EXHIBIT 10.23
AMENDMENT TO SETTLEMENT AND RELEASE AGREEMENT
THIS AMENDMENT (the "Amendment") DATED AS OF JANUARY 27, 2005 TO SETTLEMENT AND
RELEASE AGREEMENT DATED AS OF OCTOBER 5, 2004 (the "Agreement"), by and among
the Debtors(1) and the Creditors' Committee:
1. Section 4.2.f. of the Agreement shall be amended and restated as
follows:
f. Except as otherwise provided in this Section, the pre-petition
intercompany Claim held by KFC against KACC (the "KFC Claim") shall be
allowed as a valid enforceable pre-petition unsecured Claim in the
amount of $1.106 billion and shall receive the same treatment as
allowed general unsecured Claims (excluding retiree medical Claims)
under any plan or plans of reorganization for KACC and/or KAC. 75% of
the KFC Claim shall be assigned to the 524(g) trust or master tort
trust on the effective date of a plan or plans of reorganization for
KACC and/or KAC, provided that such plan or plans provide for the
524(g) trust or master tort trust to receive (a) a cash distribution
of no more than $13 million (excluding any proceeds of insurance), (b)
no equity distribution from any of the Debtors other than (i) 100% of
the stock of KAE Trading, Inc. (which as of the effective date of such
plan will own only the property described in the term sheet annexed
hereto as Exhibit A) and (ii) stock of KAC in respect of 75% of the
KFC Claim and (c) no debt distribution from any of the Debtors (the
"Permitted Cash and Equity Trust Distributions"). If a plan or plans
of reorganization for KACC and/or KAC are confirmed and become
effective which provide for a 524(g) trust or master tort trust to
receive cash and equity distributions in excess of the Permitted Cash
and Equity Trust Distributions, or a distribution of debt from any
Debtor, 75% of the KFC Claim shall not be assigned to the 524(g) trust
or master tort trust and the KFC Claim shall be allowed unless the
United States on behalf of EPA, DOI, NOAA, or BPA (the "US") files an
abjection to the allowance of the KFC Claim within thirty (30) days
after the effective date of such a plan or plans. If the US files an
objection in accordance with the preceding sentence (which shall be
the only circumstance in which the US may file an objection to the KFC
Claim), the US may object to the KFC Claim on any basis, including
based on any facts relating to the KFC-KACC note, provided, however,
that the US may not object to the KFC Claim based on the treatment of
intercompany Claims under the Agreement (as amended by the Amendment).
The Debtors and the Creditors' Committee expressly reserve their
rights to oppose any such Claim objection which shall be adjudicated
by the Court.
2. Section 7.7 of the Agreement shall be amended and restated as follows:
7.7 KACC shall pay, in cash, the reasonable fees and expenses of each of
the members of the Creditors' Committee (including indenture trustee
fees and the fees and expenses of counsel of such members) incurred in
connection with the negotiation, execution and approval of the
settlement contained in this Agreement
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(1) All terms not otherwise defined herein shall have the meaning set forth in
the Agreement.
and this Agreement, subject only to the Creditors' Committee filing an
application with the Bankruptcy Court. The Debtors and the United
States Trustee may object to the reasonableness of any particular fees
or expenses sought in such application.
3. This Amendment may be executed in two or more counterparts, in which
case this Amendment shall include each such executed and delivered counterpart,
each of which shall be deemed to be part of a single instrument. This Amendment
may be executed and delivered by facsimile.
4. Except as provided in this Amendment, none of the terms of the Agreement
shall be deemed to have been modified or altered in any way. The Agreement, as
modified by the Amendment, shall remain in full force and effect.
5. This Amendment shall became effective when the Agreement becomes
effective but shall not be effective unless the requisite DIP Lenders and the
Agent have consented to this Amendment or such consent is no longer required
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as of the day and year first above written.
KAISER ALUMINUM CORPORATION
By: /s/ Edward F. Houff
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Name: Edward F. Houff
Title: Senior Vice President and
Chief Restructuring Officer
KAISER ALUMINUM & CHEMICAL CORPORATION
By: /s/ Edward F. Houff
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Name: Edward F. Houff
Title: Senior Vice President and
Chief Restructuring Officer
KAISER FINANCE CORPORATION
By: /s/ Edward F. Houff
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Name: Edward F. Houff
Title: Senior Vice President and
Chief Restructuring Officer
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KAISER ALUMINA AUSTRALIA CORPORATION
By: /s/ John M. Donnan
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Name: John M. Donnan
Title: Vice President and General Counsel
KAISER ALUMINUM TECHNICAL SERVICES, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER BELLWOOD CORPORATION
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER ALUMINIUM INTERNATIONAL, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER MICROMILL HOLDINGS LLC
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER SIERRA MICROMILLS, LLC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
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KAISER TEXAS SIERRA MICROMILLS, LLC
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER TEXAS MICROMILL HOLDINGS, LLC
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER ALUMINUM PROPERTIES, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
AKRON HOLDING CORP.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
OXNARD FORGE DIE COMPANY, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER ALUMINIUM & CHEMICAL INVESTMENT, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
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KAISER CENTER, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
ALWIS LEASING, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
ALPART JAMAICA, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER JAMAICA CORPORATION
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER BAUXITE COMPANY
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER ALUMINUM & CHEMICAL OF CANADA LIMITED
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
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KAISER ALUMINUM & CHEMICAL OF CANADA
INVESTMENT LIMITED
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAE TRADING, INC.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER CENTER PROPERTIES
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
TEXADA MINES LTD.
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
KAISER EXPORT COMPANY
By: /s/ John M. Donnan
-----------------------------------------
Name: John M. Donnan
Title: Vice President and General Counsel
CREDITORS' COMMITTEE
By: /s/ Lisa G. Beckerman
-----------------------------------------
Name: Lisa G. Beckerman
Title: Counsel to the Creditors'
Committee
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Settlement Proposal Subject to Rule 408
of Federal Rules of Evidence
KAC PLAN TREATMENT OF PERSONAL INJURY CLAIMS AND DEMANDS
A. Creation of PI Trust(s)
The KAC plan of reorganization (the "Plan") will provide for the
creation of a trust(s) ("PI Trust(s)") that will be funded with the Trust Assets
described below and will assume the liability for the Covered PI Claims
described below. Appropriate channeling injunctions pursuant to Section 524(g)
and Section 105 of the Bankruptcy Code will become effective upon confirmation
of the Plan.
B. Personal Injury Claims Assumed by PI Trust(s)
Each of the four categories of personal injury claims and demands set
for the below ("Covered PI Claims") will be assumed by the PI Trust(s), and
each will be treated as a separate class under the Plan pursuant to Section
1126 of the Bankruptcy Code.
1. Asbestos Claims and Demands
2. Silica Claims and Demands
3. CTPV Claims and Demands
4. NIHL Claims
C. Assets ("Trust Assets") to be Contributed to the PI Trust(s)
1. Proceeds form existing and future postpetition settlements
(consummated on or before the effective date of the Plan (the
"Effective Date")) of Covered PI Claims' insurance, including
the amounts currently held in two separate escrow accounts
approved by orders of the Bankruptcy Court entered July 28,
2003 and December 29, 2004.
2. Insurance assets as follows:
a. Assignment of rights to proceeds under the Insurance
Policies described below as to Covered PI Claims
b. Applicable Insurance Policies
i. Insurance policies to be defined by schedule
- Pre-1985 General Liability Policies
- London ships policies
- Pre-April 15, 1990 KACC General
Liability Policies, except joint
MAXXAM policies
ii. No right to recover to the extent of any self
insurance (i.e., deductibles, SIR, captives)
or workers' compensation
c. Responsibility for and Right to Control Litigation and
Settlement after Plan Consummation
i. PI Trust(s) will undertake, at its expense,
the continuation of the insurance coverage
litigation or any other pursuit of recoveries
from insurers for Covered PI Claims, and no
additional demands will be made on the Debtors
for additional funds or distributions related
to the conduct of the insurance coverage
litigation or other pursuit or such
recoveries, except insofar as any Debtor or
affiliate thereof may be required to make a
payment (premium, loss or otherwise) in order
to satisfy a condition precedent (such as
"exhaustion") to coverage, in which case the
PI Trust(s) will advance such payment on
behalf of the Debtor or affiliate.
ii. PI Trust(s) will have right to control the
coverage litigation and to settle as to
Covered PI Claims under the Insurance
Policies.
iii. PI Trust(s) will be authorized to proceed in
the name of reorganized KAC to the extent
required to pursue recoveries under the
Insurance Policies. If required by law, e.g.,
if any of the assignments of rights to
insurance proceeds described above are held
not to be effective, reorganized KAC will
appear in and prosecute actions to pursue
recoveries under the applicable insurance
policies for the benefit and at the expense
of the PI Trust(s).
iv. Reorganized KAC will undertake to provide
information, including all historical files
and records, to the PI Trust(s), as required
in the conduct of the coverage litigation or
other pursuit of recoveries for Covered PI
Claims, subject to reimbursement for expenses.
3. $13 million in cash from KACC.
4. Distributions in respect of an $829,500,000 allowed unsecured
prepetition claim against KACC (75% of the US $1.106 billion
intercompany claim held by Kaiser Finance Corporation against
KACC), which shall be in the form of equity of KAC and shall
be made at the same time or times that equity distributions
are made to other unsecured creditors of KACC.
5. 100% of the stock of KAE Trading, Inc., which, as of the
effective date of the Plan, will own only the Brooklawn
property located in Louisiana and the lessor's interest in
a lease of such property between KACC and Defense National
Stockpile Center (as modified as of October 18, 2002), except
that, if, based on an updated environmental and/or appraisal
report acceptable to the parties hereto, the Brooklawn
property is determined to have zero or negative value,
different
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property acceptable to all the parties hereto shall be
substituted for the Brooklawn property, provided that such
substitute property shall have a value of $1 million or less.
D. Insurance Neutrality
The parties hereto will discuss an appropriate insurance neutrality
provision for inclusion in the Plan, PI Trust(s) and confirmation order.
E. Trust and Trust Distribution Procedures
1. TDPs established for asbestos, silica and CTPV claims and
demands
2. Matrix for payment of NTHL claims, with recoveries limited to
premises insurance only.
3. TDPs will set forth the requirements for claim submission and
resolution, including specific medical criteria, product
exposure requirements, claim valuation terms, mechanisms to
assure consistency of treatment and conserve assets for future
claims.
F. Restrictions on Transfer of KAC Equity
The parties hereto shall cooperate with each other in formulating
restrictions on transfers of reorganized KAC equity and/or share lock-up
agreements regarding KAC equity in an effort to prevent an ownership change of
reorganized KAC (and to provide a reasonable margin of error for such purpose),
and thereby preserve the unlimited use of reorganized KAC's anticipated
consolidated federal income tax net operating losses, which restrictions and/or
share lock-up agreements shall be acceptable to the parties.
G. Conditions Precedent to Plan
Court approval of (1) the settlement and release agreement regarding
prepetition and postpetition intercompany claims entered into between the
Debtors and the Creditors' Committee, (2) the settlement agreement entered into
between the Debtors and the PBGC and (3) the amended agreement with the USWA
will be conditions precedent to confirmation of the Plan, and the parties
hereto agree to use their commercially reasonable best efforts to support
prompt approval of each.
H. Support of KAC Plan
All parties hereto agree to use their commercially reasonable best
efforts to support prompt confirmation and consummation of the Plan with the
terms described above and the pending plans of reorganization for AJI/KJC and
KAAC/KFC, and to not directly or indirectly support efforts by other parties to
oppose prompt confirmation of the Plan and these pending plans. The parties
hereto acknowledge that there are other terms of the Plan that have not yet
been agreed upon by certain parties. The rights of the parties with respect to
such other provisions of the Plan, including the right to object to the Plan on
the basis of such other provisions, or any provision dividing the Trust Assets
described in Paragraph C hereof, are expressly reserved.
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Amendment of Term Sheet
This term sheet may be amended by written amendment acceptable to all
the parties hereto.
Dated: January 26, 2005
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Debtors and Debtors in Possession
By: Edward F. Houff
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Title: Senior VP & Chief Restrictionary Officer
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Unsecured Creditors' Committee
By: /s/ Lisa G. Beckerman
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Title: Counsel for the secured
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Creditor's Committees
United Steelworkers of America
By: David A. Foster
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Title: Director, District #11
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Pension Benefit Guaranty Corporation
By: /S/ Jim P. Eggeman
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Title: Attorney
---------------------------------
Asbestos Claimants' Committee
By: /S/ Ronald E. Reinsel
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Title: Attorney for Asbestos
---------------------------------
Claimants' Committee
Asbestos Future Claimants' Representative
NIV on behalf of Michael Murphy
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Silica/CTPV Future Claimants' Representative
Anne Ferrazzi
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