Exhibit 10.1
------------
EXECUTION VERSION
SUPPORT AGREEMENT
This Support Agreement ("Agreement") is made and entered into as of
December ___, 2005, by and among Pliant Corporation, a Utah corporation
("Pliant" or the "Company"), Flexible Films, LLC, a Delaware limited liability
company, Flexible Films II, LLC, a Delaware limited liability company,
Southwest Industrial Films, LLC, a Delaware limited liability company, and
Southwest Industrial Films II, LLC, a Delaware limited liability company
(collectively, "JPM") and the undersigned holders (the "Consenting
Noteholders") of Pliant's 13% Senior Subordinated Notes due 2010 (the
"Subordinated Notes") issued pursuant to an Indenture, dated May 31, 2000, as
amended (the "2000 Indenture") among Pliant, certain subsidiaries of Pliant
and The Bank of New York, as trustee, and an Indenture dated April 10, 2002,
as amended (the "2002 Indenture"), among Pliant, certain subsidiaries of
Pliant and The Bank of New York, as trustee. Each of Pliant, JPM and each
Consenting Noteholder is referred to herein individually as a "Party", and
collectively as the "Parties".
Recitals
WHEREAS, Pliant is contemplating a financial restructuring (the
"Restructuring") to be implemented on a consensual basis pursuant to an
out-of-court exchange offer (the "Exchange Offer") or pursuant to a plan of
reorganization (the "Plan of Reorganization") under Chapter 11 of the United
States Bankruptcy Code, 11 U.S.C. xx.xx. et seq. (the "Bankruptcy Code"), the
terms and conditions of which will be consistent with those described in the
term sheet which is attached hereto as Exhibit A (the "Term Sheet"); and
WHEREAS, JPM currently holds Series A Redeemable Preferred Stock, no
par value (the "Preferred Stock"), and Common Stock, no par value, issued by
Pliant (the "JPM Stock"), and has agreed to support, to the extent legally
possible, the Restructuring as set forth herein and in accordance with
applicable law, and
WHEREAS, the Consenting Noteholders have agreed to support, to the
extent legally possible, the Restructuring, on the terms and subject to the
conditions set forth herein and in accordance with applicable law;
NOW, THEREFORE, in consideration of the premises and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. Implementation of the Restructuring
As soon as practicable following execution of this Agreement, Pliant
intends to commence the Exchange Offer in compliance with applicable
securities laws for the Subordinated Notes and solicit acceptances for a
prepackaged Plan of
Reorganization (the "Prepackaged Plan") on terms and conditions consistent
with those set forth in the Term Sheet. The Exchange Offer and solicitation of
acceptances will be effected pursuant to an Offering Memorandum and
Solicitation Document and other documents (collectively, the "Exchange
Documents") which shall be consistent with the terms and conditions set forth
in the Term Sheet. Pliant and certain of its affiliates may, any time prior to
the consummation of the Exchange Offer, commence voluntary cases under Chapter
11 of the Bankruptcy Code (the "Chapter 11 Cases") and seek to implement the
Restructuring pursuant to the Plan of Reorganization and any other necessary
documents (collectively, the "Plan Documents") as soon as practicable after
the date of commencement of the Chapter 11 Cases (the "Filing Date").
2. Forbearance
Each Consenting Noteholder agrees (i) to forbear, during the period
commencing on the date hereof and ending on the earlier of the Filing Date and
the termination of this Agreement (the "Forbearance Period"), from exercising
any rights or remedies it may have under the 2000 Indenture, the 2002
Indenture, applicable law or otherwise with respect to any default in
existence as of the date hereof or arising under either the 2000 Indenture or
the 0000 Xxxxxxxxx and (ii) to direct in writing, on or prior to December 31,
2005, that the trustee under the 2000 Indenture and the 2002 Indenture
forbear, during the Forbearance Period, from exercising any rights or remedies
it may have under the 2000 Indenture, the 2002 Indenture, applicable law or
otherwise with respect to any default in existence or arising under either the
2000 Indenture or the 2002 Indenture.
3. Holdings by Consenting Noteholders
Each Consenting Noteholder represents that, as of the date hereof,
such Consenting Noteholder (i) either (A) is the sole legal and beneficial
owner of the principal amount of Subordinated Notes set forth opposite its
name on Schedule 1 hereto and all related claims, rights and causes of action
arising out of or in connection with or otherwise relating thereto (for each
such Consenting Noteholder, the "Consenting Noteholder Claims"), in each case
free and clear of all claims, liens and encumbrances, except for those grants
of security interests to lenders of leveraged funds in accordance with the
Consenting Noteholders' customary business practices, or (B) has investment or
voting discretion with respect to such Subordinated Notes and Consenting
Noteholder Claims and has the power and authority to bind the beneficial
owner(s) of such Subordinated Notes and/or Consenting Noteholder Claims to the
terms of this Agreement, and (ii) has full power and authority to vote on and
consent to matters concerning such Subordinated Notes and Consenting
Noteholder Claims. [This Agreement shall only apply to the foregoing holdings
of the Consenting Noteholder held in such Consenting Noteholder's proprietary
accounts and in any way shall not include such Consenting Noteholder's customer
accounts.](1)
-2-
---------
(1) Language that has been bracketed in this form of Support Agreement is not
included in certain of the executed Support Agreements.
4. Subsequent Transfers
(a) Each of the Consenting Noteholders hereby agrees that, so long
as this Agreement has not been terminated, it shall not sell, transfer, assign
or grant any participation in any of its Subordinated Notes or Consenting
Noteholder Claims or any option thereon or any right or interest (voting or
otherwise) therein, unless the transferee thereof or participant therein
agrees in writing for the benefit of the other Parties to be bound by all of
the terms of this Agreement applicable to the transferor and executes a
counterpart signature page of this Agreement and the transferor provides the
Company and JPM with a copy thereof, in which event (i) each such other Party
shall be deemed to have acknowledged that its obligations to the Consenting
Noteholders hereunder shall be deemed to constitute obligations in favor of
such transferee, (ii) the transferee shall be a Party and all obligations
of the transferor to the other Parties shall be deemed to be obligations of
the transferee[, and (iii) so long as the Consenting Nothholder owns no other
Subordinated Notes, the Consenting Noteholder shall have no further obligations
under this Agreement].
(b) JPM hereby agrees that, so long as this Agreement has not been
terminated, it shall not sell, transfer, or assign, or grant any option or
proxy with respect to, any of the JPM Stock excluding (i) any grants of such
rights pursuant to existing governance or shareholder documents or agreements
and (ii) participations of economic interests pursuant to which JPM retains
beneficial ownership of the JPM Stock.
5. Agreement to Support the Restructuring
(a) Each of the Consenting Noteholders agrees that, so long as its
agreement hereunder has not been terminated, and subject to the conditions
that (i) the Exchange Documents and, if applicable, the Plan Documents provide
for the treatment of the Subordinated Notes and the Consenting Noteholder
Claims consistent with the treatment set forth in the Term Sheet, (ii) Pliant
fulfills its obligations as contemplated herein, (iii) if a disclosure
statement concerning the transactions contemplated by the Term Sheet is
hereafter approved by a bankruptcy court, such disclosure statement does not
contain information concerning the Company as of the date of this Agreement
that (a) would be material to a Consenting Noteholders's decision to support
the Term Sheet, and (b) was not disclosed to the Consenting Noteholder prior
its execution hereof, (iv) all applicable law relating to the Exchange Offer
and the transactions contemplated by the Plan Documents have been complied
with, and subject further in each case to the provisions set forth in Sections
11 and 12 hereof, it shall (x) tender its Subordinated Notes in the Exchange
Offer, (y) vote in favor of the Plan of Reorganization, and (z) if Pliant
files the Chapter 11 Cases, support the Plan of Reorganization. Such support
shall include the following: each Consenting Noteholder (together with its
affiliates, officers, directors, stockholders, members, employees, partners,
employees, representatives and agents[, but specifically excluding any brokers
or advisors in the ordinary course of their business (in matters unrelated to
its proprietary accounts) who are employed by or affiliated with the
Consenting Noteholder]) (i) shall not: (A) object to the Plan of Reorganization
or to any efforts to obtain acceptance of, and to confirm and implement, the
Plan of Reorganization; (B) vote for, consent to, or participate in the
formulation of
-3-
any plan other than the Plan of Reorganization or the filing of any
involuntary bankruptcy or insolvency case or proceeding involving the Company;
(C) solicit or engage in any inquiries, discussions, offers or proposals, or
enter into any agreements, relating to any disposition of the equity or assets
of Pliant and its subsidiaries outside of the ordinary course of business or
any plan of reorganization or liquidation for Pliant and its subsidiaries
other than this Agreement, the Plan of Reorganization or any amendment
thereto, and any documents in support hereof or thereof; (D) support in any
fashion any person or entity to vote against the Plan of Reorganization; or
(E) take any other action directly or indirectly for the purpose of delaying,
preventing, frustrating or impeding acceptance, confirmation or implementation
of the Exchange Offer or the Plan of Reorganization and (ii) shall support
dismissal of any involuntary bankruptcy case involving the Company. Such
support shall extend to all debt, claims or equity securities of Pliant held
or controlled by the Consenting Noteholder.
(b) Subject to Section 11, JPM agrees that, so long as its agreement
hereunder has not been terminated, and subject to the conditions that (i) the
Exchange Documents and, if applicable, the Plan Documents provide for the
treatment of the JPM Stock, the Subordinated Notes and the Consenting
Noteholder Claims consistent with the treatment set forth in the Term Sheet,
(ii) the Parties hereto fulfill their respective obligations as contemplated
herein, and (iii) all applicable law relating to the Exchange Offer and the
transactions contemplated by the Plan Documents have been complied with, it
shall (x) agree to exchange the Preferred Stock for its share of the Series AA
Preferred and Common Equity as provided for in the Term Sheet, (y) vote in
favor of the Plan of Reorganization, and (z) if Pliant files the Chapter 11
Cases, support the Plan of Reorganization. Such support shall include the
following: JPM (together with its officers, directors, employees and partners)
shall not: (A) object to the Plan of Reorganization or to any efforts to
obtain acceptance of, and to confirm and implement, the Plan of
Reorganization; (B) vote for, consent to or participate in the formulation of
any plan other than the Plan of Reorganization; (C) solicit or engage in any
inquiries, discussions, offers or proposals, or enter into any agreements,
relating to any disposition of the equity or assets of Pliant and its
subsidiaries outside of the ordinary course of business or any plan of
reorganization or liquidation for Pliant and its subsidiaries other than this
Agreement, the Plan of Reorganization or any amendment thereto, and any
documents in support hereof or thereof; (D) support in any fashion any person
or entity to vote against the Plan of Reorganization; or (E) intentionally
take any other action directly or indirectly for the purpose of delaying,
preventing, frustrating or impeding acceptance, confirmation or implementation
of the Exchange Offer or the Plan of Reorganization. Such support shall extend
to all debt, claims or equity securities of Pliant held or controlled by JPM.
6. Termination of Obligations
(a) The holders of a majority in principal amount of the
Subordinated Notes held by the Consenting Noteholders (the "Majority Holders")
may terminate this Agreement by written notice to Pliant and JPM upon the
occurrence of any of the following events:
-4-
(i) Neither the commencement of the Exchange Offer nor the
Filing Date has occurred by January 20, 2006;
(ii) If the Filing Date occurs after commencement of the Exchange
Offer, the Plan of Reorganization is not confirmed within 90
days after completion of solicitation of acceptances
thereof;
(iii) If the Filing Date occurs prior to commencement of the
Exchange Offer, the Plan of Reorganization is not confirmed
within 150 days after the Filing Date;
(iv) Pliant commences an exchange offer or files a chapter 11
plan providing for treatment of the Subordinated Notes or
the Consenting Noteholder Claims that is inconsistent with
the terms and conditions set forth in the Term Sheet in a
manner that is materially adverse to the Consenting
Noteholders;
(v) After commencement of the Exchange Offer, there shall be any
modification to the Exchange Documents that is inconsistent
with the terms and conditions set forth in the Term Sheet in
a manner that is materially adverse to the Consenting
Noteholders;
(vi) after filing of the Plan of Reorganization, there shall be
any modification or supplement to the Plan Documents that is
inconsistent with the terms and conditions set forth in the
Term Sheet in a manner that is materially adverse to the
Consenting Noteholders;
(vii) Pliant has materially breached any of its other obligations
hereunder and has failed to cure such breach within ten
business days after the giving of written notice of such
breach, or
(viii) JPM, at any time, ceases to own more than 50.1% of Pliant's
common equity;
(ix) Pliant shall withdraw the Exchange Offer or Plan of
Reorganization or publicly announce its intention not to
support the Exchange Offer or Plan of Reorganization; or
(x) JPM has materially breached any of its obligations hereunder
and has failed to cure such breach within ten business days
after the giving of written notice of such breach.
(b) This Agreement will automatically terminate, without notice,
upon the occurrence of any of the following events:
(i) after the Filing Date, and prior to the confirmation of the
Plan of Reorganization, any or all of the Chapter 11 Cases
shall have been
-5-
converted to a case or cases under chapter 7, to one or more
liquidating chapter 11 cases, or dismissed;
(ii) the Bankruptcy Court terminates Pliant's exclusive period to
file the Plan of Reorganization or such exclusive period
lapses;
(iii) an examiner is appointed pursuant to section 1104(c)(1) of
the Bankruptcy Code with expanded powers to run the business
of Pliant, or an examiner or the Bankruptcy Court makes a
finding of fraud, dishonesty, or misconduct by any officer
or director of Pliant, or a trustee under chapter 7 or
chapter 11 of the Bankruptcy Code is appointed for Pliant in
any of the Chapter 11 Cases; or
(iv) any court shall enter a final non-appealable judgment or
order declaring this Agreement to be unenforceable;
(c) Notwithstanding anything contained herein, this Agreement will
automatically terminate on June 15, 2006.
(d) If this Agreement is terminated in accordance with the
foregoing, all further obligations of the Parties hereunder shall be
terminated without further liability of any Party except for any liabilities
of the Parties arising from a breach of this Agreement occurring prior to the
termination hereof.
7. Prior Negotiations
This Agreement and the Term Sheet constitute the entire
understanding of the parties with respect to the subject matter hereof. No
representations, oral or written, other than those set forth herein, may be
relied on by any party in connection with the subject matter hereof.
8. Representations of Pliant
Pliant hereby represents and warrants to each Consenting Noteholder
and JPM as follows:
(a) Corporate Power and Authority. It has all requisite corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated by, and perform its obligations under, this
Agreement.
(b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary corporate action on its part.
(c) No Conflicts. The execution, delivery and performance by it of
this Agreement do not and shall not (i) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate of
incorporation or bylaws or other organizational documents or those of any of
its subsidiaries or (ii) conflict with,
-6-
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 or any of its
subsidiaries is a party, other than, if applicable, as a result of the
commencement of the Chapter 11 Cases.
(d) Governmental Consents. The execution, delivery and performance
by it of this Agreement do not and shall not require any registration or
filing with, consent or approval of, or notice to, or other action to, with or
by, any federal, state or other governmental authority or regulatory body,
other than filings under the Securities Exchange Act of 1934, as amended,
which have been or will be made.
(e) Binding Obligation. Subject to the provisions of sections 1125
and 1126 of the Bankruptcy Code, this Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its terms.
(f) No Litigation. There are no material actions, suits, claims,
proceedings, or investigations pending or, to its knowledge, threatened
against it, except those that have been publicly disclosed by Pliant in the
periodic or current reports filed with the Securities and Exchange Commission
by Pliant pursuant to the reporting requirements set forth in the Securities
Exchange Act of 1934, as amended.
9. Representations of the Consenting Noteholders and JPM
Each of the Consenting Noteholders and JPM represents and warrants,
severally but not jointly, to each of the other Parties, as follows:
(a) Corporate Power and Authority. It has all requisite corporate,
partnership or limited liability company power and authority to enter into
this Agreement and to carry out the transactions contemplated by, and perform
its obligations under, this Agreement.
(b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary corporate, partnership or limited liability company action on its
part.
(c) No Conflicts. The execution, delivery and performance by it of
this Agreement do not and shall not (i) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate of
incorporation or bylaws or other organizational documents or those of any of
its subsidiaries 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 or any of its subsidiaries is a party.
(d) Governmental Consents. The execution, delivery and performance
by it of this Agreement do not and shall not require any registration or
filing with, consent or approval of, or notice to, or other action to, with or
by, any federal, state or other governmental authority or regulatory body.
(e) Binding Obligation. Subject to the provisions of sections 1125
and 1126 of the Bankruptcy Code, this Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its terms.
-7-
10. Further Acquisition of Claims
This Agreement shall in no way be construed to preclude the
Consenting Noteholders from acquiring additional Subordinated Notes, or debt
or equity securities or other claims against Pliant or any of its
subsidiaries. However, any such additional Subordinated Notes, or debt or
equity securities or other claims so acquired shall automatically be deemed to
be subject to the terms of this Agreement.
11. Fiduciary Duties
Notwithstanding anything to the contrary herein, nothing in this
Agreement shall require or prohibit, as the case may be, the Company or any
directors or officers of the Company (in such person's capacity as a director
or officer of the Company) to take any action, or to refrain from taking any
action, to the extent required to comply with its or their fiduciary
obligations under applicable law and any such Person or entity's taking or
refraining from taking any such action shall not be a violation or default
hereunder.
12. Impact of Appointment to Creditors' Committee
Pliant agrees to use its reasonable efforts, if requested by any
Consenting Noteholder, to support such Consenting Noteholder's appointment to
any official unsecured creditors' committee ("Creditors' Committee") formed
pursuant to 11 U.S.C. ss. 1102 in the Chapter 11 Cases. Notwithstanding
anything herein to the contrary, if any Consenting Noteholder is appointed to
and serves on the Creditors' Committee in the Chapter 11 Cases, the terms of
this Agreement shall not be construed so as to limit or prohibit any actions
taken in furtherance of such Consenting Noteholder's fiduciary duties to any
person or entity arising from its service on such Creditors' Committee, and
any such exercise (in the sole discretion of such Consenting Noteholder) in
furtherance of such fiduciary duties shall not be deemed to constitute a
breach of the terms of this Agreement. Without limiting the foregoing, nothing
herein shall be construed to impose liability on any Consenting Noteholder who
is appointed to a Creditors' Committee for taking actions to discharge such
Noteholder's fiduciary obligations as a member of such committee.
13. No Oral Amendments
No modification or amendment of the terms of this Agreement shall be
valid unless such modification or amendment is in writing and has been signed
by Pliant, JPM and the Consenting Holders.
14. Governing Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to such state's choice
of law provisions which would require the application of the law of any other
jurisdiction. By its execution and delivery of this Agreement, each of the
Parties hereby irrevocably and unconditionally agrees for itself that any
legal action, suit or proceeding against it with
-8-
respect to any matter arising under or arising out of or in connection with
this Agreement or for recognition or enforcement of any judgment rendered in
any such action, suit or proceeding, may be brought in the United States
District Court for the Southern District of New York, and by execution and
delivery of this Agreement, each of the Parties hereby irrevocably accepts and
submits itself to the exclusive jurisdiction of such court, generally and
unconditionally, with respect to any such action, suit or proceeding.
Notwithstanding the foregoing consent to New York jurisdiction, upon the
commencement of the Chapter 11 Cases, each of the Parties hereto hereby agrees
that the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") shall have exclusive jurisdiction of all matters arising
out of or in connection with this Agreement.
15. Specific Performance
It is understood and agreed by the Parties that money damages would
not be a sufficient remedy for any breach of this Agreement by any Party and
each non-breaching Party shall be entitled to specific performance and
injunctive or other equitable relief as a remedy of any such breach,
including, without limitation, an order of the Bankruptcy Court or other court
of competent jurisdiction requiring any Party to comply promptly with any of
its obligations hereunder.
16. Reservation of Rights
This Agreement is part of a proposed consensual Restructuring among
the Parties hereto. Except as expressly provided in this Agreement, nothing
herein is intended to, or does, in any manner waive, limit, impair or restrict
the ability any party to protect and preserve its rights, remedies and
interests, including, without limitation, its claims against the Pliant. If
the Restructuring contemplated herein and in the Term Sheet is not
consummated, or if this Agreement is terminated for any reason, the Parties
hereto fully reserve any and all of their rights.
17. Headings
The section headings of this Agreement are for convenience of
reference only and shall not, for any purpose, be deemed a part of this
Agreement.
18. Successors and Assigns, Several Obligations
This Agreement is intended to bind and inure to the benefit of the
Parties and their respective successors, permitted assigns, heirs, executors,
administrators and representatives. The invalidity or unenforceability at any
time of any provision hereof shall not affect or diminish in any way the
continuing validity and enforceability of the remaining provisions hereof. The
agreements, representations and obligations of the Consenting Noteholders
under this Agreement are several and not joint in all respects. Any breach of
this Agreement by a Consenting Noteholder shall not result in liability for
any other non-breaching Consenting Noteholder.
-9-
19. Third-Party Beneficiaries
Unless expressly stated herein, this Agreement shall be solely for
the benefit of the Parties hereto and no other person or entity shall be a
third party beneficiary hereof.
20. Counterparts
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same agreement. Execution copies of this agreement
may be delivered by facsimile which shall be deemed to be an original for the
purposes of this paragraph.
21. Consideration
It is hereby acknowledged by the Parties that no consideration shall
be due or paid to the Consenting Noteholders in exchange for their support of
the Plan of Reorganization, in accordance with the terms and conditions of
this Agreement, other than the obligations imposed upon Pliant and the other
Consenting Noteholders pursuant to the terms of this Agreement.
22. Expenses.
Pliant shall continue to be bound by the terms of (i) the Engagement
Letter, dated as of November 2, 2005, by and among Xxxxxxx XxXxxxxxx LLP (as
counsel to the Consenting Noteholders) and Pliant and (ii) the Engagement
Letter, dated as of November 1, 2005, by and among CIBC World Markets (as
financial advisor to the Consenting Noteholders), Xxxxxxx XxXxxxxxx LLP, and
Pliant. In the event that (a) the Company commences a Chapter 11 Case, (b)
Xxxxxxx XxXxxxxxx LLP ("Xxxxxxx") and/or CIBC World Markets ("CIBC") are not
retained by the Creditors' Committee, (c) Xxxxxxx and/or CIBC are primarily
responsible for gaining creditor support for and confirmation of a Plan of
Reorganization to the exclusion of the Committee, then Pliant shall support
the filing of a substantial contribution application by Xxxxxxx and/or CIBC,
as the case may be.
23. Expenses Reimbursement.
Pliant will promptly reimburse JPM upon request for all fees and
expenses incurred by JPM (including, but not limited to, reasonable legal fees
and expenses) in connection with the consummation of the transactions
contemplated by this Agreement (including, but not limited to, the Exchange
Offer, Prepackaged Plan and Plan of Reorganization).
-10-
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed and delivered by their respective duly authorized officers, solely
in their respective capacity as officers of the undersigned and not in any
other capacity, as of the date first set forth above.
PLIANT CORPORATION
By:
---------------------------
Name:
Title:
Signature Page to Support Agreement
FLEXIBLE FILMS, LLC
By: X.X. Xxxxxx Partners (BHCA), L.P.
its Member
By: JPMP Master Fund Manager, L.P.,
its General Partner
By: JPMP Capital Corp.,
its General Partner
By:
---------------------------
Name:
Title:
FLEXIBLE FILMS II, LLC
By: X.X. Xxxxxx Partners (BHCA), L.P.
its Member
By: JPMP Master Fund Manager, L.P.,
its General Partner
By: JPMP Capital Corp.,
its General Partner
By:
---------------------------
Name:
Title:
SOUTHWEST INDUSTRIAL FILMS, LLC
By: X.X. Xxxxxx Partners (BHCA), L.P.
its Member
By: JPMP Master Fund Manager, L.P.,
its General Partner
By: JPMP Capital Corp.,
its General Partner
By:
---------------------------
Name:
Signature Page to Support Agreement
-12-
Title:
SOUTHWEST INDUSTRIAL FILMS II, LLC
By: X.X. Xxxxxx Partners (BHCA), L.P.
its Member
By: JPMP Master Fund Manager, L.P.,
its General Partner
By: JPMP Capital Corp.,
its General Partner
By:
---------------------------
Name:
Title:
Signature Page to Support Agreement
-13-
CONSENTING NOTEHOLDER
---------------------
Institution Name:
------------------------------
By:
---------------------------
Name:
Title:
Principal amount of Subordinated Notes: $
----------------------------
Signature Page to Support Agreement
-14-
SUPPORT AGREEMENT VERSION
DETAILED
SUMMARY OF PROPOSED TERMS
This term sheet creates no binding rights or obligations in favor of any
party. A binding commitment with respect to the transaction referred to below
will result only from the execution of all necessary definitive documentation.
This term sheet is for discussion purposes only. It does not constitute an
offer to buy or sell any securities, nor shall it be construed as a binding
agreement of any kind or a commitment to enter into, or offer to enter into,
any agreement or to consummate any transaction.
Company: Pliant Corporation and the subsidiary
guarantors of the Old Notes (collectively,
the "Company")
Transaction Structure(1): An out-of court exchange offer (with minimum
97% acceptance threshold), a "pre-packaged"
Chapter 11 or a "prenegotiated" Chapter 11.
Revolving Credit Facility: Unimpaired
1st Lien Notes: Unimpaired
2nd Lien Notes: Unimpaired
Trade and Other General Unsecured Unimpaired
Creditors
13.0% Senior Subordinated Notes o The December 1, 2005 interest
(the "Old Notes"): payment due on the Old Notes will be paid
by the Company's issuance of $20.0 million
in "tack-on" 1st Lien Notes issued under
the 1st Lien Indenture (the "Tack-On Notes")
o If (i) the restructuring is implemented
through a Chapter 11 proceeding and (ii)
the Bankruptcy Court determines that
issuance of the Tack-On Notes to the Old
Note holders would result in an impairment
of the 1st Lien Note Holders or the 2nd
Lien Note Holders or otherwise violates
such agreements, then, in lieu of the
Tack-On Notes, the holders of the Old
Notes will receive or retain $35 million
principal amount of unsecured senior
subordinated notes
------------------
(1) Parties will cooperate in structuring the transaction to minimize adverse
tax impact to the Company.
1
(the "New Senior Subordinated Notes")
permitted by the 0xx Xxxx xxx 0xx Xxxx
Xxxxxxxxxx. The New Senior Subordinated
Notes will mature in 2010 and accrue PIK
interest at a rate of 13% per annum for
the first year following issuance and
semi-annual cash pay interest at a rate of
13% per annum thereafter. The Company
shall have the right to refinance (the
"Call Option") the New Senior Subordinated
Notes at any time during the first year
following their issuance by tendering to
the holders cash in an amount equal to (i)
$20 million plus (ii) interest accrued at
a rate of 13% per annum from the date of
issuance through the date of payment on a
principal amount of $20 million minus
(iii) any interest previously paid in cash
on the New Senior Subordinated Notes. The
Company shall have the right to assign the
Call Option.
o Each holder of Old Notes who consents
to the proposed restructuring (and votes
in favor of a plan of reorganization that
implements the proposed restructuring)
will receive a cash consent fee equal to
1% of the principal amount of the Old
Notes held by such holder (the "Consent
Fee").(2)
o In addition to the Tack-On Notes or the
New Senior Subordinated Notes, holders of
the Old Notes will receive, in full
satisfaction of the Old Notes(3), (a) $260
million of Series AA Redeemable Preferred
Stock (77.5% of total Series AA, subject
to adjustment as described previously in
footnote 2), and (b) 30.0%(4) of
fully-diluted (subject to management
equity incentive compensation) Common
------------------------------------------------------------------------------
(2) If (i) the restructuring is implemented through a Chapter 11 proceeding
and (ii) the Bankruptcy Court determines that payment of the Consent Fee would
result in an impairment of the 1st Lien Note Holders or the 2nd Lien Note
Holders or otherwise violates the terms of such agreements then the Series AA
Preferred Stock will be split between holders of the Old Notes and holders of
the Existing Series A Preferred 80% and 20%, respectively, and the Consent Fee
will be eliminated.
(3) Holders of Old Notes should also surrender any Pliant warrants currently
held by them.
(4) Percentage subject to change to ensure change in control is not triggered.
2
Equity (the "Bondholder Common Equity")
(following conversion of Series A
Preferred into Common Equity) with
remainder of Common Equity divided between
Series A Preferred and Old Equity.
o The Company will (i) obtain waivers of
subscription rights from the parties to
the Stockholders' Agreement dated as of
May 31, 2000 (the "2000 Shareholders
Agreement") with respect to the issuance
of the equity securities to be issued to
the holders of the Old Notes (including
the equity securities to be issued upon
conversion of such securities) in
connection with this restructuring or (ii)
otherwise deal with such rights in a way
that does not result in dilution of the
Series AA Redeemable Preferred Stock and
Common Equity to be issued to the holders
of the Old Notes in the restructuring.
Series A Preferred and Old Equity: o The Existing Series A Preferred will
convert into (a) $75.5 million of Series
AA Redeemable Preferred Stock ("Series AA
Preferred") (22.5% of total Series AA,
subject to adjustment as described
previously in footnote 2), and (b) [TBD]%
of new Common Equity.(5)
o Existing Common Shares ("Old Equity")
will remain outstanding and held by the
current shareholders, but will be subject
to dilution from the issuance of new
Common Equity to the holders of the Series
A Preferred and to holders of the Old
Notes up to the point (in the latter case)
that a change of control is not triggered.
o Holders of Old Series A and Old Equity
will account for, in aggregate, [70%] of
the new Common Equity.(6)
o As a condition to Closing,(7)
affiliates of X.X. Xxxxxx Partners
(5) Percentage subject to change to ensure change in control is not triggered.
(6) Percentage subject to change to ensure change in control is not triggered.
(7) Closing as used herein shall mean either (1) the consummation of the
out-of court exchange offer, or (2) as defined in any Chapter 11 plan of
reorganization.
3
("JPM") and holders of the Bondholder
Common Equity shall enter into a
shareholders agreement (the "New
Shareholders Agreement") which will
provide, among other things, that JPM(8)
shall not sell or otherwise transfer its
shares of Common Equity (except under
circumstances contemplated in the Merger
Exception below) on or before fifth
anniversary of the effective date of the
restructuring unless (1) the purchaser or
transferee of such shares is a Permitted
Holder and a change of control is not
triggered under the 1st and 2nd Lien Notes
and such Permitted Holder agrees to assume
the same obligations as JPM or (2) the
Series AA Preferred has been redeemed and
the Tack-On Notes or the New Senior
Subordinated Notes (as the case may be)
have been repaid in full in cash.
Warrants: o The parties to the Plan Support
Agreement will surrender all of their
outstanding warrants, options or other
securities that give them the right to
acquire equity securities of the Company.
The parties to the Plan Support Agreement
will endeavor to have all outstanding
warrants, options and other securities to
acquire equity securities of the Company
cancelled.
Management: o Existing Series B Preferred Stock held
by management shall be extinguished and
shall have no value. A new Series M
Preferred Stock will be created to
incentivize management to maximize the
value of the restructured Company. The
design of the Series M Preferred Stock
will be substantially similar to the
design of the Series B Preferred Stock,
but with appropriate adjustments to
reflect the modified capital structure.
The Series M Preferred Stock will be
entitled to 8.0% of the equity value of
the
------------------------------------------------------------------------------
(8) This assumes that JPM will own 50.1% of the Common Equity on a fully
diluted basis. In the event that JPM owns less, an appropriate number of the
Permitted Holders (as defined in the 1st and 0xx Xxxx Xxxxxxxxxx) will need to
be added to this provision.
4
restructured Company on a fully diluted
basis.
o One half of one percent (0.5%) of the
equity value included in such management
equity incentive program can only be
distributed to management with the consent
of the holders of a majority of the Series
AA Preferred (excluding the Series AA
Preferred held at the time by current
holders of (i) existing Series A
Preferred, and (ii) Old Equity) (the
"Non-Current Equity Preferred").
o The Series M Preferred Stock will
not have any voting rights.
Series AA Redeemable Preferred Stock(9): o $335.56 million liquidation
preference
o Dividends - PIK quarterly at 13%
o Company may redeem at any time at
principal plus accrued dividends.
o Ability to force IPO after three (3)
years (see Registration Rights section
below).
o Following the 4th anniversary of the
Closing Date, directors elected by the
Series AA Preferred will have
supermajority voting rights that will
permit them to initiate a sale of the
Company and give them majority control of
any board vote related to a sale of the
Company.
o If the Series AA Preferred is not
redeemed within five (5) years after
issuance, holders of a majority of the
Non- Current Equity Preferred will be able
to (i) subject to the Merger Exception set
forth below, convert the entire Series AA
Preferred to 99.9% of fully-diluted Common
Equity at such time, and (ii) appoint a
majority of the board of directors without
converting the Series AA Preferred to
Common Equity.
o The Series AA Preferred shall be freely
tradable at (or, if a shelf registration
statement is filed pursuant to the
following sentence, as soon as
------------------
(9) Series AA Preferred Stock to be structured in such a manner that they are
not considered debt for accounting purposes.
5
practicable after) the time of Closing. If
the transaction is consummated out of
court, the Company shall cause a shelf
registration statement which would allow
holders of the Series AA Preferred to
resell their shares of Series AA Preferred
from time to time, including pursuant to
one or more underwritten public offerings,
to be effective as soon as practicable
after the time of Closing and to remain
effective until the second anniversary of
the Closing. This requirement shall not
apply if the exchange is consummated
pursuant to Section 3(a)(9) of the
Securities Act. If the exchange is
consummated pursuant to Section 1145 of
the Bankruptcy Code or pursuant to Section
3(a)(9) of the Securities Act, the Company
and the holders of the Series AA Preferred
Stock who were former holders of Old Notes
will enter into a registration rights
agreement pursuant to which those of such
holders owning a majority of the number of
shares of Series AA Preferred Stock owned
by all such holders (which can be
initiated by the holders of 10% of the
shares of Series AA Preferred Stock held
by such holders) can require the Company
to register, at any time after the nine
month anniversary of the Closing, an
underwritten public offering of Series AA
Preferred Stock.
o As detailed below, the holders of a
majority of the Series AA Preferred shall
have the right to elect two (2) directors
to the board of the reorganized Company.
o Approval of holders of a majority of the
Non-Current Equity Preferred shall be
required to (i) amend the Company charter
in a manner materially adverse to the
Series AA Preferred holders, or (ii) grant
additional options or shares to
(10) Any redemption of the Tack-On Notes referenced in this Term Sheet shall
be made in accordance with the terms of the 1st Lien Notes including any
applicable redemption premium.
6
management.
o In the event that the Company seeks to
sell all or substantially all of the
Company's assets to a non-affiliated
entity for cash, the approval of the
holders of two-thirds of the Series AA
Preferred shall be required, unless, as
part of the transaction the Series AA
Preferred (including any PIK dividends
through such date) has or will be redeemed
in full and the Tack-On Notes or the New
Senior Subordinated Notes (as the case may
be) have or will be paid in full in cash(10)
o In the event that the Company seeks to
effect a merger, the approval of the
holders of a majority of the Non-Current
Equity Preferred shall be required unless,
if, after giving effect to the merger (the
"Merger Exception") (1) the Company's pro
forma ratio of EBITDA to total interest
obligations (including cash or PIK
interest on the New Senior Subordinated
Notes and dividends on the Series AA
Preferred) for the most recent twelve
month period prior to signing is at least
10% higher than the Company's actual ratio
of EBITDA to interest obligations for the
same period, (2) the Company's pro forma
ratio of total funded debt (including the
Series AA Preferred any equity that is
senior or equal to the Series AA
Preferred) as of the end of the quarter
immediately preceding the signing to
EBITDA for the most recent twelve month
period prior to signing is at least 10%
less than the Company's actual ratio of
total funded debt to EBITDA for the same
period, (3) the conversion right described
above will, if exercised, result in the
Series AA Preferred converting into at
least 51% of the Common Equity of the
surviving parent entity, and (4) a
majority of the Non-Current Equity
Preferred will retain the right to
7
appoint a majority of the board of
directors of the surviving parent entity
in the fifth year following the Closing.
o In the event that the Company seeks to
sell all or substantially all of the
Company's assets to (i) a non affiliated
entity for non-cash consideration, (ii) an
affiliated entity for cash, or (iii) an
affiliated entity for non-cash
consideration, the approval of the holders
of a majority of the Non-Current Equity
Preferred shall be required unless, as
part of the transactions described in (i)
through (iii) the Series AA Preferred
(including any PIK dividends through such
date) has or will be redeemed in full and
the Tack-On Notes or the New Senior
Subordinated Notes (as the case may be)
have or will be paid in full in cash.
o The Company shall take all steps
reasonably required to permit the Series
AA Preferred to be traded on the NASDAQ
OTC Bulletin Board (including registering
the Series AA Preferred under section
12(g) of the Securities Exchange Act of
1934).
o Other customary terms and conditions.
Registration Rights for Common Equity: o JPM and the holders of the Bondholder
Common Equity (the "Registerable Holders")
will either become parties to the
Company's existing registration rights
agreement or enter into a new registration
rights agreement with the Company,
pursuant to which (i) those of such
Registerable Holders owning a majority of
the number of shares of the Common Equity
held by all Registerable Holders can
require the Company after the date that is
three (3) years following the Closing, to
register a public offering of the Common
Equity, and (ii) unless the exchange is
effected pursuant to Section 1145 of the
Bankruptcy Code or Section 3(a)(9) of the
Securities Act, the holders of the
8
Bondholder Common Equity shall receive two
demand rights on Form S-1, unlimited demand
rights on Form S-3 and unlimited piggy-back
rights following the initial public
offering of the Common Equity, in each
case, subject to the existing priorities
in such registration rights agreement,
which priorities shall be no less
favorable to the holders of the Bondholder
Common Equity than they are to the
Investor Stockholders (as defined in such
registration rights agreement).
Tag Along Rights for Bondholder Common o The Bondholder Common Equity holders will
Equity: either become parties to the 2000
Shareholders Agreement, with such
modifications as shall be acceptable to
the holders of the Old Notes, the Company
and JPM, or enter into a new stockholders'
agreement and, as such, shall be entitled
to, among other things, certain "tag
along" and preemptive rights and shall be
subject to certain "drag -along"
provisions and restrictions on transfers
as shall be acceptable to the holders of
the Old Notes, the Company and JPM.
Board Representation: o The Board of Directors shall consist of
seven (7) members. Old Equity shall be
entitled to appoint four (4) directors. At
the Closing (or as soon as practicable),
holders of a majority of the Old Notes
shall be entitled to appoint two (2)
directors. As the terms of the two (2)
directors appointed by the Old Notes
expire in the ordinary course, thereafter,
the holders of a majority of the Series AA
Preferred shall appoint any replacements.
The CEO shall retain its current Board
seat. [Subject to pro rata adjustment in
the event that the trust retains board
representation.]
Restriction on Additional Debt: o Except as provided for herein, the
Company shall not incur additional
9
debt beyond that debt that is currently
contemplated by the existing Revolving
Credit Facility, the 1st and 2nd Lien
Indentures, the proposed DIP Facility and
an exit facility. The Company shall be
entitled to structure an exit facility in
a manner that maximizes the Company's
liquidity so long as the exit facility is
permitted under the 1st and 2nd Lien
documents.
Reincorporation of Pliant: o As soon as practicable following the
Closing, Pliant shall reincorporate as a
Delaware corporation.
10
