Pg 1 of 15 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------x In re : : Chapter 11 WESTINGHOUSE ELECTRIC : COMPANY LLC, et al., : Case No. 17-10751 (MEW) : Debtors. 1 : (Jointly Administered) --------------------------------------------------------X STIPULATION, AGREEMENT AND ORDER BETWEEN THE DEBTORS AND OWEN INDUSTRIES, INC. D/B/A PAXTON VIERLING STEEL CO. Stone and Webster, Inc. (d/b/a WECTEC Global Project Services ( WECTEC ) and certain of its affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (collectively, the Debtors ) and Owen Industries, Inc. d/b/a Paxton Vierling Steel Co. ( PVS, and together with the Debtors, the Parties and, each, a Party ) hereby enter into this stipulation, agreement, and proposed order (the Stipulation and Order ) and represent and agree, as follows: 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, if any, are: Westinghouse Electric Company LLC (0933), CE Nuclear Power International, Inc. (8833), Fauske and Associates LLC (8538), Field Services, LLC (2550), Nuclear Technology Solutions LLC (1921), PaR Nuclear Holding Co., Inc. (7944), PaR Nuclear, Inc. (6586), PCI Energy Services LLC (9100), Shaw Global Services, LLC (0436), Shaw Nuclear Services, Inc. (6250), Stone & Webster Asia Inc. (1348), Stone & Webster Construction Inc. (1673), Stone & Webster, Inc. d/b/a WECTEC Global Project Services Inc. (8572), Stone & Webster International Inc. (1586), Stone & Webster Services LLC (5448), Toshiba Nuclear Energy Holdings (UK) Limited (N/A), TSB Nuclear Energy Services Inc. (2348), WEC Carolina Energy Solutions, Inc. (8735), WEC Carolina Energy Solutions, LLC (2002), WEC Engineering Services Inc. (6759), WEC Equipment & Machining Solutions, LLC (3135), WEC Specialty LLC (N/A), WEC Welding and Machining, LLC (8771), WECTEC Contractors Inc. (4168), WECTEC LLC (6222), WECTEC Staffing Services LLC (4135), Westinghouse Energy Systems LLC (0328), Westinghouse Industry Products International Company LLC (3909), Westinghouse International Technology LLC (N/A), and Westinghouse Technology Licensing Company LLC (5961). The Debtors principal offices are located at 1000 Westinghouse Drive, Cranberry Township, Pennsylvania 16066.
Pg 2 of 15 RECITALS 1. On March 29, 2017 (the Petition Date ), each of the Debtors commenced voluntary cases under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) in the Bankruptcy Court for the Southern District of New York (the Court ). 2. On March 30, 2017, the Court entered an order [ECF No. 68] approving that certain Interim Assessment Agreement, dated as of March 28, 2017 (as amended, the IAA ), 2 between certain of the Debtors, on one hand, and South Carolina Electric & Gas Company and the South Carolina Public Service Authority, on the other hand (collectively, the Owners ). Pursuant to the IAA, the Owners agreed to pay the costs of continuing construction of Units 2 and 3 of the Virgil C. Summer Nuclear Station near Jenkinsville, South Carolina (the Project ) during the Interim Assessment Period (as defined in the IAA): The [] Owners agree to pay all costs and administrative claims accrued by the Debtors during the Interim Assessment Period pursuant to the [Engineering, Procurement and Construction Agreement dated May 23, 2008, as amended from time to time (the EPC )], the Interim Assessment Agreement, or any other agreement related to the V.C. Summer Project, regardless of whether the costs become payable during the Interim Assessment Period, and including all costs accrued by the Debtors to Flour, Subcontractors and/or Vendors pursuant to (i) existing purchase orders, vendor contracts and Subcontracts (as defined in the EPC) and (ii) new purchase orders, new vendor contracts, Subcontracts, or change orders to existing purchase order, vendor contracts, or Subcontracts (items (i) and (ii), the IAP Contracts ). IAA 6, see IAA, Amendment No. 1, 2 [ECF No. 385]. The IAA also provides that the Owners will: [I]ndemnify and hold harmless the Debtors against any administrative expenses which the Debtors may incur under the EPC, the Interim Assessment Agreement, the IAP Contracts, or any other agreement related to the V.C. Summer Project, regardless of whether the administrative expenses arise during or after the Interim 2 The IAA was subsequently amended on April 28, 2017 [ECF No. 385] and June 27, 2017 [ECF No. 778]. 2
Pg 3 of 15 Assessment Period, including for the avoidance of doubt, prior to the execution of this agreement. IAA 11, see IAA, Amendment No. 1, 4 [ECF No. 385]. 3. Prior to the Petition Date, WECTEC and PVS entered into (i) Purchase Order No. 132177-SS01.00 and Purchase Order No. 132178-SS01.00 (collectively, the Purchase Orders ). Pursuant to the Purchase Orders, PVS provided certain materials, including fabricated steel components, to WECTEC to support WECTEC s provision of services to the Project. 4. During the Interim Assessment Period, PVS continued to produce and supply fabricated steel for the Project pursuant to the Purchase Orders. 5. On July 31, 2017, the Owners announced publicly that they were ceasing construction of the Project and provided the Debtors with a notice of termination of the IAA. On August 7, 2017, the IAA expired in accordance with its terms as a result of the Owners termination. 6. On August 7, 2017, the Debtors filed the Omnibus Motion of Debtors Pursuant to 11 U.S.C. 365(a) and 105(a) for Entry of Order Authorizing Debtors to Reject Certain Executory Contracts Related to the VC Summer Project [ECF No. 1099], rejecting the Purchase Orders. The Purchase Orders were rejected in accordance with the Notice of Resolution of Pending Objection to Omnibus Motion of Debtors for Authority to Reject Certain Executory Contracts Related to the VC Summer Project [ECF No. 1391] and Second Notice of Resolution of Pending Objection to Omnibus Motion of Debtors for Authority to Reject Certain Executory Contracts Related to the VC Summer Project [ECF No. 1744]. Proofs of Claim 7. On August 29, 2017, PVS filed proof of claim number 1969 ( POC 1969 ) asserting an unliquidated, contingent claim against WECTEC for (i) claims arising under any 3
Pg 4 of 15 future default, termination, or rejection of PVS purchase orders issued in connection with the Project, and (ii) legal fees and expenses by PVS incurred as of August 29, 2017. 8. On August 29, 2017, PVS filed proof of claim number 1974 ( POC 1974 ) asserting a claim for $3,123,604.65 against WECTEC for prepetition services performed and materials sold in connection with the Project. POC 1974 asserts (i) a general unsecured claim for $504,478.60, and (ii) a secured claim for $2,619,126.05 for claims arising under sections 503(b)(9) and 546(c) of the Bankruptcy Code. 9. On October 3, 2017, PVS filed the Motion of Owen Industries, Inc. d/b/a Paxton & Vierling Steel Co. for Allowance and Immediate Payment of Administrative Expense Claim Pursuant to 11 U.S.C. 503(a), (b)(1) and (b)(9) [ECF No. 1446] (the Motion ) asserting a total administrative expense of $9,804,637.09 plus interest (the Asserted Claim ) and demanding immediate payment of the Asserted Claim. The claims asserted in the Motion (i.e., the Asserted Claim) are reflected in the Debtors claim register as proof of claim 3331 ( POC 3331 ). 10. On November 11, 2017, the Debtors filed the Debtors Settlement Notice Under the Order Pursuant to 11 U.S.C. 105 and 546(c) Establishing and Implementing Exclusive and Global Procedures for Treatment of Reclamation Claims Between the Debtors and Owen Industries Inc. d/b/a Paxton Vierling Steel Co. [ECF No. 1772] (the Reclamation Settlement ), granting PVS an allowed administrative expense claim under section 503(b) of the Bankruptcy Code in the amount of $696,332.38 for its Valid Reclamation Claim (as defined in the Reclamation Settlement). 11. On December 1, 2017, the Court entered the Stipulation, Agreement, and Order Between the Debtors and Owen Industries, Inc. d/b/a Paxton Vierling Steel Co. [ECF No. 1842] (the 503(b)(9) Settlement ) allowing an administrative expense claim of $1,325,248.23 pursuant 4
Pg 5 of 15 to section 503(b)(9) of the Bankruptcy Code (the 503(b)(9) Claim ). In accordance with the 503(b)(9) Settlement, and pursuant to the Order Pursuant to 11 U.S.C. 503(b)(9) and 105(a) (I) Approving Procedures for the Resolution and Satisfaction of Claims Asserted Pursuant to 11 U.S.C. 503(b)(9) and (II) Prohibiting Vendors from Pursuing Such Claims Outside the Procedures [ECF No. 1759], the Debtors paid the 503(b)(9) Claim on or about January 11, 2018. 12. On January 18, 2018, PVS amended POC 1974 by filing proof of claim number 3462 ( POC 3462, together with POC 1969, 1974, and 3331, the Proofs of Claim ) against WECTEC for $1,798,356.42. POC 3462 asserts (i) a total general unsecured claim of $541,067.00, and (ii) a secured claim for $1,257,356.42 for claims arising under section 546(c) of the Bankruptcy Code (including the Reclamation Claim, which remains unpaid as of the date hereof). The Motion 13. In the Motion, PVS asserts that the Asserted Claim arose out of their performance under the Purchase Orders and the subsequent rejection of the Purchase Orders, and is comprised of the following: (i) $1,361,836.63 for invoices for materials delivered in furtherance of the Project within 20 days of the Petition Date (which was subsequently resolved by the 503(b)(9) Settlement), and (ii) $8,442,800.46 for labor and materials furnished by PVS to the Project after the Petition Date and other postpetition costs incurred by PVS related to the Purchase Orders. 14. On March 9, 2018, Tom Richardson, Contract Manager of Owen Industries, Inc. d/b/a Paxton Vierling Steel Co., on behalf of PVS, signed and PVS filed the Declaration of Tom Richardson in Support of Motion of Owen Industries, Inc. d/b/a Paxton Vierling Steel Co. for Allowance and Immediate Payment of Administrative Expense Claim Pursuant to 11 U.S.C. 503(a) and (b)(1) [ECF No. 2787] (the Declaration ). 5
Pg 6 of 15 15. To date, the Debtors have paid or resolved $4,569,428.067 of the Asserted Claim, including through payment of the 503(b)(9) Claim. As of the date hereof, $5,235,208.42 of the Asserted Claim (the Remaining Claim Asserted ), corresponding to the amounts set forth on Exhibit A and Exhibit B annexed hereto, has not been paid by the Debtors. The Remaining Claim Asserted is comprised of: (i) $44,910.77 in claims asserted by PVS for expenses PVS asserts were incurred on account of materials ordered by WECTEC that were furnished and delivered to the Project by PVS during the Interim Assessment Period (the Delivered Materials ), and (ii) $4,956,734.76 in claims asserted by PVS for expenses PVS asserts were incurred on account of materials ordered by WEC, fabricated (in whole or in part) by PVS, but not delivered to the Project prior to the termination of the Interim Assessment Period (the Non-Delivered Materials ). 16. The Debtors have attempted in good faith to independently verify and/or where obtain the Owners confirmation that the Remaining Claim Asserted is on account of materials provided for the benefit of the Debtors estates such that it represents either a valid within the meaning of either section 502(a) or 503(b)(1) of the Bankruptcy Code. 17. As a result, as set forth in the Declaration, PVS has provided proof of delivery for the Delivered Materials and additional documentation (21 documents totaling over 15 MB in size) relating to the costs incurred for the benefit of the Debtors by PVS on account of the Non-Delivered Materials. 18. Based on the aggregate information provided to the Debtors in the Motion, by PVS, by counsel to PVS, and in the Declaration, the Debtors determined that PVS is entitled to either an administrative expense claim or a general unsecured claim to the extent set forth herein. Specifically, (i) $23,284.58 for the invoices identified as Admin. Expenses on Exhibit A 6
Pg 7 of 15 annexed hereto, and (ii) $4,738,712.03 for the costs identified as Admin Expenses on Exhibit B annexed hereto are valid administrative expense claims that accrued during the Interim Assessment Period (collectively, the Validated Administrative Expense Claim ). 19. Further, after a review of their books and records, the Debtors believe that (i) PVS s assertion of a general unsecured claim of $487,670.50 in POC 3462 for materials and services provided to the Debtors is a valid general unsecured claim, and (ii) PVS s assertion of administrative expense claims for $243,258.96 of the Remaining Asserted Claim in POC 3331 represent valid general unsecured claims arising out of the rejection of the Purchase Orders. Accordingly, the Parties have agreed that PVS is entitled to an allowed general unsecured claim on account of the Proofs of Claim in an aggregate amount of $730,929.46 (the Validated General Unsecured Claim ). 20. By the execution of this Stipulation and Order, PVS represents and warrants that the Validated Administrative Expense Claim and the Validated General Unsecured Claim has not and will not be paid or otherwise satisfied by the Debtors or any other entity except as provided for herein. 21. In light of the foregoing, the Parties have agreed, subject to approval of the Bankruptcy Court, to resolve the Motion and the Proofs of Claim by, among other things, allowing the Validated Administrative Expense Claim and Validated General Unsecured Claim. 7
Pg 8 of 15 IT IS HEREBY STIPULATED AND ORDERED AS FOLLOWS: A. This Stipulation and Order shall be effective and binding immediately upon entry of the Stipulation and Order by the Bankruptcy Court and such order becoming a final order (the Effective Date ). B. The Validated Administrative Expense Claim shall be allowed pursuant to section 503(b)(1) of the Bankruptcy Code against WECTEC. C. Within ten (10) business days of the later of the Effective Date or the date PVS provides the Debtor payment delivery instructions, the Debtors shall pay the amount of the Validated Administrative Expense Claim and the Validated Reclamation Claim to PVS. D. The Validated Administrative Expense Claim arose during the Interim Assessment Period. E. The Validated General Unsecured Claim shall be allowed as a prepetition general unsecured claim against WECTEC. Upon payment of the Validated Administrative Expense Claim and Reclamation Claim, POC 3462 shall be reduced and allowed as the Validated General Unsecured Claim in the amount of $730,929.46. POC 1969, POC 1974 and POC 331 shall be disallowed and expunged. F. In consideration of the allowance of the Validated Administrative Expense Claim and the Validated General Unsecured Claim, and payment of the Validated Reclamation Claim, PVS is deemed to release the Debtors and their predecessors, successors, parents, direct subsidiaries, indirect subsidiaries, affiliates, assigns, agents, their current and former directors, officers, employees, representatives, insurers, attorneys, and shareholders (collectively the Debtor Parties ), from any and all claims, proofs of claim, debts, demands, damages, attorneys fees, judgments, liabilities, causes of action, or controversies of any kind whatsoever, 8
Pg 9 of 15 whether at law or in equity, whether matured or unmatured, whether before a local, state, or federal court or state or federal administrative agency or commission, or arbitration administrator, and whether now known or unknown, liquidated or unliquidated, that PVS has, may have had, asserted, and/or may have asserted, against the Debtor Parties on behalf of itself, or any other person or entity, including the Remaining Claim Asserted, or arising from or related to the facts asserted in the Motion or Proofs of Claim, as set forth herein; provided, however, that nothing contained in this release shall prevent the Parties from asserting or pursuing any claim to enforce the terms of this Stipulation and Order. G. Except to the extent set forth herein, PVS shall not be entitled to damages related to the rejection of the Purchase Orders or otherwise, including any claim for lost profits, costs, or expenses related to the Non-Delivered Materials, including any such claims set forth in the Proofs of Claim. H. Any and all rights of PVS as to (i) any administrative expense claims it may have related to the Vogtle Project, (ii) mechanics lien claims that PVS may have against the Owners, are hereby expressly preserved. Any and all rights of the Debtors and parties in interest in these cases to defend against any such claims are likewise expressly preserved. I. This Stipulation and Order contains the entire agreement between the Parties and supersedes all prior agreements and undertakings between the Parties thereto. J. This Stipulation and Order may be signed in counterpart originals, which, when fully executed, shall constitute a single original. K. Nothing in this Stipulation and Order shall be considered an admission of any breach, wrongdoing, negligence, omission, liability, or fault on the part of either of the Parties. The Parties are entering into this Stipulation and Order as a commercial compromise on disputed 9
Pg 10 of 15 claims and solely to resolve the claims that are addressed herein. Nothing in this Stipulation and Order, nor anything done pursuant hereto, shall be deemed or construed as modifying, or establishing any precedent, interpretation, or course of dealing under any contract or agreement made between the Parties. L. Nothing herein shall prejudice the Debtors rights against the Owners under the IAA. M. The Debtors may adjust the claims register in the Debtors chapter 11 cases to reflect the disallowance of claims asserted in the Proof of Claim that are released by PVS pursuant to this Stipulation and Order, the claims agent in the Debtors chapter 11 cases is authorized to adjust the claims register in accordance with this Stipulation and Order. N. This Stipulation and Order may not be modified other than by a signed writing executed by the Parties hereto or by further order of the Bankruptcy Court. O. Each person who executes this Stipulation and Order on behalf of a Party hereto represents that he is duly authorized to execute this Stipulation and Order on behalf of such Party. P. The Debtors are authorized to execute, deliver, implement, and fully perform any and all obligations, instruments, and papers and to take any and all actions reasonably necessary or appropriate to perform any and all of the Debtors obligations set forth in, or contemplated by, the Stipulation and Order. Q. The Stipulation and Order and all of the provisions hereof shall be binding upon and shall insure to the benefit of all Parties, and each of their respective successors or assigns. R. This Agreement shall be governed, in all respects, under the laws of the State of New York, irrespective of its choice of law rules. 10
Pg 11 of 15 S. The Bankruptcy Court will retain exclusive jurisdiction over all disputes arising from or relating to this Stipulation and Order. Dated: New York, New York Dated: Lexington, Kentucky March 16, 2018 March 16, 2018 By: /s/ Garrett A. Fail Gary T. Holtzer Robert J. Lemons Garrett A. Fail David N. Griffiths WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Attorneys for the Debtors and Debtors in Possession By: /s/ Elizabeth Lee Thompson Elizabeth Lee Thompson David B. Ratterman STITES & HARBISON, PLLC 250 West Main Street, Suite 2300 Lexington, KY 40507 Telephone: (859) 226-2300 Facsimile: (859) 253-9144 Counsel to Owen Industries, Inc. d/b/a Paxton & Vierling Steel Co SO ORDERED Dated: April 2, 2018 New York, New York s/michael E. Wiles THE HONORABLE MICHAEL E. WILES UNITED STATES BANKRUPTCY JUDGE 11
Pg 12 of 15 EXHIBIT A
Pg 13 of 15 EXHIBIT A Paxton & Vierling Steel Westinghouse Invoice # Purchase Order Invoice Date Invoice Amount Amount Due Admin. Exp. Disallowed 90490554 132177 D100.04 4/18/2017 $ 102,889.00 $ 7,588.04 $ 3,860.04 90506880 132177 SS01.00 8/28/2017 2,149.13 2,149.13 2,149.13 90506882 132177 SS01.00 8/28/2017 2,538.73 2,538.73 2,538.73 90506883 132178 SS01.00 8/28/2017 2,149.13 2,149.13 2,149.13 90506884 132178 SS01.00 8/28/2017 2,538.73 2,538.73 2,538.73 90507148 132177 SS01.00 8/29/2017 3,796.70 3,796.70 3,796.70 90507151 132178 SS01.00 8/29/2017 8,598.83 8,598.83 8,598.83 90509727 132177 SS01.00 9/20/2017 821.31 821.31 821.31 90509728 132178 SS01.00 9/20/2017 821.31 821.31 821.31 90519435 132177 SS01.00 11/28/2017 6,954.43 6,954.43 6,954.43 90519471 132178 SS01.00 11/28/2017 6,954.43 6,954.43 6,954.43 Total Delivered Goods $ 140,211.73 $ 44,910.77 $ 23,284.58 $ 17,898.19 {00190187.1 / 3908.001}
Pg 14 of 15 EXHIBIT B
Pg 15 of 15 EXHIBIT B Description of Cost Asserted Paxton & Vierling Steel Westinghouse Reference Documents Total Cost Asserted Admin. Exp. GUC Disallowed 1) Work in Process (WIP) as of July 31, 2017 The values noted for this item represent work that was in PVS' shop as of July 31, 2017 in various stages of fabrication/completion. a) WIP Summary PO No. 132177-SS01.00 VC Summer (Unit-2) total. Attachment-1A $ 1,594,271.14 $ 1,594,271.14 $ - $ - b) WIP Summary PO No. 132178-SS01.00 VC Summer (Unit-3) total. Attachment-1B 1,390,586.62 1,390,586.62 - - 2) Cost to Stop Work Cost associated with physically stopping work in production and transferring raw materials and partially fabricated and completed materials (not yet shipped) to a storage location outdoors while awaiting disposition direction from WECTEC/Owner. 94,150.00-94,150.00-3) Cost of Storage a) Storage Costs (based on a six month duration). $5.00 per ton per Month 967.78 Tons to store @ 6 months 29,033.47-29,033.47 - b) Storage costs include tarping painted materials. Un-painted materials will be stored outside untarped and exposed to the elements. Estimated tarp costs 7,000.00-7,000.00-4) Long Term Storage If the storage duration exceeds the above noted six month duration the rate will adjust to $10.00 per ton per month for the next six month period with a maximum storage availability of 12 months. 967.78 Tons to store @ 6 months 58,066.93 - - 58,066.93 5) Detailing / Engineering Costs Expended Detailing costs for work that will not ship due to this notification. Detailing compensation is received through the unit prices as fabricated complete materials are shipped and invoiced. Attachment-2A 643,906.00 643,906.00 - - 6) Sub-Vendor Costs a) PTI (Stainless Steel IRWST Towers, PVS CR-011) Attachment-3A 408,448.00 408,448.00 - - b) Egger (Miscellaneous Steel) Attachment-3B 56,222.00 56,222.00 - - c) IKG (Grating) Attachment-3C 17,300.00 17,300.00 - - d) New Millennium (Deck) Attachment-3D 253,750.00 253,750.00 - - 7) Legal Fees Attachment-4A 93,229.73 - - 93,229.73 8) Administration Fees Administration costs to suspend/terminate these projects. Attachment-5A 113,074.99-113,074.99-9) Pending Change Orders for Work Performed/Supplied - - - CR's expended but not submitted, and/or submitted but not yet approved or paid. a) CR-017: L-2177 Void Parts, CTC-0016 dated, September 29, 2016. Attachment-6A 40,241.20 40,241.20 - - b) CR-017: L-2178 Void Parts, CTC-0012 dated, September 29, 2016. Attachment-6A 40,241.20 40,241.20 - - c) CR-055: Third Party Investigation Costs, CTC-0236 dated, December 5, 2016. Attachment-6B 18,810.82 18,810.82 - - d) CR-056: Flare Bevel Groove Weld Added Costs (L-2176 and L-2178), CTC-0271 dated, June 29, 2017. Attachment-6C 188,050.99 188,050.99 - - e) CR-060: Detailing Hourly Rate Adjustment Request, CTC-0287 dated, July 28, 2017. Attachment-6D 57,030.50 - - 57,030.50 f) CR-066: Box Beam - New Scope, CTC-0285 dated, July 27, 2017. Attachment-6E 49,849.56 49,849.56 - - g) CR-069: Paint Disposal Costs due Slip Coefficient Requirement, CTC-0295 dated, September 5, 2017. Attachment-6F 37,034.50 37,034.50 - - Total Termination Costs $ 5,190,297.65 $ 4,738,712.03 $ 243,258.46 $ 208,327.16