provided herein or in the Confirmation Order, Intermet,
Reorganized Intermet, the Company and the Reorganized Company (the
"Releasing Parties") shall waive, release and discharge each Initial
Committed Purchaser, the Senior Credit Agent, the Consenting Senior Credit
Lenders, the Creditors' Committee, and the Indenture Trustee, and each of
their respective members, officers, directors, agents, financial advisors,
attorneys, employees, equity holders, partners, affiliates and
representatives and their respective
7
properties, from any liability based upon any act or omission related to
post-petition date service in such capacity with, for or on behalf of the
Releasing Parties, through and including the Effective Date, subject to a
carve-out for intentional fraud and willful misconduct as determined by a
final order of the Bankruptcy Court.
On the Effective Date, effective as of the Confirmation Date, and except as
otherwise provided herein or in the Confirmation Order (a) each person that
votes to accept the Plan, and (b) to the fullest extent permissible under
applicable law, all holders of claims, in consideration for the obligations
of the Company and the Reorganized Company under the Plan and the cash and
other contracts, instruments, releases, agreements or documents to be
delivered in connection with the Plan, each entity (other than the Company)
that has held, holds or may hold a claim, as applicable, shall have
conclusively, absolutely, unconditionally, irrevocably and forever, released
each Released Party from any claim or cause of action that is based in whole
or in part upon any act, omission, transaction, event or other occurrence
taking place before the Effective Date in connection with any of the Debtors
or their respective property, except for intentional fraud and willful
misconduct as determined by a final order of the Bankruptcy Court
(collectively, the "Released Actions") and in all respects shall be entitled
to rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan; provided, however, that any party in
interest may enforce the terms of the Plan. Nothing in the Plan shall
prejudice any right, remedy, defense, claim, cross-claim, counterclaim, or
third party claim that any person may have against any person other than
with respect to the Released Actions against the Released Parties. As used
herein, "Released Parties" shall mean collectively, Intermet, Reorganized
Intermet, the Company, the Reorganized Company, each Initial Committed
Purchaser, the Creditors' Committee, the Senior Credit Agent, each
Consenting Senior Credit Lender and the Indenture Trustee, and each of their
respective former and current members, officers, directors, agents,
financial advisors, attorneys, employees, equity holders, partners,
affiliates and representatives and their respective properties.
Notwithstanding any provision of the Plan to the contrary, the foregoing
releases shall not apply to (i) any indebtedness of any person to the
Company for money borrowed by such person, (ii) any setoff or counterclaim
that the Company may have or assert against any person, provided that the
aggregate amount thereof shall not exceed the aggregate amount of any claims
held or asserted by such person against the Company, and (iii) any
garnishments. Notwithstanding any provision in the Plan to the contrary,
the releases contained in this section shall not be construed as or operate
as a release of any actions retained by the Reorganized Company pursuant to
the Plan.
8
OTHER FEATURES OF THE
RESTRUCTURING:
THE KEY EMPLOYEE RIGHTS OFFERING: The Company will conduct a key employee rights offering (the "Key Employee
Rights Offering"), in connection with which the Company shall offer to the
Key Employees (as defined below) the right to purchase, on a pro rata basis,
181,249 shares of New Common Stock, in consideration for cash in the amount
of $10.00 per share. The Key Employees shall have a right of
over-subscription with respect to the Key Employee Rights Offering as set
forth on Annex C. Moreover, the rights to purchase shares of New Common
Stock in connection with the Key Employee Rights Offering shall be
non-transferable. Other terms and conditions of the Key Employee Rights
Offering are to be determined by the Company and the Initial Committed
Purchasers, in consultation with the Creditors' Committee.
As used herein, the term "Key Employees" means those persons who: (i) shall
be employed by the Company on the Effective Date; (ii) upon consummation of
the Plan, shall be entitled to receive stay bonuses under the Intermet
Amended and Restated Employee Retention Plan, dated effective September 20,
2004 and restated December 8, 2004 (the "KERP"); and (iii) are identified in
an annex to the Commitment Letter.
The Key Employees either: (i) may receive in cash any unpaid stay bonuses to
which they may be entitled in accordance with the terms and subject to the
conditions of the KERP, including, without limitation, the stay bonus
payment schedule set forth therein; or (ii) upon consummation of the Plan,
may purchase shares of New Common Stock in connection with the Key Employee
Rights Offering by authorizing Reorganized Intermet to apply, on their
behalf, on a dollar-for-dollar basis, any such stay bonuses toward the
purchase of the shares of New Common Stock covered by the Key Employee
Rights Offering.
PURCHASE OF On the Effective Date: (i) the Initial Committed Purchasers shall purchase,
CASH-OUT SHARES: on a pro rata basis, from Reorganized Intermet the Cash-Out Shares, for an
aggregate consideration equal to the product (the "Aggregate Cash-Out
Payment") determined by multiplying the Cash-Out Amount by the total number
of Cash-Out Shares; and (ii) the Initial Committed Purchasers shall deliver
to Reorganized Intermet, by wire transfer of immediately available funds,
cash in the amount of the Aggregate Cash-Out Payment, in consideration of
the Cash-Out Shares.
EXIT FACILITY: A term loan facility and a revolving loan/letter of credit facility the
total of which shall not exceed $260 million, or such other higher amount as
the Company and Initial Committed Purchasers, in consultation with the
Creditors' Committee, deem appropriate and necessary (collectively, the
"Exit Facility"), shall be made available, by one or more lenders
(collectively, the "Exit Facility Lenders"), to
9
the Company, on terms and conditions acceptable to the Company and the Initial
Committed Purchasers, in consultation with the Creditors' Committee.
EMPLOYMENT AGREEMENTS: In connection with the Plan, each officer currently a party to an employment
agreement with the Company shall enter into a new employment agreement
between such officer and the Company, on terms and conditions acceptable to
the Initial Committed Purchasers, in consultation with the Creditors'
Committee, which shall supersede such officer's existing employment
agreement.
MANAGEMENT INCENTIVE PLAN: On or as soon as reasonably practicable after the Effective Date, a
management incentive plan (the "Management Incentive Plan") shall be
implemented to reserve for designated members of senior management of the
Reorganized Company equity interests (including, without limitation,
restricted common stock and/or options) in Reorganized Intermet in an amount
up to 5.0% of the New Common Stock issued on the Effective Date. The
Management Incentive Plan will contain terms and conditions that shall be
determined by the Board of Directors of Reorganized Intermet.
STOCKHOLDERS' AGREEMENT: All holders of New Common Stock will be subject to a stockholders' agreement
(the "Stockholders' Agreement") which will, among other things, govern
appointment of the Board of Directors of Reorganized Intermet, each holder
of New Common Stock's access to information with respect to the Reorganized
Company, and ability to transfer such holder's New Common Stock. No New
Common Stock shall be distributed pursuant to the Plan or otherwise until
and unless the recipient agrees in writing to be bound by the Stockholders'
Agreement. Each certificate representing share(s) of New Common Stock shall
bear a legend indicating that the New Common Stock is subject to the
Stockholders' Agreement. The Stockholders' Agreement will be effective as
of the Effective Date. The Stockholders' Agreement shall be in form and
substance acceptable to the Initial Committed Purchasers.
REIMBURSABLE EXPENSES: The Company shall pay, within 10 days of receipt of an invoice from the
Initial Committed Purchasers, the reasonable and documented out-of-pocket
fees and expenses incurred by the Initial Committed Purchasers, including
the fees and expenses of their legal counsel, on and after January 10, 2005
in connection with the Restructuring, plus all of the reasonable and
documented fees and expenses incurred by the Initial Committed Purchasers,
including the fees and expenses of their legal counsel, in connection with
the drafting, negotiation, prosecution or defense of the Commitment Letter
(including this term sheet), the Private Placement Purchase Agreement, the
Rights Offering, corporate governance documents, the Cash-Out Purchase
Agreement, the Plan, the Disclosure Statement, the Confirmation Order, the
Stockholders' Agreement, the Exit Facility agreements and related documents
and any and all agreements and other documents ancillary hereto or thereto
(collectively, the "Restructuring
10
Documents"), including any fees and expenses incurred by the Initial Committed
Purchasers in connection with obtaining all required regulatory approvals
(collectively, the "Reimbursable Expenses"). The accrual of the Reimbursable
Expenses to be paid by Intermet hereunder shall cease in the event that the
Commitment Letter is terminated. So long as the Initial Committed Purchasers
are not in material breach of their obligations under the Commitment Letter,
the obligations of Intermet to pay the Reimbursable Expenses provided herein
shall remain effective whether or not any of the transactions contemplated by
this Term Sheet are consummated, any definitive documents with respect to the
Restructuring are executed and notwithstanding any termination of the
Commitment Letter, and shall be binding upon Reorganized Intermet whether or
not any plan of reorganization with respect to Intermet is consummated.
Notwithstanding anything contained herein or in the Commitment Letter to the
contrary, the payment of any amounts due pursuant to the Commitment Letter
or this Term Sheet, including but not limited to the Reimbursable Expenses
due shall be subject to the approval of the Commitment Letter by the
Bankruptcy Court, and such payment not causing a default pursuant to the DIP
Credit Facility; provided, however, if any such payment would cause a
default pursuant to the DIP Credit Facility, the Initial Committed
Purchasers shall have a super-priority administrative expense claim for such
unpaid amount subordinate only to the claims of the DIP Lenders.
CORPORATE GOVERNANCE: On the Effective Date, the Board of Directors of Reorganized Intermet shall
be composed of seven members. On the Effective Date, five of such members
shall be selected by the Initial Committed Purchasers, one of such members
shall be the Chief Executive Officer of Reorganized Intermet and one of such
members shall be selected by the Creditors' Committee. The member selected
by the Creditors' Committee shall be acceptable to the Initial Committed
Purchasers. Two of the five members selected by the Initial Committed
Purchasers may not be officers, directors or employees of either of the
Initial Committed Purchasers.
REGISTRATION RIGHTS: On the Effective Date, Reorganized Intermet shall enter into a Registration
Rights Agreement with the Initial Committed Purchasers, pursuant to which
Intermet shall agree to register the resale of the shares of New Common
Stock issued to the Initial Committed Purchasers in accordance with the
requirements of the Securities Act of 1933, as amended. The Registration
Rights Agreement shall provide that any holder owning greater than 10% of
the outstanding New Common Stock upon emergence shall be entitled to
piggyback registration rights. A summary of the material terms and
conditions of the Registration Rights Agreement (including without
limitation the time period which must have lapsed before any demand
registration may be made thereunder) shall be set forth in an annex to the
Commitment Letter.
11
INITIAL COMMITTED PURCHASERS The obligations of the Initial Committed Purchasers, and such qualified
CONDITIONS PRECEDENT: holders of Noteholder Claims that have so elected, to purchase the Private
Placement Shares, and the obligations of the Initial Committed Purchasers to
purchase the Cash-Out Shares, will be subject to the following conditions
precedent (each, an "Initial Committed Purchasers Condition Precedent"),
each of which may be waived in writing by both of the Initial Committed
Purchasers:
(i) the Plan and the disclosure statement (the "Disclosure
Statement") shall be in form and substance consistent with the
provisions of the Commitment Letter and reasonably
satisfactory to the Initial Committed Purchasers;
(ii) a final, non-appealable order confirming the Plan (the
"Confirmation Order"), in form and substance reasonably
satisfactory to the Initial Committed Purchasers, shall have
been entered by the Bankruptcy Court;
(iii) there shall not have occurred any Material Adverse Change (as
defined below);
(iv) execution and delivery of appropriate legal documentation
regarding the Restructuring, including without limitation,
(A) the amended and restated certificate of incorporation and
bylaws of Reorganized Intermet and each of its subsidiaries,
(B) the Exit Facility, (C) the Registration Rights Agreement,
(D) Private Placement Purchase Agreement, (E) the
Stockholders' Agreement, and (F) the Cash-Out Purchase
Agreement, each in form and substance satisfactory to the
Initial Committed Purchasers and the satisfaction of the
conditions precedent contained therein, which conditions
precedent shall not vary materially from the conditions
precedent set forth herein;
(v) all material governmental, regulatory and third party
approvals, waivers and/or consents in connection with the
Restructuring (collectively, "Approvals") shall have been
obtained and shall remain in full force and effect, and there
shall exist no claim, action, suit, investigation, litigation
or proceeding, pending or threatened in any court or before
any arbitrator or governmental instrumentality, which would
prohibit the Initial Committed Purchasers from consummating
the transactions contemplated by the Commitment Letter;
(vi) the Company realizes year-to-date consolidated EBITDA for
2005, excluding administrative fees and expenses associated
with the Restructuring, through the latest calendar month
ending at least 25 days prior to the Effective Date, in an
amount that is no less than the amount specified for such
calendar month on Exhibit A
12
hereto, and the Company shall provide the Initial Committed
Purchasers on the Effective Date a statement, which shall be
executed by the President and Chief Executive Officer and Chief
Financial Officer of Intermet, which shall set forth the actual
year to date EBITDA through such calendar month;
(vii) issuance by Reorganized Intermet of the shares of New Common
Stock to the Initial Committed Purchasers as described herein;
(viii) cash (or cash equivalents) and/or availability under the Exit
Facility as of the Effective Date, after giving effect to the
proceeds realized from the issuance and sale of the Private
Placement Purchase Shares, but taking into account
distributions under the Plan, of at least the amount required
pursuant to the Exit Facility, and the Company shall provide
the Initial Committed Purchasers, on the business day
immediately preceding the Effective Date, a certificate,
executed by the President and Chief Executive Officer and the
Chief Financial Officer of Intermet, confirming such
availability;
(ix) payment in full of the Commitment Amount (as defined below)
and all Reimbursable Expenses outstanding on the Effective
Date, pursuant to the terms contained herein;
(x) [INTENTIONALLY LEFT BLANK;]
(xi) the Exit Facility shall have closed on the terms and
conditions acceptable to the Company and the Initial Committed
Purchasers, in consultation with the Creditors' Committee, and
not materially inconsistent with the terms of the Commitment
Letter;
(xii) on the Effective Date, all representations and warranties of
the Company contained in the Commitment Letter, Private
Placement Purchase Agreement and the Cash-Out Purchase
Agreement shall be true, complete and accurate in all material
respects; and
(xiii) on the Effective Date, all covenants of the Company contained
in the Commitment Letter, Private Placement Purchase Agreement
and the Cash-Out Purchase Agreement shall have been complied
with by the Company in all material respects.
INTERMET CONDITIONS PRECEDENT: The obligations of Intermet to consummate the transactions contemplated by
the Commitment Letter will be subject to the following conditions precedent
(each an "Intermet Condition Precedent"), each of which may be waived in
writing by Intermet, in
13
consultation with the Creditors' Committee:
(i) on the Effective Date, all representations and warranties of
the Initial Committed Purchasers contained in the Commitment
Letter, Private Placement Purchase Agreement and the Cash-Out
Purchase Agreement shall be true, complete and accurate in all
material respects;
(ii) on the Effective Date, all covenants of the Initial Committed
Purchasers contained in the Commitment Letter, Private
Placement Purchase Agreement and the Cash-Out Purchase
Agreement shall have been complied with by the Initial
Committed Purchasers in all material respects;
(iii) the Confirmation Order, in form and substance satisfactory to
the Company, shall have been entered by the Bankruptcy Court;
(iv) execution and delivery of appropriate legal documentation
regarding the Restructuring, including without limitation, (A)
the amended and restated certificate of incorporation and
bylaws of Reorganized Intermet and each of its Subsidiaries,
(B) the Exit Facility, (C) the Registration Rights Agreement,
(D) the Private Placement Purchase Agreement, (E) the
Stockholders' Agreement and (F) the Cash-Out Purchase
Agreement, each in form and substance satisfactory to the
Company and the satisfaction of the conditions precedent
contained therein, which conditions precedent shall not vary
materially from the conditions precedent set forth herein;
(v) all material Approvals shall have been obtained and shall
remain in full force and effect, and there shall exist no
claim, action, suit, investigation, litigation or proceeding,
pending or threatened in any court or before any arbitrator or
governmental instrumentality, which would prohibit the Company
from consummating the transactions contemplated by the
Commitment Letter;
(vi) the Exit Facility shall have closed on the terms and
conditions acceptable to the Company; and
(vii) (A) Reorganized Intermet shall obtain and maintain in full
force tail insurance covering such risks as are presently
covered for a period of not less than 5 years after the
Effective Date in favor of the former and current officers
and directors of the Company on terms and conditions acceptable
to the Company and the Initial Committed Purchasers; provided,
however, that the aggregate cost of such tail insurance shall
not exceed $1.5 million and (B) Reorganized Intermet shall
indemnify all officers and directors of the Company who served
14
in such capacity at any time prior to the Effective Date
(as defined below) for any amounts such officers and directors
are required to pay as a result of any retentions or deductibles
applicable under policies of insurance in effect on the date
hereof or as contemplated by paragraph (A) above, which policies
(or extensions thereof having terms no less favorable to the
officers and directors) shall be assumed by Reorganized Intermet
in the Plan. The indemnity described herein shall not include
liability relating to any action, omission, transaction, event,
occurrence or other circumstance that would constitute an
exclusion under the applicable policies of insurance or liability
in excess of the limits of such policies. Furthermore, amounts
payable by Reorganized Intermet pursuant to the aforementioned
shall be paid on a current basis on behalf of the officers and
directors, without requiring the officers and directors to first
pay such amounts from their own funds and then seek reimbursement
from Reorganized Intermet , so long as Reorganized Intermet
shall have received a written undertaking by each such officer
and director to repay such amounts to Reorganized Intermet if it
shall be determined by a court of competent jurisdiction pursuant
to a final, non-appealable order that such officer or director
is not entitled to coverage under such policies of insurance.
TERMINATION OF The Commitment Letter shall terminate and all of the obligations of the
COMMITMENT LETTER: parties thereto (other than the obligations of Intermet to pay the
Commitment Amount, the Alternate Transaction Amount and the Reimbursable
Expenses and to satisfy its indemnification obligations thereunder in
accordance with the terms and conditions of the Commitment Letter) shall be
of no further force or effect, upon the giving of written notice of
termination by the Initial Committed Purchasers or, with respect to
(xiii)(B) only, Intermet, in the event that any of the following occurs
(each, a "Termination Event"), each of which may be waived in writing by
both of the Initial Committed Purchasers or, with respect to (xiii)(B) only,
Intermet, as applicable:
(i) the Board of Directors of Intermet shall fail to approve of
the terms and conditions of the Commitment Letter on or before
the fifth day following execution of the Commitment Letter;
(ii) Intermet shall fail to file a motion with the Bankruptcy Court
seeking an order (the "Approval Order"), approving the terms
and conditions of the Commitment Letter and designating the
payment of any indemnification or the payment of the
Commitment Amount and the Reimbursable Expenses payable
thereunder as administrative expenses and obligations of
Intermet, on the fourth business day after the approval of the
Commitment Letter by the Board of Directors of Intermet;
(iii) the Bankruptcy Court shall fail to enter the Approval
15
Order on or before the 21st day following the filing of the
motion seeking entry of the Approval Order;
(iv) Intermet and the Initial Committed Purchasers shall fail to
agree upon, execute and deliver the Private Placement Purchase
Agreement and the Cash-Out Purchase Agreement on or before 30
days after the entry of the Approval Order;
(v) the Company shall fail to file the Plan and the related
Disclosure Statement, each in form and substance reasonably
satisfactory to the Initial Committed Purchasers, with the
Bankruptcy Court on or before 10 days after the entry of the
Approval Order;
(vi) the Disclosure Statement or a version thereof that is not
inconsistent with the terms set forth in the Commitment Letter
shall not have been approved by a final, non-appealable order
of the Bankruptcy Court on or before 45 days after the filing
thereof with the Bankruptcy Court;
(vii) the Confirmation Order shall not have been entered by the
Bankruptcy Court within 100 days of the entry of the Approval
Order;
(viii) the Plan shall not have become effective on or before the 20th
day following confirmation of the Plan;
(ix) there shall be any modification to any provision of the Plan
or the Disclosure Statement that is inconsistent with the
terms and conditions set forth in the Commitment Letter,
without the prior written consent of the Initial Committed
Purchasers, which consent shall not be unreasonably withheld,
or Intermet shall withdraw, or file a motion to withdraw, the
Plan, except on terms reasonably acceptable to the Initial
Committed Purchasers;
(x) an event shall have occurred or an order shall have been
entered by the Bankruptcy Court that shall have the practical
effect of preventing confirmation of the Plan on or before the
date contemplated in clause (vii) above and such order or
event shall not have been vacated or otherwise corrected
within 30 days after receipt of notice from the Initial
Committed Purchasers;
(xi) the conversion of one or more of the Chapter 11 Cases to a
case under Chapter 7 of the Bankruptcy Code, unless any such
conversion is made with the prior written consent of the
Initial Committed Purchasers;
16
(xii) the appointment of a trustee, receiver or examiner with
expanded powers in one or more of the Chapter 11 Cases, unless
any such appointment is made with the prior written consent of
the Initial Committed Purchasers;
(xiii) (A) one or more of the Initial Committed Purchasers Conditions
Precedent shall not have been satisfied (or waived by the
Initial Committed Purchasers) on or before 120 days of the
entry of the Approval Order, unless such delay is solely due
to the fault of the Initial Committed Purchasers; or (B) one
or more of the Intermet Conditions Precedent shall not have
been satisfied (or waived by the Intermet) on or before 120
days of the entry of the Approval Order, unless such delay is
solely due to the fault of the Intermet;
(xiv) 10 days after the receipt of written notice of termination by
Intermet from the Initial Committed Purchasers that Intermet
has failed to perform in any material respect any of its
obligations under the Commitment Letter and such failure
remains uncured at the conclusion of such ten-day period; or
(xv) at any time after the occurrence of a Material Adverse Change.
As used herein, the term "Material Adverse Change" means any
change, effect, event, occurrence, state of facts or development,
either alone or in combination, and either known or unknown by
the Company as of the date of the Commitment Letter, that is
materially adverse to the business, financial condition or
results of operation of Intermet and its subsidiaries, taken
as a whole; provided, however, that in no event shall any change,
effect, event, occurrence, state of facts or development that
is disclosed in Intermet's Annual Report on Form 10-K for the
twelve-month period ended December 31, 2003, or in Intermet's
Quarterly Reports on Form 10-Q for the three-month periods ended
March 31, 2004, June 30, 2004 and September 30, 2004, or on any
filing on Form 8-K made by Intermet prior to the date of the
Commitment Letter, each in the form first filed by Intermet
with the Securities and Exchange Commission, or any other
information delivered in writing by the Company to the Initial
Committed Purchasers prior to the date of the Commitment Letter,
be considered a Material Adverse Change, and provided further,
that in no event shall the prosecution of the Chapter 11 Cases
on terms and conditions consistent with the terms and conditions
set forth in the Commitment Letter be considered a Material
Adverse Change.
REPRESENTATION OF INITIAL The Initial Committed Purchasers represent to the Debtors that the Initial
COMMITTED PURCHASER OWNERSHIP: Committed Purchasers hold, as of the date of the Commitment Letter,
collectively, on behalf of certain funds and managed accounts, in excess of
$58.0 million in face amount of the Notes. If the Initial Committed
Purchasers, at any time prior to the date on which the Plan shall be
confirmed by the Bankruptcy Court or the termination of the
17
Commitment Letter, shall fail to hold collectively, on behalf of such funds
and managed accounts, at least $58 million in face amount of the Notes, the
Initial Committed Purchasers shall promptly deliver written notice (the
"Sell-Down Notice") thereof to Intermet.
So long as Intermet is not in breach of its obligations under the Commitment
Letter, Intermet may terminate the Commitment Letter at any time within five
business days of its receipt of the Sell-Down Notice by delivering to the
Initial Committed Purchasers written notice (the "Sell-Down Termination
Notice") of such termination. Upon the receipt of the Sell-Down Termination
Notice by the Initial Committed Purchasers, the Commitment Letter shall
terminate and all of the obligations of the parties thereto (other than the
obligations of Intermet to pay the Reimbursable Expenses and to satisfy its
indemnification obligations thereunder in accordance with the terms and
conditions of the Commitment Letter) shall be of no further force or effect.
COMMITMENT AMOUNT: In accordance with the terms and conditions of the Commitment Letter and
this Term Sheet, Intermet shall pay the Initial Committed Purchasers an
amount equal to $3.0 million (the "Commitment Amount"). $1.0 million of the
Commitment Amount shall be nonrefundable and shall be payable by Intermet no
later than one business day after the Bankruptcy Court shall enter the
Approval Order.
The balance of the Commitment Amount shall be payable by Intermet:
(i) on the Effective Date except as otherwise set forth herein;
(ii) in the event that Intermet fails to consummate (other than by
reason of the material breach of the obligations of either of the Initial
Committed Purchasers hereunder) the transactions contemplated by this term
sheet because the Commitment Letter has been terminated by Intermet as a
result of failure to meet Intermet Conditions Precedent (iii) through (vii)
(except, in the case of Intermet Condition Precedent (v), insofar as the
failure to meet the same is caused by the failure to obtain Approvals due to
the operations, business or identity of the Initial Committed Purchasers),
in which event the balance of the Commitment Amount shall be paid within
three business days of any such termination;
(iii) in the event that Intermet fails to consummate (other than by
reason of the material breach of the obligations of either of the Initial
Committed Purchasers hereunder) the transactions contemplated by this term
sheet because the Commitment Letter has been terminated by the Initial
Committed Purchasers based on the occurrence of any Termination Event (xv)
or Termination Event (xiii) due to the fact that any of the Initial
Committed Purchasers Conditions Precedents (iii), (vi) or (xi) have not been
satisfied, in which event Intermet shall pay the Initial Committed
Purchasers $500,000 in full
18
satisfaction of the balance of the Commitment Amount within three business
days of any such termination;
(iv) in the event that Intermet fails to consummate (other than by
reason of the material breach of the obligations of either of the Initial
Committed Purchasers hereunder) the transactions contemplated by this term
sheet because the Commitment Letter has been terminated by the Initial
Committed Purchasers based on the occurrence of any Termination Event (v)
through (viii) or Termination Event (xiii) due to the fact that any of the
Initial Committed Purchasers Conditions Precedents (i), (ii) or (iv) have
not been satisfied, in which event Intermet shall pay the Initial Committed
Purchasers $1,000,000 in full satisfaction of the balance of the Commitment
Amount within three business days of any such termination;
(v) in the event that Intermet fails to consummate (other than by
reason of the material breach of the obligations of either of the Initial
Committed Purchasers hereunder) the transactions contemplated by this term
sheet because the Commitment Letter has been terminated by the Initial
Committed Purchasers based on the occurrence of any Termination Event (ix)
through (xii) or Termination Event (xiv), or Termination Event (xiii) due to
the fact that any of the Initial Committed Purchasers Conditions Precedents
(v), (vii) through (ix), (xii) or (xiii) have not been satisfied (except, in
the case of Initial Committed Purchasers Condition Precedent (v), insofar as
the failure to satisfy the same is caused by the failure to obtain Approvals
due to the operations, business or identity of the Initial Committed
Purchasers), in which event the balance of the Commitment Amount, $2
million, shall be paid within three business days of any such termination;
(vi) [Intentionally Deleted]; or
(vii) in the event that Intermet fails to consummate (other than by
reason of the material breach of the obligations of either of the Initial
Committed Purchasers hereunder) the transactions contemplated by this term
sheet because the Commitment Letter has been terminated by (A) Intermet as a
result of the failure to meet Intermet Condition Precedent (i) or (ii), (B)
Intermet as a result of the delivery of a Sell-Down Termination Notice, or
(B) the Initial Committed Purchasers based on the occurrence of any
Termination Event (i) through (iv); or (C) in the event the Commitment
Letter is terminated by either party because of the failure to receive
Approvals is due to the operations, business or identity of the Initial
Committed Purchasers, Intermet shall not have to pay the Initial Committed
Purchasers the balance of the Commitment Amount.
Interment shall pay the Initial Committed Purchasers $2.0 million (the
"Alternate Transaction Amount"), which Alternate Transaction Amount is in
addition to the balance of the Commitment Amount
19
otherwise payable hereunder, in the event that (i) Intermet consummates a
financial restructuring other than the Restructuring described herein prior to
or within 12 months after termination of the Commitment Letter, (ii) there has
not been a material breach of the obligations of the Initial Committed
Purchasers hereunder and (iii) the financial restructuring that is consummated
(a) pays the Senior Credit Facility Loans in full in cash and (b) delivers a
dollar recovery to all Unsecured Holders in excess of the implied dollar
recovery to Unsecured Holders according to the Rights Offering price. So long
as the conditions described in clauses (i) through (iii) of this paragraph
shall have been satisfied, Intermet shall pay the Initial Committed Purchasers
the Alternative Transaction Amount on the day on which any such financial
restructuring is consummated.
The obligation to pay the Commitment Amount (including the foregoing
obligation to pay the additional $2.0 million upon the occurrence of the
events specified herein) and the Reimbursable Expenses shall be binding on
Reorganized Intermet whether or not any plan of reorganization for Intermet
is consummated.
The Initial Committed Purchasers shall have no duties or obligations under
the Commitment Letter, Private Placement Purchase Agreement or Cash-Out
Purchase Agreement, other than those expressly set forth herein or therein.
Notwithstanding anything contained herein or in the Commitment Letter to the
contrary, the payment of any amounts due pursuant to the Commitment Letter
or this Term Sheet, including but not limited to the payment of any portion
of the Commitment Fee due shall be subject to the approval of the Commitment
Letter by the Bankruptcy Court, and such payment not causing a default under
the DIP Credit Facility; provided, however, if any such payment would cause
a default pursuant to the DIP Credit Facility, the Initial Committed
Purchasers shall have a super-priority administrative expense claim for such
unpaid amount subordinate only to the claims of the DIP Lenders.
ALTERNATE APPLICATION OF THE So long as the Commitment Letter has not been previously terminated, on the
COMMITMENT AMOUNT: Effective Date, the Initial Committed Purchasers:(i) may purchase up to
300,000 additional shares of New Common Stock, at a purchase price of $10.00
per share, by delivering to Reorganized Intermet, by wire transfer of
immediately available funds, cash in an amount up to the Commitment Amount
that the Initial Committed Purchasers shall have previously received; and
(ii) may apply all or any portion of the Commitment Amount otherwise payable
to the Initial Committed Purchasers toward the purchase of up to 300,000
additional shares of New Common Stock at a purchase price of $10.00 per
share. Any shares of New Common Stock purchased by an Initial Committed
Purchaser (collectively, the "Alternate Subscription Shares") pursuant to
this paragraph shall be issued to such Initial Committed Purchaser on the
Effective Date, and the portion of the
20
Commitment Amount otherwise payable to such Initial Committed Purchaser shall
be correspondingly reduced.
PLAN SUPPORT: Until the termination of the Commitment Letter in accordance with its terms,
the Initial Committed Purchasers agree to support confirmation of the Plan
and agree not to support any other plan of reorganization with regard to the
Company.
21
EXHIBIT A
INTERMET CORPORATION
<Table>
If the latest calendar month Then the year-to-date
ending at least 25 days prior to 2005 consolidated EBITDA,
the Effective Date is the month excluding administrative
of: fees and expenses
associated with the
Restructuring, for such
calendar month shall be
no less than:
June 2005 $15,230,000
July 2005 $14,163,000
August 2005 $17,149,000
September 2005 $22,476,000
October 2005 $26,799,000
November 2005 $29,725,000
December 2005 $27,459,000
</Table>
22
ANNEX "B"
Summary of the Terms and Conditions
of the Registration Rights Agreement
The Registration Rights Agreement shall provide, among other things,
that:
(i) within sixty days after the date on which Reorganized Intermet
shall receive a written request, signed by either of the Initial Committed
Purchasers, pursuant to which such Initial Committed Purchaser shall request
that Reorganized Intermet register the resale of the shares of New Common Stock
held by such Initial Committed Purchaser under the Securities Act of 1933, as
amended (the "Securities Act"), Reorganized Intermet shall prepare and file, and
shall use its reasonable best efforts to have declared effective within sixty
days thereafter, a registration statement under the Securities Act for the
offering on a continuous basis pursuant to Rule 415 of the Securities Act, of
the shares of New Common Stock held by such Initial Committed Purchaser (the
"Shelf Registration"); and
(ii) Reorganized Intermet shall keep the Shelf Registration effective
for a period ending on the earlier of (a) the date that is the two-year
anniversary of the date upon which such registration statement is declared
effective by the Securities and Exchange Commission (the "SEC"), (b) the date
such Registrable Securities have been disposed of pursuant to an effective
registration statement, (c) the date such Registrable Securities have been
disposed of (1) pursuant to and in accordance with SEC Rule 144 (or any similar
provision then in force) under the Securities Act or (2) pursuant to another
exemption from the registration requirements of the Securities Act pursuant to
which the Registrable Securities are thereafter freely tradeable without
restriction under the Securities Act, (d) the date such Registrable Securities
may be disposed of pursuant to SEC Rule 144 (or any similar provision then in
force) within the volume limitations thereunder within a 90 day period or
pursuant to SEC Rule 144(k) (or any similar provision then in force) under the
Securities Act or (e) such Registrable Securities cease to be outstanding.
The Registration Rights Agreement shall include such other provisions,
including provisions relating to indemnification and contribution and the
payment by Reorganized Intermet of the fees and expenses incurred by the Initial
Committed Purchasers, customarily included in registration rights agreements
entered into in connection with similar financings.
The Registration Rights Agreement shall also provide that any person
holding more than 10% of the outstanding New Common Stock on the Effective Date
shall be entitled to piggy-back registration rights.
ANNEX "C"
Key Employee Rights Offering
<Table>
Name of Number of Shares
Key Employee of New Common Stock
- ------------ -------------------
Those persons who upon consummation of the Plan, 181,249*
shall be entitled to receive stay bonuses under
the Intermet Amended and Restated Employee
Retention Plan, dated effective September 20, 2004
and restated December 8, 2004 and are classified
as Tier I Participants or Tier II Participants
</Table>
*To the extent that the KERP Shares exercised by TIER I participants plus
the KERP Shares exercised by the TIER II participants is less than 181,249,
such TIER I participants and such TIER II participants may purchase the KERP
Shares that have not otherwise been exercised on a pro rata basis based upon
the KERP payment which would otherwise be due to such participant. In no event
will more than 181,249 shares be issued.