ANNEX A
ASSUMPTION AGREEMENT AND
AMENDMENT TO FINANCING AGREEMENTS
THIS
ASSUMPTION
AGREEMENT AND AMENDMENT TO FINANCING
AGREEMENTS
(this
"Amendment") is made and entered into as of
_____________, 2004,
by and between
KEYSTONE CONSOLIDATED INDUSTRIES, INC. ("Keystone"), DESOTO ENVIRONMENTAL
MANAGEMENT, INC., FV STEEL AND WIRE
COMPANY, J.L. PRESCOTT COMPANY, SHERMAN WIRE
COMPANY (f/k/a DESOTO, INC.), and SHERMAN WIRE OF CALDWELL,
INC., each as a
debtor and debtor-in-possession in the Cases (defined below) (each
a "Debtor,"
and, collectively, the "Debtors"), and
CONGRESS FINANCIAL CORPORATION (CENTRAL),
as lender ("Lender"). Unless otherwise specified, the capitalized terms used
herein shall have the meanings ascribed to them in the Pre-Petition Credit
Agreement (defined below).
RECITALS
A. Keystone,
as pre-petition debtor, and Lender are parties to (i)
that
certain Amended and Restated Revolving Loan
and Security Agreement, dated as of
December 29, 1995 (as amended, modified, restated or supplemented prior to
the
date hereof, the "Pre-Petition Credit
Agreement"), and (ii)
the other Financing
Agreements, as defined in the Pre-Petition
Credit Agreement (all such Financing
Agreements, together with the Pre-Petition
Credit Agreement, in each case as
amended, modified, restated or supplemented prior to
the date hereof or by any
other amendment executed on or after the date hereof, collectively, the
"Original Financing Agreements").
B. Debtors have
filed petitions for
relief under chapter 11 of title 11 of
the United States Code, 11 U.S.C.
ss.ss. 101, et seq.
(the "Bankruptcy
Code"),
in the United States Bankruptcy Court for
the Eastern District of Wisconsin (the
"Bankruptcy Court"), on ___________, 2004 (the "Petition Date"), Jointly
Administered Case No. ________________ (the
"Cases").
C. The
commencement
of the Cases
constituted
an Event of Default
under
Section 10.1(g) the Pre-Petition Credit
Agreement.
D. In order to
continue their operations as debtors-in-possession under the
Bankruptcy Code, Debtors have requested that Lender
make certain
postpetition
secured loans to Keystone (the "DIP
Financing").
Lender is willing to
provide
such DIP Financing to Keystone on and after the
Petition Date only if, among
other things, the Original Financing Agreements are amended as
hereinafter set
forth and the Bankruptcy Court enters interim and final orders
approving this
Amendment and otherwise in form and
substance satisfactory to Lender in Lender's
sole discretion (the "Interim Order" and
the "Final Order," respectively).
AGREEMENT
NOW,
THEREFORE,
in consideration of
the premises, and for
other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as
follows:
1. Amendments. The parties
hereby amend the Original Financing Agreements
as follows:
(a) From and after the
date hereof, all
references
in the Original
Financing Agreements to "Keystone Consolidated Industries,
Inc.,"
"Borrower," "the
"Company," and all other references to Keystone
in any capacity shall be deemed to be references to Keystone
both
before the Petition
Date, as pre-petition
obligor, and on and
after the Petition
Date, as a debtor and
debtor-in-possession in
the Cases.
(b) Section 1 of the
Pre-Petition Credit
Agreement is hereby amended
by adding in their proper alphabetical order the definitions of
"Bankruptcy Code," "Bankruptcy Court," "Cases," "DIP
Financing,"
"Original
Financing
Agreements," "Petition Date" and
"Pre-Petition Credit Agreement" set forth in the recitals of
this
Amendment.
(c) Section 1 of the
Pre-Petition Credit
Agreement is hereby further
amended by adding
the following definitions in their proper
alphabetical order (to
the extent
such terms are not already
defined in the Pre-Petition Credit Agreement) and by
substituting
the following
definitions for the
existing definitions
of such
terms (to the extent
such terms are currently defined in the
Pre-Petition Credit Agreement):
"Agreement" shall mean
the Amended and Restated Revolving Loan
and Security
Agreement,
dated as of December 29, 1995, as
amended, modified,
restated or
supplemented from time
to time,
including, without
limitation, (a) by the
Assumption
Agreement
and (b) by the Interim
Order, the Final Order or any other
applicable order of the Bankruptcy Court.
"Assumption
Agreement"
shall mean the
Assumption Agreement
and
Amendment to Financing
Agreements,
dated as of
_____________,
2004, by and between
Keystone Consolidated Industries, Inc.,
Desoto Environmental Management, Inc., FV Steel and Wire
Company,
J.L. Prescott Company, Sherman Wire Company (f/k/a Desoto,
Inc.),
and Sherman
Wire
of Caldwell, Inc. as debtors and
debtors-in-possession in the Cases, and Congress Financial
Corporation (Central), as lender.
"Budget" shall have the meaning ascribed to such term in
Section
7.1 hereof.
"Debtors" shall mean
Keystone Consolidated Industries, Inc.,
Desoto Environmental Management, Inc., FV Steel and Wire
Company,
J.L. Prescott Company, Sherman Wire Company (f/k/a Desoto,
Inc.),
and Sherman
Wire
of Caldwell, Inc. as debtors and
debtors-in-possession in the Cases under the Bankruptcy Code.
"DIP Financing"
shall mean the
advance of funds by
Congress to
Debtors on
and/or after the Petition Date in the form of
Revolving Loans and in
the form of a Term
Loan under the
terms
and conditions set forth herein.
"DIP Indebtedness"
shall mean all
indebtedness and
obligations
incurred on or after
the Petition
Date by Debtors to
Congress
pursuant to
the Financing Agreements (including, without
limitation, principal,
accrued and unpaid interest and costs and
expenses, including reasonable attorneys' fees and expenses).
"DIP Term Loan" shall mean the $2,000,000 principal amount of
the
Term Loan funded by Lender to Borrower during the Cases pursuant
to the Interim Order and/or the Final Order.
"EWP DIP Credit
Agreement" shall mean
the
Debtor-In-Possession
Credit Agreement between the Debtors and EWP Financial
"EWP Financial" shall
mean EWP Financial LLC, a Delaware limited
liability company.
"EWP Collateral"
shall mean (i) the stock of Engineered Wire
Products, Inc. and all
substitutions therefor
and distributions
with respect thereto,
(ii) the account
maintained on Keystone's
books and records
styled Loan Account - EWP, Account Number
46009, (iii) the
Separate Loan Proceeds Account and (iv) all
proceeds of the foregoing.
"Final Order" shall mean an order of the Bankruptcy Court
entered
in the Cases after the
Final Hearing as
defined in the
Interim
Order, inter alia, authorizing Debtors, as
debtors-in-possession,
to incur secured
indebtedness
pursuant to section 364 of the
Bankruptcy Code,
which order shall be in form and substance
satisfactory to Lender in its sole discretion.
"Financing Agreements" shall mean, collectively, this Agreement,
the Assumption Agreement, the Interim Order, the Final Order,
the
DIP Credit
Documents and all notes, guarantees, security
agreements, trademark security agreements, lockbox and/or
blocked
account agreements, mortgages, deeds of trust, pledge
agreements,
letters of credit and other agreements, documents and written
indicia of contractual
obligations between
Debtors and
Lender,
any Affiliate of Debtors and Lender, any Person owning
Collateral
and Lender, and/or any
Person guaranteeing all or any portion of
the Obligations and Lender, in connection with the
transactions
contemplated hereby,
whether pre-petition
or post-petition,
as
each such document has been and may from time to time be
amended,
modified, supplemented, extended, renewed, restated or
replaced.
"Interim Order"
shall mean the order of the Bankruptcy Court
entered in the Cases on ___________, 2004 pursuant to sections
363 and 364 of the
Bankruptcy
Code, inter alia, authorizing
Debtors, as
debtors-in-possession,
to enter into the Assumption
Agreement, which
order
shall
be in form and substance
satisfactory to Lender in its sole discretion.
"Loans" shall mean any loan or extension of credit, whether made
before, on or after
the Petition Date, by Lender pursuant to the
Financing Agreements,
including the
Revolving Loans,
the Term
Loan and the DIP Financing.
"Maturity Date"
shall mean the date on which this Agreement
ceases to continue in
full force and effect
pursuant to Section
12.1(a) hereof.
"Maximum Credit" shall mean the amount of $55,000,000; provided,
however, that such
amount shall
decrease when each payment of
principal on the Term
Loan is received by
Lender and applied to
the Term Loan, by an amount equal to the amount of such
principal
reduction in the Term Loan.
"Participation
Agreement" shall mean that certain Participation
Agreement dated as of
February ___, 2004 between Lender and EWP
Financial.
"Participation"
shall have
the meaning set forth in the
Participation Agreement.
"Revolving Loans"
shall mean any Revolving Loans, whether made
before, on or after
the Petition Date, by Lender pursuant to the
Financing Agreements and/or the Interim or Final Order.
"Separate Loan
Proceeds Account" shall have the meaning set forth
in Section 4.1(i)(d) of this Amendment.
(d) In subsection
1.49 of the
Pre-Petition
Credit Agreement, the
phrase "provided,
that, the Interest Rate shall mean the rate of
two and one-half
percent (2.5%) per annum . . .," where it
appears, is hereby amended to read "provided, that, the Interest
Rate shall mean the rate of three percent (3.0%) per annum . . .
."
(e) Subsection
2.3 of the
Pre-Petition
Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"2.3 Availability
Reserves.
All Revolving Loans otherwise
available to
Borrower pursuant to the lending formulas and
subject to
the Maximum Credit and other applicable limits
hereunder shall
be subject to Lender's continuing right to
establish and revise
Availability
Reserves in its
discretion,
upon not less than five (5) days prior written notice to
Borrower
identifying the
new or revised Availability Reserve and the
reason for the establishment or revision thereof."
(f) The Term Loan under subsection 2.4 of the Pre-Petition Credit
Agreement shall be
increased:
(i) upon the
effective date of this
Amendment, by a principal amount of $2,042,812; (ii) upon the later
to
occur of the
following: (y) the
effective date of this Amendment and
(z) the date that is one Business Day after Lender has received a
$2,000,000
payment from
EWP Financial to purchase an initial
Participation
pursuant to
Section 4.1(a) of the Participation
Agreement, by an additional principal amount of $2,000,000;
provided,
however, that if,
on the date on which the Lender receives the
$2,000,000 payment
-------- ------- from EWP Financial to purchase an
initial Participation
pursuant to Section 4.1(a) of the Participation
Agreement, such
$2,000,000
is received by Lender
from EWP Financial
prior to 2:00 p.m.
Eastern time,
then Congress shall use its best
efforts to effect such $2,000,000 increase in the principal amount
of
the Term Loan on such same date rather than on the next
Business Day;
and (iii) upon the date that is one
Business Day after Lender has
received a $3,000,000
payment from EWP to purchase an additional
Participation (for a
total Participation of
$5,000,000) pursuant
to
Section 4.1(b)
of the Participation Agreement, by an additional
principal amount of
$3,000,000; provided,
however, that if, on the
date on --------
------- which the
Lender receives
the $3,000,000
payment from EWP
Financial to purchase an initial Participation
pursuant to
Section 4.1(b) of the Participation Agreement, such
$3,000,000 is received by Lender from EWP Financial prior to 2:00
p.m.
Eastern time, then
Congress shall use its best efforts to effect such
$3,000,000 increase in
the principal amount
of the Term Loan on such
same date rather than on the next Business Day. Such increase(s) in
the Term Loan shall be deemed added to the Term Loan
existing on the
Petition Date under
the Pre-Petition
Credit Agreement and shall be
deemed to be a "Term Loan" under the Agreement. The Debtors expressly
acknowledge and agree
that Lender shall have no liability whatsoever
to the Debtors
arising from or related to any failure of EWP to
purchase or fund any Participation at any time.
(g) Notwithstanding anything set forth in the Pre-Petition Credit
Agreement, from and
after the effective date of this Amendment, the
outstanding principal
balance of the Term
Loan shall be amortized as
follows: A monthly installment in the amount of the lesser of
$100,000
and the entire
remaining unpaid balance of the Term Loan shall be due
and payable on the first day of each calendar month, commencing on
April 1, 2004, until the Term Loan has been repaid in full.
(h) Subsection 5.1 of the Pre-Petition Credit Agreement is amended by
adding the following language to the first sentence of such
subsection
5.1 immediately
after
the phrase "and wherever located" and
immediately prior to the first parenthetical in such subsection
5.1:
", whether arising or acquired
before, on or after the Petition Date"
(i) Subsection 5.2(d) of the Pre-Petition Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"(d) Borrower does not have any lockbox or other deposit
accounts
(where payments on Receivables or other proceeds of Inventory or
other
Collateral are
deposited) as of the date hereof, except as set forth
in the Information
Certificate.
Borrower shall not, directly or
indirectly, after the
date hereof open,
establish or maintain any
lockbox or other deposit account (where payments on Receivables or
other proceeds of Inventory or other Collateral are deposited)
unless
each of the following
conditions is satisfied: (i) Lender shall have
received not less than five (5) Business Days prior written
notice of
the intention
of Borrower to open or
establish such
account which
notice shall specify in reasonable detail and specificity
acceptable
to Lender the name of the account, the owner of the account, the
name
and address
of the bank at which
such account is to be opened or
established, the individual at such bank with whom Borrower is
dealing
and the purpose of the
account, (ii) the bank
where such account
is
opened or maintained
shall be acceptable to
Lender, and (iii) on
or
before the opening of such deposit account, Borrower shall as Lender
may specify
either (A) deliver to
Lender a Deposit
Account Control
Agreement with
respect to such deposit account duly authorized,
executed and delivered
by Borrower and the bank at which such deposit
account is opened and
maintained or (B)
arrange for Lender to become
the customer of the bank with respect to the deposit account on terms
and conditions
acceptable to Lender. The terms of this subsection (d)
shall not apply to deposit accounts specifically and exclusively
used
for payroll,
payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower's salaried or hourly wage
employees. The terms
of this subsection
(d) shall also not
apply to
the Borrower's
account at U.S. Bank, Routing number: 123000220,
Account number:
153656080931,
Account name:
Keystone Consolidated
Industries, Inc. (the
"Separate Loan
Proceeds Account");
provided,
however, that
notwithstanding
any of the foregoing
to the contrary,
the Separate Loan Proceeds Account shall at no time contain
any funds
other than the proceeds of funding from EWP Financial to the Borrower
pursuant to the EWP DIP Credit Agreement and the proceeds of the DIP
Term Loan."
(j) Subsection 6.3(a) of the Pre-Petition Credit Agreement is hereby
amended and restated in its entirety to read as follows:
6.3 Collection
of Accounts. (a)
Borrower shall establish and maintain, at
its expense, blocked accounts or lockboxes and related blocked accounts (in
either case, "Blocked Accounts"),
as Lender may specify,
with such banks as are
acceptable to Lender into which Borrower
shall promptly
deposit and direct
its
account debtors to directly remit all
payments on Receivables and all payments
constituting proceeds of Inventory or other
Collateral in the identical form in
which such payments are made, whether by cash, check or other
manner. Borrower
shall deliver, or cause to be delivered to
Lender, a Depository Account Control
Agreement duly authorized, executed and delivered by each
bank where a Blocked
Account is maintained as provided in Section
5.2 hereof or at any ti
