Management, LLC, Sankaty Advisors, LLC and Tinicum Lantern II L.L.C., each on behalf of the funds and accounts managed by it in their capacity as purchasers pursuant to this Agreement (collectively, the “ Investors ”), agree, severally and not jointly, subject to the terms and conditions set forth in this Agreement, to purchase, its respective percentage set forth on Schedule A hereto, and for a price per note of the Purchase Price, on the Effective Date (as defined in Section 1(c)) the Unsubscribed New Notes.

 

The effectiveness of this Agreement is conditioned upon the receipt by the Investors or their counsel of evidence satisfactory to the Investors that the Issuer has entered into (a) the Noteholders Restructuring Support Agreement  (the “ Noteholders Restructuring Support Agreement ”) with holders of  Old Notes which beneficially own, or act as the investment advisor or manager with respect to, at least two-thirds of the aggregate principal amount of the Old Notes then outstanding; and (b) the Lender Restructuring Support Agreement (the “ Lender Restructuring Support Agreement ”) with lenders representing more than 50% of the aggregate principal amount of the First Out Loan Obligations (as defined in the Credit Agreement (as defined below)) outstanding under the Credit Agreement.

 

In consideration of the foregoing, and the representations, warranties and covenants set forth herein, and other good and valuable consideration, the Issuer and the Investors, severally and not jointly, agree as follows:

 

1.                                        The Rights Offering .  The Rights Offering will be conducted as follows:

 

(a)                                   Subject to the terms and conditions of this Agreement (including Bankruptcy Court approval), the Issuer will offer New Notes for subscription by holders of Rights.

 

(b)                                  The ballot forms (the “ Ballots ”) or related subscription forms (the “ Subscription Form ”) distributed in connection with the solicitation of acceptances and rejections of the Plan shall provide a place whereby each Eligible Holder of Old Notes as of a record date to be determined may exercise its Right to subscribe for up to a percentage of the New Notes equal to such Eligible Holder’s percentage holdings of Old Notes.  The Rights may be exercised during a period (the “ Rights Exercise Period ”) to be specified in the disclosure statement approved by the Bankruptcy Court (the “ Disclosure Statement ”), which period will commence on the date the Ballots and Subscription Forms are distributed and will end at the Expiration Time.  “ Expiration Time ” means 5:00 p.m., New York City time, on the date on which all Ballots and Subscription Forms must be returned, or such later date as the Issuer, subject to the approval of the Investors in their sole discretion, may specify in a notice provided to the Investors before 9:00 a.m., New York City time, on the Business Day before the then-effective Expiration Time.  “ Business Day ” means any day other than (a) a Saturday, (b) a Sunday, (c) any day on which commercial banks in New York, New York are required or authorized to close by law or executive order, and (d) the Friday after Thanksgiving Day.  The Plan shall provide that in order to exercise a Right, each Eligible Holder shall, (i) prior to the Expiration Time, return a duly completed

 

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Subscription Form to the Subscription Agent (as defined in Section 1(d)) and (ii) pay an amount equal to the full purchase price of the principal amount of New Notes elected to be purchased by such Eligible Holder by wire transfer or bank or cashier’s check delivered to the Subscription Agent no later than the Expiration Time.

 

(c)                                   The Issuer will issue the New Notes to the Eligible Holders with respect to which Rights were validly exercised by and payment was duly received from such holder prior to the Expiration Time on the effective date of the Plan (the “ Effective Date ”).  The principal amount of New Notes to be issued in respect of any Right will be rounded up or down to the nearest $1,000.

 

(d)                                  If the subscription agent under the Plan (the “ Subscription Agent ”) for any reason does not receive from a given holder both a timely and duly completed Subscription Form and timely payment of such holder’s Subscription Purchase Price prior to the Expiration Time, the Plan shall provide that the holder shall be deemed to have relinquished and waived its right to participate in the Rights Offering.

 

(e)                                   The Issuer hereby agrees and undertakes to give, or instruct the Subscription Agent to give, the Investors by electronic facsimile transmission or by electronic mail a notice conforming to the requirements specified herein of either (i) the calculation of the principal amount of Unsubscribed New Notes, the principal amount of Purchased New Notes and the aggregate Purchase Price for all Unsubscribed New Notes (a “ Purchase Notice ”) or (ii) in the absence of any Unsubscribed New Notes, the fact that there are no Unsubscribed New Notes and that the Backstop Commitment (as defined in Section 2(a)) is terminated (a “ Satisfaction Notice ”), as soon as practicable after the Expiration Time and, in any event, at least four (4) Business Days prior to the Effective Date (the date of transmission of confirmation of a Purchase Notice or a Satisfaction Notice, the “ Determination Date ”).

 

2.                                        The Backstop Commitment .

 

(a)                                   On the basis of the representations and warranties contained herein, but subject to the conditions set forth in Section 7, each Investor agrees to purchase from the Issuer on the Effective Date, and the Issuer agrees to issue and sell to each Investor, at the aggregate Purchase Price therefor, such Investor’s portion of the Unsubscribed New Notes as set forth on Schedule A hereto (the “ Backstop Commitment ”).

 

(b)                                  The Issuer will pay to the Investors the aggregate backstop commitment fee of (i) $5.6 million (the “ Cash Backstop Fee ”) which shall be released to the Investors, (A) upon the issuance of the New Notes as contemplated herein on the Effective Date, in the form of shares of New Common Stock representing 4% of all of the Issuer’s outstanding New Common Stock on the Effective Date (on a fully-diluted basis), or (B) in the form of a super-priority

 

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administrative claim against the Issuer if this Agreement is terminated in accordance with the terms hereof prior to the Effective Date or the New Notes are not issued on the Effective Date pursuant to the Plan as contemplated hereby, and (ii) on the basis of the representations and warranties herein contained, but subject to the entry of a final, non-appealable Confirmation Order (as defined below) and on the Effective Date, shares of New Common Stock representing 4% of all of the Issuer’s outstanding New Common Stock on the Effective Date (on a fully-diluted basis) (the “ Stock Backstop Fee, ” and together with the Cash Backstop Fee, the “ Backstop Fee ”), in each case of payment to the Investors, in such proportions per Investor as indicated in Schedule A hereto, to compensate each such Investor for the risk of its undertakings herein; provided that in the event that any Investor defaults on its obligation to purchase the Unsubscribed New Notes that it has agreed to purchase hereunder, the fee allocable to such defaulting Investor shall be re-allocated to the Investor(s) who assume such defaulting Investor’s obligations hereunder on a pro rata basis, or if such obligation is not assumed by any Investor, among the non-defaulting Investors pro rata based on their respective backstopping commitments set forth in Schedule A hereto. The New Common Stock each Investor receives pursuant to clauses (i)(A) and/or (ii) above shall have the benefit of substantially the same anti-dilution protection as the New Notes. The Cash Backstop Fee and all other amounts payable hereunder will be paid in U.S. dollars.  Payment of the Cash Backstop Fee pursuant to clause (i)(B) above will be made by wire transfer of immediately available funds and payment of the Stock Backstop Fee and, if applicable, delivery of shares of New Common Stock in exchange for the Cash Backstop Fee pursuant to clause (i)(A) above, will be made by stock transfer of the appropriate shares of New Common Stock to the account specified by each Investor to the Issuer at least 24 hours in advance.  The Backstop Fee will be payable whether or not any Unsubscribed New Notes are purchased pursuant to the Backstop Commitment and will be nonrefundable when paid.

 

(c)                                   The Issuer will reimburse or pay, as the case may be, the reasonable expenses of the Investors, including the fees and expenses of Rothschild Inc., financial advisor to the Investors, and Milbank, Tweed, Hadley & McCloy LLP and local Wilmington, Delaware counsel, as legal advisors to the Investors and reasonable fees and expenses of any other professionals retained by the Investors in connection with the transaction contemplated hereby, including, but not limited to, reasonable fees and expenses incurred in connection with the escrow of the Cash Backstop Fee contemplated in Section 2(b) above (collectively, “ Transaction Expenses ”); provided that the Issuer shall not be responsible for the fees or expenses of more than one financial advisor or more than one counsel and one local counsel to the Investors.  Such reimbursement or payment shall be made by the Issuer within two (2) days of presentation of an invoice approved by the Investors, without Bankruptcy Court review or further Bankruptcy Court order (but subject to any conditions imposed by the Bankruptcy Court or the United States Trustee in the order authorizing the assumption of this Agreement or the DIP Order (as defined below)), whether or not the transactions contemplated hereby are consummated.  These obligations are in addition to, and

 

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do not limit, the Issuer’s obligations under Section 8.  The provision for the payment of the Transaction Expenses is an integral part of the transactions contemplated by this Agreement, and without this provision the Investors would not have entered into this Agreement and shall, subject to the approval of the assumption of this Agreement by the Bankruptcy Court, constitute an administrative expense of the Issuer under section 364(c)(1) of the Bankruptcy Code.

 

(d)                                  On the Effective Date, the individual Investors will purchase, and the Issuer will sell to the individual Investors, at a price equal to the Purchase Price therefor, such principal amount of Unsubscribed New Notes as is listed in the Purchase Notice, without prejudice to the rights of the Investors to seek later an upward or downward adjustment if the principal amount of Unsubscribed New Notes in such Purchase Notice is inaccurate.

 

(e)                                   Delivery of the Unsubscribed New Notes will be made by the Issuer to the respective accounts of the Investors (or to such other accounts as the Investors may designate) on the Effective Date against payment of the Purchase Price for such Unsubscribed New Notes by wire transfer of immediately available funds to the account specified by the Issuer to the Investors at least 24 hours in advance.

 

(f)                                     All Unsubscribed New Notes will be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by the Issuer to the extent required under the Confirmation Order or applicable law.

 

(g)                                  The documents to be delivered on the Effective Date by or on behalf of the parties hereto will be delivered at the offices of Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, New York 10005 on the Effective Date.

 

(h)                                  Notwithstanding anything to the contrary in this Agreement, each Investor, in its sole discretion, may designate that some or all of the Unsubscribed New Notes be issued in the name of and delivered to, one or more of its Affiliates or any other third party.

 

(i)                                      No Investor shall have any liability for the Backstop Commitment of any other Investor.

 

3.                                        Representations and Warranties of the Issuer .  The Issuer represents and warrants to, and agree with, the Investors as follows. Each representation and warranty is made as of the date hereof and on the Effective Date:

 

(a)                                   Accuracy of Information . All information, other than financial projections (the “ Projections ”), that has been made available to the Investors by the Issuer or any of its representatives, was as of the date furnished, and to the Issuer’s knowledge, is as of the date of this Agreement, when taken together as a

 

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whole, complete and correct in all material respects and did not as of the date furnished, and to the Issuer’s knowledge, does not as of the date of this Agreement, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements were made. All information, other than Projections, that is made available in the future to the Investor by the Issuer or any of its representatives will be, as of the date such information is furnished to the Investors, when taken together as a whole, complete and correct in all material respects and will not, as of such date, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made.  The Projections that have been or will be prepared and made available to the Investors by the Issuer or any of its representatives, including but not limited to those contained in the presentation titled “Private Lender Supplement,” dated July 2009 (the “ July Projections ”), have been or will be prepared in good faith based upon reasonable assumptions at the time made, and the Issuer did not have any knowledge when it prepared and delivered such Projections and does not have any knowledge as the date hereof of any fact or information that would lead it to believe that such assumptions are incorrect or misleading in any material respect (and will not deliver any Projections in the future with such knowledge). As of the date of this Agreement, the July Projections are the most up-to-date projections being used as a base case by the management of the Issuer.

 

(b)                                  Incorporation and Qualification .  The Issuer and each of the direct and indirect subsidiaries of the Issuer has been duly organized and is validly existing as a corporation or other form of entity, where applicable, in good standing under the laws of their respective jurisdictions of organization, with the requisite power and authority to own its properties and conduct its business as currently conducted, subject, as applicable, to the restrictions that result from any such entity’s status as a debtor-in-possession under chapter 11 of the Bankruptcy Code.  The Issuer and each of its subsidiaries has been duly qualified as a foreign corporation or other form of entity for the transaction of business and, where applicable, is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts business so as to require such qualification, except to the extent the failure to be so qualified or, where applicable, be in good standing would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, results of operations, property or financial condition of the Issuer and its subsidiaries taken as a whole, or on the ability of the Issuer, subject to the approvals and other authorizations set forth in Section 3(g), to consummate the transactions contemplated by this Agreement or the Plan (a “ Material Adverse Effect ”).

 

(c)                                   Corporate Power and Authority .

 

(i)                                      The Issuer has the requisite corporate power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder,

 

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including the issuance of the Rights and the New Notes.  The Issuer has taken all necessary corporate action required for the due authorization, execution, delivery and performance by it of this Agreement, including the issuance of the Rights and the New Notes, other than the entry of the Confirmation Order and the expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rule 3020(e) and the need to amend its certificate of incorporation effective as of the Effective Date.

 

(ii)                                   The distribution of the Rights and issuance of the New Notes on the Effective Date will have been duly and validly authorized.

 

(iii)                                Subject to entry of the Confirmation Order and the expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rule 3020(e), on the Effective Date, the Debtors will have the requisite corporate power and authority to execute the Plan and to perform their obligations thereunder, and will have taken all necessary corporate actions required for the due authorization, execution, delivery and performance by the Debtors of the Plan.

 

(d)                                  Execution and Delivery; Enforceability .

 

(i)                                      This Agreement has been duly and validly executed and delivered by the Issuer, and constitutes the valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with its terms, subject to bankruptcy, reorganization, insolvency, moratorium and other laws affecting the enforcement of creditors’ rights generally from time to time in effect and subject to general equitable principles.

 

(ii)                                   On the Effective Date, the Indenture shall have been duly authorized by the Issuer and the guarantors named therein (the “ Guarantors ”) and, when executed and delivered by the Issuer, the guarantors named therein and the trustee party thereto, will be a valid and binding agreement of the Issuer and the Guarantors, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and general principles of equity.

 

(iii)                                On the Effective Date, the New Notes shall have been duly authorized by the Issuer and, when executed and delivered by the Issuer and duly authenticated in accordance with the terms of the Indenture and delivered to and paid for by the Investor in accordance with the terms hereof, will constitute valid and binding obligations of the Issuer, enforceable in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar

 

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laws affecting creditors’ rights generally and general principles of equity, and will be entitled to the benefits of the Indenture; the maximum number of shares of New Common Stock (the “ Shares ”) issuable upon conversion of the New Notes shall have been duly authorized and validly reserved for issuance upon conversion of the New Notes, and, upon conversion of the New Notes in accordance with their terms and the terms of the Indenture, such Shares will be issued free of any right of pledge, usufruct or other encumbrance, and shall be sufficient in number to meet the current conversion requirements (assuming all conditions to such conversion have been satisfied); such Shares, when so issued upon such conversion in accordance with the terms of the New Notes and of the Indenture, will be duly and validly issued and fully paid and non-assessable; and the certificates for such Shares will be in due and proper form; and

 

(iv)                               The Plan will be duly and validly filed with the Bankruptcy Court by the Debtors and, upon the entry of the Confirmation Order and the expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rule 3020(e), will constitute the valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to general equitable principles.

 

(e)                                   No Conflict .  Subject to the entry of the Confirmation Orders and the expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rules 6004(h) and 3020(e), as applicable, the distribution of the Rights, the issuance, sale and delivery of New Notes upon exercise of the Rights and the consummation of the Rights Offering by the Issuer, the issuance, sale and delivery of the Unsubscribed New Notes and the execution and delivery (or, with respect to the Plan, the filing) by the Issuer of this Agreement and the Plan and compliance by the Issuer with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein (including compliance by each Investor with its obligations hereunder and thereunder) (i) will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the acceleration of, or the creation of any lien under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Issuer or any of its subsidiaries is a party or by which the Issuer or any of its subsidiaries is bound or to which any of the property or assets of the Issuer or any of its subsidiaries is subject, (ii) will not result in any violation of the provisions of the certificate of incorporation or bylaws of the Issuer and any other Debtor and (iii) will not result in any violation of, or any termination or material impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Issuer or any of its subsidiaries or any of their respective properties, except in any such

 

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case described in subclause (i) or (iii) as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(f)                                     Consents and Approvals .  No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body having jurisdiction over the Issuer or any of its subsidiaries or any of their respective properties or by any third party pursuant to any contract or otherwise is required for the distribution of the Rights, the issuance, sale and delivery of New Notes upon exercise of the Rights to the Investors hereunder and the consummation of the Rights Offering by the Issuer and the execution and delivery by the Issuer of this Agreement or the Plan and performance of and compliance by the Issuer with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except for (i) the entry of the Confirmation Order and the expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rules 6004(h) and 3020(e), as applicable; (ii) filings with respect to and the expiration or termination of the waiting period under the HSR Act, if applicable, (iii) such consents, approvals, authorizations, registrations or qualifications as may be reasonably required under state securities or “blue sky” laws in connection with the purchase of Unsubscribed New Notes by the Investors or (iv) such consents, approvals, authorizations, registrations or qualifications, the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(g)                                  Financial Statements .  The audited consolidated financial statements of the Issuer as of and for the year ended December 31, 2008 and the unaudited consolidated financial statements of the Issuer as of and for the six months ended June 30, 2009 previously delivered to the Investors present fairly in all material respects, in each case together with the related notes, the financial position of the Issuer and its consolidated subsidiaries at the dates indicated and the statements of operations, stockholders’ equity and cash flows of the Issuer and its consolidated subsidiaries for the periods specified, except that the unaudited financial statements are subject to normal and recurring year-end adjustments that are not expected to be in the aggregate material.  Such financial statements have been prepared in conformance with generally accepted accounting principles in the United States, except as otherwise noted in such financial statements or related notes, applied on a consistent basis throughout the periods involved.  Each Investor acknowledges that the Issuer’s financial statements described above do not reflect the terms of the Plan or the effect of fresh-start accounting.

 

(h)                                  No Material Adverse Change .  Except as disclosed in the Issuer’s Securities and Exchange Commission (the “ Commission ”) filings as of the date of this Agreement (the “ SEC Filings ”), since June 30, 2009 there has not (i) been any material change in the capital stock or long-term debt of the Issuer or its subsidiaries; (ii) been any dividend or distribution of any kind declared, set aside for payment, paid or made by the Issuer on any class of their capital stock; (iii) occurred (A) any event, fact or circumstance which has had or would reasonably be expected to have, individually, or in the aggregate, a Material Adverse Effect

 

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on the Issuer and its subsidiaries or (B) any loss of a significant portion of the business of any of Daimler Truck North America, LLC, PACCAR, Inc., International Truck and Engine Corporation or Volvo Truck Corporation (each, a “ Material Adverse Change Event ”); or (iv) been any changes with respect to the accounting policies or procedures of the Issuer or the Debtors, except as required by law or changes in GAAP.

 

(i)                                      No Violation or Default; Licenses and Permits .  Except as otherwise set forth in the SEC Filings, each of the Issuer and its subsidiaries (i) is in compliance with all laws, statutes, ordinances, rules, regulations, orders, judgments and decrees of any court or governmental agency or body having jurisdiction over the Issuer or any of its subsidiaries or any of their respective properties, and (ii) has not received written notice of any alleged material violation of any of the foregoing except, in the case of clauses (i) and (ii) above, for any such failure to comply, default or violation that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.  Subject to the restrictions that result solely from the Issuer or any subsidiary’s status as a debtor-in-possession under chapter 11 of the Bankruptcy Code (including that in certain instances such subsidiary’s conduct of its business requires Bankruptcy Court approval), each of the Issuer and its subsidiaries holds all material licenses, franchises, permits, consents, registrations, certificates and other governmental and regulatory permits, authorizations and approvals required for the operation of the business as currently conducted by it and for the ownership, lease or operation of its material assets, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect and is not in violation of its certificate of incorporation, bylaws or other organizational document.  Except as otherwise set forth in the SEC Filings, no event has occurred, with the notice or lapse of time or both, that would constitute a default, in the due performance or observation of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Issuer or any of its subsidiaries is a party or by which the Issuer or any of its subsidiaries is subject.

 

(j)                                      Legal Proceedings .  Except as described in the SEC Filings, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending or, to the knowledge of the Issuer, threatened against the Issuer or any of its subsidiaries which, individually or in the aggregate, if determined adversely to the Issuer or any of its subsidiaries, would reasonably be expected to have a Material Adverse Effect.

 

(k)                                   Independent Accountants .  Deloitte & Touche LLP (the “ Accountants ”), who have certified the financial statements of the Issuer and its consolidated subsidiaries, are an independent registered public accounting firm with respect to the Issuer and its consolidated subsidiaries.

 

(l)                                      Title to Intellectual Property .  The Issuer and its subsidiaries own or possess adequate rights to use all material patents, patent applications,

 

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trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses, except where the failure to own or possess any such rights could not reasonably be expected to have a Material Adverse Effect; and, except as could not reasonably be expected to have a Material Adverse Effect, the conduct of their respective businesses will not conflict in any material respect with any such rights of others, and the Issuer and its subsidiaries have not received any written notice of any material claim of infringement or conflict with any such material rights of others.

 

(m)                                No Undisclosed Relationships .  No relationship, direct or indirect, exists between or among the Issuer or any of its subsidiaries, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Issuer or any of its subsidiaries, on the other, that is required be disclosed in the SEC Filings and that are not so disclosed.

 

(n)                                  Investment Company Act .  The Issuer is not, and after giving effect to the offering and sale of the New Notes and the application of the proceeds thereof, will not be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.

 

(o)                                  Compliance With Environmental Laws .  Except as disclosed in the SEC Filings, the Issuer and its subsidiaries (i) are in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “ Environmental Laws ”); (ii) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and are not aware of any actions that are pending or threatened in writing that seek to repeal, modify, amend, revoke, limit, or otherwise appeal or challenge any such permits, licenses or other approvals; (iii) have not received written notice of any actual or potential liability for the investigation or remediation of any disposal, arrangement for disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants and (iv) are not aware of any facts, events or circumstances that could give rise to any liability or investigatory, corrective or remedial obligations under Environmental Laws with respect to their past or present facilities or their respective businesses, except, in the case of each of the clauses (i), (ii), (iii) and (iv), as would not, individually or in the aggregate, have a Material Adverse Effect.

 

(p)                                  Compliance With ERISA . Each “employee benefit plan” as defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations

 

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thereunder (“ ERISA ”), as to which the Issuer or, to the Issuer’s knowledge, any of its subsidiaries has or could have any liability, is in compliance in all material respects with all applicable provisions of ERISA and the U.S. Internal Revenue Code of 1986, as amended, including the regulations thereunder (the “ Code ”), each such “employee benefit plan” has been established and administered in accordance with its terms and each of the Issuer and its subsidiaries is in compliance in all material respects with its obligations under ERISA and the Code with respect to each such “employee benefit plan”. Each “employee benefit plan” for which the Issuer or its subsidiaries could have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification, except as would not, individually or in the aggregate result in a Material Adverse Effect. Except as would not, individually or in the aggregate, result in a Material Adverse Effect, (i) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred with respect to any “employee benefit plan” for which the Issuer, or any entity that is required to be aggregated with the Issuer pursuant to Section 414 of the Code (an “ ERISA Affiliate ”), could have any liability; (ii) each of the Issuer and any ERISA Affiliate has not incurred and does not expect to incur liability under Title IV of ERISA other than for PBGC premiums due but not delinquent under Section 4007 of ERISA; (iii) neither the Issuer or any of its subsidiaries has incurred nor do any such entities expect to incur liability under Section 4971 or 4975 of the Code; and (iv) no “employee benefit plan” for which the Issuer or any ERISA Affiliate could have any liability has failed to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such plan, or filed pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any such “employee benefit plan”.

 

(q)                                  Accounting Controls .  The Issuer and its subsidiaries maintain systems of internal accounting controls designed in accordance with applicable law to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(r)                                     Insurance .  Except as would not, individually or in the aggregate, result in a Material Adverse Effect, the Issuer and its subsidiaries have insurance covering their respective properties, operations, personnel and businesses, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are customary for companies whose businesses are similar to the Issuer and its subsidiaries; and as of the date hereof, neither the Issuer nor any of its subsidiaries has (i) received written notice from

 

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any insurer or agent of such insurer that capital improvements or other material expenditures are required or necessary to be made in order to continue such insurance or (ii) any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business.

 

(s)                                   No Unlawful Payments .  Neither the Issuer nor any of its subsidiaries nor, to the knowledge of the Issuer, any director, officer, agent, employee or other person associated with or acting on behalf of the Issuer or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977 or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

 

(t)                                     No Restrictions on Certain Dividends and Other Payments .  The Issuer’s direct and indirect subsidiaries are not currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party, other than under the Issuer’s Fourth Amended and Restated Credit Agreement dated as of January 31, 2005 (as amended by the First Amendment dated as of November 28, 2007, the Second Amendment dated as of January 28, 2009 and the Third Amendment dated as of August 14, 2009 and as may be further amended from time to time, the “ Credit Agreement ”), from paying any dividends to its parent, from making any other distribution on such subsidiary’s capital stock, from repaying to the Issuer or any other subsidiary of the Issuer any loans or advances to such subsidiary from the Issuer or from any other subsidiary of the Issuer or from transferring any of such subsidiary’s properties or assets to the Issuer or any other subsidiary of the Issuer.

 

(u)                                  No Broker’s Fees .  None of the Issuer or any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against the Investors for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Rights or the New Notes.

 

(v)                                  Labor Relations . Except as set forth in the SEC Filings:

 

(i)                                      neither the Issuer nor any of its subsidiaries is a party to, or bound by, any material collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization (other than contracts or other agreements or understandings with labor unions or labor organizations in connection with products and services offered and sold to such unions and organizations by the Issuer or its subsidiaries);

 

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(ii)                                   neither the Issuer nor any of its subsidiaries is the subject of any proceeding asserting that it or any subsidiary has committed an unfair labor practice or sex, age, race or other discrimination or seeking to compel it to bargain with any labor organization as to wages or conditions of employment, which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect;

 

(iii)                                there are no current or, to the knowledge of the Issuer, threatened organizational activities or demands for recognition by a labor organization seeking to represent employees of the Issuer or any subsidiary and no such activities have occurred during the past 24 months that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(iv)                               no grievance, arbitration, litigation or complaint or, to the knowledge of the Issuer, investigations relating to labor or employment matters is pending or, to the knowledge of the Issuer, threatened against the Issuer or any of its subsidiaries which, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(v)                                  the Issuer and each of its subsidiaries has complied and is in compliance in all respects with all applicable laws (domestic and foreign), agreements, contracts, and policies relating to employment, employment practices, wages, hours, and terms and conditions of employment and is not engaged in any material unfair labor practice as determined by the National Labor Relations Board (or any foreign equivalent) except where the failure to comply has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(vi)                               the Issuer has complied in all respects with its payment obligations to all employees of the Issuer and its subsidiaries in respect of all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to such employees under any Issuer policy, practice, agreement, plan, program or any statute or other law, except to the extent that any noncompliance, either individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect; and

 

(vii)                            the Issuer has complied and is in compliance in all respects with its obligations pursuant to the Worker Adjustment and Retraining Notification Act of 1988 (and any similar state or local law) to the extent applicable, and all material other employee notification and bargaining obligations arising under any collective

 

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bargaining agreement or statute, except to the extent that any noncompliance, either individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect.

 

(w)                                Title to Real and Personal Property . The Issuer and its subsidiaries have good and marketable title to all real property owned by the Issuer and its subsidiaries and good title to all other tangible and intangible properties (other than Intellectual Property covered by Section 3(m) owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (i) are described in the SEC Filings or (ii) individually and in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. All of the leases and subleases to which the Issuer or its subsidiaries are a party are in full force and effect and enforceable by the Issuer or such subsidiary in accordance with their terms, and neither the Issuer nor any subsidiary has received any written notice of any claim that has been asserted by anyone adverse to the rights of the Issuer or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Issuer or such subsidiary to the continued possession of the leased or subleased property by under any such lease or sublease, except where any such claim or failure to be enforceable would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(x)                                    Tax Matters . Except where any such failure has not had or would not be expected to have a Material Adverse Effect: (i) the Issuer (and each subsidiary) has filed all material Tax Returns required to be filed by applicable law prior to the date hereof; such Tax Returns were true, complete and correct; and the Issuer (and each subsidiary) (A) has paid all Taxes that are due and payable and (B) has recorded reserves for any Taxes in accordance with GAAP;  (ii) there are no Tax liens upon the assets of the Issuer (or any subsidiary) except liens for Taxes not yet due or payable; (iii) neither the Issuer nor any subsidiary has executed any outstanding waivers or comparable consents regarding the application of the statute of limitations for any Taxes or Tax Returns (and no extensions of any statutory periods have been executed on their behalf); (iv) no audits or other administrative proceedings or court proceedings are presently pending or to the knowledge of Issuer threatened with regard to any Taxes or Tax Returns of the Issuer (or any subsidiary); (v) the Issuer (and each subsidiary) has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed; (vi) the Issuer is not a United States real property holding corporation within the meaning of Code section 897(c)(2); (vii) neither the Issuer nor any subsidiary has any liability for Taxes of any person other than the Issuer and its subsidiaries under Treasury Regulation §1.1502-6 (or any similar provision of state, local, or non-U.S. law); and (viii) neither the Issuer nor any subsidiary is a party to or bound by any tax

 

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allocation or tax sharing agreement. Neither the Issuer nor any subsidiary is or has been party to any “listed transaction” as defined in Code §6707A(c)(2) and Treas. Reg. §1.6011-4(b)(2).  As used in this Section 3(x), “ Taxes ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto; and “ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

4.                                        Representations and Warranties of the Investors .  Each of the Investors, severally and not jointly, represents and warrants to, and agrees, with respect to itself only, with, the Issuer as set forth below.  Each representation, warranty and agreement is made as of the date hereof and as of the Effective Date:

 

(a)                                   Organization .  Such Investor has been duly incorporated or formed, as the case may be, and is validly existing as a corporation or a limited partnership, as the case may be, in good standing under the laws of its jurisdiction of organization.

 

(b)                                  Corporate Power and Authority .  Such Investor has the requisite corporate power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder and has taken all necessary action required for the due authorization, execution, delivery and performance by it of this Agreement.

 

(c)                                   Execution and Delivery .  This Agreement has been duly and validly executed and delivered by such Investor and constitutes its valid and binding obligation, enforceable against such Investor in accordance with its terms, subject to general equitable principles.

 

(d)                                  No Conflicts .  The execution, delivery, and performance by such Investor of this Agreement do not and shall not (i) violate any provision of its certificate of incorporation or by-laws (or other organizational documents) or any law, rule, or regulation applicable to it or (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it is a party or under its certificate of incorporation or by-laws (or other organizational documents).

 

(e)                                   Proceedings .   No litigation or proceeding before any court, arbitrator, or administrative or governmental body is pending against it that would adversely affect such Investor’s ability to enter into this Agreement or perform its obligations hereunder.

 

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(f)                                     Consents and Approvals .  No consent, approval, order, authorization, registration or qualification of or with any court or governmental agency or body having jurisdiction over such Investor or such Investor’s affiliates, is required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for any consent, approval, order or authorization required under the Bankruptcy Code.

 

(g)                                  Sufficiency of Funds .  Such Investor has, or is the investment advisor or investment manager for entities that have, and on the Effective Date will have or is the investment advisor or investment manager for entities that will have, sufficient immediately available funds to make and complete the payment of the aggregate Purchase Price for its portion of the Unsubscribed New Notes and the availability of such funds is not subject to the consent, approval or authorization of any third party.

 

(h)                                  Sophistication and Investment Intent .  Such Investor has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the New Notes, and has so evaluated the merits and risks of such investment.  Such Investor is, as of the date hereof and will be as of the Effective Date, an “accredited investor” within the meaning of Rule 501(a) under the Securities Act of 1933, as amended (the “ Securities Act ”). Such Investor understands and is able to bear any economic risks associated with such investment (including, without limitation, the necessity of holding such Unsubscribed New Notes for an indefinite period of time or the complete loss of such investment).  Such Investor is acquiring the New Notes in good faith solely for its own account or accounts managed by it, for investment and not with a view toward distribution within the meaning of the Securities Act.  Such Investor acknowledges that the Issuer will rely upon the truth and accuracy of the foregoing as well as the other representations, warranties and other agreements of such Investor in connection with the transactions described in this Agreement.

 

(i)                                      Information .  Such Investor acknowledges that it has been afforded the opportunity to ask questions and receive answers concerning the Issuer and to obtain additional information.  Notwithstanding the foregoing, nothing contained herein will operate to modify or limit in any respect the representations and warranties of the Issuer or to relieve the Issuer from any obligations to such Investor for breach thereof or the making of misleading statements or the omission of material facts in violation of applicable law in connection with the transactions contemplated herein.

 

5.                                       Additional Covenants of the Issuer .  The Issuer agrees with the Investors:

 

(a)                                   First Day Motions, Disclosure Statement and Plan .  The Issuer will file each of the first day motions in connection with the Chapter 11 Case as set forth on Schedule I of the Noteholders Restructuring Support Agreement on the date the Debtors file petitions commencing the Chapter 11 Case (the “ Chapter 11

 

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Commencement Date ”). In accordance with the Term Sheets, the DIP Order (as defined below) and the post-petition debtor-in-possession financing (“ DIP Financing ”) agreement (as amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the “ DIP Agreement ”, and together with the Term Sheets and the DIP Order, the “ Restructuring Support Documents ”) attached to the Interim DIP Order (as defined below) in Exhibit B hereto, the Issuer will prepare and file with the Bankruptcy Court a Disclosure Statement and Plan reflecting the terms and conditions set forth in the Restructuring Support Documents and in form and substance reasonably acceptable to the Required Investors and use commercially reasonable efforts to seek Bankruptcy Court approval thereof under sections 1125 and 1129 of the Bankruptcy Code as set forth in the Restructuring Support Documents.  Prior to filing or disseminating any revision, supplement, modification or amendment to the Plan, the Disclosure Statement or any version of the Plan or the Disclosure Statement, the Issuer will provide counsel to the Investors a copy of such filing, revision, modification, supplement or amendment and a reasonable opportunity to review and comment on such documents prior to being filed or disseminated; provided that such review and comment shall not constitute a presumption or other determination that the documents constitute (and comply with the definition of) either a Plan or a Disclosure Statement, as applicable.  In addition, the Issuer will provide counsel to the Investors a copy of a draft of the Confirmation Order and a reasonable opportunity to review such draft prior to such order being filed with the Bankruptcy Court.  The Debtors shall not make any revision, supplement, modification or amendment to the Plan or the Disclosure Statement that would change, in a manner that is adverse to the Investors, any of the terms set forth on the Term Sheets attached as Exhibit A hereto without the prior written consent of (i) 50% of the Investors (by purchase obligation) (the “ Required Investors ”), and (ii) with respect to any change that adversely affects a New Notes Investor in a manner different from the other New Notes Investors,  the consent of each such New Notes Investor, and if such consent is not obtained, such non-consenting New Notes Investor shall have no further obligations whatsoever under this Agreement.

 

(b)                                  Rights Offering .  To effectuate the Rights Offering as provided herein and to use commercially reasonable efforts to seek entry of an order of the Bankruptcy Court, prior to the commencement of the Rights Offering, authorizing the Issuer and the other Debtors to conduct the Rights Offering pursuant to the securities exemption provisions set forth in section 1145(a) of the Bankruptcy Code.

 

(c)                                   Notification .  To notify, or to cause the Subscription Agent to notify, on each Friday during the Rights Exercise Period and on each Business Day during the five (5) Business Days prior to the Expiration Time (and any extensions thereto), or more frequently if reasonably requested by an Investor, each Investor of the aggregate principal amount of Rights known by the Issuer or the Subscription Agent to have been exercised pursuant to the Rights Offering as

 

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of the close of business on the preceding Business Day or the most recent practicable time before such request, as the case may be.

 

(d)                                  Unsubscribed New Notes .  To determine, or instruct the Subscription Agent to determine, the principal amount of Unsubscribed New Notes, if any, in good faith, and to provide, or instruct the Subscription Agent to provide a Purchase Notice or a Satisfaction Notice that reflects the principal amount of Unsubscribed New Notes as so determined and to provide to the Investors, such written backup to the determination of the Unsubscribed New Notes as an Investor may reasonably request.

 

(e)                                   Use of Proceeds .  The Issuer will apply the net proceeds from the sale of the New Notes as provided in the Term Sheets.

 

(f)                                     No Stabilization . The Issuer will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the New Notes.

 

(g)                                  Registration Rights Agreement .  The Issuer will file with the Bankruptcy Court as soon as practicable a form of a registration rights agreement (the “ Registration Rights Agreement ”) in form and substance reasonably acceptable to the Issuer and the Required Investors.  The Issuer and the Investors shall use commercially reasonable efforts to negotiate and execute, and seek Bankruptcy Court approval of, the Registration Rights Agreement as promptly as practicable.

 

(h)                                  Conduct of Business .  During the period from the date of this Agreement to the Effective Date , the Issuer and its subsidiaries shall carry on their businesses in the ordinary course (subject to any actions which are consistent with the SEC Filings and any limitations on such actions under the Bankruptcy Code) and, to the extent consistent therewith, use their commercially reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with the Issuer or its subsidiaries.  Without limiting the generality of the foregoing, and except as otherwise expressly provided or permitted by this Agreement, prior to the Effective Date, the Issuer shall not, and shall cause its subsidiaries not to, take any of the following actions without the prior written consent of the Required Investors, which consent shall not be unreasonably withheld, conditioned or delayed:

 

(i)                                      (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock (other than upstream dividends by a direct or indirect wholly-owned subsidiary of the Issuer to the Issuer or another direct or indirect subsidiary of the Issuer), (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in

 

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substitution for shares of its capital stock or (C) purchase, redeem or otherwise acquire, except in connection with the Plan, any shares of capital stock of the Issuer or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;

 

(ii)                                   except for intercompany transactions and any financing activities which are consistent with the Issuer’s existing financing, issue, deliver, grant, sell, pledge, dispose of or otherwise encumber any of its capital stock or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock at less than fair market value;

 

(iii)                                acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the stock, or other ownership interests in, or substantial portion of assets of, or by any other manner, any business or any corporation, partnership, association, joint venture, limited liability company or other entity or division thereof except in the ordinary course of business;

 

(iv)                               sell, lease, mortgage, pledge, grant a lien, mortgage, pledge, security interest, charge, claim or other encumbrance of any kind or nature on or otherwise encumber or dispose of any of its properties or assets, except (A) in the ordinary course of business, (B) to the extent required in connection with the DIP Financing and (C) other transactions involving not in excess of $5 million in any 12 month period;

 

(v)                                  other than ordinary course trade payables and in connection with raw materials or foreign exchange hedging transactions or the DIP Financing, incur any indebtedness for borrowed money or guarantee any such indebtedness of another individual or entity, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Issuer, guarantee any debt securities of another individual or entity, enter into any “keep well” or other agreement to maintain any financial statement condition of another person (other than a subsidiary) or enter into any arrangement having the economic effect of any of the foregoing in excess of $5 million in any 12 month period;

 

(vi)                               except for the previously negotiated collective bargaining agreement covering Accuride Canada, Inc., enter into any new, or amend or supplement any existing, collective bargaining agreement; or

 

(vii)                            authorize any of, or commit or agree to take any of, the foregoing actions.

 

(i)                                      Access to Information . Subject to applicable law and existing confidentiality agreements between the parties ( provided that, unless otherwise agreed upon between the Issuer and any particular Investor,  prior to receipt of any such information by such Investor, such Investor shall enter into an

 

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amendment to its confidentiality agreement to remove any requirement for the Issuer to disclose material non-public information under Section 4 thereof and such amendment shall be effective until the earlier of the Effective Date or the date on which this Agreement is terminated in accordance with the terms herein), upon reasonable notice, the Issuer shall (and shall cause its subsidiaries to) afford the Investors and their respective directors, officers, employees, investment bankers, attorneys, accountants and other advisors or representatives, reasonable access, throughout the period prior to the Effective Date, to its employees, properties, books, contracts and records and, during such period, the Issuer shall (and shall cause its subsidiaries to) furnish promptly to the Investors all information concerning its business, properties and personnel as may reasonably be requested by any Investor; provided, that the foregoing shall not require the Issuer (i) to permit any inspection, or to disclose any information, that in the reasonable judgment of the Issuer would cause the Issuer to violate any of its obligations with respect to confidentiality to a third party if the Issuer shall have used commercially reasonable efforts to obtain the consent of such third party to such inspection or disclosure, (ii) to disclose any privileged information of the Issuer or any of its subsidiaries or (iii) to violate any laws; provided, further, that the Issuer shall deliver to the Investors a schedule setting in forth in reasonable detail a description of any information not provided to the Investors pursuant to subclauses (i) through (iii) above.

 

(j)                                      Financial Information . For each month, beginning October 31, 2009 until the Expiration Time, the Issuer shall provide to each Investor an unaudited consolidated balance sheet and related unaudited consolidated statements of operations and consolidated statements of cash flows for the month then ended within 30 days of the end of such month (the “Monthly Financial Statements”). The Monthly Financial Statements, except as indicated therein, shall be prepared in accordance with the Issuer’s normal financial reporting practices.

 

(k)                                   Amendments to Organizational Documents .  The Issuer will amend its certificate of incorporation, bylaws and any other required organizational documents to provide for the governance rights granted to holders of the New Notes as set forth in the Term Sheets.

 

6.                                        Additional Covenants of the Investors .  Each of the Investors, severally and not jointly, agrees with the Issuer, with respect to itself only:

 

(a)                                   No Inconsistent Action .  To not file any pleading or take any other action in the Bankruptcy Court with respect to this Agreement, the Plan, the Disclosure Statement or the Confirmation Order of the consummation of the transactions contemplated hereby or thereby that is inconsistent in any material respect with this Agreement or the Issuer’s efforts to obtain the entry of court orders consistent with this Agreement other than to enforce such Investor’s rights and remedies at law or equity, or to enforce the terms of the Restructuring Support Documents or this Agreement.

 

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(b)                                  Transfer Restrictions . Such Investor acknowledges that Unsubscribed New Notes to be purchased by it pursuant to the terms of this Agreement have not been registered under the Securities Act and that the Company shall not be required to effect any registration of the Unsubscribed New Notes under the Securities Act or any state securities law except as contemplated in the Registration Rights Agreement.  Such Investor acknowledges that Unsubscribed New Notes will only be disposed of pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities laws.

 

7.                                        Conditions .

 

(a)                                   Conditions to the Obligations of Each Party .  The respective obligations of the Investors and the Issuer to effect the purchase of the Unsubscribed New Notes pursuant to this Agreement on the Effective Date are subject to the following conditions:

 

(i)                                      Confirmation Order .  An order of the Bankruptcy Court confirming a Plan consistent with the Restructuring Support Documents (the “ Confirmation Order ”) shall have been entered and such order shall be final and non-appealable, shall not have been appealed within ten (10) days of entry or, if such order is appealed, shall not have been stayed pending appeal, and there shall not have been entered by any court of competent jurisdiction any reversal, modification or vacatur, in whole or in part, of the Confirmation Order.

 

(ii)                                   Conditions to Confirmation .  The conditions to confirmation and the conditions to the Effective Date of the Plan shall have been satisfied or waived in accordance with the Plan.

 

(iii)                                Documentation . The Issuer and the Investors shall have received all the documentation required to consummate the transaction contemplated hereby, including but not limited to the Indenture and, in the case of the Investors, an officers’ certificate of the Issuer certifying as to the effect of Section 7(b)(i) hereof and other documents and certificates as the Issuer and the Investors may reasonably require, each duly executed and in form and substance reasonably satisfactory to the Issuer and the Required Investors.

 

(iv)                               Rights Offering .  The Expiration Time shall have occurred.

 

(v)                                  No Restraint .  No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Plan, the Rights Offering or the transactions contemplated by this Agreement.

 

(vi)                               HSR Act; Regulatory Approvals .  If the purchase of Unsubscribed New Notes by any Investor pursuant to this Agreement is subject to the terms of the HSR Act or the laws of any relevant foreign jurisdiction, the applicable

 

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waiting period shall have expired or been terminated thereunder with respect to such purchase.

 

(vii)                            No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued in each by any federal, state or foreign governmental or regulatory authority that, as of the Effective Date, prohibits the issuance or sale of the Rights or the New Notes or the Purchased New Notes or the sale of the Unsubscribed New Notes pursuant to this Agreement; and no injunction or order of any federal, state or foreign court shall have been issued that, as of the Effective Date, prohibits the issuance or sale of the Rights or the New Notes or the Purchased New Notes or the resale of the Unsubscribed New Notes pursuant to the Agreement.

 

(viii)                         Consents . All other material governmental and third party notifications, filings, consents, waivers and approvals required for the consummation of the transactions contemplated by this Agreement and the Plan shall have been made or received.

 

(b)                                  Conditions to the Obligations of the Investors .  The obligation of the Investors to purchase the Unsubscribed New Notes pursuant to this Agreement on the Effective Date are subject to the following conditions:

 

(i)                                      Representations and Warranties and Covenants .  The representations and warranties of the Issuer set forth in this Agreement (other than such representations and warranties set forth in Section 3(h)(iii)) (disregarding all qualifications and exceptions contained therein regarding materiality or Material Adverse Effect) shall be true and correct on the date hereof and on the Effective Date as if made on such date, except, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. The Issuer shall have complied in all material respects with all of its material obligations hereunder.

 

(ii)                                   No Material Adverse Change .  Since the date of this Agreement, no Material Adverse Change Event shall have occurred and be continuing.

 

(iii)                                Liquidity . As of the Effective Date, the Issuer and its consolidated subsidiaries shall have minimum cash and cash equivalents of $50 million (excluding any cash used to collateralize any letter of credit), adjusted to give effect to the restructuring contemplated under the Plan and the consummation of the Rights Offering, the purchase of the Unsubscribed New Notes by the Investors and the other transactions contemplated by this Agreement.

 

(iv)                               Purchase Notice .  The Investors shall have received a Purchase Notice in accordance with Section 1(e), dated as of the Determination Date, stating the principal amount of Unsubscribed New Notes to be purchased pursuant to the Backstop Commitment.

 

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(v)                                  Fees, Etc .  All fees and other amounts required to be paid or reimbursed to the Investors as of the Effective Date, including, without limitation, the Backstop Fee, shall have been paid or reimbursed in full.

 

(vi)                               Registration Rights Agreement . The Issuer shall have entered into the Registration Rights Agreement with the Investors in accordance with Section 5(g), in form and substance reasonably satisfactory to the Required Investors.

 

(vii)                            Terms of New Notes .  The New Notes shall have the terms set forth in Exhibit A hereto.

 

(c)                                   Conditions to the Obligations of the Issuer .  The obligation of the Issuer to effect the purchase the Unsubscribed New Notes pursuant to this Agreement on the Effective Date are subject to the following conditions:

 

(i)                                      Representations and Warranties and Covenants .  The representations and warranties of the Investors set forth in this Agreement shall be true and correct in all material respects on the date hereof and on the Effective Date as if made on such date. The Investors shall have complied in all material respects with all of their respective material obligations hereunder.

 

8.                                        Indemnification .

 

(a)                                   Whether or not the Rights Offering is consummated or this Agreement is terminated, the Issuer (in such capacity, the “ Indemnifying Party ”) shall indemnify and hold harmless the Investors, their respective affiliates and their respective officers, directors, employees, agents and controlling persons (each an “ Indemnified Person ”) from and against any and all losses, claims, damages, liabilities and reasonable expenses, joint or several, to which any such Indemnified Person may become subject arising out of or in connection with any third party claim, challenge, litigation, investigation or proceeding with respect to this Agreement, the Rights Offering, the Backstop Commitment, or the transactions contemplated hereby or thereby, including without limitation, payment of the Backstop Fee, distribution of Rights, purchase and sale of New Notes in the Rights Offering and purchase and sale of Unsubscribed New Notes pursuant to this Agreement, or any breach by the Issuer of this Agreement and to reimburse such Indemnified Persons for any reasonable legal or other reasonable out-of-pocket expenses as they are incurred in connection with investigating, responding to or defending any of the foregoing, provided that the foregoing indemnification will not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or expenses to the extent that they are finally judicially determined to have resulted from any breach of this Agreement by such Indemnified Person or bad faith, gross negligence or willful misconduct on the part of such Indemnified Person.  If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Person as a result of such loss, claim, damage, liability or expense in

 

24

 

such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party on the one hand and such Indemnified Person on the other hand but also the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, as well as any relevant equitable considerations.  It is hereby agreed that the relative benefits to the Indemnifying Party on the one hand and all Indemnified Persons on the other hand shall be deemed to be in the same proportion as (i) the total value received or proposed to be received by the Issuer pursuant to the sale of New Notes contemplated by this Agreement bears to (ii) the aggregate fee paid or proposed to be paid to the Investors in connection with such sale.

 

(b)                                  Promptly after receipt by an Indemnified Person of notice of the commencement of any claim, litigation, investigation or proceeding relating to this Agreement, the Rights Offering, the Backstop Commitment, or any of the transactions contemplated hereby or thereby (“ Proceedings ”), such Indemnified Person will, if a claim is to be made hereunder against the Indemnifying Party in respect thereof, notify the Indemnifying Party in writing of the commencement thereof; provided that the omission so to notify the Indemnifying Party will not relieve it from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure.  In case any such Proceedings are brought against any Indemnified Person and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein, and, to the extent that it may elect by written notice delivered to such Indemnified Person, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Person, provided that if the defendants in any such Proceedings include both such Indemnified Person and the Indemnifying Party and such Indemnified Person shall have concluded that there may be legal defenses available to it that are different from or additional to those available to the Indemnifying Party, such Indemnified Persons shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Proceedings on behalf of such Indemnified Person.  Upon receipt of notice from the Indemnifying Party to such Indemnified Person of its election so to assume the defense of such Proceedings and approval by such Indemnified Person of counsel, the Indemnifying Party shall not be liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection with the defense thereof (other than reasonable costs of investigation) unless (i) such Indemnified Person shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the Indemnifying Party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Proceedings), (ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to such Indemnified Person to represent such Indemnified Person within a reasonable time after notice of commencement of the Proceedings or (iii) the Indemnifying Party shall have authorized in writing the employment of counsel for such Indemnified Person.

 

25

 

(c)                                   The Indemnifying Party shall not be liable for any settlement of any Proceedings effected without its written consent (which consent shall not be unreasonably withheld).  If any settlement of any Proceeding is consummated with the written consent of the Indemnifying Party or if there is a final judgment for the plaintiff in any such Proceedings, the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Person from and against any and all losses, claims, damages, liabilities and expenses by reason of such settlement or judgment in accordance with, and subject to the limitations of, the provisions of this Section 8.  The Indemnifying Party shall not, without the prior written consent of an Indemnified Person (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened Proceedings in respect of which indemnity has been sought hereunder by such Indemnified Person unless (a) such settlement includes an unconditional release of such Indemnified Person in form and substance reasonably satisfactory to such Indemnified Person from all liability on the claims that are the subject matter of such Proceedings and (b) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

 

9.                                        Acknowledgements and Agreements of the Debtors .  Notwithstanding anything herein to the contrary, the Debtors acknowledge and agree that (a) the transactions contemplated hereby are arm’s-length commercial transactions between the Issuer and the Debtors, on the one hand, and the Investors, on the other, (b) in connection therewith and with the processes leading to such transactions, each Investor is acting solely as a principal and not the agent or fiduciary of the Issuer or the Debtors or their estates, (c) the Investors have not assumed advisory or fiduciary responsibilities in favor of the Issuer or the Debtors or their estates with respect to such transactions or the processes leading thereto and (d) the Issuer and the Debtors have consulted their own legal and financial advisors to the extent they deemed appropriate.

 

10.                                  Defaulting Investor .

 

(a)                                   If any Investor defaults on its obligation to purchase the Unsubscribed New Notes that it has agreed to purchase hereunder, the non-defaulting Investors may in their discretion arrange for the purchase of such Unsubscribed New Notes by other persons satisfactory to the Issuer (including such non-defaulting Investors on a pro rata basis) on the terms contained in this Agreement. As used in this Agreement, the term “Investor” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule A hereto that, pursuant to this Section 10, purchases the Unsubscribed New Notes that a defaulting Investor agreed but failed to purchase.

 

(b)                                  If, after giving effect to any arrangements for the purchase of the Unsubscribed New Notes of a defaulting Investor or Investors by the non-defaulting Investors and the Issuer as provided in paragraph (a) above, the Issuer shall not have initiated litigation against the defaulting Investor or Investors seeking specific performance of their obligations under this Agreement and the aggregate principal amount of Unsubscribed New Notes that remain unpurchased

 

26

 

on the Effective Date exceeds $15.0 million, then this Agreement shall terminate without liability on the part of the non-defaulting Investors.  Any termination of this Agreement pursuant to this Section 10 shall be without liability on the part of the Issuer, except that the Issuer will continue to be liable for the payment of expenses as set forth in Section 3(c) hereof and except that the provisions of Section 8 hereof shall not terminate and shall remain in effect.

 

(c)                                   Nothing contained herein shall relieve a defaulting Investor of any liability it may have to the Issuer or any non-defaulting Investor for damages caused by its default.

 

11.                                  Survival of Representations and Warranties .  The representations and warranties made in this Agreement will survive the execution and delivery of this Agreement for the length of the applicable statute of limitations with respect thereto.

 

12.                                  Termination .

 

(a)                                   This Agreement shall automatically terminate:

 

(i)                                      if the assumption of this Agreement by the Debtors has not been approved by the Bankruptcy Court by final order within thirty-five (35) days after the date on which the Debtors file petitions commencing the Chapter 11 Case;

 

(ii)                                   if the purchase and sale contemplated by Section 2(a) have not occurred by April 15, 2010;

 

(iii)                                if the Noteholders Restructuring Support Agreement has been terminated by any of the parties thereto for whatever reasons; or

 

(iv)                               if the Lenders Restructuring Support Agreement has been terminated by any of the parties thereto for whatever reasons.

 

(b)                                  The Required Investors may, acting collectively, terminate this Agreement:

 

(i)                                      if the Issuer or any of the other Debtors has failed to meet any of the deadlines set forth in Section 6 of the Noteholders Restructuring Support Agreement as in effect at the time;

 

(ii)                                   if the Debtors shall not have provided evidence satisfactory to the Required Noteholders that lenders representing at least 67% of the aggregate principal amount of the First Out Loan Obligations (as defined in the Credit Agreement) outstanding under the Credit Agreement have executed the Lender Restructuring Support Agreement within seven (7) Business Days after the entry of a order by the Bankruptcy Court approving the Disclosure Statement;

 

(iii)                                upon the failure of any of the conditions set forth in Section 7 hereof to be satisfied, which failure cannot be cured by April 15, 2010;

 

27

 

(iv)                               if the Issuer makes a public announcement that it intends to support or supports, or enters into an agreement to support, or files any pleading or document with the Bankruptcy Court indicating its intention to support, or support, any Competing Transaction; or the Issuer enters into a Competing Transaction;

 

(v)                                  if the Issuer has materially breached its obligations under this Agreement, the Noteholders Restructuring Support Agreement or the Lenders Restructuring Support Agreement and such breach is not cured (to the extent curable) within five (5) Business Days after first being aware of such breach or the giving of written notice by any Investor to the Issuer of such breach (whichever is earlier);

 

(vi)                               if the Plan does not conform in all economic and other material respects to the Term Sheets with respect to the treatment of the Old Notes;

 

(vii)                            if the Plan does not conform in all economic and other material respects to the Term Sheets with respect to the treatment of the Investors;

 

(viii)                         if the terms of the Plan and the exhibits and any supplements thereto not otherwise set forth in the Restructuring Support Documents, including any amendment or modification of any of the foregoing, shall not be in form or substance reasonably acceptable to the Required Investors;

 

(ix)                                 if an order dismissing or converting the chapter 11 case of any of the Debtors to a case under chapter 7 of the Bankruptcy Code is entered by the Bankruptcy Court;

 

(x)                                    if the Debtors’ exclusive right to file a chapter 11 plan pursuant to section 1121 of the Bankruptcy Code shall have terminated;

 

(xi)                                 any court of competent jurisdiction or other competent governmental or regulatory authority issues a ruling, determination, or order making illegal or otherwise restricting, preventing or prohibiting the consummation of the Restructuring substantially on the terms set forth in the Term Sheets and in this Agreement, including an order of the Bankruptcy Court denying confirmation of the Plan, which ruling, determination or order (i) has been in effect for 30 days and (ii) is not stayed;

 

(xii)                              upon the entry of an order by the Bankruptcy Court appointing an examiner with enlarged powers relating to the operation of the material part of the business of the Debtors, taken as a whole (powers beyond those set forth in section 1106(a)(3) and (4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code, or the entry of an order by the Bankruptcy Court appointing a trustee under section 1104 of the Bankruptcy Code;

 

(xiii)                           if the Bankruptcy Court shall enter an order approving a payment to any party (whether in cash or other property or whether as adequate protection,

 

28

 

settlement of a dispute, or otherwise) that would be inconsistent with the treatment of such party under the Restructuring Support Documents;

 

(xiv)         upon the entry of an order dismissing one or more of the Debtors’ chapter 11 cases;

 

(xv)          if (A) the Issuer shall not have obtained an interim order (the “ Interim DIP Order ”) substantially and in all material respects in the form attached as Exhibit B hereto approving the DIP Financing on the terms and conditions set forth in the DIP Agreement within five (5) days after the Chapter 11 Commencement Date; (B) the Issuer has not obtained a final order approving the DIP Financing (such final order, together with the Interim DIP Order, the “ DIP Order ”) on the terms and conditions set forth in the DIP Agreement within forty-five (45) days after the Chapter 11 Commencement Date; or (C) there shall have occurred a “ Termination Date ” under the DIP Order or the DIP Agreement and the enforcement by the DIP lenders of any of their rights and remedies thereunder;

 

(xvi)         any order required to be entered by the Bankruptcy Court under this Section 12 and Section 6 of the Noteholders Restructuring Support Agreement on a final basis shall not become a final order within a reasonable period of time;

 

(xvii)        the Debtors shall have made a material change to the DIP Budget (as defined in the Noteholders Restructuring Support Agreement) without the prior written consent of the Required Investors; or

 

(xviii)       the Plan does not receive the requisite number of votes in favor of such Plan in number and amount in the class of claims in which the Eligible Holders’ claims are placed.

 

(c)            If (i) this Agreement is terminated pursuant to Section 12(b)(iii) or 12(d) and at the time of such termination the Investors are in compliance in all material respects with this Agreement, or (ii) this Agreement is terminated pursuant to Section 12 (a)(ii) or Section 12(b) and within 12 months after such termination of this Agreement, the Issuer or any of its subsidiaries (A) enters into an agreement or files any pleading or document with the Bankruptcy Court evidencing its intention to support, or otherwise supports, any Competing Transaction (as defined below), or (B) enters into a Competing Transaction, in each case, if such Competing Transaction relates to the Issuer’s sale of substantially all of its assets under Section 363 of the Bankruptcy Code or other sale of the Issuer through an auction process, then upon the closing of such Competing Transaction, the Issuer shall pay the Investors an aggregate fee of $10 million (the “ Termination Fee ”), and the Issuer shall also pay to the Investors any Transaction Expenses certified by the Investors to be due and payable hereunder that have not been paid theretofore and such Termination Fee and Transaction Expenses shall, subject to approval of the Bankruptcy Court, constitute

 

29

 

administrative expenses of the Issuer.  The provision for the payment of the Termination Fee and Transaction Expenses is an integral part of the transactions contemplated by this Agreement, and without this provision the Investors would not have entered into this Agreement.  The Issuer agrees to use its best efforts to obtain approval from the Bankruptcy Court of the Termination Fee.  If the Bankruptcy Court fails or refuses to enter an order approving the terms of this Section 12(c), including but not limited to, the Termination Fee, such failure or refusal shall not affect the Investors’ commitment hereunder or the other provisions of this Agreement.  If the Bankruptcy Court approves the Termination Fee, the Termination Fee shall be the sole and exclusive remedy of the Investors for any breach of this Agreement in circumstances in which the Termination Fee is required to be paid other than any breach of the provisions of Section 13 hereof. Payment of all amounts due under this Section 12(c), shall be made by wire transfer of immediately available funds to the account specified by the Investors at least 24 hours in advance to the Issuer.  If payment of the Termination Fee and Transaction Expenses due under this Section 12(c) are not paid, and the Investors are forced to commence any action or proceeding to collect same which results in a final judgment against the Issuer no longer subject to appeal, the Issuer shall pay to the Investors all costs and expenses, including attorneys’ fees, in connection with collecting or enforcing their rights and remedies hereunder.

 

(d)            The Issuer may terminate this Agreement in order to enter into a Superior Transaction (as defined below) or an agreement to support a Superior Transaction.

 

(e)            Upon termination under this Section 12, the covenants and agreements made by the parties herein under Sections 9, 11, 12(c) and 13 through 20 will survive indefinitely in accordance with their terms.

 

13.            Competing Transactions .  From the date of this Agreement to the Effective Date or earlier termination of this Agreement, the Issuer shall not make a public announcement that it intends to support or supports, enter into an agreement to support, or file any pleading or document with the Bankruptcy Court evidencing its intention to support, or otherwise knowingly support, any transaction inconsistent with this Agreement or the Plan, shall not file any plan that is not the Plan and shall not agree to, consent to, knowingly provide any support to, solicit, participate in the formulation of, or vote for any transaction or plan of reorganization other than the Plan (a “ Competing Transaction ”).   Notwithstanding anything to the contrary herein, or in the Plan or any other agreement among the Issuer and the Investors, at any time prior to the date on which the Plan is confirmed by the Bankruptcy Court, if the Issuer has received a bona fide written proposal for a Competing Transaction that the special committee of the board of directors of the Issuer or, if the special committee is no longer in existence, the board of directors of the Issuer determines in good faith is or could reasonably be expected to lead to a Superior Transaction and that the failure of the Board to pursue such Competing Transaction could reasonably be expected to result in a breach of the Board of Directors’ fiduciary duties under applicable law, then the Issuer may (a) furnish non-public information to, and engage in discussions and negotiations with, the person making such

 

30

 

proposal and its representatives with respect to the Competing Transaction, and (b) terminate this Agreement pursuant to Section 12(d)  in order to enter into a Superior Transaction or an agreement to support a Superior Transaction.  For purposes of this Agreement, a “ Superior Transaction ” shall be a Competing Transaction that the special committee of the board of directors of the Issuer or, if the special committee is no longer in existence, the board of directors of the Issuer determines in good faith (x) would be in the best interests of the Issuer and its creditor constituencies and equity holders as a whole, including, but not limited to the Investors, and (y) would reasonably be expected to provide a superior recovery (but, with respect to any creditor constituent, not in excess of its claim) to each class of creditor constituencies and equity holders.  At all times prior to, on, or after the date of the commencement of the Chapter 11 Case, the Issuer shall be obligated to promptly deliver to the advisors for the Investors all written communications delivered to or received by the Issuer or its advisors making or materially modifying any proposals with respect to any Competing Transaction, including, without limitation, copies of all expressions of interest, term sheets, letters of interest, offers, proposed agreements or otherwise, and shall periodically update (not less than once every week) the advisors for the Investors concerning such matters.

 

14.            Notices .  All notices and other communications in connection with this Agreement will be in writing and will be deemed given (and will be deemed to have been duly given upon receipt) if delivered personally, sent via electronic facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as will be specified by like notice):

 

(a)            If to Investors or any of the Investors, at their respective addresses set forth on the signature pages hereto, with copies to:

 

Rothschild Inc.
1251 Avenue of the Americas, 51 st  Floor
New York, NY 10020
Facsimile: (212) 403-5454
Attn: Steven Ledoux
and
Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street, 30 th  Floor
Los Angeles, CA 90017
Facsimile: (213) 892-4277
Attn: Paul S. Aronzon, Esq.
(b)            If to the Issuer, to:
Accuride Corporation
77140 Office Circle
Evansville, IN 47715
Attention: Steve Martin, Esq.
Facsimile: (812) 962-5470

 

31

 

with a copy to:
Latham & Watkins LLP
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, IL 60606
Attn:	David S. Heller, Esq.
	Bradley Faris, Esq.
Facsimile: (312) 993-9767

 

15.            Assignment; Third Party Beneficiaries .  Neither this Agreement nor any of the rights, interests or obligations under this Agreement will be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other party.  Notwithstanding the previous sentence, this Agreement, or any Investor’s obligations hereunder, may be assigned, delegated or transferred, in whole or in part, by an Investor to (i) any entity or person over which such Investor or any of its Affiliates exercises investment authority, including, without limitation, with respect to voting and dispositive rights or (ii) any person or entity reasonably acceptable to the Issuer to which such Investor transfers the Old Notes held by it; provided, that any such assignee assumes the obligations of the Investor hereunder and agrees in writing to be bound by the terms of this Agreement in the same manner as the Investor.  Notwithstanding the foregoing or any other provisions herein, no such assignment will relieve the assigning Investor of its obligations hereunder if such assignee fails to perform such obligations.  Except as provided in Section 8 with respect to the Indemnified Parties, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement.  Notwithstanding the foregoing or any other provisions herein to the contrary, an Investor may not assign any of its rights or obligations under this Agreement, to the extent such assignment would affect the securities laws exemptions applicable to this transaction.

 

16.            Prior Negotiations; Entire Agreement .  This Agreement (including the exhibits hereto and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties with respect to the subject matter of this Agreement, except that the parties hereto acknowledge that any confidentiality agreements heretofore executed among the parties will continue in full force and effect.

 

17.            Governing Law; Jurisdiction .  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflict of laws of the State of New York.  By its execution and delivery of this Agreement, each of the parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit, or proceeding against it with respect to any matter under or arising out of or in connection

 

32

 

with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit, or proceeding, shall be brought in a federal court of competent jurisdiction in the Southern District of New York.  By execution and delivery of this Agreement, each of the parties hereto hereby irrevocably accepts and submits to the nonexclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit, or proceeding.  Notwithstanding the foregoing consent to jurisdiction, upon the commencement of the Debtors’ chapter 11 cases, each of the parties hereto hereby agrees that the Bankruptcy Court shall have exclusive jurisdiction over all matters arising out of or in connection with this Agreement.

 

18.            Counterparts .  This Agreement may be executed in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the parties and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.

 

19.            Waivers and Amendments .  This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance, and subject, to the extent required, to the approval of the Bankruptcy Court.  No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement.  The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.

 

20.            Headings .  The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

 

21.            Specific Performance .  The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy, and, accordingly, the parties agree that, in addition to any other remedies, each will be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting bond.

 

[ Signature Page Follows ]

 

33

 

If the foregoing is in accordance with your understanding, please sign and return to us a counterpart hereof, and upon the acceptance hereof by you, this letter and such acceptance hereof will constitute a binding agreement between you, and (subject to the approval of the Bankruptcy Court) and the Issuer.

 

				Very truly yours,
				ACCURIDE CORPORATION
				By:
					Name:
					Title:
Accepted as of the date hereof:
By:
	Name:
	Title:
Facsimile:
Attn:

 

34

 

EXHIBIT A

 

TERM SHEETS

 

A-1

 

ACCURIDE CORPORATION

NON-BINDING TERM SHEET FOR PROPOSED RESTRUCTURING

 

Reference is made to those certain 8.5% Senior Subordinated Notes due 2015 (collectively, the “ Old Notes ”) issued by Accuride Corporation, a Delaware corporation (“ Accuride ”, and together with all of its direct and indirect subsidiaries, the “ Company ”).

 

For discussion purposes only, the following outline of the principal terms and conditions of a restructuring is being submitted for consideration.  The ad hoc committee (the “ Committee ”) of certain entities(1) that hold or manage the Old Notes contemplates implementing these transactions through a pre-arranged Chapter 11 case to be filed shortly after agreement on this Term Sheet is reached.  This Term Sheet and all related communications shall be deemed to be settlement negotiations and subject to Federal Rule of Evidence 408.

 

This Term Sheet replaces and supersedes all prior agreements and understandings, both written and oral, between the Committee and the Company and their respective advisors with respect to the subject matter hereof.

 

(1) The ad hoc committee consists of Blackrock Financial Management, Inc., Brigade Capital Management, LLC, Canyon Capital Advisors LLC, Principal Global Investors LLC, Sankaty Advisors, LLC and Tinicum Incorporated.

 

A-2

 

Treatment of Current Stakeholders

 

1.		Term Facility (the “ Term Facility ”) and Revolving Credit Facility (the sum of the Canadian Revolving Facility and the US Revolving Facility, together the “Revolving Credit Facility ”) under the Credit Agreement (as amended, the “ Credit Agreement ”), with Citicorp USA, Inc. as administrative agent (“ Agent ”)   (Approximately $56.07 million and $224.60 million outstanding under the Revolving Credit Facility and the Term Facility, respectively as of September 25, 2009)		The Credit Agreement shall be amended with terms and conditions, including covenants and maturities, consistent with the terms set forth in the “Senior Prepetition Debt Restructuring Term Sheet” (in the form approved by the Committee as of the date hereof).
2.		Last-Out Facility (the “Sun Facility”) under the Credit Agreement (Approximately $70 million outstanding as of September 25, 2009)		The Sun Facility will be repaid or redeemed from the proceeds of new financing (see “Implementation — New Capital” below) on terms acceptable to the Company and the Old Noteholders.
3.		Claims of the Holders (the “ Old Noteholders ”) of the 8.5% Senior Subordinated Notes due 2015 (the “ Old Notes ”) including all related guarantee claims against the Company   ($275 million in principal outstanding, together with accrued interest of $15.3 million as of September 25,		The Old Noteholders shall receive their pro rata share of shares of common stock issued by restructured or reorganized Accuride (the “ New Common Stock ”), sufficient to result in the Old Noteholders receiving 98.0% of the aggregate issued and outstanding New Common Stock on a fully diluted basis, except as provided below (the “ Noteholder Equity ”). The Noteholder Equity shall be subject to dilution by shares issued upon (a) the exercise of the New Warrants (as defined below), (b) the exercise of any options to purchase New Common Stock provided under a management incentive plan acceptable to the new Board

 

A-3

 

		2009)		of Directors (the “ Old Equity Retention ”), and (c) the conversion of (A) the senior convertible notes (the “ New Notes ”) described in the “Implementation — New Capital” section below and (B) the notes representing the paid-in-kind interest on the New Notes (the “ PIK Notes ”).
4.		Other Secured and Unsecured Claims		Unimpaired.
5.		Common Equity in Accuride (the “ Old Equity ”)		The holders of the Old Equity would receive their pro rata share of:   (i) 2.0% of the aggregate issued and outstanding New Common Stock on a fully diluted basis, after giving effect to the transactions contemplated herein and subject to further dilution by shares issued upon (a) the exercise of the New Warrants, (b) the exercise of any options to purchase New Common Stock provided under a management incentive plan, and (c) the conversion of the New Notes and the PIK Notes; and   (ii) “ New Warrants ”, which would enable the holders thereof to purchase up to 15% in the aggregate of the New Common Stock on a fully diluted basis, subject to further dilution by shares issued upon (a) the exercise of any options to purchase New Common Stock provided under a management incentive plan and (b) the conversion of the New Notes and the PIK Notes. The New Warrants would expire 2 years from the date of their issuance. The New Warrants would be exercisable at a strike price that is 110% of a par recovery on the Old Notes on the effective date of a Restructuring. The New Warrants would have other terms and conditions that are customary for securities of this type.   In connection with a pre-arranged Chapter 11 case, all equity interests in Accuride including all options, warrants and other agreements to acquire equity interests of any kind in Accuride (including any arising under or in connection with any employment agreement) will be cancelled. Provided that the Old Equity class votes to accept the plan of reorganization, the holders of Old Equity would receive New Common Stock in a percentage equal to the Old Equity Retention.

 

A-4

 

Implementation

 

1.		Restructuring Transaction		The Company shall restructure its capital structure (the “ Restructuring ”) through a pre-arranged plan of reorganization (the “ Plan ”) for the Company in a case commenced under chapter 11 of the Bankruptcy Code (the “ Chapter 11 Case ”), the material terms and conditions of which will be set forth in this Term Sheet and in the restructuring support agreement to be executed by the Committee and the Company (as amended, supplemented or otherwise modified, the “ Restructuring Agreement ”), together with the New Capital Term Sheet (as defined below), the restructuring support agreement to be executed by the Company and certain prepetition lenders to the Company and the Senior Prepetition Debt Restructuring Term Sheet.
2.		Chapter 11 Case		The conditions to confirmation and to the effective date of the Plan shall each be in form and substance reasonably acceptable to the Committee and the Company. The Plan will provide that no condition may be waived, amended or deleted without the consent of the Committee, not to be unreasonably withheld or delayed. All documents, including without limitation, the Plan, the order approving a disclosure statement with respect to the Plan, the confirmation order, including any findings of fact and conclusions of law with respect thereto, and the corporate governance and related documents for the reorganized Company, shall each be in form and substance reasonably acceptable to the Committee and the Company. In addition, the business plan included in the disclosure statement with respect to the Plan shall be substantially the same business plan as that contained in the presentations titled “Public Lenders Presentation” and “Private Lender Supplement,” each dated July 2009, which were provided by the Company to the Committee, with any change to be reasonably acceptable to the Committee.
4.		Public Markets		The Company shall covenant that all shares of New Common Stock will upon issuance be freely tradable under applicable securities laws, validly issued, fully paid, and non-assessable. The Company will use its best efforts to list such shares of New Common Stock on the Over the Counter Bulletin Board or another national

 

A-5

 

				exchange or quotation service.
5.		New Capital		The terms of the New Notes shall be set forth in a separate term sheet (the “ New Capital Term Sheet ”).
6.		DIP Financing		The Company shall obtain debtor-in-possession financing (“ DIP Financing ”) in amounts and on terms and conditions set forth in the DIP credit agreement (in the form approved by the Committee on the date hereof).
7.		Canadian Operations		The Company shall maintain current business operations in Canada and obtain an appropriate waiver/forbearance under the Credit Agreement with respect to Accuride Canada, which shall be reasonably satisfactory to the Committee.

 

A-6

 

Corporate Matters

 

1.		Restructuring Expenses		The Company will pay (i) the fees and expenses of the Committee’s counsel (including local counsel) and financial advisor in accordance with their respective engagement letters, and (ii) the reasonable out-of-pocket expenses of the Committee members in connection with any travel to meetings with the Company. The obligations of the Company to pay such fees and expenses shall not be subject to the bankruptcy court’s approval of such fees and expenses.
2.		Documentation		The foregoing proposals are subject to the negotiation of definitive documents, in form and substance acceptable to the Company and the Committee and the members thereof.
3.		Board of Directors		The size and composition of the Board of Directors will be mutually agreed upon between the Committee and Accuride.
4.		Corporate Governance		Certificates of incorporations, by-laws and all constituent documents shall be in form and substance acceptable to the Committee and the Company.
5.		Releases, Exculpation Management Incentive Plan		Terms to be proposed by and acceptable to the Committee and the Company.
6.		Registration Rights Agreement		Terms to be proposed by and acceptable to the Committee and the Company.

 

A-7

 

ACCURIDE CORPORATION

TERM SHEET FOR NEW CAPITAL

IN CONNECTION WITH PROPOSED RESTRUCTURING

 

Reference is made to those certain 8.5% Senior Subordinated Notes due 2015 (collectively, the “ Old Notes ” and the holders thereof, the “ Old Noteholders ”) issued by Accuride Corporation, a Delaware corporation (“ Accuride ”, and together with all of its direct and indirect subsidiaries, the “ Company ”).

 

For discussion purposes only, the following outline of the principal terms and conditions of the new capital to be raised in connection with a proposed restructuring (the “ Restructuring ”) is being submitted by the ad hoc committee (the “ Committee ”) of certain entities(2) that hold or manage the Old Notes for consideration by the Company.  This is the New Capital Term Sheet referred to in the “Implementation — New Capital” section in the term sheet for the Restructuring (the “ Master Term Sheet ”) being considered by the Company, the Committee and certain other stakeholders and should be read in conjunction with the Master Term Sheet. This New Capital Term Sheet and all related communications shall be deemed to be settlement negotiations and subject to Federal Rule of Evidence 408. All terms used and not defined herein shall have the meanings ascribed to them in the Master Term Sheet.

 

This New Capital Term Sheet replaces and supersedes all prior agreements and understandings, both written and oral, between the Committee and the Company and their respective advisors with respect to the subject matter hereof.

 

(2) The ad hoc committee consists of Blackrock Financial Management, Inc., Brigade Capital Management, LLC, Canyon Capital Advisors LLC, Principal Global Investors LLC, Sankaty Advisors, LLC and Tinicum Incorporated.

 

A-8

 

Terms of New Capital

 

Issuer:		Accuride Corporation, a Delaware corporation.
Securities to be Issued:		Accuride will issue senior convertible notes in an aggregate principal amount of US$140.0 million (the “ Initial Notes ”, and together with the PIK Notes (as defined below), the “ New Notes ”), plus paid-in-kind (“ PIK ”) interest as set forth below. The New Notes shall be convertible into shares of New Common Stock as set forth below and have such other terms specified herein.
Use of Proceeds		The proceeds from the issuance and sale of the Initial Notes shall be used (a) to repay or redeem in full the last out term loans of Sun Capital and its affiliates (the “ Sun Facility ”); (b) to repay in full any debtor in possession financing facility of Accuride and its affiliated co-debtors and to pay, or make provision for the payment of, administrative claims; and (c) for general corporate purposes.
Closing Date:		Upon the consummation of a plan of reorganization for the Company in form and substance reasonably acceptable to the Backstop Providers and consistent with the Master Term Sheet (in the form approved by the Backstop Providers as of the date hereof), this New Capital Term Sheet and the “Senior Prepetition Debt Restructuring Term Sheet” (in the form approved by the Backstop Providers as of the date hereof) (the “Closing”), but no later than April 15, 2010.
Investors:		·       The Initial Notes shall be offered to the Old Noteholders, with each of the Old Noteholders entitled to purchase up to its pro rata share of the Initial Notes (the purchasing Old Noteholders, collectively, the “ New Notes Investors ”), that is, that each Old Noteholder as of a record date to be determined shall be entitled to purchase up to that percentage of the Initial Notes equal to such Old Noteholder’s percentage holdings of the Old Notes.   ·       The Backstop Providers listed below shall enter into agreement(s) to subscribe, in accordance with Schedule A to the Convertible Notes Commitment Agreement (the “ Commitment Agreement ”), for any portion of the Initial

 

A-9

 

		Notes not subscribed for by the Old Noteholders (the “ Unsubscribed New Notes ”). The Backstop Providers shall be entitled to receive backstop commitment fees as set forth in, and in accordance with the terms of, the Commitment Agreement.   ·       The Backstop Providers are Blackrock Financial Management, Inc., Brigade Capital Management, LLC, Sankaty Advisors, LLC and Tinicum Lantern II L.L.C. Each Backstop Provider will be committed to acquire the percentage of any Unsubscribed New Notes that is specified on Schedule A to the Commitment Agreement.
		
Transfer:		Subject to applicable securities laws, the New Notes Investors and their respective permitted transferees shall have the right to transfer freely the New Notes or the New Common Stock received upon conversion of the New Notes (the “ Conversion Shares ”) at any time.
Interest Rate:		Interest on the New Notes will be payable semi-annually, with the first six interest payments being payable in PIK and the remaining being payable in cash, at a rate of 7.5% per annum. To the extent interest on the New Notes is paid in PIK, the additional notes so paid (the “ PIK Notes ”) shall be convertible into New Common Stock at the same Conversion Price (as defined below) as the New Notes.
Maturity Date:		The New Notes will mature ten (10) years from the date of Closing.
Ranking:		The New Notes will be senior unsecured debt obligations of Accuride. The New Notes will rank pari passu in right of payment to any existing senior unsecured debt of Accuride or any Guarantor (as defined below), and senior in right of payment to any current or future subordinated debt of Accuride or of any Guarantor.
Subsidiary Guarantees:		All of the direct and indirect subsidiaries of Accuride (the “ Guarantors ”) will guarantee Accuride’s payment obligations with respect to the New Notes.
Conversion/Dividend		The New Notes shall be convertible at any time at the option of

 

A-10

 

Participation:		the holder thereof, in part or in whole, into New Common Stock at a conversion price (the “ Conversion Price ”) that results in the Initial Notes, if converted in whole immediately upon issuance and without giving effect to the accrual of any PIK Interest, being  convertible into the equivalent of 60.0% of all the outstanding New Common Stock (on a fully diluted basis). The Conversion Price shall be subject to adjustment from time to time as described in the section entitled “Anti-Dilution Protection” below. In addition to the interest otherwise specified herein, there shall be payable additional interest on the New Notes in an aggregate amount equal to the amount of any dividends or distributions paid on the New Common Stock prior to conversion (adjusted to reflect the amount of New Common Stock into which the New Notes are then convertible), other than in-kind dividends and distributions, which shall be distributed to the holders of the New Notes on an as-converted basis.
Voting Rights:		The holders of the New Notes shall be entitled to exercise all the voting rights associated with the New Common Stock on an as-converted basis.
Anti-Dilution Protection:		The New Notes shall have customary anti-dilution provisions with respect to stock splits, combinations, issuance of shares or convertible instruments below the greater of market price (or, if the New Common Stock is not actively traded, fair market value) and the Conversion Price on a standard weighted average basis and other standard anti-dilution provisions, as well as a provision that protects the New Notes from dilution by issuance of the PIK Notes. Notwithstanding the foregoing, anti-dilution provisions of the New Notes shall not apply to the issuance of options and other stock incentives under a management incentive plan approved by Accuride’s post-emergence Board of Directors.
Prepayment or Redemption:		The New Notes shall not be prepayable at any time or redeemable prior to maturity without the holders’ consent.
Put Right on Change of Control:		Customary change of control provisions to be agreed upon between the Company and the New Notes Investors.
Make-Whole:		The definitive documents will provide for a make-whole upon the occurrence of certain events to be determined.

 

A-11

 

Affirmative/Reporting Covenants:		Customary affirmative and reporting covenants to be agreed upon.
Negative Covenants:		So long as any New Notes are outstanding, Accuride shall not, and shall not permit any of its subsidiaries to, without the approval of the holders of more than 50% of the New Notes:   1.              Purchase or redeem any capital stock of Accuride, or pay any dividends or distributions with respect to any such capital stock;   2.              Modify any rights, preferences or privileges in respect of the New Common Stock;   3.              Issue any capital stock that has a liquidation or other preference senior to the New Common Stock;   4.              Modify Accuride’s charter or bylaws in any way that is adverse to holders of the New Notes or the New Common Stock, including by the provision of any preferred or otherwise senior class of capital stock to the New Common Stock;   5.              Permit or cause the voluntary bankruptcy or winding up or dissolution of Accuride;   6.              Incur any debt (other than the debt under the Credit Agreements outstanding as of the date of Closing), subject to exceptions to be agreed upon between the Company and the New Notes Investors; or   7.              Take any action that breaches other customary negative covenants to be agreed upon.
Financial Covenants:		The indenture relating to the New Notes shall not contain any financial covenants.
Events of Default:		The indenture relating to the New Notes shall contain events of default customary for securities of this type.
Registration Rights and Listing		Terms of registration rights agreement to be proposed by and agreed upon by the Committee and the Company.   The Company agrees to use its best efforts to cause the New Notes and the Conversion Shares to be listed on the Over the Counter Bulletin Board or another national exchange or quotation service.

 

A-12

 

Chapter 11 Case		The transactions contemplated in this term sheet, the Master Term Sheet and the Senior Prepetition Debt Restructuring Term Sheet will be implemented through a pre-arranged Chapter 11 bankruptcy plan. The terms of such Chapter 11 bankruptcy plan and the final order approving such plan (including, if applicable, any declaration of the effectiveness) shall be in form and substance reasonably satisfactory to the New Notes Investors.   The business plan included in the disclosure statement with respect to the Plan shall be substantially the same business plan as that contained in the presentations titled “Public Lenders Presentation” and “Private Lender Supplement,” each dated July 2009, which were provided by the Company to the Committee, with any change to be reasonably acceptable to the Committee.
Restructuring Expenses		The Company will pay (i) the fees and expenses of the Committee’s counsel (including local counsel) and financial advisor in accordance with their respective engagement letters, and (ii) the reasonable out-of-pocket expenses of the Committee members in connection with any travel to meetings with the Company. The obligations of the Company to pay such fees and expenses shall not be subject to the bankruptcy court’s approval of such fees and expenses.
Choice of Law		New York

 

A-13

 

Summary of Terms and Conditions for the Restructured
Prepetition Senior Secured Credit Facilities (collectively, the “ Restructured Facilities ”)

 

Capitalized terms used herein without definition shall have the meaning given to them in the Fourth Amended and Restated Credit Agreement, dated as of January 31, 2005 (as amended, restated, supplemented and/or otherwise modified through the date hereof, the “ Existing Credit Agreement ”), among Accuride Corporation, a Delaware Corporation, Accuride Canada Inc., a corporation organized under the laws of the Province of Ontario, Canada, Deutsche Bank Trust Company Americas as the administrative agent, and the other Lenders party thereto from time to time.

 

This term sheet is proffered in furtherance of settlement discussions, and is entitled to the protections of Federal Rule of Evidence 408 and any other applicable statutes or doctrines protecting the use or disclosure of confidential information and information exchanged in the context of settlement discussions.  This Term Sheet is for discussion purposes only and shall not be construed as a commitment of any kind to restructure the existing Prepetition Senior Secured Credit Facilities.  Any such restructuring shall, in any event, be subject to final documentation in form and substance satisfactory to the existing Lenders, which such documentation may contain terms that vary from those set forth below, and shall be conditioned upon a Chapter 11 plan of reorganization for the Debtors in form and substance satisfactory to the existing Lenders.

 

The proposed terms and conditions for the Restructured Facilities assume the following in connection with the restructuring of Accuride’s capital structure:

 

·       $140.0 million of New Capital will be provided on a committed basis by the Backstop Providers (as provided for in the New Capital Term Sheet), to repay the post-petition financing facility in full, to provide liquidity to finance working capital and general corporate purposes and to repay in cash at par in full the principal balance of the Sun Last Out Term Advances (other than accrued paid-in-kind interest thereon, which will be added to and form part of the Restructured Prepetition Senior Secured Credit Facility).

 

·       New Capital will be provided on the effective date of the Chapter 11 plan of reorganization of the Borrower and its domestic U.S. Subsidiaries, incorporating the provisions of (i) this term sheet, (ii) the separate Non-Binding Term Sheet for Proposed Restructuring (attached hereto and outlining the proposed terms of the restructuring to be completed pursuant to such plan of reorganization), (iii) the Noteholder New Capital Term Sheet (attached hereto and outlining the proposed terms of the New Capital to be provided by the New Notes Investors and the Backstop Providers as described therein), (iv) the Lender Restructuring Support Agreement among Accuride Corporation and certain Prepetition Lenders and (v) the Noteholder Restructuring Support Agreement among Accuride Corporation and certain Noteholders; each of (ii), (iii), (iv) and (v) in the form agreed by the Steering Committee (the “ Plan ”).

 

·       New Capital will be in the form of unsecured convertible notes, with interest to be paid-in-kind for the first three years and paid in cash thereafter to maturity, and will otherwise comply with the terms included in the New Capital Term Sheet (the “ New Notes ”).

 

A-14

 

·       $5.0 million (assuming net sale proceeds of at least $20.0 million) of proceeds from the sale of Fabco may be reinvested by the U.S. Borrower.

 

·       Existing First Out Obligations (which include the term facility of approximately $224.6 million as of 9/25/09, and the revolving credit facilities of approximately $56.07 million as of 9/25/09 (comprised of the Canadian Revolving Credit Facility and the U.S. Revolving Credit Facility, and excluding issued LC’s of approximately $18.2 million)) will continue to be classified as indebtedness on the terms set out in this Term Sheet, with no reduction to principal or change in currency.

 

·       The defaulting lender Lehman revolving commitment of $24 million shall not be funded and shall be cancelled.

 

Borrower:		Accuride Corporation (the “ U.S. Borrower ”), Accuride Canada Inc. (the “ Canadian Borrower ” and together with the U.S. Borrower, the “ Borrowers ”).
Guarantors/Guarantees:		Identical to those under the Existing Credit Agreement and subject to the same guarantee limitations and restrictions required under U.S. and local law.
Lead Arranger :		Deutsche Bank Securities, Inc (3) .
Administrative Agent:		Deutsche Bank Trust Company Americas (“ DBTCA ”) (4) .
Steering Committee:		DBTCA, GE Capital, Eaton Vance and Fifth Third Bank.
Security:		Maintenance of existing first priority security interests in the Loan Parties’ assets and properties secured by the Collateral Documents and provision of new first priority security interests in any of the Loan Parties’ assets and properties not presently secured by the Collateral Documents, subject to customary exceptions to avoid adverse tax consequences.
Availability:		No availability under Revolving Facility. No Swingline Facility. Provision of new Letter of Credit facility (to replace the existing issued letters of credit) to be discussed.
Closing Date:		The effective date of the Plan (the “ Closing Date ”).
Maturity:		Termination Date of both the Prepetition Revolving Facility (U.S. and Canadian) and the Prepetition Term Facility (First-Out and Last-Out) shall be extended to June 30, 2013.
Interest Rate:		Revolving Loans/First Out Term Loans : LIBOR +675 bps; LIBOR floor of 300 bps; cash pay.   Prepetition Last Out Term Loans : To be refinanced in full with a portion of the proceeds of the New Capital in accordance with the terms of the New Capital Term Sheet.

 

(3)        For a fee to be agreed.

(4)        For a fee to be agreed.

 

A-15

 

Amortization/Excess Cash Flow Sweep:		Same as Existing Credit Agreement, subject to modifications, including 75% of ECF (less amount of cash required to remain in compliance with Minimum Liquidity covenant) to be swept annually, commencing with fiscal year 2011, first sweep date at beginning of Q1, 2012.
Mandatory Prepayments:		Each Borrower shall make mandatory prepayments corresponding with those set forth under the Existing Credit Agreement, with appropriate modifications as may be determined by the Steering Committee, including:   ·       Asset Sales: 100%, subject to a $5.0 million per year reinvestment carve-out;   ·       Issuance of Debt: 100% for any issuance, subject to a (i) $20,000,000 basket carve-out for the issuance of (A) additional senior convertible notes on terms that are identical to the New Notes or (B) other subordinated debt; provided that (x) any such additional issuance or other subordinated debt shall be unsecured, fully subordinated to the Existing Credit Facility (on terms satisfactory to the Lenders) and have a later maturity than the Existing Credit Facility and (y) interest on any such additional issuance or other subordinated debt shall be paid-in-kind following the issuance thereof until the New Notes become cash pay, and thereafter may also become cash pay; and (ii) $5,000,000 general basket carve-out for new debt issuances (the “ Subordinated Debt Basket ”); provided that the obligation to apply the proceeds of any issuance of debt shall not apply to the proceeds of the New Notes or to paid-in-kind interest on the New Notes; and   ·       Issuance of Equity: Existing leverage-based thresholds to be eliminated, 100% for any issuance.
		
Limitation on Indebtedness:		Based on the exceptions/baskets set forth in the Existing Credit Agreement, with appropriate modifications acceptable to the Steering Committee including:   ·       Prohibition on junior/subordinated indebtedness, subject to carve-out for Subordinated Debt Basket;   ·       Prohibition on indebtedness in connection with any merger or acquisition that is a permitted investment;   ·       Purchase money debt and Capital Lease basket of $5,000,000; and   ·       Up to $5,000,000 general basket carve-out for new debt

 

A-16

 

		issuances.
		
Limitation on Liens:		Based on the exceptions/baskets as set forth in the Existing Credit Agreement, with appropriate modifications acceptable to the Steering Committee including:   ·       $5,000,000 general basket.
		
Financial Covenants:		From and after the Closing Date :   (i)             Minimum Liquidity (calculated without giving effect to the Commitments of any Defaulting Lender) of $25 million to be tested monthly on the last business day of each month.   (ii)            Minimum EBITDA (LTM) to be tested quarterly at covenant levels with headroom to the base case plan presented to the Lenders in July 2009, as set forth below.  Covenant holiday for four fiscal quarters after the quarter in which the effective date of the Plan occurs.  Assuming effective date occurs in April 2010, covenant holiday would apply from fiscal quarter ending September 30, 2010 through fiscal quarter ending June 30, 2011.(5)  From and after the covenant holiday through and including fiscal quarter ending December 31, 2011, covenant levels to be as follows (to the extent not covered by the covenant holiday):
			Q2 2011		$67.2 million
			Q3 2011		$76.3 million
			Q4 2011		$83.8 million
			2012		$120.6 million
			2013		$143.9 million
		(iii)           Equity cures (in form of new common stock or subordinated indebtedness up to basket limit referred to under Mandatory Prepayments) of up to $15 million in aggregate to be permitted to cure any EBITDA covenant shortfalls.  Limitations and conditions for exercise of equity cure to be agreed.
Canadian Operations		The U.S. Borrower shall maintain current business operations in Canada and obtain an appropriate waiver/forbearance under the Existing Credit Agreement with respect to Accuride Canada Inc., which shall be reasonably satisfactory to the Instructing Group.

 

(5)        If exit of Chapter 11 occurs either earlier or later than April 2010, covenant holiday period to be adjusted accordingly.

 

A-17

 

Other provisions

Additional modifications may be required relating to, among others, (i) events of default, (ii) limitations on asset sales, JVs and mergers and acquisitions, (iii) limitations on investments, (iv) limitations on capital expenditure, (v) limitations on restricted payments, (vi) reporting requirements and (vii) voting and to reflect position agreed on application of Fabco sale proceeds and terms and conditions of New Capital. Releases and exculpations to be reasonably acceptable to the Debtors and the Steering Committee.

 

The foregoing is intended to summarize certain terms of the Restructured Facilities.  It is not intended to be a definitive list of all of the requirements of the Lenders in connection with the Restructured Facilities.

 

A-18

 

EXHIBIT B

 

INTERIM DIP ORDER AND DIP AGREEMENT

 

 

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

 

In re:		Chapter 11
ACCURIDE CORPORATION,		Case No. 09-           (      )
et al .,(1)
		Joint Administration Pending
	Debtors.

 

INTERIM ORDER PURSUANT TO SECTIONS 361, 362, 363 AND 364
OF THE BANKRUPTCY CODE AND RULE 4001 OF THE FEDERAL
RULES OF BANKRUPTCY PROCEDURE (A) AUTHORIZING THE
DEBTORS TO (I) USE CASH COLLATERAL OF THE PREPETITION SECURED
PARTIES, (II) OBTAIN POST-PETITION FINANCING AND (III) PROVIDE
ADEQUATE PROTECTION TO THE PREPETITION SECURED PARTIES,
AND (B) PROVIDING NOTICE AND SCHEDULING FINAL HEARING

 

Upon the motion, dated October 8, 2009 (the “ Motion ”), of Accuride Corporation (“ AccuCorp ”) and the other above-captioned debtors and debtors-in-possession (collectively, the “ Debtors ”) in the above-captioned chapter 11 cases (the “ Cases ”), for the entry of an order (A) authorizing the Debtors to (I) use cash collateral, pursuant to Section 363 of title 11 of the United States Code (as amended, the “ Bankruptcy Code ”), (II) obtain postpetition financing pursuant to Sections 361, 362 and 364 of the Bankruptcy Code and (III) provide adequate protection to the Prepetition Secured Parties (defined below) pursuant to Sections 361, 362 and 363 of the

 

(1)                                   The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: Accuride Corporation, a Delaware corporation (9077); Accuride Cuyahoga Falls, Inc., a Delaware corporation (9556); Accuride Distributing, LLC, a Delaware limited liability company (3124); Accuride EMI, LLC, a Delaware limited liability company (N/A); Accuride Erie L.P., a Delaware limited partnership (4862); Accuride Henderson Limited Liability Company, a Delaware limited liability company (8596); AKW General Partner L.L.C., a Delaware limited liability company (4861); AOT Inc., a Delaware corporation (3088); Bostrom Holdings, Inc., a Delaware corporation (9282); Bostrom Seating, Inc., a Delaware corporation (7179); Bostrom Specialty Seating, Inc., a Delaware corporation (4182); Brillion Iron Works, Inc., a Delaware corporation (6942); Erie Land Holding, Inc., a Delaware corporation (8018); Fabco Automotive Corporation, a Delaware corporation (9802); Gunite Corporation, a Delaware corporation (9803); Imperial Group Holding Corp. -1, a Delaware corporation (4007); Imperial Group Holding Corp. -2, a Delaware corporation (4009); Imperial Group, L.P., a Delaware limited partnership (4012); JAII Management Company, a Delaware corporation (N/A); Transportation Technologies Industries, Inc., a Delaware corporation (2791); and Truck Components Inc., a Delaware corporation (5407).  The mailing address for Accuride Corporation is 7140 Office Circle, Evansville, Indiana 47715.

 

B-1

 

Bankruptcy Code, and (B) scheduling interim and final hearings pursuant to Rule 4001(b) and (c) of the Federal Rules of Bankruptcy Procedure (as amended, the “ Bankruptcy Rules ”), the Debtors sought, among other things, the following relief:

 

(i)                                      the Court’s authorization, pursuant to Sections 363 and 364(c)(1), (2), (3) and (d)(1) of the Bankruptcy Code, for AccuCorp, as borrower (the “ DIP Borrower ”), and the other Debtors as guarantors (together with the DIP Borrower, the “ DIP Loan Parties ”), to enter into a senior secured superpriority post-petition credit facility (the “ DIP Facility ”) provided by Deutsche Bank Trust Company Americas (“ DBTCA ”), as administrative agent and as collateral agent (in such capacities, respectively, the “ DIP Administrative Agent ” and “ DIP Collateral Agent ,” and collectively, the “ DIP Agent ”), GE Capital, as syndication agent, certain of the Prepetition Secured Lenders (defined below), as First Out Lenders (in such capacities, the “ First Out DIP Lenders ”), and certain of the Prepetition Noteholders (defined below), as Last Out Term Lenders (in such capacities, the “ Last Out DIP Lenders ,” and collectively with the First Out DIP Lenders, the “ DIP Lenders ”), pursuant to the Senior Secured Superpriority Debtor-in-Possession ABL Credit Agreement attached hereto as Exhibit A (the “ DIP Credit Agreement ,”(2) and together with this order (the “ Interim Order ”), the Final Order (defined below), and all other Loan Documents, including the DIP Budget (defined below), collectively, the “ DIP Loan Documents ”)(3), and to obtain extensions of credit thereunder

 

(2)                                   Terms used but not otherwise defined herein shall have the meanings given to them in the DIP Credit Agreement.

 

(3)                                   As set forth more fully below and in the DIP Credit Agreement, the Last Out DIP Lenders are DIP Lenders in respect of $25,000,000 of Advances under the DIP Facility on a first in/last out and substantially silent basis.  Among other things, as set forth in Section 2.20 of the DIP Credit Agreement, the Last Out Obligations (as defined in the DIP Credit Agreement; such obligations are referred to herein as the “ Last Out DIP Obligations ”) are subordinated in right of payment to the payment in full of the First Out Obligations (as defined in the DIP Credit Agreement; such obligations are referred to herein as the “ First Out DIP Obligations ”).

 

B-2

 

on a senior secured and superpriority basis, (a) during the period (the “ Interim Period ”) from the date hereof through and including the earlier to occur of (x) the date of entry of the Final Order by this Court and (y) the Termination Date, in an aggregate principal amount not to exceed $25,000,000, and (b) upon entry of the Final Order and thereafter until the Termination Date, in an aggregate principal amount not to exceed $50,000,000 (or such lesser maximum amount as set forth in the DIP Credit Agreement), in each case at any time outstanding (all Advances, Letters of Credit and other financial accommodations and extensions of credit under the DIP Credit Agreement and the DIP Facility, the “ DIP Extensions of Credit ”);

 

(ii)                                   the Court’s authorization to use DIP Extensions of Credit in accordance with the cash flow forecast prepared by the Debtors and annexed hereto as Exhibit B (as updated from time to time pursuant to the DIP Loan Documents and subject to the prior approval of the DIP Agent, the “ DIP Budget ”), and as otherwise provided herein and in the other DIP Loan Documents;

 

(iii)                                the Court’s authorization to grant to the DIP Agent for the benefit of the DIP Lenders and the other secured parties under the DIP Loan Documents (collectively, the “ DIP Secured Parties ”), in respect of the DIP Obligations (defined below), a superpriority administrative claim pursuant to Section 364(c)(1) of the Bankruptcy Code and first priority priming liens on and security interests in substantially all assets and property of the Debtors (now owned or hereafter acquired) pursuant to Sections 364(c)(2), (c)(3) and (d)(1) of the Bankruptcy Code, in each case as and to the extent set forth more fully below and subject to the Carve-Out (defined below);

 

B-3

 

(iv)                               the Court’s authorization to use “cash collateral” as such term is defined in Section 363 of the Bankruptcy Code (the “ Cash Collateral ”) in which the Prepetition Secured Parties have an interest;

 

(v)                                  the Court’s authorization to grant, as of the Petition Date (defined below), the Adequate Protection Superpriority Claim (defined below) and Adequate Protection Liens (defined below), to the extent of and as compensation for any Diminution in Value (defined below), and the payment of fees and expenses to the Prepetition Agent (defined below) for the benefit of the Prepetition Secured Parties, in each case, as set forth more fully below and subject to the Carve-Out;

 

(vi)                               modification by the Court of the automatic stay imposed by Section 362 of the Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of the DIP Facility, this Interim Order and the other DIP Loan Documents;

 

(vii)                            the scheduling by the Court of a final hearing (the “ Final Hearing ”) to consider entry of an order (the “ Final Order ”) granting the relief requested in the Motion on a final basis and approving the form of notice with respect to the Final Hearing and the transactions contemplated by the Motion; and

 

(viii)                         the Court’s waiving of any applicable stay (including under Rule 6004 of the Federal Rules of Bankruptcy Procedure) and providing for the immediate effectiveness of this Interim Order.

 

The Court having considered the Motion, the terms of the DIP Facility and the DIP Loan Documents, the Declaration of James Woodward, sworn to on October 8, 2009 in Support of the First Day Motions and Pursuant to Local Bankruptcy Rule 1007-2, and the evidence submitted at the hearing held before this Court on October 9, 2009, to consider entry of this Interim Order

 

B-4

 

(the “ Interim Hearing ”); and in accordance with Bankruptcy Rules 2002, 4001(b), (c), and (d), and 9014 and the local rules of the Court, due and proper notice of the Motion and the Interim Hearing having been given; and it appearing that approval of the interim relief requested in the Motion is necessary to avoid immediate and irreparable harm to the Debtors pending the Final Hearing and is otherwise fair and reasonable and in the best interests of the Debtors, their creditors and their estates, and essential for the continued operation of the Debtors’ businesses; and, subject to the terms hereof, the Court having determined that there is adequate protection of the Prepetition Liens (defined below); and all objections, if any, to the entry of this Interim Order having been withdrawn, resolved or overruled by the Court; and after due deliberation and consideration, and for good and sufficient cause appearing therefor:

 

BASED UPON THE RECORD ESTABLISHED AT THE INTERIM HEARING, THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:

 

A.                                    Petition Date .   On October 8, 2009 (the “ Petition Date ”), the Debtors filed voluntary petitions under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “ Court ”).  The Debtors have continued in the management and operation of their businesses and properties as debtors-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.  No trustee or examiner has been appointed in the Cases.

 

B.                                      Jurisdiction and Venue .   The Court has jurisdiction over these proceedings, pursuant to 28 U.S.C. § 1334.  Consideration of the Motion constitutes a core proceeding under 28 U.S.C. § 157(b)(2).  Venue for the Cases and the proceedings on the Motion is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409.

 

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C.                                      Committee Formation .   No official committee of unsecured creditors has been appointed in the Cases (together with any other statutory committee, a “ Committee ”).

 

D.                                     Notice .   Notice of the Interim Hearing and the relief requested in the Motion has been provided by the Debtors, by telecopy, email, overnight courier and/or hand delivery, to (a) the United States Trustee for the District of Delaware, (b) all parties asserting a security interest in the assets of the Debtors to the extent reasonably known to the Debtors, (c) the Office of the United States Attorney General for the District of Delaware; (d) the Internal Revenue Service, and (e) those creditors holding the 30 largest unsecured claims against the Debtors’ estates (the “ Notice Parties ”).  Under the circumstances, such notice of the Interim Hearing and the relief requested in the Motion constitutes due, sufficient and appropriate notice and complies with Section 102(1) of the Bankruptcy Code, Bankruptcy Rules 2002 and 4001(b) and (c) and the local rules of the Court.

 

E.                                       Prepetition Secured Credit Facility; Prepetition Indenture .

 

(i)                                      AccuCorp and Accuride Canada Inc. (“ AccuCanada ”), as borrowers (respectively, the “ Prepetition U.S. Borrower ” and the “ Prepetition Canadian Borrower ” and, together, the “ Prepetition Borrowers ”), the lenders party thereto from time to time (the “ Prepetition Secured Lenders ”), DBTCA, as successor administrative agent (in such capacity, and in its capacity as successor collateral agent under the Prepetition Collateral Documents (defined below), the “ Prepetition Agent ”), Citigroup Global Markets Inc. and Lehman Brothers Inc., as joint lead arrangers and joint book-runners, Lehman Commercial Paper Inc., as syndication agent, and UBS Securities LLC, as documentation agent, are parties to that certain Fourth Amended and Restated Credit Agreement, dated as of January 31, 2005 (as amended by (i) that certain First Amendment, dated as of November 28, 2007, (ii) that certain Second

 

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Amendment, dated as of January 28, 2009, (iii) that certain Third Amendment, dated as of August 14, 2009, and (iv) that certain Fourth Amendment and Canadian Forbearance Agreement, dated as of October 8, 2009, and as otherwise amended, restated, supplemented and/or modified through the Petition Date, the “ Prepetition Credit Agreement ” and, together with the other Loan Documents (defined in the Prepetition Credit Agreement), the “ Prepetition Loan Documents ”).

 

(ii)                                   The Prepetition Credit Agreement provides for (a) a term loan facility (the “ Prepetition Term Facility ”), (b) a U.S. revolving credit facility, which includes a letter of credit facility and a swingline facility (the “ Prepetition U.S. Revolving Facility ”), and (c) a Canadian revolving credit facility (the “ Prepetition Canadian Revolving Facility ” and, together with the Prepetition Term Facility and the Prepetition U.S. Revolving Facility, the “ Prepetition Secured Credit Facility ”).  Article VI of the Prepetition Credit Agreement provides for, among other things, an unconditional guaranty by the Prepetition U.S. Borrower of the obligations of the Prepetition Canadian Borrower under the Prepetition Loan Documents.  Each of the Debtors is a party to the Prepetition Guarantee and Collateral Agreement (defined below), which provides for, among other things, an unconditional joint and several guaranty by such Debtor of all of the Prepetition Obligations (defined below).

 

(iii)                                The Debtors are parties, as applicable, to the following documents and agreements (collectively, the “ Prepetition Collateral Documents ”), which provide for pledges and grants by the Debtors of liens on and security interests in their assets and property (to the extent described therein) as security for the repayment of the Prepetition Obligations:  (a) that certain Amended and Restated Guarantee and Collateral Agreement, dated as of January 31, 2005 (as amended, restated, supplemented and/or otherwise modified through the Petition Date, the “ Prepetition Guarantee and Collateral Agreement ”), made by the Debtors and certain other

 

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Grantors (defined therein) in favor of the Prepetition Agent, (b) that certain Pledge of Shares Agreement, executed as of June 13, 2003, by and between the Prepetition U.S. Borrower and the Prepetition Agent (as amended by that certain Confirmation and Amendment Agreement, dated January 31, 2005, and as otherwise amended, restated, supplemented or modified through the Petition Date), and (c) the Mortgages and the other Collateral Documents (each defined in the Prepetition Credit Agreement).

 

F.                                       Stipulations as to Prepetition Secured Credit Facility .   Without limiting the rights of a Committee or any other party in interest as and to the extent set forth in Paragraph 8 hereof, the Debtors permanently, immediately, and irrevocably acknowledge, represent, stipulate and agree:

 

(i)                                      Prepetition Obligations .    As of the Petition Date, the Debtors were indebted and liable to the Prepetition Agent, the Prepetition Secured Lenders and the other Secured Parties (defined in the Prepetition Credit Agreement) (the “ Prepetition Secured Parties ”) under the Prepetition Loan Documents without objection, defense, counterclaim or offset of any kind, (a) in the aggregate principal amount of not less than (I) $300,249,610.50 with respect to the Prepetition Term Facility (comprised of the First Out Term Advances (defined in the Prepetition Credit Agreement) in the aggregate principal amount of $224,559,153.15, the Last Out Term Advances (defined in the Prepetition Credit Agreement) in the aggregate principal amount of $70,065,846, and the New Term Advances (defined in the Prepetition Credit Agreement) in the aggregate principal amount of $5,624,611.35), (II) $34,069,786.79 with respect to the Prepetition U.S. Revolving Facility (comprised of U.S. Revolving Credit Advances (defined in the Prepetition Credit Agreement)), (III) $22,000,000 with respect to the Prepetition Canadian Revolving Facility, and (IV) approximately $2,183,831 with respect to the Debtors’

 

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obligations in respect of a Bank Hedging Agreement (defined in the Prepetition Credit Agreement) with Deutsche Bank AG New York Branch, as counterparty, which terminated prior to the Petition Date, plus, in each case, accrued (both before and after the Petition Date) and unpaid interest thereon, (b) for $18,232,199 aggregate face amount of undrawn Letters of Credit (defined in the Prepetition Credit Agreement), and (c) for fees, expenses and all other Obligations (defined in the Prepetition Credit Agreement), including any attorneys’, accountants’, consultants’, appraisers’ and financial and other advisors’ fees that are chargeable or reimbursable under the Prepetition Loan Documents (clauses (a) through (c), collectively, the “ Prepetition Obligations ”).  As of the Petition Date, the value of the Prepetition Collateral (defined below) exceeds the amount of the Prepetition Obligations.

 

(ii)                                               Enforceability, etc. of Prepetition Obligations .  The Prepetition Loan Documents and the Prepetition Obligations are (a) legal, valid, binding, and enforceable against each Debtor and (b) not subject to any contest, attack, objection, recoupment, defense, counterclaim, offset, subordination, re-characterization, avoidance or other claim, cause of action or other challenge of any kind or nature under the Bankruptcy Code, under applicable non-bankruptcy law or otherwise.

 

(iii)                                            Enforceability, etc. of Prepetition Liens .   The liens and security interests (collectively, the “ Prepetition Liens ”) granted by the Debtors under the Prepetition Collateral Documents to or for the benefit of the Prepetition Secured Parties as security for the Prepetition Obligations encumber substantially all of the Debtors’ assets and property (all such assets and property, as the same existed on or at any time prior to the Petition Date, together with all cash and non-cash proceeds thereof, collectively, the “ Prepetition Collateral ”) .  The Prepetition Liens have been properly recorded and perfected under state law, and are legal, valid, enforceable,

 

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non-avoidable, and not subject to contest, avoidance, attack, offset, re-characterization, subordination or other challenge of any kind or nature under the Bankruptcy Code, under applicable non-bankruptcy law or otherwise.  As of the Petition Date, and without giving effect to this Interim Order, the Debtors are not aware of any liens or security interests having priority over the Prepetition Liens, except the Senior Third Party Liens (defined below).  The Prepetition Liens were granted to or for the benefit of the Prepetition Secured Parties for fair consideration and reasonably equivalent value, and were granted contemporaneously with the making of the loans and/or commitments and other financial accommodations secured thereby.

 

(iv)                                           Indemnity .   The Prepetition Secured Parties and the DIP Secured Parties have acted in good faith, and without negligence or violation of public policy or law, in respect of all actions taken by them in connection with or related in any way to negotiating, implementing, documenting or obtaining requisite approvals of the DIP Facility and the use of Cash Collateral, including in respect of the granting of the DIP Liens (defined below) and the Adequate Protection Liens, any challenges or objections to the DIP Facility or the use of Cash Collateral, the Prepetition Lender Restructuring Support Lockup Agreement, the other Restructuring Support Documents (defined in the Prepetition Lender Restructuring Support Lockup Agreement), the Noteholder Restructuring Support Lockup Agreement, and all documents related to and all transactions contemplated by the foregoing.  Accordingly, the Prepetition Secured Parties and the DIP Secured Parties shall be and hereby are indemnified and held harmless by the Debtors in respect of any claim or liability incurred in respect thereof or in any way related thereto.  No exception or defense in contract, law or equity exists as to any obligation set forth, as the case may be, in this paragraph F, in the Prepetition Loan Documents or in the DIP Loan Documents, to indemnify and/or hold harmless the Prepetition Agent, the DIP

 

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Agent, or any other Prepetition Secured Party or DIP Secured Party, as the case may be, and any such defenses are hereby waived.

 

(v)                                              No Control .  None of the DIP Secured Parties or the Prepetition Secured Parties are control persons or insiders of the Debtors or any of their affiliates by virtue of any of the actions taken with respect to, in connection with, related to, or arising from the DIP Facility, the Prepetition Secured Credit Facility, the DIP Loan Documents and/or the Prepetition Loan Documents.

 

(vi)                                           No Claims, Causes of Action .  As of the date hereof, there exist no claims or causes of action against any of the Prepetition Secured Parties or the DIP Secured Parties with respect to, in connection with, related to, or arising from the Prepetition Loan Documents, the DIP Loan Documents, the Prepetition Secured Credit Facility and/or the DIP Facility that may be asserted by the Debtors or any other person or entity.

 

(vii)                                        Release . The Debtors forever and irrevocably release, discharge, and acquit all former, current and future DIP Secured Parties and Prepetition Secured Parties, and each of their respective former, current and future officers, employees, directors, agents, representatives, owners, members, partners, financial and other advisors and consultants, legal advisors, shareholders, managers, consultants, accountants, attorneys, affiliates, and predecessors and successors in interest (collectively, the “ Releasees ”) of and from any and all claims, demands, liabilities, responsibilities, disputes, remedies, causes of action, indebtedness and obligations, rights, assertions, allegations, actions, suits, controversies, proceedings, losses, damages, injuries, attorneys’ fees, costs, expenses, or judgments of every type, whether known, unknown, asserted, unasserted, suspected, unsuspected, accrued, unaccrued, fixed, contingent, pending or threatened including, without limitation, all legal and equitable theories of recovery,

 

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arising under common law, statute or regulation or by contract, of every nature and description, arising out of, in connection with, or relating to the DIP Facility, the DIP Loan Documents, the Prepetition Secured Credit Facility, the Prepetition Loan Documents, the Prepetition Lender Restructuring Support Lockup Agreement, the Noteholder Restructuring Support Lockup Agreement and/or the transactions contemplated hereunder or thereunder including, without limitation, (x) any so-called “lender liability” or equitable subordination claims or defenses, (y) any and all claims and causes of action arising under the Bankruptcy Code, and (z) any and all claims and causes of action with respect to the validity, priority, perfection or avoidability of the liens or claims of the Prepetition Secured Parties and/or the DIP Secured Parities.

 

G.                                      Immediate Need for Postpetition Financing and Use of Cash Collateral .   The Debtors have requested immediate entry of this Interim Order pursuant to Bankruptcy Rule 4001(b)(2) and (c)(2).  Good cause has been shown for entry of this Interim Order.  An immediate need exists for the Debtors to obtain funds and liquidity in order to continue operations and to administer and preserve the value of their estates.  The ability of the Debtors to finance their operations, to preserve and maintain the value of the Debtors’ assets and to maximize the return for all creditors requires the availability of the DIP Facility and the use of Cash Collateral.  In the absence of the availability of such funds and liquidity in accordance with the terms hereof, the continued operation of the Debtors’ businesses would not be possible, and serious and irreparable harm to the Debtors and their estates and creditors would occur.  Further, the possibility for a successful reorganization would be jeopardized in the absence of the availability of funds in accordance with the terms of this Interim Order.  Thus, the ability of the Debtors to preserve and maintain the value of their assets and maximize the return for creditors requires the availability of working capital from the DIP Facility and the use of Cash Collateral.

 

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H.             No Credit Available on More Favorable Terms .   The Debtors have been unable to obtain on more favorable terms and conditions than those provided in this Interim Order (a) adequate unsecured credit allowable under Bankruptcy Code Section 503(b)(1) as an administrative expense, (b) credit for money borrowed with priority over any or all administrative expenses of the kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code, (c) credit for money borrowed secured by a lien on property of the estate that is not otherwise subject to a lien, or (d) credit for money borrowed secured by a junior lien on property of the estate which is subject to a lien.  The Debtors are unable to obtain credit for borrowed money without granting the DIP Liens and the DIP Superpriority Claim (defined below) to (or for the benefit of) the DIP Secured Parties.

 

I.               Use of Cash Collateral and Proceeds of the DIP Facility, DIP Collateral and Prepetition Collateral .   All Cash Collateral, all proceeds of the Prepetition Collateral and the DIP Collateral (defined below), including proceeds realized from a sale or disposition thereof, or from payment thereon, and all proceeds of the DIP Facility (net of any amounts used to pay fees, costs and expenses payable under this Interim Order or the Final Order) shall be used and/or applied in accordance with the terms and conditions of this Interim Order and the other DIP Loan Documents, for the types of expenditures in the DIP Budget and for no other purpose; provided , that up to $50,000 in the aggregate of the proceeds of the DIP Facility, DIP Collateral, Prepetition Collateral or Cash Collateral, may be used by any Committee solely to investigate the matters covered by the Claims Stipulations (defined below). Amounts advanced by the DIP Borrower for the general corporate purposes of any Subsidiary in accordance with the DIP Credit Agreement shall be and are hereby subordinated to the Prepetition Obligations and the DIP

 

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Obligations and shall be pledged as collateral security on a first priority basis to secure the DIP Facility.

 

J.              Adequate Protection for Secured Parties .  The Prepetition Agent has negotiated in good faith regarding the Debtors’ use of the Prepetition Collateral (including the Cash Collateral) to fund the administration of the Debtors’ estates and continued operation of their businesses, in accordance with the terms hereof.  The Prepetition Secured Parties have agreed to permit the Debtors to use the Prepetition Collateral, including the Cash Collateral, in accordance with the terms hereof during the Interim Period subject to the terms and conditions set forth herein, including the protections afforded parties acting in “good faith” under Section 363(m) of the Bankruptcy Code.  The Prepetition Secured Parties are entitled to the adequate protection as and to the extent set forth herein pursuant to Sections 361, 362 and 363 of the Bankruptcy Code.  Based on the Motion and on the record presented to the Court at the Interim Hearing, the terms of the proposed adequate protection arrangements and of the use of the Cash Collateral are fair and reasonable, reflect the Debtors’ prudent exercise of business judgment and constitute reasonably equivalent value and fair consideration for the Prepetition Agent’s consent thereto; provided , that nothing in this Interim Order or the other DIP Loan Documents shall prejudice, limit or otherwise impair the rights of the Prepetition Agent (for the benefit of the Prepetition Secured Parties) to seek new, different or additional adequate protection in the event of a material change in circumstances after the date hereof.

 

K.             Section 552 . Subject to the entry of a Final Order, in light of, as applicable, the subordination of the Prepetition Liens and the Adequate Protection Liens to the DIP Liens and the Carve-Out, and the granting of the DIP Liens on the Prepetition Collateral, the Prepetition

 

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Secured Parties are each entitled to all of the rights and benefits of Section 552(b) of the Bankruptcy Code, and the “equities of the case” exception shall not apply.

 

L.              Extension of Financing .  The DIP Secured Parties have indicated a willingness to provide financing to the Debtors in accordance with the terms hereof.  The DIP Secured Parties are good faith financiers.  The intercreditor, payment priority, consents, waivers and similar provisions contained in the DIP Credit Agreement as between the First Out DIP Lenders and the Last Out DIP Lenders were negotiated in good faith and at arm’s length among commercially sophisticated parties, and such arrangements are an integral element of the DIP Facility and of the basis of the DIP Secured Parties’ willingness to enter into the DIP Facility and to make DIP Extensions of Credit, and of the Prepetition Secured Parties’ consent to the priming of the Prepetition Liens and the use of the Prepetition Collateral and the Cash Collateral.  The Prepetition Secured Parties have consented to the priming of the Prepetition Liens and the use of the Prepetition Collateral and the Cash Collateral, solely in respect of the DIP Facility provided by the DIP Secured Parties, and not in respect of any other postpetition financing or cash collateral facility.  Nothing in this Interim Order or in the DIP Loan Documents shall be deemed or construed as a consent by the Prepetition Secured Parties to any such postpetition financing or cash collateral facility, or as an admission or evidence that any adequate protection provided herein would be sufficient adequate protection in respect thereof.  The DIP Secured Parties’ claims, superpriority claims, security interests and liens and other protections granted pursuant to this Interim Order (and the Final Order) and the DIP Facility (including the DIP Liens and DIP Superiority Claim) will not be affected by any subsequent reversal, modification, vacatur or amendment of this Interim Order or the Final Order or any other order, as provided in Section 364(e) of the Bankruptcy Code.

 

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M.            Business Judgment and Good Faith Pursuant to Section 364(e) .

 

(i)             The terms and conditions of the DIP Facility, and the fees paid and to be paid thereunder, are fair, reasonable, and the best available under the circumstances, reflect the Debtors’ exercise of prudent business judgment consistent with their fiduciary duties, and are supported by reasonably equivalent value and consideration;

 

(ii)            the DIP Facility was negotiated in good faith and at arm’s length among the Debtors and the DIP Secured Parties; and

 

(iii)           the use of the proceeds to be extended under the DIP Facility will be so extended in good faith, and for valid business purposes and uses, as a consequence of which the DIP Secured Parties are entitled to the protection and benefits of Section 364(e) of the Bankruptcy Code.

 

N.             Relief Essential; Best Interest .  The relief requested in the Motion (and provided in this Interim Order) is necessary, essential and appropriate for the continued operation of the Debtors’ businesses and the management and preservation of the Debtors’ assets and property.  It is in the best interest of the Debtors’ estates that the Debtors be allowed to enter into the DIP Facility, incur the DIP Obligations and use the Cash Collateral as contemplated herein.

 

NOW, THEREFORE, on the Motion of the Debtors and the record before this Court with respect to the Motion, including the record made during the Interim Hearing, and with the consent of the Debtors, the Prepetition Secured Parties and the DIP Secured Parties, and good and sufficient cause appearing therefor,

 

IT IS ORDERED that:

 

1.              Motion Granted .   The Motion is granted in accordance with the terms and conditions set forth in this Interim Order.  Any objections to the Motion with respect to entry of

 

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this Interim Order to the extent not withdrawn, waived or otherwise resolved, and all reservation of rights included therein, are hereby denied and overruled.

 

2.              DIP Facility .

 

(a)            DIP Obligations, etc.   The Debtors are expressly and immediately authorized and empowered to enter into the DIP Facility and to incur and to perform the DIP Obligations in accordance with and subject to this Interim Order (and, upon its entry, a Final Order) and the other DIP Loan Documents, to execute and/or deliver all DIP Loan Documents and all other instruments, certificates, agreements and documents, and to take all actions, which may be reasonably required or otherwise necessary for the performance by the Debtors under the DIP Facility, including the creation and perfection of the DIP Liens described and provided for herein.  The Debtors are hereby authorized and directed to pay all principal, interest, fees and expenses, indemnities and other amounts described herein and in the other DIP Loan Documents as such shall accrue and become due hereunder or thereunder, including, without limitation, the reasonable fees and expenses of the attorneys and financial and other advisors and consultants of the DIP Agent and the DIP Lenders as and to the extent provided for herein and in the other DIP Loan Documents (collectively, all loans, advances, extensions of credit, financial accommodations, fees, expenses and other liabilities and obligations (including indemnities and similar obligations) in respect of DIP Extensions of Credit, the DIP Facility and the DIP Loan Documents, the “ DIP Obligations ”).  The DIP Obligations shall not otherwise be subject to further approval of this Court.  The DIP Loan Documents and all DIP Obligations shall represent, constitute and evidence, as the case may be, valid and binding obligations of the Debtors, enforceable against the Debtors, their estates and any successors thereto in accordance with their terms.  The term of the DIP Facility shall commence on the date of entry of this

 

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Interim Order and end on the Termination Date, subject to the terms and conditions set forth herein and in the other DIP Loan Documents, including the protections afforded a party acting in good faith under Section 364(e) of the Bankruptcy Code.

 

(b)            Authorization to Borrow, etc.   In order to enable them to continue to operate their businesses, subject to the terms and conditions of this Interim Order and the other DIP Loan Documents, the DIP Borrower is hereby authorized under the DIP Facility to borrow during the Interim Period (and the other Debtors are authorized to guarantee repayment of) up to an aggregate principal amount of $25,000,000.

 

(c)            Conditions Precedent .   The DIP Lenders shall have no obligation to make any DIP Extension of Credit or any other financial accommodation hereunder or under the other DIP Loan Documents (and the Debtors shall not make any request therefor) unless all conditions precedent to making DIP Extensions of Credit under the DIP Loan Documents have been satisfied or waived in accordance with the terms of the DIP Loan Documents.

 

(d)            DIP Collateral .   As used herein, “ DIP Collateral ” shall mean, all now owned or hereafter acquired assets and property, whether real or personal, of the Debtors including, without limitation, all Prepetition Collateral, all assets and property pledged under the DIP Loan Documents, and all cash, any investment of such cash, inventory, accounts receivable, including intercompany accounts (and all rights associated therewith), other rights to payment whether arising before or after the Petition Date, contracts, contract rights, chattel paper, goods, investment property, inventory, deposit accounts (including the cash collection, “lockbox” and “concentration” accounts described in paragraph 14 or otherwise under the DIP Loan Documents), “core concentration accounts,” “cash collateral accounts”, and in each case all amounts on deposit therein from time to time, equity interests, securities accounts, securities

 

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entitlements, securities, commercial tort claims, books, records, plants, equipment, general intangibles, documents, instruments, interests in leases and leaseholds, interests in real property, fixtures, payment intangibles, tax or other refunds, insurance proceeds, letters of credit, letter of credit rights, supporting obligations, machinery and equipment, patents, copyrights, trademarks, tradenames, other intellectual property, all licenses therefor, and all proceeds, rents, profits, products and substitutions, if any, of any of the foregoing, and including, upon entry of the Final Order, all of the Debtors’ claims and causes of action under Sections 502(d), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code, and any other avoidance or similar action under the Bankruptcy Code or similar state law, and the proceeds thereof, whether received by judgment, settlement or otherwise (the “ Avoidance Action Collateral ”).(4)

 

(e)            DIP Liens .   Effective immediately upon the entry of this Interim Order, and subject to the Carve-Out, as set forth more fully in this Interim Order, the DIP Agent for the ratable benefit of the DIP Secured Parties is hereby granted the following security interests and liens, which shall immediately be valid, binding, perfected, continuing, enforceable and non-avoidable (all liens and security interests granted to the DIP Agent for the benefit of the DIP Secured Parties pursuant to this Interim Order, any Final Order and the other DIP Loan Documents, the “ DIP Liens ”):

 

(I)        pursuant to Section 364(c)(2) of the Bankruptcy Code, valid, enforceable, perfected and non-avoidable first priority liens on and security interests in all DIP Collateral that was not encumbered by valid, enforceable, perfected and non-avoidable liens as of the Petition Date;

 

(4)            With respect to any liens on the capital stock of the Debtors’ directly owned foreign subsidiaries to secure the DIP Obligations, such liens shall be limited to pledges that would not result in deemed dividends to the Debtors pursuant to Section 956 of the Internal Revenue Code.

 

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(II)       pursuant to Section 364(c)(3) of the Bankruptcy Code, valid, enforceable, perfected and non-avoidable liens on and security interests in (x) all DIP Collateral which is unencumbered by the Prepetition Liens but on which a third party, i.e. , not the Prepetition Secured Parties (a “ Third Party Lienholder ”), had a pre-existing lien on the Petition Date and (y) all DIP Collateral encumbered by the Prepetition Liens on which a Third Party Lienholder had a pre-existing lien on the Petition Date that was senior to the Prepetition Liens, in each case junior only to any such liens and security interests of Third Party Lienholders, but solely to the extent that such liens and security interests were in each case valid, enforceable, perfected and non-avoidable as of the Petition Date, and were permitted by the terms of the Prepetition Loan Documents (the “ Senior Third Party Liens ”); and

 

(III)     pursuant to Section 364(d) of the Bankruptcy Code, valid, enforceable, perfected and non-avoidable liens on and security interests in all Prepetition Collateral, which liens and security interests shall be senior to and prime the Prepetition Liens and the liens of all Third Party Lienholders which are pari passu with or junior and subject to the Prepetition Liens.

 

(f)             Other Provisions Relating to the DIP Liens .   The DIP Liens shall secure all of the DIP Obligations.  The DIP Liens shall not, without the consent of the DIP Agent, be made subject to, or pari passu with, any other lien or security interest, other than to the extent expressly provided herein and to the Carve-Out, by any court order heretofore or hereafter

 

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entered in the Cases, and shall be valid and enforceable against any trustee appointed in the Cases, upon the conversion of any of the Cases to a case under Chapter 7 of the Bankruptcy Code or in any other proceedings related to any of the foregoing (any “ Successor Cases ”), and/or upon the dismissal of any of the Cases.  It is understood and agreed, and hereby ordered, that, notwithstanding the immediately preceding sentence or anything else to the contrary set forth in this Interim Order, in any other DIP Loan Document, or in any other order of this Court entered in the Cases, any amounts advanced or expended by the Prepetition Secured Parties or the DIP Secured Parties (other than by the Last Out DIP Lenders or the Last Out Lenders (as defined in the Prepetition Credit Agreement; such lenders are referred to herein as, the “ Last Out Prepetition Lenders ”)), in their sole and absolute discretion and without requiring the consent or approval of any other party, after the occurrence and during the continuation of an Event of Default, directly or indirectly, to protect, preserve, maintain, market, sell or liquidate the Prepetition Collateral or DIP Collateral, including to fund the Debtors’ operations during a Bankruptcy Code Section 363 sale process, and any reasonable professional or advisory fees and expenses of White & Case LLP, Stikeman Elliot LLP, Houlihan, Lokey, Howard & Zukin, any local or foreign counsel and other advisors, appraisers and/or liquidators retained by the Prepetition Agent or the DIP Agent, shall be added to the First Out DIP Obligations for all purposes hereunder and under the other DIP Loan Documents.  The DIP Liens and the Adequate Protection Liens shall not be subject to Sections 510, 549, 550 or 551 of the Bankruptcy Code or the “equities of the case” exception of Section 552 of the Bankruptcy Code or, to the extent provided in the Final Order, Section 506(c) of the Bankruptcy Code.

 

(g)            Superpriority Administrative Claim Status .   The DIP Obligations shall, pursuant to Section 364(c)(1) of the Bankruptcy Code, at all times constitute an allowed

 

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superpriority claim (the “ DIP Superpriority Claim ”) of the DIP Agent for the benefit of the DIP Secured Parties, and be payable from and have recourse to all DIP Collateral.  The DIP Superpriority Claim shall be subject and subordinate only to the Carve-Out; provided that the Last Out DIP Lenders shall not receive or retain any payments, property, distribution or other amounts in respect of the DIP Superpriority Claim or DIP Obligations unless and until the First Out DIP Obligations are paid and satisfied in full and in cash (including cash collateralization of all Letters of Credit in accordance with the DIP Loan Documents).  Other than as expressly provided herein, including in paragraph 11 and with respect to the Carve-Out, no costs or expenses of administration, including, without limitation, professional fees allowed and payable under Bankruptcy Code Sections 328, 330 and 331, or otherwise, that have been or may be incurred in these proceedings or in any Successor Cases, and no priority claims are, or will be, senior to, prior to or pari passu with the DIP Liens, the DIP Superpriority Claim or any of the DIP Obligations, or with any other claims of the DIP Secured Parties arising hereunder or under the other DIP Loan Documents, or otherwise in connection with the DIP Facility.

 

3.              Authorization and Approval to Use Cash Collateral and Proceeds of DIP Facility . Subject to the terms and conditions of this Interim Order and the other DIP Loan Documents, and to the adequate protection granted to or for the benefit of the Prepetition Secured Parties as hereinafter set forth, each Debtor is authorized during the Interim Period (and not beyond) to (a) use the Cash Collateral and (b) request and use proceeds of the DIP Extensions of Credit, in each case for the types of expenditures set forth in the DIP Budget.  The DIP Budget may only be amended, supplemented, modified, restated, replaced, or extended in accordance with the DIP Loan Documents and the prior written consent of the DIP Agent.  The Last Out DIP Lenders shall have the consultation rights provided for in the DIP Credit

 

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Agreement.  Notwithstanding anything herein to the contrary, subject only to the Debtors’ rights under paragraphs 17(b) and 17(c), the Debtors’ right to request or use proceeds of DIP Extensions of Credit or to use Cash Collateral shall terminate on the Termination Date, including upon written notice being provided by the DIP Agent to the Debtors that an Event of Default has occurred and is co