EXECUTION VERSION
PLAN SUPPORT AGREEMENT
PLAN SUPPORT AGREEMENT (this "AGREEMENT"), dated as of November 23,
2008, among (i) Lenox, Incorporated, a New Jersey corporation, D 56, Inc., a
Minnesota corporation, and Lenox Retail, Inc., a Minnesota corporation, Lenox
Group Inc., a Delaware corporation, FL 56 Intermediate, Corp., a Delaware
corporation, Lenox Worldwide, LLC, a Delaware limited liability company, and
Lenox Sales, Inc., a Minnesota corporation (collectively referred to as
"LENOX"), (ii) the undersigned lenders (collectively, the "TERM LENDERS,"
together with Lenox, each referred to as a "Party" and collectively referred to
as the "PARTIES"), who are "Lenders" under that certain Amended and Restated
Term Loan Credit Agreement dated April 20, 2007 (as amended, the "TERM LOAN
AGREEMENT") by and between Lenox, Incorporated, D 56, Inc., and Lenox Retail,
Inc., as borrowers; and Lenox Group Inc. and other guarantors party thereto as
guarantors; Bank of New York/Mellon as administrative agent (as successor to UBS
AG, Stamford Branch) and the Lenders party thereto.
W H E R E A S :
A. Prior to the date hereof, representatives of Lenox and the Term Lenders
have engaged in arm's length, good faith discussions regarding a financial
restructuring of Lenox's indebtedness and other obligations (the
"RESTRUCTURING") and the agreed upon terms of such Restructuring are as set
forth in this Agreement.
B. Each Party desires that the Restructuring will be implemented through
the sale of substantially all of Lenox's assets to an entity owned by the Term
Lenders pursuant to a chapter 11 plan of reorganization, subject to the
non-occurrence of a 363 Hearing Event, or in the event of a 363 Hearing Event,
through the sale of all or substantially all of the assets of Lenox under
section 363 of the Bankruptcy Code in accordance with the Bidding Procedures
(the "TRANSACTION").
C. This Agreement and the Plan Term Sheet set forth the agreement among the
Parties concerning their commitment, subject to the terms and conditions hereof
and thereof, to implement the Restructuring.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, each Party, intending to be legally bound hereby,
agrees as follows:
1. DEFINITIONS. The following terms shall have the following definitions:
"363 HEARING EVENT" has the meaning set forth in paragraph 5
hereto.
"AGREEMENT" has the meaning set forth in the preamble hereof.
"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, or is under common control
with, or is controlled by, such Person. As used in this definition,
"control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean, with
respect to any Person, the possession, directly or indirectly, of
power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise) of such Person.
"BALLOT" means the ballot distributed with the Disclosure
Statement for voting on the Plan.
"BANKRUPTCY CODE" means title 11 of the United States Code, 11
U.S.C. ss.ss.101 ET SEQ.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Southern District of New York.
"BANKRUPTCY RULES" means the Federal Rules of Bankruptcy
Procedure.
"BIDDING PROCEDUREs" means those procedures set forth in EXHIBIT
B attached hereto to be employed with respect to the proposed sale of
the equity of reorganized Lenox or substantially all of the assets of
Lenox as the case may be.
"BID PROCEDURES ORDER" means an order, in form and substance
reasonably acceptable to the Proposed Purchaser, (i) fixing the date,
time and location of the hearing (the "TRANSACTION APPROVAL HEARING")
to approve the Transaction, (ii) fixing the time, date and location of
an auction, (iii) containing such other appropriate buyer protections
as may be reasonably requested by the Proposed Purchaser, and (iv)
otherwise approving the Bidding Procedures.
"BORROWERS" means D 56, Inc., a Minnesota corporation, Lenox
Retail, Inc., a Minnesota corporation, and Lenox, Incorporated, a New
Jersey corporation.
"BUSINESS DAY" means any day other than Saturday, Sunday and any
day that is a legal holiday or a day on which banking institutions in
New York, New York are authorized by law or other governmental action
to close.
"CHAPTER 11 CASES" means the voluntary chapter 11 cases to be
commenced by Lenox.
"CONFIRMATION ORDER" has the meaning set forth in paragraph 5(f)
hereof.
"DIP FINANCING" means that certain debtor in possession
financing, the principal terms of which shall be in form and substance
acceptable to the Term Lenders.
"DIP TERM SHEET" means the term sheet outlining the principal
terms of the DIP Financing set forth as EXHIBIT A to this Agreement.
"DISCLOSURE STATEMENT" means the disclosure statement in respect
of the Plan.
-2-
"EQUITY COMMITMENT LETTER" refers to that certain letter
agreement among the Term Lenders dated as of November 23, 2008,
pursuant to which each Term Lender signatory thereto commits to
contribute all or a portion of its Term Loans to the Proposed
Purchaser in connection with the Transaction.
"EXECUTION DATE" means the date on which the Purchase Agreement
is executed and delivered to each of the parties thereto.
"FINAL FINANCING ORDER" means the order authorizing the DIP
Financing and use of cash collateral on a final basis in form and
substance acceptable to the Term Lenders.
"FINAL ORDER" means an order or judgment of the Bankruptcy Court,
or other court of competent jurisdiction, as entered on the docket of
such court, the operation or effect of which has not been stayed,
reversed, vacated, modified or amended, and as to which order or
judgment (or any revision, modification, or amendment thereof) the
time to appeal, petition for certiorari, or seek review or rehearing
has expired and as to which no appeal, petition for certiorari, or
petition for review was filed, or if filed, remains pending; provided,
however, that the possibility that a motion may be filed pursuant to
Rules 9023 or 9024 of the Bankruptcy Rules or Rules 59 or 60(b) of the
Federal Rules of Civil Procedure shall not mean that an order or
judgment is not a Final Order.
"INTERIM FINANCING ORDER" means the order authorizing the DIP
Financing and use of cash collateral on an interim basis in form and
substance acceptable to the Term Lenders.
"MATERIAL ADVERSE CHANGE" means any change, effect, event,
occurrence, development, circumstance or state of facts occurs which
has had or would reasonably be expected to have a materially adverse
effect on the business, properties, operations, financial condition or
results of operations of Lenox (including its subsidiaries and their
respective businesses), taken as a whole, or which would materially
impair Lenox's ability to perform its obligations under this Agreement
or have a materially adverse effect on or prevent or materially delay
the consummation of the transactions contemplated by this Agreement.
The filing of voluntary petitions commencing the Chapter 11 Cases
contemplated by this Plan Support Agreement shall not constitute a
Material Adverse Change.
"MATERIAL CONTRACT" means (a) any license agreement, or (b) any
agreement that involves the payment of, or the purchase or provision
of goods or services having a value in excess of, $250,000 in any year
or $500,000 over the life of such contract.
"OUTSIDE DATE" means March 31, 2009.
"PARTIES" has the meaning set forth in the preamble hereof.
"PERSON" means an individual, a partnership, a joint venture, a
limited liability company, a corporation, a trust, an unincorporated
organization, a group or any legal entity or association.
-3-
"PETITION DATE" means the date on which Lenox files voluntary
petitions under the Bankruptcy Code.
"PLAN" means a joint plan of reorganization for Lenox to be filed
in the Chapter 11 Cases based on the terms and conditions set forth in
the Plan Term Sheet, and in form and substance acceptable to Required
Term Lenders, as such Plan may be amended, modified or otherwise
supplemented from time to time with the written consent of Required
Term Lenders; provided, however, that any amendment, modification or
supplement to the Plan that would require resolicitation under section
1127 of the Bankruptcy Code shall require the written consent of
Supermajority Term Lenders.
"PLAN TERM SHEET" means the term sheet annexed hereto as EXHIBIT
A, as amended, modified or supplemented with the written consent of
Required Term Lenders; provided, however, that any amendment,
modification or supplement to the Plan Term Sheet, which, if made to
the Plan, would require resolicitation under section 1127 of the
Bankruptcy Code, shall require the written consent of Supermajority
Term Lenders.
"PREVAILING PURCHASER" means the person or entity that submits
the Successful Bid (as defined in the Bidding Procedures).
"PROPOSED PURCHASER" means an entity or entities to be formed by
the Term Lenders or their Affiliates for the purpose of effecting the
Transaction.
"PURCHASE AGREEMENT" means a purchase agreement to be entered
into between the Proposed Purchaser and Lenox, or such other agreement
as may be entered into by and between Lenox and the Prevailing
Purchaser in accordance with the Bidding Procedures, providing for the
sale of the equity of reorganized Lenox or the sale of all or
substantially all of the assets of Lenox, as the case may be.
"REQUIRED TERM LENDERS" means, as of any date of determination,
Term Lenders holding more than fifty percent (50%) of the Term Loans.
"RESTRUCTURING" has the meaning set forth in the preamble hereof.
"REVOLVING LENDERS" means the lenders under that certain Amended
and Restated Revolving Credit Agreement, dated April 20, 2007, by and
between Lenox, Incorporated, D 56, Inc., and Lenox Retail, Inc., as
borrowers; Lenox Group Inc. and other guarantors party thereto as
guarantors; UBS AG, Stamford Branch, as issuing bank and
administrative agent; and the lenders party thereto.
"SUPERMAJORITY TERM LENDERS" means, as of any date of
determination, Term Lenders holding at least sixty-six and two-thirds
percent (66 2/3%) of the Term Loans.
"TERM LOAN AGREEMENT" has the meaning set forth in the preamble
hereof.
"TERM LOANS" means the obligations under the Term Loan Agreement.
"TERMINATION DATE" has the meaning set forth in paragraph 4
hereto.
-4-
"TERMINATION EVENT" has the meaning set forth in paragraph 4
hereto.
"TRANSACTION" has the meaning set forth in the preamble hereof.
"TRANSACTION APPROVAL ORDER" means an order, which may be the
Confirmation Order, in form and substance acceptable to the Prevailing
Purchaser and Required Term Lenders, (i) approving the equity sale or
asset sale by the Prevailing Purchaser (and, in the case of an asset
sale, free and clear of all liens, claims and encumbrances pursuant to
sections 363(b) and 363(f) of the Bankruptcy Code), (ii) approving the
assumption by (and, if necessary, assignment to) the Prevailing
Purchaser of any contracts assumed in connection with the sale
pursuant to section 365 of the Bankruptcy Code, (iii) containing
findings of fact and conclusions of law that the Prevailing Purchaser
is a good faith purchaser entitled to the protections of Bankruptcy
Code section 363(m), and (iv) which is otherwise reasonably acceptable
to Required Term Lenders.
"TRANSFER" has the meaning set forth in paragraph 6 hereto.
2. COMMITMENT OF THE TERM LENDERS. Subject to the terms and conditions hereof,
each Term Lender shall (severally and not jointly):
(a) use its commercially reasonable efforts to cause the Proposed
Purchaser to negotiate in good faith and enter into a Purchase
Agreement with Lenox pursuant to which, among other things, the
Proposed Purchaser shall agree, subject to the terms and conditions
contained therein, to consummate the Transaction;
(b) subject to its receipt of a Bankruptcy Court approved Disclosure
Statement, vote all Term Loans, now or hereafter beneficially owned by
such Term Lender or for which it now or hereafter serves as the
nominee, investment manager or advisor for beneficial holders thereof
in favor of the Plan in accordance with the applicable procedures set
forth in the Disclosure Statement and accompanying solicitation
materials, and timely return a duly executed Ballot in connection
therewith, PROVIDED, HOWEVER, no Term Lender shall be obligated to
vote in favor of the Plan, -------- ------- and, notwithstanding
subsection (c) of this paragraph 2, may withdraw or revoke its tender,
consent or vote with respect to the Plan, upon (i) the termination of
this Agreement (provided that if the Term Lenders are the terminating
party, they are not then in material breach of their obligations under
this Agreement); (ii) the withdrawal, amendment, modification of, or
the filing of a pleading seeking to withdraw, amend, or modify, the
Plan, Disclosure Statement or any documents related to the foregoing,
including motions, notices, exhibits, appendices and orders, in a
manner which is not acceptable to the Term Lenders to the extent that
such amendments or modifications are adverse to them; (iii) the
occurrence of a material breach of the Bidding Procedures; or (iv) the
occurrence of a 363 Hearing Event as defined herein or in the Purchase
Agreement, as applicable, if the Term Lenders elect that the
Transaction be effected outside of a chapter 11 plan in accordance
with section 5 below, as applicable;
-5-
(c) subject to subsection (b) of this paragraph 2, not withdraw or revoke
its tender, consent or vote with respect to the Plan;
(d) consent to Lenox granting the Revolving Lenders a first priority
priming lien on those assets of Lenox as to which such Revolving
Lenders currently have a first priority lien in connection with the
DIP Financing;
(e) following the commencement of the Chapter 11 Cases, not (i) object, on
any grounds, to the terms, conditions, nature or amount of the DIP
Financing, except to the extent that such terms are inconsistent in
any material respect from those contained in the DIP Term Sheet, (ii)
object to, delay, or take any other action to interfere, directly or
indirectly, in any respect with acceptance or implementation of the
Plan or the Transaction, so long as the Plan and the Transaction
contain terms and conditions effectuating the Restructuring that
conform in all material respects to the Plan and Purchase Agreement
subject to the rights of the Term Lenders under sections (b) and (f)
of this section, (iii) encourage any person or entity to do any of the
foregoing in clauses (i) and (ii) herein, or (iv) directly or
indirectly seek, solicit, support or encourage (x) post-petition
financing other than the DIP Financing, (y) any plan of reorganization
or liquidation other than the Plan or (z) any transaction involving
the sale of a material portion of Lenox's assets or the equity of
reorganized Lenox other than the Transaction;
(f) so long as Lenox conducts an auction in accordance with the Bidding
Procedures, if the Proposed Purchaser is not the Prevailing Purchaser,
not object to the sale of the equity in reorganized Lenox or the sale
of all or substantially all of the Lenox's assets to the prevailing
bidder on lack of consent; and
(g) except as otherwise permitted herein, not take any other action,
including, without limitation, initiating or joining in any legal
proceeding that is inconsistent with, or that would be reasonably
likely to delay consummation of, the Restructuring.
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
prohibit any Party from appearing as a party-in-interest in any matter to be
adjudicated in the Chapter 11 Cases so long as such appearance and the positions
advocated in connection therewith are not materially inconsistent with this
Agreement and the Restructuring and are not for the principal purpose of
hindering, delaying or preventing the consummation of the Restructuring.
Notwithstanding anything contained in this Agreement, neither a vote to accept
the Plan by the Term Lenders, nor the acceptance of the Plan by any class of
creditors, shall in any way be deemed to impair or waive the rights of the Term
Lenders to assert or raise any objection permitted under subsections (b), (c),
(e), or (f) above in connection with the confirmation of the Plan or a hearing
to approve a Transaction.
3. COMMITMENT OF LENOX. Subject to its fiduciary duties as debtor in possession
based upon the advise of counsel, Lenox agrees to use its best efforts to (i)
support and complete the Restructuring and all transactions contemplated under
the Plan and Purchase Agreement, (ii) take any and all necessary and appropriate
actions in furtherance of the Restructuring and the transactions contemplated
under the DIP Term Sheet, (iii) complete the Restructuring and all
-6-
transactions contemplated under the Plan and Purchase Agreement within the
time-frame outlined herein, including, without limitation, by filing the Plan
and Disclosure Statement with the Bankruptcy Court on or as soon as reasonably
practicable after the Petition Date and taking all steps necessary and desirable
to obtain an order of the Bankruptcy Court confirming the Plan and close the
Transaction prior to the Outside Date, and (iv) obtain any and all required
regulatory and/or third-party approvals for the Restructuring. Furthermore,
Lenox agrees to (i) pay the reasonable fees and expenses of a consultant(s)
hired by the Term Lenders to advise them on the operation of Lenox's business
and (ii) provide such consultant(s) an office at Lenox's corporate headquarters
and reasonable access to Lenox's books, records, operations and employees;
provided, however, that such consultant(s) shall not have access to Lenox's
headquarters on days when a potential third party purchaser is on site to
conduct diligence with respect to Lenox's assets.
4. TERMINATION. This Agreement may be terminated and the commitments contained
herein shall be of no further force and effect, at the option of Required Term
Lenders (in the exercise of their sole reasonable discretion) or Lenox (unless
otherwise provided below or if the Termination Event is caused by the
terminating party's breach of any provision hereof), upon the occurrence of any
of the following events (each a "TERMINATION EVENT"):
(a) Lenox fails to commence the Chapter 11 Cases on or before November 25,
2008;
(b) Lenox fails to obtain entry of (i) the Interim Financing Order on or
within three (3) Business Days following the Petition Date or (ii) the
Final Financing Order within thirty (30) Business Days following the
Petition Date;
(c) Lenox fails to file a motion for approval of the Bidding Procedures by
December 1, 2008 or fails to obtain entry of the Bid Procedures Order
by December 19, 2008;
(d) Lenox and the Term Lenders fail to enter into a Purchase Agreement by
December 19, 2008;
(e) Lenox fails to file the Plan and Disclosure Statement by December 19,
2008 or fails to obtain an order approving the Disclosure Statement
and solicitation procedures by January 20, 2009;
(f) Lenox fails to obtain entry of a Confirmation Order by March 15, 2009;
(g) the effective date of the Plan (the "EFFECTIVE DATE") shall not have
occurred by the Outside Date;
(h) Lenox moves (1) to voluntarily dismiss any of the Chapter 11 Cases,
(2) for conversion of any of the Chapter 11 Cases to a case under
chapter 7 of the Bankruptcy Code, or (3) for appointment of a trustee
or an examiner with expanded powers pursuant to Section 1104 of the
Bankruptcy Code in any of the Chapter 11 Cases;
(i) (1) a trustee or an examiner with expanded powers is appointed in any
of the Chapter 11 Cases or (2) any of the Chapter 11 Cases is
dismissed or converted to a case under chapter 7 of the Bankruptcy
Code;
-7-
(j) the entry of an order by the Bankruptcy Court invalidating,
disallowing or limiting in any respect, as applicable, either (1) the
enforceability, priority, or validity of the liens securing the Term
Loans, or (2) the claims of the Term Lenders;
(k) Lenox is in material breach of any of its obligations under this
Agreement or the agreements governing the Transaction and any such
breach by Lenox is not cured by the earlier of five (5) calendar days
after receipt of written notice from the Term Lenders, or, if
applicable, the expiration of the cure period under the agreements
governing the Transaction;
(l) at the option of Required Term Lenders, upon the occurrence of an
"Event of Default" under the DIP Financing resulting in the
termination of the Revolving Lenders' commitment thereunder and an
acceleration of the obligations owing thereunder;
(m) at the option of Lenox, if the Term Lenders commit a material breach
under this Agreement which is not cured within five (5) calendar days
after receipt of written notice from Lenox;
(n) at the option of Lenox, if any Term Lender commits a material breach
under such Term Lender's Equity Commitment Letter that has an adverse
effect on Lenox and that is not cured within five (5) calendar days
after receipt of written notice thereof from Lenox;
(o) any court of competent jurisdiction or other competent governmental or
regulatory authority shall have issued a final and non-appealable
order making illegal or otherwise restricting, preventing, or
prohibiting the Transaction in a way that cannot reasonably be
remedied by Lenox or the Term Lenders; or
(p) at the option of Required Term Lenders, upon the occurrence of a
Material Adverse Change.
The date on which this Agreement is terminated in accordance with the foregoing
provisions shall be referred to as the "TERMINATION DATE". Notwithstanding any
provision in this Agreement to the contrary, upon the written consent of the
Required Term Lenders, the dates set forth in sections 4(a) through (f) herein
may be extended prior to or upon each such date and such later dates agreed to
and in lieu thereof shall be of the same force and effect as the dates provided
herein. Notwithstanding any provision in this Agreement to the contrary, upon
the written consent of Supermajority Term Lenders, the date set forth in section
4(g) herein may be extended prior to or upon such date and such later date
agreed to and in lieu thereof shall be of the same force and effect as the date
provided herein.
5. CONVERSION TO HEARING STANDALONE 363 SALE. Notwithstanding anything to the
contrary set forth in the Plan or this Agreement, at the option of Required Term
Lenders, if one or more of the following events occurs (each, a "363 HEARING
EVENT"), Lenox and the Term Lenders, in lieu of seeking to consummate the
Transaction in conjunction with the Plan process, shall provide notice that they
intend to seek Bankruptcy Court approval of the Transaction outside of a chapter
11 plan,
-8-
in the form of a sale pursuant to section 363 of the Bankruptcy Code at
the Transaction Approval Hearing:
(a) Lenox fails to file the Plan and Disclosure Statement with the
Bankruptcy Court within the period set forth in section 4(e) hereof;
(b) the Disclosure Statement shall not have been approved by the date set
forth in section 4(e) hereof;
(c) Lenox does not file a notice with the Bankruptcy Court identifying the
Successful Bid (as defined in the Bidding Procedures) at least ten
(10) Business Days prior to the deadline established by order of the
Bankruptcy Court for the submission of Ballots;
(d) the Confirmation Order shall not have been entered by the Bankruptcy
Court by the date set forth in section 4(f);
(e) entry of an order denying confirmation of the Plan;
(f) the Effective Date shall not have occurred by the Outside Date;
(g) any court of competent jurisdiction or other competent governmental or
regulatory authority shall have issued a final and non-appealable
order making illegal or otherwise restricting, preventing, or
prohibiting solicitation, confirmation and/or consummation of the Plan
in a way that cannot be reasonably remedied by the Parties; or
(h) the withdrawal, amendment, modification of, or the filing of a
pleading seeking to amend or modify, the Plan, Disclosure Statement or
any documents related to the foregoing, including motions, notices,
exhibits, appendices and orders, in a manner not reasonably acceptable
to the Term Lenders.
Notwithstanding any provision in this Agreement to the contrary, upon the
written consent of the Required Term Lenders, the deadlines set forth in
sections 5(a) through (d) herein may be waived or extended prior to or upon each
such date and such later dates agreed to in lieu thereof and shall be of the
same force and effect as the dates provided herein. Notwithstanding any
provision in this Agreement to the contrary, upon the written consent of
Supermajority Term Lenders, the date set forth in section 5(f) herein may be
waived or extended prior to or upon such date and such later date agreed to in
lieu thereof and shall be of the same force and effect as the date provided
herein.
6. TRANSFER OF TERM LOANS. Prior to the consummation of the Transaction, no Term
Lender will sell, contract to sell, give, assign, hypothecate, pledge, encumber,
grant a security interest in, offer, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of (collectively, "TRANSFER") all or
any portion of Term Loans or equity interest in the Proposed Purchaser, and no
such Transfer will be effective, unless: (i) the transferee (in the case of a
Transfer by a Term Lender) furnishes to Lenox and counsel to the Term Lenders, a
joinder, in form and substance reasonably acceptable to Lenox and counsel to the
Term Lenders, pursuant to which such transferee agrees to be bound by all
-9-
the terms and conditions of this Agreement and the transferor's Equity
Commitment Letter, (ii) the Term Lender effecting such Transfer notifies counsel
to the Term Lenders in writing of such Transfer prior to the settlement date of
such Transfer, and (iii) from and after the formation of the Proposed Purchaser,
the Proposed Purchaser shall be reasonably satisfied prior to such Transfer that
registration under the Securities Act of 1933, as amended, and the applicable
securities laws of any other jurisdiction, is not required in connection with or
as a result of the transaction resulting in such Transfer. Notwithstanding
anything to the contrary in the foregoing, the following Transfers shall be
permitted:
a) any Transfer by any Term Lender to (i) an Affiliate of such Term
Lender, (ii) one or more affiliated funds or affiliated entity or
entities with a common investment advisor (in each case, other than
portfolio companies), or (iii) another Term Lender or an Affiliate of
another Term Lender, in each case, so long as such entity agrees to be
bound to the terms of this Agreement and the transferor's Equity
Commitment Letter with respect to the Term Loans so transferred;
b) any Transfer by any Term Lender to the Proposed Purchaser;
c) any Transfer to an assignee who is not bound by terms and conditions
of this Agreement free and clear of the terms of this Agreement if (i)
such Term Lender has offered such claims to the other Term Lenders at
a set asking price, (ii) such other Term Lenders have not agreed in
writing to purchase all of the offered claims (subject to ratable
cutback) at such set price (x) by the earlier of the tenth business
day thereafter or January 20, 2009, if such offer is made prior to
January 15, 2009 or (y) by the third business day thereafter, if such
offer is made on or after January 15, 2009, and (iii) such Term Lender
enters into a binding agreement to sell the claims to a buyer not a
party to this Agreement in the immediately succeeding ten (10)
business day period on terms and conditions, including price, no more
favorable to the buyer than the terms it offered to the other Term
Lenders; and
d) any other Transfer that is approved in writing by Required Term
Lenders.
7. OWNERSHIP OF TERM LOANS. Each Term Lender represents and warrants (severally
and not jointly) that:
a) as of the date of this Agreement, it is the beneficial owner of the
principal amount of the Term Loans, or is the nominee, investment
manager or advisor for beneficial holders of the Term Loans, as such
Term Lender has indicated on its applicable signature page; and
b) other than pursuant to this Agreement or the Term Loan Agreement, such
Term Loans are free and clear of any pledge, lien, security interest,
charge, claim, equity, option, proxy, voting restriction, right of
first refusal or other limitation on disposition or encumbrances of
any kind, that would adversely affect in any way such Term Lender's
performance of its obligations contained in this Agreement at the time
such obligations are required to be performed.
8. COOPERATION. Prior to the commencement of and during the Chapter 11 Cases,
each Party shall use its reasonable best efforts to provide to counsel for the
Company and counsel for the Term
-10-
Lenders advance copies of all motions, applications, requests for relief,
objections, responses, replies and other documents such Party intends to file
with the Bankruptcy Court relating to the Chapter 11 Cases.
9. CLAIM RESOLUTION MATTERS. Prior to the closing of the Transaction, Lenox
shall not enter into any agreements with holders of Administrative Claims,
Priority Claims or Secured Tax Claims (as such terms shall be defined in the
Plan) relating to the allowance, estimation, validity, extent or priority of
such claims, or the treatment and classification of such claims under the Plan,
without the prior written consent of the Proposed Purchaser, except with respect
to (i) trade payables and employee benefits (other than severance or any
employee benefit payment which arises as a result of the consummation of the
Transaction) and obligations which have arisen in the ordinary course of Lenox's
business, (ii) claims asserted in a liquidated amount of $10,000 or less, and
(iii) claims which Lenox is authorized to resolve or pay pursuant to "first day"
orders and acceptable to the Term Lenders.
10. MATERIAL CONTRACTS. Prior to the closing of the Transaction, Lenox shall not
enter into, terminate, amend, modify or supplement any Material Contract without
prior consultation with, and the prior consent of, the Required Term Lenders
(other than for the purchase or sale of inventory in the ordinary course of
business).
11. ACCESS. Lenox will afford the Term Lenders and the Proposed Purchaser and
their respective attorneys, consultants, accountants and other authorized
representatives full access, upon reasonable notice during normal business
hours, and at other reasonable times, to all properties, books, contracts,
commitments, records, management personnel, lenders and advisors of Lenox.
12. ENTIRE AGREEMENT. This Agreement, including the exhibits, schedules and
annexes hereto (and, solely with respect to the Term Lenders, the Equity
Commitment Letters and governance documents relating to the Proposed Purchaser),
constitutes the entire agreement of the Parties with respect to the subject
matter of this Agreement, and supersedes all other prior negotiations,
agreements and understandings, whether written or oral, among the Parties with
respect to the subject matter of this Agreement; PROVIDED, HOWEVER, that any
confidentiality agreement between any Term Lender and any other Party shall
survive this Agreement and shall continue to be in full force and effect
irrespective of the terms.
13. SURVIVAL OF AGREEMENT. Each of the Parties acknowledges and agrees that this
Agreement is being executed in connection with negotiations concerning a
possible financial restructuring of Lenox and in contemplation of possible
Chapter 11 filings by Lenox, and (a) the rights granted in this Agreement are
enforceable by each signatory hereto without approval of the Bankruptcy Court,
and (b) the exercise of such rights will not violate the automatic stay
provisions of the Bankruptcy Code.
14. LENOX UNDERTAKINGS. So long as this Agreement is in effect, absent the prior
written consent of each of the Term Lenders, Lenox shall not take any action
materially inconsistent with this Agreement, including, but not limited to, the
sale of any substantial portion of Lenox's assets. Lenox shall take all
reasonable steps necessary and desirable to obtain an order of the Bankruptcy
Court confirming the Plan as expeditiously as possible under the Bankruptcy Code
and the Bankruptcy Rules.
-11-
15. CONFIDENTIALITY: PUBLICITY. Unless required by applicable law or regulation
or requested by any regulatory authority, no Party shall disclose the amount of
a Term Lender's holdings of claims without the prior written consent of such
Term Lender; and if such disclosure is so required by law or regulation or
requested by a regulatory authority, the Party required to disclose shall, to
the extent permitted by law or advised by counsel, use commercially reasonable
efforts to afford each Term Lender a reasonable opportunity to review and
comment upon any such disclosure prior to the making of such disclosure. The
foregoing shall not prohibit Lenox from disclosing the existence of this
Agreement or the approximate aggregate holdings of claims by the Term Lenders as
a group.
16. WAIVER. If the transactions contemplated herein are or are not consummated,
or following the occurrence of the Termination Date, if applicable, nothing
shall be construed herein as a waiver by any Party of any or all of such Party's
rights and the Parties expressly reserve any and all of their respective rights.
Pursuant to Federal Rule of Evidence 408 and any other applicable rules of
evidence, this Agreement and all negotiations relating hereto shall not be
admissible into evidence in any proceeding other than a proceeding to enforce
its terms.
17. RESERVATION OF RIGHTS. This Agreement and the Restructuring are part of a
proposed settlement of outstanding indebtedness loaned to Lenox by the Term
Lenders. Except as expressly provided in this Agreement, nothing herein is
intended to, or does, in any manner waive, limit, impair or restrict the ability
of each of the Parties hereto to protect and preserve their rights, remedies and
interests. Except as expressly set forth herein, nothing herein shall be deemed
an admission of any kind. Nothing contained herein effects a modification of any
Term Lender's rights until and unless the Restructuring becomes effective. If
the transactions contemplated herein are not consummated, or if this Agreement
is terminated for any reason, the parties hereto fully reserve any and all of
their rights, pursuant to Federal Rule of Evidence 408 and any applicable state
rules.
18. REPRESENTATIONS AND WARRANTIES OF ALL PARTIES. Each of the parties hereto
(severally and not jointly) represents and warrants to each other that the
following statements are true, correct and complete as of the date hereof. It
has all requisite corporate or other power and authority to enter into this
Agreement and to carry out the transactions contemplated by, and perform its
respective obligations under, this Agreement. The execution and delivery of this
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate or other action on its part. 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, 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 or under its certificate of incorporation, by-laws
or other organizational documents.
19. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which, when so executed, shall constitute the same instrument and the
counterparts may be delivered by facsimile transmission or by electronic mail in
portable document format (.pdf).
20. AMENDMENTS. Except as otherwise provided herein, this Agreement may not be
modified, amended or supplemented without prior written consent of Lenox and
Required Term Lenders.
-12-
21. HEADINGS. The headings of the sections, paragraphs and subsections of this
Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
22. RELATIONSHIP AMONG PARTIES. Notwithstanding anything herein to the contrary,
the duties and obligations of the Term Lenders under this Agreement shall be
several, not joint. It is understood and agreed that any Term Lender may trade
in the debt or equity securities of Lenox and its Subsidiaries without the
consent of Lenox or any other Term Lender, subject to applicable securities laws
and Section 6 of this Agreement. No Term Lender shall have any responsibility
for any such trading by any other entity by virtue of this Agreement. No prior
history, pattern or practice of sharing confidences among or between Term
Lenders shall in any way affect or negate this understanding and agreement.
23. SPECIFIC PERFORMANCE. It is understood and agreed by the Parties that money
damages would be an insufficient 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.
24. 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 irrevocably and unconditionally agrees for itself that any legal
action, suit or proceeding against it with 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
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, if
the Chapter 11 Cases are commenced, each Party agrees that the Bankruptcy Court
shall have exclusive jurisdiction of all matters arising out of or in connection
with this Agreement.
25. ACTIONS OF THE TERM LENDERS. Any action to be taken by the Term Lenders
pursuant to this Agreement shall require the approval of the Required Term
Lenders or Supermajority Term Lenders, as provided herein. Such action, when so
taken, shall be evidenced by written notice thereof to Lenox, as applicable, by
counsel to the Term Lenders, and Lenox shall be entitled to rely on such written
notice.
26. NOTICES. All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally,
by internationally recognized overnight courier service, by facsimile
transmission, or by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses or facsimile
numbers:
-13-
IF TO THE ADMINISTRATIVE AGENT OR TERM LENDERS:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
IF TO LENOX:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile: 000-000-0000
27. SPECIAL PROVISION REGARDING CHASE LINCOLN FIRST COMMERCIAL CORPORATION.
Notwithstanding anything to the contrary in this Agreement and the Plan Term
Sheet, this Agreement applies only to the Credit Trading Group of Chase Lincoln
First Commercial Corporation, in its capacity as a Term Lender (the "CHASE
LINCOLN CREDIT TRADING GROUP"), and, the term "Term Lender" means only the Chase
Lincoln Credit Trading Group and such business unit's position in the Term Loans
and does not apply to (i) any securities, loans, other obligations or any other
interests in the Term Loans that may be held, acquired or sold by, or any
activities, services or businesses conducted or provided by, any other group or
business unit within, or Affiliate of, Chase Lincoln First Commercial
Corporation; or (ii) any Term Loans that may be beneficially owned by
non-Affiliated clients of Chase Lincoln First Commercial Corporation or any
Affiliate of Chase Lincoln First Commercial Corporation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-14-
<
D56 INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
LENOX RETAIL, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
LENOX, INCORPORATED
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
LENOX GROUP, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
FL 56 INTER CORP.
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
S-1
LENOX WORLDWIDE LLC
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
LENOX SALES, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
S-2
CEDARVIEW LEVERAGED OPPORTUNITES
MA, LTD
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Partner
CEDARVIEW LEVERAGED OPPORTUNITES MA
II, LTD
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Partner
CEDARVIEW OPPORTUNITES MASTER
FUND, LP
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Partner
AII INVESTMENT HOLDINGS, LTD
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Partner
S-3
CETUS CAPITAL, LLC
By: /s/ Xxxxxxx Xxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxxx
Title: Managing Director
S-4
CHASE LINCOLN FIRST COMMERCIAL
CORPORATION, but only as to its
Credit Trading Group and that
group's Term Loan position
By: /s/ Xxxxxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
S-5
CLINTON-MAGNOLIA MASTER FUND, LTD.
By CLINTON GROUP, INC., as investment adviser
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chief Financial Officer
CLINTON MULTISTRATEGY MASTERFUND, LTD.
By CLINTON GROUP, INC., as investment adviser
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chief Financial Officer
S-6
LBC CREDIT PARTNERS, L.P.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
LBC CREDIT PARTNERS PARALLEL, L.P.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
S-7
RAMIUS CREDIT OPPORTUNITIES MASTER FUND
LTD (F/K/A RCG CARPATHIA MASTER FUND,
LTD.)
By: /s/ Xxxx Xxxx
--------------------------
Name: Xxxx Xxxx
Title: Authorized Signatory
S-8
TOPAZ FUND
By:_____________________________
Name:
Title:
S-9
TRUMPET INVESTORS LP
By: /s/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Manager
S-10
UBS STAMFORD LENDER
By:_____________________________
Name:
Title:
S-11
EXHIBIT A
PLAN TERM SHEET
===============================================================================
LENOX GROUP, INC.
PLAN TERM SHEET
AS OF NOVEMBER 23, 2008
===============================================================================
The following is a summary (the "PLAN TERM SHEET") of certain material terms of
a proposed Chapter 11 liquidating plan (the "PLAN") of the Company (as defined
below). This Plan Term Sheet does not contain all the terms, conditions, and
other provisions of the Plan and the transactions contemplated by this Plan Term
Sheet are subject to conditions to be set forth in definitive documents. This
Plan Term Sheet is proffered in the nature of a settlement proposal in
furtherance of settlement discussions and is entitled to protection from any use
or disclosure to any party or person pursuant to Federal Rule of Evidence 408
and any other rule of similar import. This Plan Term Sheet and the information
contained herein are strictly confidential and contain material non-public
information. It is being provided to the Term Loan Lenders and the Revolving
Loan Lenders in accordance with the confidentiality provisions of the respective
credit documents. This Plan Term Sheet does not constitute an offer of
securities, nor is it an offer or solicitation for any chapter 11 plan, and is
being presented for discussion and settlement purposes only.
I. PARTIES
DEBTORS Lenox Group, Inc., and certain of its subsidiaries
(collectively, the "COMPANY" or the "DEBTORS"), including,
without limitation, all Borrowers and Guarantors under the
Term Loan Agreement and Revolving Credit Agreement.
TERM LOAN Bank of New York/Mellon as administrative agent and the
LENDERS leaders party to that certain Amended and Restated Term Loan
Credit Agreement, dated as of April 20, 2007 (the "TERM LOAN
AGREEMENT") (collectively, the "TERM LOAN LENDERS"), between
the Lenders and D 56, Inc., Lenox Retail, Inc., and Lenox
Incorporated, as borrowers (the "BORROWERS"), and Lenox
Group Inc. and other guarantors party thereto as guarantors
(the "GUARANTORS").
REVOLVING LOAN UBS Securities AG, Stamford Branch ("UBS") as
LENDERS administrative agent and the lenders party to that certain
Revolving Credit Agreement, dated as of April 20, 2007 (as
amended, the "REVOLVING LOAN AGREEMENT") (collectively, the
"REVOLVING LOAN LENDERS"), between the Lenders, the
Borrowers, and the Guarantors.
II. PROPOSED CHAPTER 11 SALE PURSUANT TO PLAN
SALE OF ASSETS OF The proposed Plan contemplates (a) a sale (the "LENOX SALE")
LENOX BUSINESS to the Term Loan Lenders of all or substantially all of the
PURSUANT TO A assets of (i) the Lenox Business (as defined below) and
CHAPTER 11 PLAN(1) (ii) the D56 Business (as defined below) that is remaining
at the time of the Closing (as defined below), and (b) the
subsequent disposition by the Term Loan Lenders of certain
remaining portions of the D56 Business in accordance with
the D56 Scale Down (as defined below) or as otherwise
determined by New Lenox. The assets of the Lenox Business
and the D56 Business to be purchased by the Term Loan
Lenders (the "PURCHASED ASSETS") shall include all the
assets of the Lenox Business and the D56 Business as of the
Closing Date other than rejected contracts and any other
assets or liabilities of either business designated as
excluded assets by the Term Loan Lenders at least 10 days
prior to the Effective Date.
For purposes of this Plan Term Sheet the term "LENOX
BUSINESS" shall mean all of the assets of the Debtors that
are used or useful in connection with the manufacturing,
sale and distribution of the Lenox, Dansk, Xxxxxx and other
similar brands, including (without limitation) all
inventory, accounts, intellectual property and other real
and personal property.
For purposes of this Plan Term Sheet the term "D56 BUSINESS"
shall mean all of the assets of the Debtors that are used or
useful in connection with the manufacturing, sale and
distribution of [collectibles], including (without
limitation) all inventory, accounts, intellectual property
and other real and personal property.
To facilitate the Lenox Sale, the Term Loan Lenders will
create a new entity or entities (collectively, "NEW LENOX")
to which all or a portion of the loans under the Term Loan
Agreement owned by the Term Loan Lenders party to the Plan
Support Agreement dated as of November 23, 2008 (the "PLAN
SUPPORT AGREEMENT") will be transferred. The Term Loan
Lenders will credit bid an amount up to the aggregate amount
of the obligations owned by the Term Loan Lenders and
arising under the Term Loan Agreement for the Purchased
Assets (the "PURCHASE PRICE"). Upon closing of the sale,
which shall be the effective date of the Plan (the "CLOSING"
or the "EFFECTIVE DATE"), New Lenox (and, indirectly, the
Term Lenders, as the owners of New Lenox), will own 100% of
the
________________
1 The Term Loan Lenders reserve the right to direct the Company to consummate
the Lenox Sale pursuant to a sale under section 363 of the Bankruptcy Code in
the event of a default under the DIP Facility, undue delay in the confirmation
of the Plan, in the event the cash payments to the holders of allowed
administrative and priority claims required to confirm the Plan pursuant to
section 1129 of the Bankruptcy Code exceed, in the aggregate, the aggregate
claim amounts set forth herein, or for the other reasons set forth in the Plan
Support Agreement.
2
equity in the Purchased Assets.
The terms of the Lenox Sale shall be set forth in an asset
purchase agreement in form and substance reasonably
acceptable to the Company and the Term Loan Lenders (the
"APA"). The APA will also provide for, among other things,
the assumption by New Lenox of certain other liabilities of
the Debtors, in each case as specified by New Lenox.
Pursuant to the terms of the Plan the Company will undergo a
tax liquidation as soon as reasonably practicable after the
Effective Date of the Plan.
III. PROPOSED SALE/LIQUIDATION OF D56 ASSETS
D56 BUSINESS Beginning before the Effective Date and continuing after
PROCESS the Effective Date, the D56 Business will be scaled down
or disposed of by the Company or New Lenox, as applicable,
either through a scale down plan, a sale process/royalty
arrangement or another disposition (the "D56 SCALE DOWN").
The net proceeds received by the Company prior to the
Effective Date in connection with the D56 Scale Down shall
be applied in accordance with the terms of the Revolving
Loan Agreement and the Term Loan Agreement. Any assets of
the D56 Business that remain unsold as of the Closing shall
be treated as "Purchased Assets" and shall be sold,
transferred and assigned to New Lenox.
Prior to the Effective Date, the Company will consult with
the Term Loan Lenders before making any material decisions
regarding the D56 Scale Down.
IV. PLAN ADMINISTRATOR
APPOINTMENT The Plan shall provide for the appointment of a plan
administrator (the "PLAN ADMINISTRATOR") to, among other
things, (a) oversee the claims resolution process, and (b)
wind down the Company.
On the Effective Date, pursuant to the Plan, the Plan
Administrator will be provided with funding (the "PLAN
ADMINISTRATOR FUND"), in an amount to be agreed upon by the
Company and the Term Loan Lenders, which shall be sufficient
to pay the fees and expenses of the Plan Administrator and
its professionals and all costs incident to winding down the
Company, objecting to and resolving claims, and distributing
proceeds under the Plan (the "PLAN ADMINISTRATOR EXPENSES").
All amounts realized by the Plan Administrator from the
sale, transfer or other disposition of assets, if any, shall
be added to the Plan Administrator Fund. Any net recoveries
from such proceeds that exceed amounts reasonably expected
to be required to pay for the Plan
3
Administrator Expenses shall be immediately turned over to
New Lenox. When all the duties of the Plan Administrator
have been completed, the Company has been wound down, all
allowed general unsecured claims have been paid the amount
to which they are entitled under the Plan, there are no
remaining disputed general unsecured claims, and the chapter
11 cases have been closed, any funds remaining in the Plan
Administrator Fund shall be remitted to New Lenox.
V. TREATMENT OF CLAIMS AND INTERESTS
ADMINISTRATIVE/ On the Effective Date, pursuant to the Plan, the Plan
PRIORITY/SECURED Administrator shall be provided with funding (the "APST
TAX CLAIMS FUND CLAIMS FUND") in an amount to be determined by agreement
of the Company and the Term Loan Lenders, but in any event,
subject to the aggregate claim amounts set forth below,
which funds shall be sufficient to pay all Administrative
Expense Claims, Priority and Secured Tax Claims, and Other
Priority Claims that are allowed on the Effective Date and
that may become allowed after the Effective Date. The Plan
Administrator shall be responsible for resolving and paying
all Administrative Expense Claims, Priority and Secured Tax
Claims, and Other Priority Claims. After all Administrative
Expense Claims, Priority and Secured Tax Claims, and Other
Priority Claims have been paid in full and there are no
remaining Administrative Expense Claims, Priority and
Secured Tax Claims, and Other Priority Claims, all funds
remaining in the APST Claims Fund shall be remitted to New
Lenox.
ADMINISTRATIVE AND
PRIORITY CLAIMS
o ADMINISTRATIVE Except to the extent that a holder has been paid by the
EXPENSE CLAIMS Company, in whole or in part, prior to the Effective Date
or agrees to a less favorable treatment, each holder of an
allowed administrative expense claim shall be paid in full,
in cash, the full amount of its unpaid claim on or as soon
as reasonably practicable following the later to occur of
(a) the Effective Date or as soon thereafter as is
reasonably practicable and (b) the date on which such claim
becomes allowed; provided, however, that in no event shall
the aggregate amount of non-professional fee Administrative
Expense Claims (including, without limitation, cure costs)
exceed $[1,800,000].
o SECURED TAX Except to the extent that a holder has been paid by the
AND PRIORITY Company, in whole or in part, prior to the Effective Date or
TAX CLAIMS agrees to a less favorable treatment, each holder of an
allowed secured tax claim or allowed priority tax claim
shall (a) be paid in full, in cash, the full amount of its
unpaid claim on or as soon as reasonably practicable
following the later to occur of (x) the Effective Date or as
soon thereafter as is reasonably practicable and (y) the
date on which such claim becomes allowed or (b) receive such
other terms determined by the Bankruptcy Court to provide
the holder deferred cash payments having a value, as of the
Effective
4
Date, equal to such claim; provided, however, that in no
event shall the aggregate amount of Secured Tax Claims and
Priority Tax Claims exceed $[250,000].
o OTHER Except to the extent that a holder has been paid by the
PRIORITY Company, in whole or in part, prior to the Effective Date
CLAIMS or agrees to a less favorable treatment, each holder of
an allowed other priority claim shall receive, in full
satisfaction of such other unpaid priority claim, cash in
the full amount of the claim, on or as soon as reasonably
practicable after the later of (i) the Effective Date or as
soon thereafter as is reasonably practicable, and (ii) the
date such claim becomes allowed; provided, however, that in
no event shall the aggregate amount of Other Priority Claims
exceed $[100,000].
SECURED CLAIMS
o REVOLVING LOAN The Revolving Loans (the "REVOLVING LOAN CLAIMS") arising
FACILITY from the Revolving Loan Agreement shall be "rolled up" into
the DIP Facility.
o TERM LOAN Holders of secured claims arising from the Term Loan
FACILITY Agreement shall contribute all of their claims to
New Lenox. New Lenox will credit the Purchase Price and
purchase the Purchased Assets free and clear of all liens,
interests, claims or encumbrances, except as set forth in
the APA.
o MISCELLANEOUS To the extent not previously paid pursuant to an order of
SECURED the Bankruptcy Court authorizing payment of lien claims
CLAIMS during the chapter 11 cases, all holders of claims secured
by valid liens (including, without limitation, mechanics',
materialsmens', artisans', tax and any other lien) against
property not abandoned or sold will retain their liens on
such property and be paid in the ordinary course of business
by New Lenox
UNSECURED CLAIMS
o GENERAL On the Effective Date, the Plan Administrator shall be
UNSECURED provided with an amount to be agreed upon by the Term
Lenders (the "GENERAL UNSECURED CLAIMS FUND") to pay holders
of allowed general unsecured claims. On the Effective Date,
each holder of an allowed unsecured claim shall receive its
pro rata share of the General Unsecured Claims Fund. The
Plan shall provide a mechanism for delaying distribution to
holders of general unsecured claims pending a resolution of
disputed general unsecured claims.
The Plan will provide a release of all Chapter 5 causes of
action against any person who provided goods and services in
the ordinary course of business.(2)
__________________
2 Subject to review of potential claims by Term Loan Lenders.
5
EQUITY INTERESTS Holders of equity interests in the Company will not receive
or retain any property or interest on account of their
interests, and all such interests will be cancelled and
extinguished.
VI. SOURCES FOR PAYMENTS UNDER PLAN
PLAN FUNDING At Closing, subject to the aggregate claim limits set forth
above (compliance with which shall be a condition to
effectiveness of the Plan), New Lenox will provide
sufficient funds to make all payments required to be made,
including to fund the Plan Administrator Fund, the APST
Claims Fund, and the General Unsecured Claims Fund.
VII. OTHER PLAN PROVISIONS
RELEASES AND The Company/Debtors will release their respective officers
EXCULPATION and directors, the Revolving Loan Lenders and agent under
the Revolving Loan Agreement, the Term Loan Lenders and
agent under the Term Loan Agreement, and the respective
officers, directors, employees, agents, advisors and
professionals of each of the foregoing, including of the
Company/Debtors, from all claims arising on or before the
Effective Date, other than for claims based on willful
misconduct, intentional fraud, or criminal conduct as
determined by a final order entered by a court of competent
jurisdiction.
The Plan will include standard exculpation for individuals
and professionals participating in the Debtors' chapter 11
cases.
The Term Loan Lenders will release the Debtors and their
respective officers, directors, employees, agents, advisors,
and professionals from all claims arising on or before the
Effective Date, other than for claims based on willful
misconduct, intentional fraud, or criminal conduct as
determined by a final order entered by a court of competent
jurisdiction.
INDEMNIFICATION OF Under the Plan, all indemnification provisions currently
PREPETITION OFFICES in place (whether in the by-laws, certificates of
AND DIRECTORS incorporation, or employment contracts) for the current and
former directors, officers, employees, attorneys, other
professionals and agents of the Debtors and such current and
former directors and officers' respective affiliates will be
assumed by New Lenox and will survive effectiveness of the
Plan for claims related to or in connection with any
actions, omissions or transactions occurring prior to the
Effective Date. Notwithstanding the foregoing, in no event
will New Lenox's obligation with respect to indemnification
exceed the amount of any deductible payable pursuant to the
directors and officers liability policy.
6
EMPLOYEE TRANSITION The Plan will further provide that New Lenox may, in its
PROGRAMS discretion, assume certain agreements and pre-petition
obligations as currently formulated or as modified,
including, but not limited to portions of the Company's
existing Change in Control, Outplacement, Severance and
other benefits and obligations to Company employees (3).
PENSION AND RETIREE Pursuant to the Plan, and as a condition to the
BENEFIT PLANS effectiveness of the Plan, all existing defined benefit
and other pension and/or retiree benefit plans maintained
by the Debtors shall be terminated in a manner reasonably
acceptable to New Lenox.
DEFINITIVE The Company, the agent for the Revolving Loan Lenders, the
DOCUMENTATION agent for the Term Loan Lenders, the Postpetition Lenders,
and the Exit Facility lender will negotiate in good faith
definitive documentation for the Plan consistent with the
terms hereof, including, without limitation, a plan support
agreement, the DIP Facility, and any necessary documents to
effectuate the Plan.
OTHER TERMS AND The Plan and all related documentation shall reflect the
CONDITIONS terms and conditions of this Plan Term Sheet to the parties'
mutual satisfaction and shall contain such other terms and
conditions as the parties mutually agree.
This Plan Term Sheet will become part of the Plan Support
Agreement containing customary terms and conditions to be
executed by the Company and the Term Loan Lenders in support
of the Plan.
The distributions on and treatment of claims of the Term
Loan Lenders contemplated herein shall become effective and
binding only upon the confirmation and effective date of a
Plan under Chapter 11 of the U.S. Bankruptcy Code which has
been voted upon and approved by the Term Loan Lenders in
accordance with section 1126(c) of the Bankruptcy Code, and
confirmed by the Bankruptcy Court.
The Company shall not enter into, terminate, amend, modify
or supplement any Material Contract without prior
consultation with, and the prior consent, which consent
shall not unreasonably withheld or delayed, of, the Term
Loan Lenders (other than for the purchase or sale of
inventory in the ordinary course of business). For purposes
hereof the term "Material Contract" shall mean (a) any
license agreement, or (b) any agreement that involves the
payment of, or the purchase or provisions of goods or
services having a value in excess of, $250,000 in any year
or $500,000 over the life of such contract.
________________
3 The Term Loan Lenders will need to review all agreements related to these
programs before determining whether to agree to this provision.
7
Prior to the Effective Date, the Company shall have taken
the steps to perform an audit of 2008 financial results
under a format reasonably acceptable to the Term Loan
Lenders and consistent with privately held corporations.
8
EXHIBIT B
BIDDING PROCEDURES
BIDDING PROCEDURES
Lenox, Incorporated, a New Jersey corporation, D 56, Inc., a Minnesota
corporation, Lenox Retail, Inc., a Minnesota corporation, Lenox Group Inc., a
Delaware corporation, FL 56 Intermediate, Corp., a Delaware corporation, Lenox
Worldwide, LLC, a Delaware limited liability company, and Lenox Sales, Inc., a
Minnesota corporation (collectively referred to as "LENOX" or the "DEBTORS")
intend to sell all or substantially all of their assets (the "LENOX ASSETS")
through confirmation of a plan of reorganization under chapter 11 of the
Bankruptcy Code or through a sale under section 363 of the Bankruptcy Code. In
order to attain the highest and best offer for the Lenox Assets, Lenox proposes
to market the Lenox Assets and conduct an Auction (as defined below) pursuant to
the bid procedures (the "BIDDING PROCEDURES") set forth herein. All terms not
otherwise defined herein shall have the meanings given to them in the Plan
Support Agreement dated as of November 23, 2008 among Lenox and other
signatories thereto (collectively, the "TERM LOAN LENDERS").
1. BID PROCEDURES MOTION
A. The Bidding Procedures set forth herein are subject to the approval
of the Bankruptcy Court presiding over Lenox's Chapter 11 Cases. On or before
November 26, 2008, Lenox shall file a motion seeking approval of these Bidding
Procedures and requesting that the Bankruptcy Court schedule a hearing to
approve a sale of the Lenox Assets to the highest and best bidder.
B. The hearing to approve the sale of the Lenox Assets (the "SALE
HEARING") shall be held on or before March 15, 2009 and may be held at the same
time as the Confirmation Hearing.
2. QUALIFYING BIDDERS
A. The Debtors, after consultation with the Term Loan Lenders and the
statutory committee of unsecured creditors (the "COMMITTEE"), will: (A)
determine whether any Person is a Qualifying Bidder (as defined below); (B)
determine whether a Qualifying Bidder has made a Qualified Bid (as defined
below); and (C) negotiate any offer set forth in a Qualified Bid (collectively,
the "BIDDING PROCESS"). Nothing in these Bidding Procedures shall constitute the
consent of the Term Loan Lenders or the Committee to any bid.
B. In order to participate in the Bidding Process, each Person (a
"POTENTIAL BIDDER") must deliver to the Debtors: (i) an executed confidentiality
agreement in form and substance satisfactory to the Debtors; and (ii) such
financial and other information as the Debtors shall reasonably request (the
"FINANCIAL INFORMATION") of such Potential Bidder, or, if the Potential Bidder
is an entity formed for the purpose of purchasing the Business, then: (x) the
Financial Information of the equity holder(s) of the Potential Bidder or such
other form of financial disclosure acceptable to the Debtors, following
consultation with the Term Loan Lenders and the Committee; and (y) the written
commitment of such equity holder(s) to be responsible for the Potential Bidder's
obligations in connection with the purchase of the Lenox Assets (collectively,
the "PARTICIPATION REQUIREMENTS").
1
C. A "Qualifying Bidder" is a Potential Bidder that satisfies the
Participation Requirements, and which the Debtors, in their business judgment
and after consultation with the Term Loan Lenders and the Committee, determine
is financially able to consummate the purchase of the Lenox Assets in a timely
manner. Within two (2) Business Days after receipt from the Potential Bidder of
the materials required in connection with the Participation Requirements, the
Debtors shall notify the Potential Bidder whether such Potential Bidder is a
Qualifying Bidder. Each Qualifying Bidder shall be permitted to conduct
reasonable due diligence with respect to the Lenox Assets during the period
prior to the Auction.
D. Notwithstanding anything to the contrary herein, the Term Loan
Lenders (and any designee of the Term Loan Lenders) shall be deemed Qualifying
Bidders and shall be entitled to credit bid at the Auction in accordance with
section 363(k) of the Bankruptcy Code, subject to satisfaction of the
requirements set forth in section 3.C.ii-v.
E. The Debtors shall be entitled to request due diligence from each
Qualifying Bidder, upon execution of a confidentiality agreement in form and
substance reasonably equivalent to the confidentiality agreement executed by
such Qualifying Bidder. Notwithstanding any other provision herein, failure by a
Qualifying Bidder to fully comply with the reasonable due diligence requests and
requests for additional information made by the Debtors shall be a basis for the
Debtors, after consultation with the Term Loan Lenders and the Committee, to
determine that a bid made by such Qualifying Bidder is not a Qualified Bid.
3. QUALIFIED BIDS
A. A bid or offer received from a Qualifying Bidder will constitute a
"Qualified Bid" only if such bid or offer includes all of the Qualified Bid
Documents (as defined below), meets all of the Qualified Bid Requirements (as
defined below), and is accompanied by the Good Faith Deposit (as defined below).
B. In order to be deemed a Qualifying Bidder and participate in the
Bidding Process, each Qualifying Bidder, must deliver the following documents
(collectively, the "QUALIFIED BID DOCUMENTS") to counsel for the Debtors by no
later than 4:00 P.M. (prevailing Eastern time) on January __, 2009 (the "BID
DEADLINE"):
i. a written offer stating that: (A) such Qualifying Bidder
offers to purchase all, or substantially all, of the Lenox Assets and
to assume such liabilities as may be identified by the Qualifying
Bidder; (B) such Qualifying Bidder is prepared to enter into a legally
binding purchase and sale agreement for the acquisition of the Lenox
Assets and assumption of liabilities, on terms and conditions set
forth in a xxxx-up of the Purchase Agreement submitted by such
Qualifying Bidder; and (C) such Qualifying Bidder's offer is
irrevocable through and including the date of the Auction; and
ii. a copy of a Purchase Agreement marked to show changes
made by the Qualifying Bidder executed by such Qualifying Bidder.
C. In addition, all bids must satisfy the following requirements
(collectively, the "QUALIFIED BID Requirements"):
2
i. the bid is in cash and the assumption of liabilities;
ii. the bid provides for payment in full, in cash of all
obligations outstanding under the Debtors' DIP Financing and/or all
claims of the Revolving Lenders under the Amended and Restated
Revolving Credit Agreement dated April 20, 2007;
iii. the bid is not conditioned upon approval by the
Bankruptcy Court of any bid protections, such as a termination fee,
expense reimbursement or similar type of payment;
iv. the bid fully discloses the identity of each entity that
will be bidding or otherwise participating in connection with such
bid, and the complete terms of any such participation; and
v. the Qualifying Bidder acknowledges and represents that:
(A) the Qualifying Bidder had an opportunity to conduct any and all
due diligence regarding the Lenox Assets prior to submitting its bid;
(B) the Qualifying Bidder has relied solely upon its own independent
review, investigation and/or inspection of any documents and/or the
Lenox Assets in making its bid; (C) the Qualifying Bidder did not rely
upon any written or oral statements, representations, promises,
warranties or guaranties whatsoever, whether express, implied, by
operation of law or otherwise, regarding the Lenox Assets or the
completeness of any information provided in connection therewith or
the Auction, except as expressly stated in these Bidding Procedures;
and (D) the bid is not contingent upon any additional due diligence.
D. The Term Loan Lenders are deemed to have made an initial Qualifying
Bid in the amount of $______.
E. The Debtors, after consultation with the Term Loan Lenders and the
Committee, may: (a) determine in their business judgment which Qualified Bid, if
any, is the highest or otherwise best offer; and (b) reject any Qualified Bid
that the Debtors, after consultation with the Term Loan Lenders and the
Committee, determine to be: (i) inadequate or insufficient; (ii) not in
conformity with the requirements of applicable bankruptcy laws or these Bidding
Procedures; or (iii) contrary to the best interests of the Debtors, their
estates and their creditors. The Debtors, after consultation with the Term Loan
Lenders and the Committee, shall have the right to adopt such other rules for
the Bidding Process which, in their sole judgment, will better promote the goals
of the Bidding Process and which are not inconsistent with any of the provisions
of these Bidding Procedures, or of any order of the Bankruptcy Court.
F. All Qualifying Bidders (other than the Term Loan Lenders or their
designee) that submit a bid must deliver to the Debtors via wire transfer (or
other form acceptable to the Debtors and the Term Loan Lenders) by the Bid
Deadline an amount equal to ten percent (10%) of the proposed cash portion of
the purchase price set forth in such bid (the "GOOD FAITH DEPOSIT").
3
G. If no Qualified Bids other than the Term Loan Lenders' Qualified
Bid is received, no Auction shall be held and Lenox shall seek approval of the
Term Loan Lenders' Qualified Bid as the highest and best offer for the Lenox
Assets at the Sale Hearing.
4. AUCTION
A. If the Debtors receive two or more Qualified Bids, the Debtors
will, unless otherwise ordered by the Bankruptcy Court, conduct an auction (the
"AUCTION") with respect to the Lenox Assets. In connection with the Auction, the
Debtors will provide each Qualifying Bidder that submitted a Qualified Bid with
a summary of the material terms of each Qualified Bid no later than 4:00 p.m.
(prevailing Eastern time) on _____, 2009.
B. The Auction, if required, will commence at 10:00 a.m. (prevailing
Eastern time) on _____, 2009, or at such later time and at other place as the
Debtors shall notify all Qualifying Bidders who have submitted Qualified Bids
and all other Persons entitled to attend the Auction.
C. Only the Debtors, Qualifying Bidders who have submitted Qualified
Bids, the United States Trustee, the Term Loan Lenders, and the Committee, in
each case with their respective advisors, will be entitled to attend,
participate and be heard at the Auction; provided, however, that any financing
contingency contained in a Qualified Bid must be either satisfied or waived
prior to the commencement of the Auction as a condition to the participation in
the Auction of the Qualified Bidder who made such Qualified Bid. Only Qualifying
Bidders will be entitled to make any subsequent Qualified Bids at the Auction.
D. During the Auction, bidding will begin at the purchase price stated
in the highest or otherwise best Qualified Bid, and the first bid thereafter
shall be at least $____ higher than such Qualified Bid.
E. All subsequent bids will be made in minimum increments of at least
$_____ (the "OVERBID INCREMENT") higher than the previous Qualified Bid.
F. Subject to the Overbid Increments set forth herein, the Term Loan
Lenders shall be permitted to increase their initial Qualified Bid by credit
bidding up to the full amount of outstanding principal obligations under the
Term Loan Agreement.
G. Bidding at the Auction will continue until such time as the highest
and best Qualified Bid (the "SUCCESSFUL BID") is selected as follows:
immediately prior to conclusion of the Auction, the Debtors, after consultation
with the Term Loan Lenders and the Committee, will: (i) review each Qualified
Bid on the basis of financial and contractual terms and other factors relevant
to (x) the determination of which transaction is in the best interests of the
creditors and estates of the Debtors and their Affiliates, and (y) the sale
process, including those factors affecting the speed and certainty of
consummating a transaction; and (ii) in the exercise of their business judgment,
select the Successful Bid and the second highest and best Qualified Bid (the
"BACK-UP BID"). Any Successful Bid must not be conditioned upon satisfaction of
a financing contingency.
4
H. Within two (2) Business Days after the conclusion of the Auction,
the Qualifying Bidder submitting the Successful Bid (the "SUCCESSFUL BIDDER")
must supplement its Good Faith Deposit such that its Good Faith Deposit equals
10% of the cash portion of the Successful Bid; PROVIDED, HOWEVER, that if the
Term Loan Lenders (or their designee) are the Successful Bidder, no deposit
shall be required.
5. APPROVAL AND CLOSING OF THE SALE
A. In the event that the Auction is held, the Debtors shall seek entry
of an order of the Bankruptcy Court approving the Successful Bid and the Back-up
Bid (the "SALE ORDER"), which order shall be sought in form and substance
reasonably acceptable to the Debtors, the Term Loan Lenders, the Committee and
the Qualifying Bidders submitting the Successful Bid and the Back-up Bid.
B. If, following the entry of the Sale Order by the Bankruptcy Court,
the Successful Bidder fails to consummate a transaction with the Debtors in
respect of such Successful Bid because of a breach or failure to perform on the
part of such Qualifying Bidder, then the Back-up Bid shall be deemed to be the
Successful Bid, and the Debtors, after consultation with the Term Loan Lenders
and the Committee, will be authorized, but not required, to consummate a
transaction in respect of the Back-up Bid with the Back-up Bidder without
further order of the Bankruptcy Court, if applicable.
C. The Debtors' presentation to the Bankruptcy Court for approval of a
particular Qualified Bid as the Successful Bid does not constitute the Debtors'
acceptance of such Qualified Bid. The Debtors will be deemed to have accepted
any Qualified Bid only when such Qualified Bid is determined to be the
Successful Bid and has been approved by the Bankruptcy Court.
D. The Good Faith Deposits of the Successful Bidder and the Back-Up
Bidder will be retained by the Debtors and such Qualified Bids will remain open
until the closing of a transaction with the Successful Bidder in respect of the
Successful Bid. The Good Faith Deposits of all other Qualifying Bidders shall be
returned promptly after the entry of the Sale Order. The Good Faith Deposit of
the Qualifying Bidder submitting the Back-Up Bid shall be returned promptly
after the closing of the sale to the Successful Bidder.
E. If the Successful Bidder fails to consummate a transaction in
respect of the Successful Bid because of a breach or failure to perform on the
part of such Successful Bidder and the Debtors are not then deemed to be in
material breach of the applicable purchase and sale agreement, then the Debtors
will not have any obligation to return the Good Faith Deposit to the Successful
Bidder, and such Good Faith Deposit shall irrevocably become the property of the
Debtors, and shall not be credited against the purchase price of any purchaser.
5
