Document:

kci8k05242007exhibit4_1.htm

    Exhibit
      4.1

     

     

    SECOND
      AMENDMENT TO LOAN AGREEMENT

    
       

      

      This
        Second Amendment to Loan Agreement (this "Amendment") is dated as of May
        22, 2007, and is by and between KEYSTONE CONSOLIDATED INDUSTRIES, INC.,
a Delaware corporation (the "Company") and THE COUNTY OF
        PEORIA, ILLINOIS (the "Lender").

       

       

      WITNESSETH:

       

      WHEREAS,
        the Company and the Lender are parties to that certain Loan Agreement dated
        as
        of March 13, 2002 (the same, as it may be amended, restated, modified or
        supplemented and in effect from time to time, the "Loan Agreement") under
        which the Lender made a $10,000,000 term loan to the Company, which is due
        to
        mature on June 1, 2007; and

       

      WHEREAS,
        the parties have agreed to amend the Loan Agreement in certain respects,
        as more
        fully set forth herein;

       

      NOW,
        THEREFORE, the parties hereto hereby agree as follows:

       

      1.             Definitions.       Capitalized
        terms used in this Amendment and not otherwise defined herein are used with
        the
        meanings given such terms in the Loan Agreement.

       

      2.             Amendments.  
        The Loan Agreement is hereby amended, effective as of the Amendment
        Effective Date as follows:

       

      (a)  by
        amending and restating the following definition contained in Article I of
        the
        Loan Agreement as follows:

       

      "Mortgage"
        means that certain Subordinate Mortgage, Security Agreement, Assignment of
        Rents
        and Fixture Filing dated as of April 9, 2002, and recorded on April 23, 2002
        with the Peoria County, Illinois recorder's office as document number 02-16734,
        as it may be amended, restated, supplemented or modified from time to time
        and
        in effect.

       

      "Security
        Agreement" means that certain Subordinate Security Agreement dated as of
        April
        9, 2002, by and between the Company and the Lender with respect to certain
        steel
        making assets of the Company and located in Peoria, Illinois, as it may be
        amended, restated, supplemented or modified from time to time and in
        effect.

       

      (b)  by
        amending and restating Sections 3.1 through 3.3 of the Loan
        Agreement:

       

      3.1.
        Interest Rates. Through May 31, 2007, the outstanding principal balance
        of the Loan shall not bear interest. Commencing on June 1, 2007, the outstanding
        principal balance of the Loan shall bear, and the Company shall pay, interest
        at
        a rate per annum equal to seven and one-half percent (7.5%). During any period
        that an Event of Default shall have occurred and be continuing, interest
        on the
        outstanding principal balance of the Loan shall accrue at a rate equal
        to

      

      
        
          
                  

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      nine
        and
        one-half percent (9.5%) (the "Default Interest Rate"). Notwithstanding anything
        contained herein to the contrary, in no event shall the interest rate on
        the
        Loan exceed the highest rate permitted by applicable law. Interest shall
        be
        based upon a 360-day year, and shall accrue and be payable for the actual
        number
        of calendar days elapsed.

       

      3.2.
        Principal and Interest. Payments of principal and interest on the Loan,
        if not sooner declared to be due in accordance with the provisions hereof,
        shall
        be made as follows:

       

      (a)  On
        June
        1, 2007, a payment of principal in the amount of One Million and No/100s
        Dollars
        ($1,000,000.00) shall be due and payable.

       

      (b)  Commencing
        on December 1, 2007, and continuing on the first day of each June and December
        thereafter through and including June 1, 2014 (the "Maturity Date"), payments
        of
        principal and interest each in the amount of Eight Hundred Thirty Eight Thousand
        Eighteen and 49/100s Dollars ($838,018.49) shall be due and
        payable.

       

       
         (c)       The unpaid principal balance
        of the Loan, if not sooner paid or declared to be due in accordance with
        the
        terms hereof, together with all accrued and unpaid interest thereon and any
        other amounts due and payable hereunder or under the Note, the Mortgage,
        or
        Security Agreement shall be due and payable in full on the Maturity
        Date.

       

        
        3.3. Prepayments. The Company may voluntarily prepay the principal
        balance of the Loan, in whole but not in part, at any time on or after the
        date
        hereof, subject to the following conditions:

       

          (a)  Not
        less
        than thirty (30) days prior to the date upon which the Company desires to
        make
        such prepayment, the Company shall deliver to the Lender written notice of
        its
        intention to prepay the Loan in full; and

       

      (b)  The
        Company shall pay to the Lender, concurrently with such prepayment, a prepayment
        premium equal to two percent (2%) of the then-outstanding principal amount
        outstanding to be prepaid.

       

      (c) 
        by amending and restating Subsections 3.5(a) of the Loan
        Agreement:

       

          (a)        default
        in the payment when due of any interest, principal, fee, or other amount
        payable
        by the Company hereunder or under the Note, the Mortgage, or Security
        Agreement;

       

      3.       
        Conditions to Effectiveness.  
        This Amendment shall become effective on the date (the
"Amendment Effective Date") on which the following conditions precedent
        have been satisfied or waived in writing:

       

      (a)  The
        Company and the
        Lender shall have each executed and delivered this Amendment
        to the Lender.

       

      (b)  The
        Lender shall have received a Reaffirmation of Subordinate Mortgage, Security
        Agreement, Assignment of Rents and Fixture Filing, in the form of
Exhibit A attached hereto, duly executed and delivered by the
        Company.

       

      (c)  The
        Lender shall have received an ALTA Statement, in the form used by Chicago
        Title
        Insurance Company, duly executed and delivered by the Company with respect
        to
        its Peoria facility.

       

      (d)  The
        Lender shall have received a fully executed copy of an Amended and Restated
        Subordination and Intercreditor Agreement by and among the Company, the Lender
        and Wachovia Capital Finance Corporation (Central), in the form of
Exhibit B attached hereto.

       

      (e)  The
        Lender shall have received a certification from the Company, in the form
        of
Exhibit C attached hereto, that the Company has fully complied
        with the Capital Expenditure Requirement.

       

      (f)  The
        Lender shall have received a certificate of the Secretary of the Company
        with
        certified copies of the following: (i) its Amended and Restated Certificate
        of
        Incorporation, as in effect with the State of Delaware, (ii) its By-Laws,
        (iii)
        resolutions of its Board of Directors authorizing the execution, delivery
        and
        performance by the Company of this Amendment, and (iv) the names of the officer
        or officers of the Company authorized to sign this Amendment and other
        documents, together with a sample signature of such officer(s) on which the
        Lender may conclusively rely on each such certificate until formally advised
        by
        a like certificate of any changes therein.

       

      (g)  The
        Lender shall have certificate of good standing and foreign qualification
        for the
        Company from the Secretary of States of Delaware and Illinois each dated
        within
        ten (10) days of the Amendment Effective Date.

       

              (h)      The
        Lender shall have received such other certificates, financial statements,
        schedules, resolutions, and other documents which are provided for hereunder
        or
        which the Lender shall reasonably require.

       

      4.      
        Representation and Warranties. To induce the Lender to
        enter into this Amendment, the Company hereby represents and warrants to
        the
        Lender as of the Amendment Effective Date that:

       

      (a)  The
        Company has the corporate power and authority, and the legal right, to make
        and
        deliver this Amendment and to perform all of its obligations under the Loan
        Agreement, as amended by this Amendment, and has taken all necessary corporate
        action to authorize the execution and delivery of this Amendment and the
        performance of the Note, the Mortgage, or Security Agreement, as so
        amended.

       

      (b)  When
        executed and delivered, this Amendment and the Loan Agreement, as amended
        by
        this Amendment, will constitute legal, valid and binding obligations of the
        Company, enforceable against it, in accordance with its terms, except as
        affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
        moratorium and other

      

      
        
          
                  

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      similar
        laws relating to or affecting the enforcement of creditors' rights generally,
        general equitable principles (whether considered in a proceeding in equity
        or at
        law) and an implied covenant of good faith and fair dealing.

       

            
        (c)      The representations and warranties made by the
        Company in the Loan Agreement are true and correct in all material respects
        on
        and as of the Amendment Effective Date, before and after giving effect to
        the
        effectiveness of this Amendment, as if made on and as of the Amendment Effective
        Date, other than those that relate to an earlier or specific date.

       

      5.              Reaffirmation
        and Confirmation of Subordinated Security
        Interests.   The Company
        hereby confirms to the Lender that the Company has granted to the Lender
        a
        subordinated security interest in or lien upon substantially all of the steel
        making assets located in Peoria, Illinois to secure the repayment of the
        Loan.
        The Company hereby reaffirms its grant of such subordinated such security
        interest and lien to the Lender for such purpose in all respects.

       

      6.              Miscellaneous.

       

      (a)  The
        Company hereby agrees to pay all of the Lender's reasonable attorneys' fees
        (which shall not exceed $12,000.00) and title insurance fees and expenses,
        related to this Amendment.

       

      (b)  This
        Amendment may be executed in one or more counterparts, each of which shall
        be
        deemed to be an original, but all of which shall together constitute but
        one and
        the same document.

       

      (c)  This
        Amendment shall be binding upon and inure to the benefit of the parties hereto
        and their respective successors and assigns.

       

      (d)  Section
        captions and headings used in this Amendment are for convenience only and
        are
        not part of and shall not affect the construction of this
        Amendment.

       

      (e)  This
        Amendment shall be a contract made under and governed by the laws of the
        State
        of Illinois, without regard to conflict of laws principles. Whenever possible,
        each provision of this Amendment shall be interpreted in such a manner as
        to be
        effective and valid under applicable law, but if any provision of this Amendment
        shall be prohibited by or invalid under such law, such provision shall be
        ineffective to the extent of such prohibition or invalidity, without
        invalidating the remainder of such provision or the remaining provisions
        of this
        Amendment.

       

      (f)  From
        and
        after the date of execution of this Amendment, any reference to the Loan
        Agreement contained in any notice, request, certificate or other instrument,
        document or agreement executed concurrently with or after the execution and
        delivery of this Amendment shall be deemed to include this Amendment unless
        the
        context shall otherwise require.

      

      
        
          
                  

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        (g)    Except as expressly set forth herein, nothing in this
        Amendment is intended to or shall be deemed to have amended the Loan Agreement,
        which is hereby reaffirmed, as amended, in all respects. Notwithstanding
        anything contained herein, the terms of this Amendment are not intended to
        and
        do not serve to effect a novation as to the Loan Agreement. The parties hereto
        expressly do not intend to extinguish the Loan Agreement. Instead, it is
        the
        express intention of the parties hereto to reaffirm the indebtedness created
        under the Loan Agreement which is evidenced by the Note and secured by the
        collateral referred to in the Mortgage and the Security Agreement. The Loan
        Agreement, as amended hereby, and each of the Note, the Mortgage, and Security
        Agreement remain in full force and effect and are hereby reaffirmed in all
        respects.

       

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      IN
        WITNESS WHEREOF, the parties have executed this Amendment as of the date
        first
        set forth above.

       

      KEYSTONE
        CONSOLIDATED INDUSTRIES, INC., a Delaware
        corporation

       

      By:
        /s/  Bert E. Downing,
        Jr.                     

       

      Its
        :Vice President, Chief Financial Officer, Corporate Controller and
        Treasurer                                                    

       

      THE
        COUNTY OF PEORIA, ILLINOIS

       

      By:
        /s/ Patrick
        Urich                                    

       

      Its
        :County
        Administrator                        
           
                           

      

      
        
          
                  

                      362869.4
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               Exhibit  A       

                     

            

          

        

      

      

        Form
          of
          Reaffirmation of Subordinate Mortgage, Security Agreement,

        Assignment
          of Rents and Fixture Filing

      

       

       

      REAFFIRMATION
        OF SUBORDINATE MORTGAGE,

      SECURITY
        AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING

       

      This
        Reaffirmation of Subordinate Mortgage, Security Agreement, Assignment of
        Rents
        and Fixture Filing (this "Reaffirmation") is made as of May 22 ,
        2007, by KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware
        corporation (the "Company"), to and for the benefit of THE COUNTY
        OF PEORIA, ILLINOIS (the "Lender").

       

      WITNES
        SETH:

       

      WHEREAS,
        the Company and the Lender are parties to that certain Loan Agreement dated
        as
        of March 13, 2002 (the same, as it may be amended, restated, modified or
        supplemented and in effect from time to time, the "Loan Agreement") under
        which the Lender made a $10,000,000 term loan to the Company (the
        "Loan");

       

      WHEREAS,
        the Loan is secured by that certain Subordinate Mortgage, Security Agreement,
        Assignment of Rents and Fixture Filing dated as of April 9, 2002, recorded
        on
        April 23, 2002 with the Peoria County, Illinois recorder's office as document
        number 02-16734 made by the Company to and for the benefit of the Lender
        (the
        same, as it may be amended, restated, modified or supplemented and in effect
        from time to time, the "Mortgage") which created a mortgage lien on the
        property located in Peoria, Illinois and described on Exhibit
        A;

       

      WHEREAS,
        the Company filed a petition for relief on February 26, 2004 under
        Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
        Court for the Eastern District of Wisconsin (the "Bankruptcy
        Court");

       

      WHEREAS,
        the Bankruptcy Court entered an order on or about August 10, 2005 confirming
        the
        Debtor's Third Amended Joint Plan of Reorganization pursuant to Chapter 11
        of
        the United States Bankruptcy Code (the "Plan");

       

      WHEREAS,
        pursuant to the Plan, the Loan Agreement and the Mortgage were specifically
        assumed as executory contracts so (i) the legal, equitable, and contractual
        rights of the Lender, (ii) the obligations with respect to the Loan and (iii)
        the terms of the Loan Agreement and Mortgage were unimpaired; and

       

    

    
      
         

        
          
            
            

          

          
            362869.4
              049689-21334                                

            
              

            

          

          
            
            

          

        

      

      
        
           

           Exhibit  A       

                 

        

      

       

      WHEREAS,
        the Company and the Lender have agreed to amend the Loan Agreement and the
        terms
        of the Loan in certain respects, and a condition precedent to such amendment
        is
        that the Company executes and delivers this Reaffirmation.

       

      NOW,
        THEREFORE, for good and valuable consideration the receipt of which is hereby
        acknowledged, the Mortgage is hereby reaffirmed as of the date hereof in
        all
        respects by the Company, and shall continue from and after the date hereof
        and
        shall remain in full force and effect from and after the date
        hereof.

       

      IN
        WITNESS WHEREOF, the Company has executed this Reaffirmation as of the date
        first above written.

       

      KEYSTONE
        CONSOLIDATED INDUSTRIES, INC., a Delaware corporation

       

      By:/s/
        Bert E. Downing,
        Jr.                                         

      Name:
        Bert E. Downing, Jr.

      Title:
        Vice President and Chief Financial Officer

       

      ATTEST:

       

       

      /s/
        Sandra K.
        Myers                                                  

      Secretary

      
 

       

      
        
          
            
            

          

          
            362869.4
              049689-21334                                

            
              

            

          

          
            
            

          

        

      

      
        
           

           Exhibit  A       

                 

        

      

      

      STATE
        OF
        TEXAS                             
)

      )
        .ss

      COUNTY
        OF
        DALLAS                       )

       

      I                                                    ,
        a Notary Public in and for said County, in the State aforesaid,
        DO HEREBY CERTIFY that Bert E. Downing, Jr., Vice President and Chief Finanical
        Officer of Keystone Consolidated Industries, Inc., a Delaware corporation,
        is
        personally known to me to be the same person whose name is subscribed to
        the
        foregoing instrument, appeared before me this day in person and acknowledged
        that he signed and delivered said instrument as his own free and voluntary
        act
        for the uses and purposes therein set forth.

       

      GIVEN
        under my hand and Notarial Seal this________day of May 2007.

       

       

                                                      ______________________________

                                                             
        

       

       Notary
        Public

       

      My
        Commission Expires: ___________________________

      

       

      
         

        
          
            
            

          

          
            362869.4
              049689-21334                                

            
              

            

          

          
            
            

          

        

        
           

           Exhibit  A       

                 

        

      EXHIBIT
        A

       

      Legal
        Description of Steel Making Land in Peoria, IL

       

      North
        580' of the northwest quarter of section 31, township 8 north, range 8 east
        of
        the fourth principal meridian. Also north 580' of the northeast quarter
        of section 36, township 8 north, range 7 east of the fourth principal meridian
        lying east of the east right of way line of the Chicago & Northwestern
        Railroad. Also all of the southeast quarter of section 25, township 8
        north, range 7 east of the fourth principal meridian lying east of the east
        right of way line of the Chicago & Northwestern Railroad. Also all of
        the west half of section 30, township 8 north, range 8 east of the fourth
        principal meridian lying southwest of the southwest right of way line of
        1-474
Excepting the north 1600'.

       

      Except
        the coal and other minerals underlying the surface of said land and all rights
        and easements in favor of the estate of said coal and other
        minerals.

       

      Together
        with a non-exclusive easement for ingress, egress and access on, over, across
        and through that certain improved road known as "Steel Works Road" located
        on
        the adjacent real property owned by Mortgagor and contained within Section
        25,
        Township 8 North, Range 7 East, which road connects the Property to the publicly
        dedicated street known as "Washington Street".

       

      The
        common address for the Property and other non-mortgaged property owned by
        Mortgagor is 7000 S.W. Adams, Street, Peoria, Illinois.

       

      The
        Real
        Estate Tax Identification Numbers for the Property are set forth
        below:

      18-30-100-020

      18-30-100-007

      18-30-100-008

      18-30-100-009

      17-36-226-001

      17-25-477-001

      18-31-100-001

      18-31-100-002

      18-30-300-001

      18-30-300-002

      18-30-300-004

      18-30-300-005

      

      
         

        
          
            
            

          

          
            362869.4
              049689-21334                                

            
              

            

          

          
            
            

          

        

        
           

           

            EXHIBIT
              B

          

                 

        

      

        Form
          of
          Amended and Restated Subordination and Intercreditor
          Agreement
 

      

      AMENDED
        AND RESTATED

      SUBORDINATION
        AND INTERCREDITOR AGREEMENT

      

      

      THIS
        AMENDED AND RESTATED SUBORDINATION AND INTERCREDITOR AGREEMENT (this
“Agreement”) is dated as of this  22 day of May, 2007, by and
        among the County of Peoria, Illinois, together with its successors and assigns,
        the “Subordinated Creditors”), Keystone Consolidated Industries, Inc., a
        Delaware corporation (the “Company”), and Wachovia Capital Finance Corporation
        (Central), an Illinois corporation, as agent for certain lenders (“Lenders”)
        under the Credit Agreement (as hereinafter defined) (together with its
        successors and assigns in such capacity, “Agent”).

      

      R
        E C I T A L S

      

      A.           The
        Company, certain of its Subsidiaries, Agent and Lenders have entered into
        a Loan
        and Security Agreement dated as of August 31, 2005 (as the same has been
        and may be amended, supplemented or otherwise modified from time to time
        including, without limitation, all refinancings and refundings, the “Credit
        Agreement”) pursuant to which, among other things, Lenders agreed, subject to
        the terms and conditions set forth in the Credit Agreement, to make certain
        loans and financial accommodations to the Company and certain of its
        Subsidiaries.  All of the Company’s and its Subsidiaries’ (as defined
        in the Credit Agreement) obligations to Agent and Lenders under the Credit
        Agreement and the other Senior Debt Documents (as hereinafter defined) are
        secured by liens on and security interests in substantially all of the now
        existing and hereafter acquired real and personal property of the Company
        and
        its Subsidiaries (the “Collateral”).

      

      B.           The
        Company and Subordinated Creditors have entered into a Loan
        Agreement  dated as of March 13, 2002 as amended by (i) that certain
        First Amendment to Loan Agreement dated April 4, 2007 and (ii) that certain
        Second Amendment to Loan Agreement dated as of the date hereof (as the same
        may
        be further amended, supplemented or otherwise modified from time to time
        as
        permitted hereunder, the “Subordinate Loan Agreement”) pursuant to which (i)
        Subordinated Creditors extended credit to the Company as evidenced by that
        certain Term Note dated as of April 9, 2002 in the aggregate principal amount
        of
        $10,000,000 (as the same may be amended, supplemented or otherwise modified
        from
        time to time as permitted hereunder, the “Subordinated Note”).

      

      C.           As
        an inducement to and as one of the conditions precedent to the agreement
        of
        Agent and Lenders to continue to provide financing under the Credit Agreement,
        Agent and Lenders have required the execution and delivery of this Agreement
        by
        Subordinated Creditors and the Company in order to set forth the relative
        rights
        and priorities of Lender and Subordinated Creditors under the Senior Debt
        Documents and the Subordinated Debt Documents (as hereinafter
        defined).

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
          
             

            
              EXHIBIT
                B

               

            

          

        

      

       

      NOW,
        THEREFORE, in order to induce Agent and Lenders to continue to
        consummate the transactions contemplated by the Credit Agreement (including,
        without limitation, all amendments thereto), and for other good and valuable
        consideration, the receipt and sufficiency of which hereby are acknowledged,
        the
        parties hereto hereby agree as follows:

      

      1.           Definitions.
        The following terms shall have the following meanings in this
        Agreement:

      

      “Bankruptcy
        Code” shall mean Chapter 11 of Title 11 of the
        United States Code, as amended from time to time and any successor statute
        and
        all rules and regulations promulgated thereunder.

      

      “Distribution”
        means, with respect to the Subordinated Debt, any payment, prepayment,
        redemption, purchase or other distribution by or on behalf of the Company
        or any
        guarantor of the Subordinated Debt of cash, securities or other property,
        by
        set-off or otherwise, on account of such Subordinated Debt.

      

      “Enforcement
        Action” shall mean (a) to take any enforcement
        action or otherwise commence the exercise of remedies against the Company
        or any
        guarantor of the Subordinated Debt to collect all or any part of the
        Subordinated Debt, including by way of set-off, (b) to sue for payment of,
        or to
        initiate or participate with others in any suit, action or proceeding against
        the Company or any such guarantor to (i) enforce payment of or to collect
        the
        whole or any part of the Subordinated Debt or (ii) commence judicial enforcement
        of any of the rights and remedies under the Subordinated Debt Documents or
        applicable law with respect to the Subordinated Debt, (c) to accelerate the
        Subordinated Debt, (d) to exercise any put option or to cause the Company
        or any
        such guarantor to honor any redemption or mandatory prepayment obligation
        under
        any Subordinated Debt Document or (e) take any action under the provisions
        of
        any state or federal law, including, without limitation, the Uniform Commercial
        Code, or under any contract or agreement, to enforce, foreclose upon, take
        possession of or sell any property or assets of  the Company or any
        such guarantor.

      

      “Indefeasibly
        Paid” means, with respect to the Senior Debt, that
        at least 91 days have elapsed since the Senior Debt has been paid in full
        in
        cash.

      

      “Lenders”
        shall mean the “Lenders” as defined in the Credit
        Agreement.

      

      “Lender
        Loan Documents” shall mean the Credit Agreement
        and all other agreements, documents and instruments executed from time to
        time
        in connection therewith, as the same may be amended, restated, supplemented
        or
        otherwise modified from time to time as permitted hereunder.

      

      “Permitted
        Refinancing” shall mean any refinancing of the
        Senior Debt under the Lender Loan Documents; provided that (i) the
        financing documentation entered into by the Company in connection with such
        Permitted Refinancing constitute Permitted Refinancing
        Senior Debt Documents and (ii) such Senior Debt as refinanced otherwise
        constitutes “Senior Debt” under the definition thereof.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

      

       

      “Permitted
        Refinancing Senior Debt Documents” shall mean any
        financing documentation which replaces the Lender Loan Documents and pursuant
        to
        which the Senior Debt under the Lender Loan Documents are refinanced (in
        whole
        or in part), as such financing documentation may be amended, restated,
        supplemented or otherwise modified from time to time in compliance with this
        Agreement, but specifically excluding any such financing documentation to
        the
        extent that it contains, either initially or by amendment or other modification,
        any material terms, conditions, covenants or defaults other than those which
        could be included in the Lender Loan Documents by an amendment or other
        modification that would not be prohibited by the terms of this Agreement
        (and
        provided that the applicable lenders (or an agent for such lenders) agrees
        in
        writing to be bound by the terms hereof binding on Lenders (or the agent
        for
        such lender, as applicable)).

      

      “Permitted
        Subordinated Debt Payments” means (a) payments of
        regularly scheduled payments of interest and principal on the Subordinated
        Debt
        as set forth on Schedule I hereto and on the dates set forth on Schedule I
        hereto, in each case on a non-accelerated basis and (b) payment of closing
        costs
        and fees payable on or about the date hereof in an amount not to exceed
        $20,000.

      

      “Person”
        means any natural person, corporation, general or limited partnership,
        limited liability company, firm, trust, association, government, governmental
        agency or other entity, whether acting in an individual, fiduciary or other
        capacity.

      

      “Proceeding”
        shall mean any voluntary or involuntary insolvency, bankruptcy, receivership,
        custodianship, liquidation, dissolution, reorganization, assignment for the
        benefit of creditors, appointment of a custodian, receiver, trustee or other
        officer with similar powers or any other proceeding for the liquidation,
        dissolution or other winding up of a Person.

      

      “Senior
        Debt” shall mean all monetary obligations,
        liabilities and indebtedness of every nature of one or more of the Company
        and/or its Subsidiaries from time to time owed to Agent and any Lender under
        the
        Senior Debt Documents (but subject to the limitations contained in Section
        3.1 hereof), including, without limitation, the principal amount of all
        debts, claims and indebtedness, accrued and unpaid interest and all fees,
        costs
        and expenses, whether primary, secondary, direct, contingent, fixed or
        otherwise, heretofore, now and from time to time hereafter owing, due or
        payable
        under the Senior Debt Documents, whether before or after the filing of a
        Proceeding under the Bankruptcy Code together with (a) any amendments,
        restatements, modifications, renewals, refundings, refinancings or extensions
        thereof to the extent not prohibited by the terms of this Agreement and (b)
        any
        interest accruing thereon after the commencement of a Proceeding, without
        regard
        to whether or not such interest is an allowed claim; provided, that, the
        aggregate principal amount of Senior Debt outstanding at any time and advanced
        by the holders of the Senior Debt shall not at any time exceed
        $100,000,000.  Senior Debt shall be considered to be outstanding
        whenever any loan commitment under the Senior Debt Document is
        outstanding.

       

      
         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          
             

            
              EXHIBIT
                B

               

            

          

        

      

       

      “Senior
        Debt Documents” shall mean the Lender Loan
        Documents and, after the consummation of any Permitted Refinancing, the
        Permitted Refinancing Senior Debt Documents.

      

      “Senior
        Default” shall mean any “Event of Default” under
        the Senior Debt Documents.

      

      “Subordinated
        Debt” shall mean all monetary obligations,
        liabilities and indebtedness of every nature of one or more of the Company
        and/or its Subsidiaries from time to time owed to one or more Subordinated
        Creditors evidenced by or incurred pursuant to the Subordinated Debt Documents,
        including, without limitation, the principal amount of the Subordinated Notes,
        all accrued and unpaid interest thereon and all fees, costs and expenses,
        whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
        now and from time to time hereafter owing, due or payable under the Subordinated
        Debt Documents, whether before or after the filing of a Proceeding under
        the
        Bankruptcy Code, including any interest accruing thereon after the commencement
        of a Proceeding, without regard to whether or not such interest is an allowed
        claim.

      

      “Subordinated
        Debt Documents” shall mean the Subordinated Note,
        the Subordinate Loan Agreement, any guaranty with respect to the Subordinated
        Debt, that certain Subordinate Security Agreement, dated as of April 9, 2002
        by
        Subordinated Creditors and the Company, that certain Subordinate Mortgage,
        Assignment of Rents and Leases, Security Agreement and Fixture Filing dated
        as
        of April 9, 2002, by the Company in favor of the Subordinated Creditors and
        all
        other documents, agreements and instruments now existing or hereinafter executed
        in connection therewith, as the same may be amended, supplemented or otherwise
        modified from time to time to the extent permitted under this
        Agreement.

       

      
        2.           Subordination.

         

      

      2.1           Subordination
        of Subordinated Debt to Senior
        Debt.  Subject to the provisions
        governing Permitted Subordinated Debt Payments as set forth in Section 2.3
        hereof, the Company covenants and agrees, and each Subordinated Creditor
        by its
        acceptance of the Subordinated Debt Documents (whether upon original issue
        or
        upon transfer or assignment) likewise covenants and agrees, notwithstanding
        anything to the contrary contained in any of the Subordinated Debt Documents,
        that the payment of any and all of the Subordinated Debt shall be subordinate
        and subject in right and time of payment, to the extent and in the manner
        hereinafter set forth, to the prior indefeasible payment in full in cash
        of all
        Senior Debt.  Each holder of Senior Debt, whether now outstanding or
        hereafter created, incurred, assumed or guaranteed, shall be deemed to have
        acquired Senior Debt in reliance upon the provisions contained in this
        Agreement.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      2.2           Liquidation,
        Dissolution, Bankruptcy. In the event of any
        Proceeding involving one or more of the Company or its
        Subsidiaries:

      

      (a)           All
        Senior Debt shall first be Indefeasibly Paid and all commitments to lend
        under
        the Senior Debt Documents shall be terminated before any Distribution, whether
        in cash, securities or other property, shall be made to any Subordinated
        Creditor on account of any Subordinated Debt.

      

      (b)           Any
        Distribution, whether in cash, securities or other property which would
        otherwise, but for the terms hereof, be payable or deliverable in respect
        of the
        Subordinated Debt shall be paid or delivered directly to Agent (to
        be held and/or applied by Agent in accordance with the terms of the Senior
        Debt
        Documents) until all Senior Debt is Indefeasibly Paid and all commitments
        to
        lend under the Senior Debt Documents shall have been terminated.  Each
        Subordinated Creditor irrevocably authorizes, empowers and directs any debtor,
        debtor in possession, receiver, trustee, liquidator, custodian, conservator
        or
        other Person having authority, to pay or otherwise deliver all such
        Distributions to Agent.  Each Subordinated Creditor also irrevocably
        authorizes and empowers Agent, in the name of such Subordinated Creditor,
        to
        demand, sue for, collect and receive any and all such
        Distributions.

      

      (c)           Each
        Subordinated Creditor agrees not to initiate, prosecute or participate in
        any
        claim, action or other proceeding challenging the enforceability, validity,
        perfection or priority of the Senior Debt or any liens and security interests
        securing the Senior Debt.

      

      (d)           Each
        Subordinated Creditor agrees to execute, verify, deliver and file any proofs
        of
        claim in respect of the Subordinated Debt requested by Agent in connection
        with
        any such Proceeding and hereby irrevocably authorizes, empowers and appoints
        Agent, its agent and attorney-in-fact to (i) execute, verify, deliver and
        file
        such proofs of claim upon the failure of a Subordinated Creditor promptly
        to do
        so prior to 15 days before the expiration of the time to file any such proof
        of
        claim and (ii) vote such claim in any such Proceeding upon the failure of
        a
        Subordinated Creditor to do so prior to 10 days before the expiration of
        the
        time to vote any such claim; provided that Agent shall have no obligation
        to
        execute, verify, deliver, file and/or vote any such proof of claim. In the
        event
        that Agent votes any claim in accordance with the authority granted hereby,
        no
        Subordinated Creditor shall be entitled to change or withdraw such
        vote.

      

      (e)           The
        Senior Debt shall continue to be treated as Senior Debt and the provisions
        of
        this Agreement shall continue to govern the relative rights and priorities
        of
        Agent and Lenders and Subordinated Creditors even if all or part of the Senior
        Debt or the security interests securing the Senior Debt are subordinated,
        set
        aside, avoided, invalidated or disallowed in connection with any such
        Proceeding, and this Agreement shall be reinstated if at any time any payment
        of
        any of the Senior Debt is rescinded or must otherwise be returned by any
        holder
        of Senior Debt or any representative of such holder.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      2.3           Subordinated
        Debt Payment
        Restrictions.  Notwithstanding the terms
        of the Subordinated Debt Documents, the Company  hereby agrees that it
        may not make, and each Subordinated Creditor hereby agrees that it will not
        accept, any Distribution with respect to the Subordinated Debt until the
        Senior
        Debt is Indefeasibly Paid and all commitments to lend under the Senior Debt
        Documents have terminated other than Permitted Subordinated Debt Payments
        subject to the terms of Section 2.2 of this Agreement; provided,
however, that the Company and the Subordinated Creditors further
        agree
        that no Permitted Subordinated Debt Payment may be made by the Company, directly
        or indirectly, or accepted by the Subordinated Creditors if at the time of
        such
        payment a Senior Default exists or would arise as a result of such Permitted
        Subordinated Debt Payment and such Senior Default shall not have been cured
        or
        waived.  The Company may resume Permitted Subordinated Debt Payments
        (and may make any Permitted Subordinated Debt Payments missed due to the
        application of the preceding sentence) upon a cure or waiver of the Senior
        Default so long as no Senior Default would arise after giving effect to such
        Permitted Subordinated Debt Payment.  No Senior Default shall be
        deemed to have been waived for purposes of this Section 2.3 unless and until
        the
        Company shall have received a written waiver from Agent. Any Permitted
        Subordinated Debt Payments shall indefeasibly vest in the Subordinated Creditors
        and the Agent and the Lenders waive any rights they may have to reclamation
        of
        such payments if made in accordance with this Agreement.

      

      2.4           Subordinated
        Debt Standstill Provisions.  Until the Senior Debt is
        Indefeasibly Paid and all commitments to lend under the Senior Debt Documents
        shall be terminated, no Subordinated Creditor shall, without the prior written
        consent of Agent, take any Enforcement Action with respect to the Subordinated
        Debt.

      

      2.5           Incorrect
        Payments. If any Distribution on account of the Subordinated Debt
        not permitted to be made by the Company or accepted by a Subordinated Creditor
        under this Agreement is made and received by such Subordinated Creditor,
        such
        Distribution shall not be commingled with any of the assets of such Subordinated
        Creditor, shall be held in trust by such Subordinated Creditor for the benefit
        of Agent and Lenders and shall be promptly paid over to Agent for application
        (in accordance with the Senior Debt Documents ) to the payment of the Senior
        Debt then remaining unpaid, until all of the Senior Debt is Indefeasibly
        Paid.

       

      2.6  Subordination
        of Liens and Security Interests; Agreement Not to Contest; Agreement to Release
        Liens. Until the Senior Debt has been Indefeasibly Paid and all
        lending commitments under the Senior Debt Documents have terminated, any
        liens
        and security interests of a Subordinated Creditor in the Collateral which
        may
        exist shall be and hereby are subordinated for all purposes and in all respects
        to the liens and security interests of Agent and Lenders in the Collateral,
        regardless of the time, manner or order of perfection of any such liens and
        security interests. Each Subordinated Creditor agrees that it will not at
        any
        time contest the validity, perfection, priority or enforceability of the
        Senior
        Debt, the Senior Debt Documents, or the liens and security interests of Agent
        and Lenders in the Collateral securing the Senior Debt.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      2.7           Sale,
        Transfer or other Disposition of Subordinated
        Debt.

      

      (a)           No
        Subordinated Creditor shall sell, assign, pledge, dispose of or otherwise
        transfer all or any portion of the Subordinated Debt or any Subordinated
        Debt
        Document: (i) unless, prior to the
        consummation of any such action, the transferee thereof shall execute and
        deliver to Agent an agreement substantially identical to this Agreement,
        providing for the continued subordination of the Subordinated Debt to the
        Senior
        Debt as provided herein and for the continued effectiveness of all of the
        rights
        of Agent and Lenders arising under this Agreement.

      

      (b)           Notwithstanding
        the failure of any assignee or transferee to execute or deliver an agreement
        substantially identical to this Agreement or to otherwise agree to be bound
        by
        the provisions hereof, the terms of this Agreement shall nevertheless be
        binding
        upon the successors and assigns of each Subordinated Creditor and each Agent
        and
        Lenders.

      

      2.8           Legends.
        Until the termination of this Agreement in accordance with Section 15 hereof,
        each Subordinated Creditor will cause to be clearly, conspicuously and
        prominently inserted on the face of the Subordinated Note and each other
        Subordinated Debt Document, as well as any renewals or replacements thereof,
        the
        legend in place on such documents as in effect on the date hereof or the
        following legend:

      

      “This
        instrument and the rights and obligations evidenced hereby are subordinate
        in
        the manner and to the extent set forth in that certain Amended and Restated
        Subordination and Intercreditor Agreement (the “Subordination Agreement”),
        entered into as of June 1, 2007 among Keystone Consolidated Industries, Inc.
        (“Company”), the County of Peoria, Illinois, and Wachovia Capital Finance
        Corporation (Central) (“Agent”), to the indebtedness (including interest) owed
        by the Company pursuant to that certain Loan and Security Agreement dated
        as of
        August 31, 2005 between the Company, and Agent and other Lenders party
        thereto (and the documents related thereto), as such Loan
        and Security Agreement (and related documents) has been and hereafter may
        be
        amended, restated, supplemented or otherwise modified from time to time and
        to
        indebtedness refunding or refinancing the indebtedness under that agreement
        as
        contemplated by the Subordination Agreement; and each holder of this instrument,
        by its acceptance hereof, irrevocably agrees to be bound by the provisions
        of
        the Subordination Agreement.”

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      2.9           Asset
        Sales.  The Agent’s rights with respect to the Collateral
        include the right to release any or all of the Collateral from any or all
        liens
        or encumbrances in favor of the Agent and the Subordinated Creditors in
        connection with any sale of all or any portion of the Collateral.
 The Subordinated Creditors are hereby deemed to have
        consented to all such sales.  Upon the request of the Agent, the
        Subordinated Creditors shall deliver to the Agent such duly executed and
        undated
        UCC and, as applicable, intellectual property terminations, satisfactions
        and
        discharges of mortgages (the term “mortgage” being deemed to include mortgage
        deeds, deeds of trust and other similar instruments creating a lien on real
        property), termination statements and partial release statements (in blank
        as to
        the assets being released), as Agent may request with respect to the
        Subordinated Creditors’ liens on any or all of the Company’s
        assets.  If the Agent shall determine, in connection with any sale of
        Collateral, that the termination, satisfaction, discharge or partial release
        of
        the lien on all or any portion of the Collateral in connection with such
        sale is
        necessary or advisable, the Agent may deliver to the applicable purchaser
        at
        such sale (or, upon the request of such purchaser, file) such previously
        delivered termination, satisfaction, discharge or partial release documents,
        which partial release documents the Agent  is hereby authorized to
        complete (whether one or more and from time to time)) by inserting the
        description of the assets to be released.  The Subordinated Creditors
        shall execute such other release, satisfaction, discharge and termination
        documents and instruments and shall take such further actions as the Agent
        shall
        request.  The Subordinated Creditors hereby irrevocably constitutes
        and appoints the Agent, with full power of substitution, as its true and
        lawful
        attorney-in-fact with full irrevocable power and authority in the place and
        stead of the Subordinated Creditors and in their name or in the Agent’s own
        name, from time to time in the Agent’s discretion, for the purpose of carrying
        out the terms of this paragraph, to take any and all appropriate action and
        to
        execute any and all documents and instruments which may be necessary or
        desirable to accomplish the purposes of this paragraph, including, without
        limitation, any terminations of financing statements, partial lien releases,
        mortgage satisfactions and discharges, endorsements, assignments or other
        instruments of transfer, termination or release, and, in addition, to take
        any
        and all other appropriate and commercially reasonably action for the purpose
        of
        carrying out the terms of this paragraph.  The Subordinated Creditors
        hereby ratify all that said attorneys shall lawfully do or cause to be done
        pursuant to the power of attorney granted in this paragraph.  No
        person to whom this power of attorney is presented, as authority for Agent
        to
        take any action or actions contemplated hereby, shall be required to inquire
        into or seek confirmation from the Subordinated Creditors as to the authority
        of
        the Agent to take any action described herein, or as to the existence of
        or
        fulfillment of any condition to this power of attorney, which is intended
        to
        grant to the Agent unconditionally the authority to take and perform the
        actions
        contemplated herein.  The Subordinated Creditors irrevocably waive any
        right to commence any suit or action, in law or equity, against any person
        or
        entity which acts in reliance upon or acknowledges the authority granted
        under
        this power of attorney.

       

      2.10           Cash
        Collateral; Financing.  To the extent that the Agent
        consents to the Company’s use of cash collateral under Section 363 of the
        Bankruptcy Code or otherwise or the Agent agrees to provide additional financing
        to any Company under the Bankruptcy Code, the Subordinated Creditors hereby
        agree not to impede, object to (on grounds of lack of adequate protection,
        or
        otherwise), or otherwise interfere with such use of cash collateral or
        financing.  The Subordinated Creditors specifically agree that the
        Agent may consent to any Company’s use of cash collateral or provide financing
        to Company on such terms and conditions and in such amounts as the Agent,
        in its
        sole discretion, elects.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      3.           Modifications.

      

      3.1           Modifications
        to Senior Debt Documents. Agent and Lenders may at
        any time and from time to time without the consent of or notice to any
        Subordinated Creditor, without incurring liability to any Subordinated Creditor
        and without impairing or releasing the obligations of any Subordinated Creditor
        under this Agreement, change the manner or place of payment or extend the
        time
        of payment of or renew or alter any of the terms of the Senior Debt, or amend
        in
        any manner any agreement, note, guaranty or other instrument evidencing or
        securing or otherwise relating to the Senior Debt.

      

      3.2           Modifications
        to Subordinated Debt Documents. Until the Senior
        Debt has been Indefeasibly Paid and all lending commitments under the Senior
        Debt Documents have terminated, and notwithstanding anything to the contrary
        contained in the Subordinated Debt Documents, no Subordinated Creditor shall,
        without the prior written consent of Agent, agree to any amendment, restatement,
        modification, refinancing, refunding or supplement to the Subordinated Debt
        Documents.

      

      4.           Representation.  Each
        Subordinated Creditor represents and warrants to Agent that as of the date
        hereof, The County of Peoria, Illinois, is the sole owner, beneficially and
        of
        record, of all the Subordinated Debt.

      

      5.           Modification.
        Any modification or waiver of any provision of this Agreement, or any consent
        to
        any departure by any party from the terms hereof, shall not be effective
        in any
        event unless the same is in writing and signed by Agent and Subordinated
        Creditors, and then such modification, waiver or consent shall be effective
        only
        in the specific instance and for the specific purpose given. Any notice to
        or
        demand on any party hereto in any event not specifically required hereunder
        shall not entitle the party receiving such notice or demand to any other
        or
        further notice or demand in the same, similar or other circumstances unless
        specifically required hereunder.

      

      7.           Further
        Assurances. Each party to this Agreement promptly will execute and
        deliver such further instruments and agreements and do such further acts
        and
        things as may be reasonably requested in writing by any other party hereto
        that
        may be necessary or desirable in order to effect fully the purposes of this
        Agreement.

       

      8.           Notices.
        Unless otherwise specifically provided herein, any notice delivered under
        this
        Agreement shall be in writing addressed to the respective party as set forth
        below and may be personally served, telecopied or sent by overnight courier
        service or certified or registered United States mail and shall be deemed
        to
        have been given (a) if delivered in person, when delivered; (b) if delivered
        by
        telecopy, on the date of transmission if transmitted on a business day before
        4:00 p.m. (Chicago time) or, if not, on the next succeeding business day;
        (c) if
        delivered by overnight courier, one business day after delivery to such courier
        properly addressed; or (d) if by United States mail, four business days after
        deposit in the United States mail, postage prepaid and properly
        addressed.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      Notices
        shall be addressed as follows:

      

      (a)           if
        to Agent:

      

      Wachovia
        Capital Finance Corporation (Central)

      150
        S.
        Wacker Drive, Suite 2200

      Chicago,
        IL  60606

      Attention:  Keystone
        Account Manager

      Facsimile
        No.:  312/332-0424

      

      with
        a
        copy to:

      

      Latham
        & Watkins

      233
        S.
        Wacker Drive, Suite 5800

      Chicago,
        IL  60606

      Attention:
        Vik Puri

      Facsimile
        No.:  312/993-9767

      

      (b)           if
        to the Subordinated Creditors:

      

      The
        County of Peoria, Illinois

      324
        Main
        Street

      Peoria,
        IL  61602

      Attention:
        F. Patrick Urich, County Administrator

      Facsimile
        No.:  309/672-6029

      

      with
        a
        copy to:

      

      Schwartz
        Cooper Chartered

      180
        N.
        LaSalle Street, Suite 2700

      Chicago,
        IL  60601

      Attention:
        Gary P. Segal

      Facsimile
        No.:  312/264-2476

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

      

      

      (c)           if
        to the Company:

      

      Keystone
        Consolidated Industries, Inc.

      Three
        Lincoln Centre, Suite 1740

      5430
        LBJ
        Freeway

      Dallas,
        TX  75240

      Attention:
        President

      Facsimile
        No.:  972/448-1408

      

      with
        a
        copy to:

      

      Keystone
        Consolidated Industries, Inc.

      Three
        Lincoln Centre, Suite 1740

      5430
        LBJ
        Freeway

      Dallas,
        TX  75240

      Attention:
        E. Pierce Marshall, Jr. Acting Associate General Counsel

      Facsimile
        No.:  972/448-1445

      

      

      

      or
        in any
        case, to such other address as the party addressed shall have previously
        designated by written notice to the serving party, given in accordance with
        this
        Section 8.

      

      9.           Successors
        and Assigns. This Agreement shall inure to the benefit of, and
        shall be binding upon, the respective successors and assigns of Agent and
        Lenders, Subordinated Creditors and the Company. To the extent permitted
        under
        the Senior Debt Documents, Agent and Lenders may, from time to time, without
        notice to any Subordinated Creditor, assign or transfer any or all of the
        Senior
        Debt or any interest therein to any Person and, notwithstanding any such
        assignment or transfer, or any subsequent assignment or transfer, the Senior
        Debt shall, subject to the terms hereof, be and remain Senior Debt for purposes
        of this Agreement, and every permitted assignee or transferee of any of the
        Senior Debt or of any interest therein shall, to the extent of the interest
        of
        such permitted assignee or transferee in the Senior Debt, be entitled to
        rely
        upon and be the third party beneficiary of the subordination provided under
        this
        Agreement and shall be entitled to enforce the terms and provisions hereof
        to
        the same extent as if such assignee or transferee were initially a party
        hereto.

      

      10.           Relative
        Rights.   This Agreement shall
        define the relative rights of Agent and Lenders and Subordinated Creditors.
        Nothing in this Agreement shall (a) impair, as among the Company and Agent
        and
        Lenders and as between the Company and Subordinated Creditors, the obligation
        of
        the Company with respect to the payment of the Senior Debt and the Subordinated
        Debt in accordance with their respective terms or (b) affect the relative
        rights
        of Agent and Lenders or Subordinated Creditors with respect to any other
        creditors of the Company.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      11.           Conflict.
        In the event of any conflict between any term, covenant or condition of this
        Agreement and any term, covenant or condition of any of the Subordinated
        Debt
        Documents, the provisions of this Agreement shall control and
        govern.

      

      12.           Headings.
        The paragraph headings used in this Agreement are for convenience only and
        shall
        not affect the interpretation of any of the provisions hereof.

      

      13.           Counterparts.
        This Agreement may be executed in one or more counterparts, each
        of
        which shall be deemed an original, but all of which together shall constitute
        one and the same instrument.

      

      14.           Severability.
        In the event that any provision of this Agreement is deemed to be
        invalid, illegal or unenforceable by reason of the operation of any law or
        by
        reason of the interpretation placed thereon by any court or governmental
        authority, the validity, legality and enforceability of the remaining provisions
        of this Agreement shall not in any way be affected or impaired thereby, and
        the
        affected provision shall be modified to the minimum extent permitted by law
        so
        as most fully to achieve the intention of this Agreement.

      

      15.           Continuation
        of Subordination; Termination of Agreement. This Agreement shall
        remain in full force and effect until the indefeasible payment in full in
        cash
        of the Senior Debt and the termination of all lending commitments under the
        Senior Debt Documents after which this Agreement shall terminate without
        further
        action on the part of the parties hereto.

      

      16.           Applicable
        Law. This Agreement shall be governed by and shall
        be construed and enforced in accordance with the internal laws of the State
        of
        Illinois, without regard to conflicts of law principles.

      

      17.           CONSENT
        TO JURISDICTION.EACH OF THE PARTIES HERETO
        HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
        COURT
        LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS.  EACH OF THE
        PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION
        OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
        CONVENIENS.  EACH OF THE PARTIES HERETO HEREBY WAIVES PERSONAL SERVICE
        OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE
        MADE
        UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
        TO
        SUCH PARTY AT THEIR RESPECTIVE ADDRESSES SET FORTH IN THIS AGREEMENT AND
        SERVICE
        SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
        POSTED.

      

      18.           WAIVER
        OF JURY TRIAL. EACH OF THE PARTIES HERETO
        HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
        OF
        ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE SUBORDINATED
        DEBT
        DOCUMENTS OR ANY OF THE SENIOR DEBT DOCUMENTS.  EACH OF THE PARTIES
        HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO
        A
        BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO
        THIS
        AGREEMENT AND THE SENIOR DEBT DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY
        ON
        THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  EACH OF THE PARTIES
        HERETO WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING
        THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
        WAIVES ITS JURY TRIAL RIGHTS.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

 

      19,           Prior
        Agreement.  Each of the Parties hereto agrees that this
        Agreement shall amend, restate and replace that certain Subordination and
        Intercreditor Agreement dated as of March 15, 2002 (as amended) among Agent
        (f/k/a Congress Financial Corporation (Central)), Company and Subordinated
        Creditors.

      

      

      [Signature
        Page Follows]

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

      

      

      IN
        WITNESS WHEREOF, Subordinated Creditors, the Company, and the Agent
        have caused this Agreement to be executed as of the date first above
        written.

      

      AGENT:

      WACHOVIA
        CAPITAL FINANCE (CENTRAL)

      

      

      By:                                                                        

      Its:                                                                        

      

      

      SUBORDINATED
        CREDITORS:

      

      THE
        COUNTY OF PEORIA, ILLINOIS

      

       

      
        By:                                                                        

        Its:                                                                        

        

      

      

      COMPANY:

      

      KEYSTONE
        CONSOLIDATED INDUSTRIES, INC.

      

       

      
        By:                                                                        

        Its:                                                                        

        

      

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            EXHIBIT
              B

             

          

        

      

       

      SCHEDULE
        I

      

      

      
        	
                Payment
                  Date

              	
                Payment
                  Amount

              	
                Principal
                  Payment

              	
                Interest
                  Payment

              	
                Cumulateive
                  Principal Accruing Interest

              	
                Cumulative
                  Interest

              
	 	 	 	 	 	 
	
                June
                  1, 2007

              	
                1,000,000.00

              	
                1,000,000.00

              	
                N/A

              	
                N/A

              	
                N/A

              
	
                December
                  1, 2007

              	
                838,018.49

              	
                500,518.49

              	
                337,500.00

              	
                500,518.49

              	
                337,500.00

              
	
                June
                  1, 2008

              	
                838,018.49

              	
                519,287.93

              	
                318,730.56

              	
                1,019,806.42

              	
                656,230.56

              
	
                December
                  1, 2008

              	
                838,018.49

              	
                538,761.23

              	
                299,257.26

              	
                1,558,567.65

              	
                955,487.82

              
	
                June
                  1, 2009

              	
                838,018.49

              	
                558,964.78

              	
                279,053.71

              	
                2,117,532.43

              	
                1,234,541.53

              
	
                December
                  1, 2009

              	
                838,018.49

              	
                579,925.96

              	
                258,092.53

              	
                2,697,458.39

              	
                1,492,634.06

              
	
                June
                  1, 2010

              	
                838,018.49

              	
                601,673.18

              	
                236,345.31

              	
                3,299,131.57

              	
                1,728,979.37

              
	
                December
                  1, 2010

              	
                838,018.49

              	
                624,235.92

              	
                213,782.57

              	
                3,923,367.49

              	
                1,942,761.94

              
	
                June
                  1, 2011

              	
                838,018.49

              	
                647,644.77

              	
                190,373.72

              	
                4,571,012.26

              	
                2,133,135.66

              
	
                December
                  1, 2011

              	
                838,018.49

              	
                671,931.45

              	
                166,087.04

              	
                5,242,943.71

              	
                2,299,222.70

              
	
                June
                  1, 2012

              	
                838,018.49

              	
                697,128.88

              	
                140,889.61

              	
                5,940,072.59

              	
                2,440,112.31

              
	
                December
                  1, 2012

              	
                838,018.49

              	
                723,271.21

              	
                114,747.28

              	
                6,663,343.80

              	
                2,554,859.59

              
	
                June
                  1, 2013

              	
                838,018.49

              	
                750,393.88

              	
                87,624.61

              	
                7,413,737.69

              	
                2,642,484.19

              
	
                December
                  1, 2013

              	
                838,018.49

              	
                778,533.65

              	
                59,484.84

              	
                8,192,271.34

              	
                2,701,969.03

              
	
                June
                  1, 2014

              	
                838,018.49

              	
                807,728.67

              	
                30,289.82

              	
                9,000,000.00

              	
                2,732,258.86

              
	 	 	
                10,000,000.00

              	 	 	 

      

      

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          Exhibit
            C

        

      

       

      

        Form
          of
          Capital Expenditure Requirement Certification

      

      CERTIFICATE
        OF COMPLIANCE

      WITH
        CAPITAL EXPENDITURE REQUIREMENT

      

      The
        undersigned, does hereby certify to The County of Peoria, Illinois and the
        State
        of Illinois, Department of Commerce and Community Affairs that he is a duly
        elected, qualified and acting Vice President and Chief Financial Officer
        of
        KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation (the “Company”), and that
        he is authorized to execute this certificate and that he further certifies
        that:

       

      1.           Since
        April 9, 2002, the Company has invested at least Ten Million and No/100s
        Dollars
        ($10,000,000.00) in Durable Movable Equipment for the Company’s facilities in
        Peoria, Illinois in accordance with the provisions of Part III, Section 2.2
        of
        the DCCA Grants (the “Capital Expenditure Requirement”).

       

      2.           In
        complying with the Capital Expenditure Requirement, the Company used generally
        accepted sound business practices, arms length bargaining and the other
        principles set forth in Part IV, Section 4.8 of the DCCA Grants.

       

      3.           Attached
        hereto as Exhibit A are copies of invoices for the Durable
        Movable Equipment that was purchased for the Company’s facilities in Peoria,
        Illinois since April 9, 2002 with an aggregate purchase price of Ten Million
        and
        No/100s Dollars ($10,000,000.00), or an itemized list of such Durable Movable
        Equipment.

       

      IN
        WITNESS WHEREOF, the undersigned has executed this Certificate as of
        May 22, 2007.

       

      By:
        /s/ Bert E. Downing,
        Jr.                                   
     

      Bert
        E.
        Downing, Jr.,

      Vice
        President and Chief Financial OfficerExhibit 10.1

    Exhibit
      10.1

    
 

    
      	
               

               

               

               

               

               

               

               

              FIRST
                MID-ILLINOIS BANCSHARES, INC.

              2007
                STOCK INCENTIVE PLAN

               

               

               

               

               

               

               

               

               

               

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              TABLE
                OF CONTENTS

            
	 	 	 
	 	 	
              Page

            
	 	 	 
	
              1.

            	
              PURPOSE
                OF THE PLAN

            	
              1

            
	
              2.

            	
              DEFINITIONS

            	
              1

            
	
              3.

            	
              ADMINISTRATION
                OF THE PLAN

            	
              2

            
	
              4.

            	
              SHARES
                SUBJECT TO THE PLAN

            	
              3

            
	
              5.

            	
              STOCK
                OPTIONS

            	
              3

            
	
              6.

            	
              STOCK
                AWARDS

            	
              4

            
	
              7.

            	
              STOCK
                APPRECIATION RIGHTS

            	
              4

            
	
              8.

            	
              STOCK
                UNITS

            	
              5

            
	
              9.

            	
              CHANGE
                IN CONTROL

            	
              5

            
	
              10.

            	
              AWARD
                AGREEMENTS

            	
              6

            
	
              11.

            	
              NONTRANSFERABILITY

            	
              6

            
	
              12.

            	
              WITHHOLDING
                OF TAX

            	
              6

            
	
              13.

            	
              STOCK
                CERTIFICATES

            	
              6

            
	
              14.

            	
              RIGHT
                OF FIRST REFUSAL

            	
              7

            
	
              15.

            	
              DELIVERY
                AND REGISTRATION OF STOCK

            	
              7

            
	
              16.

            	
              AMENDMENT
                OR TERMINATION OF THE PLAN OR AWARD AGREEMENTS

            	
              7

            
	
              17.

            	
              TERM
                OF PLAN

            	
              8

            
	
              18.

            	
              SERVICE

            	
              8

            
	
              19.

            	
              GOVERNING
                LAW

            	
              8

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

        
        

      

    

    FIRST
      MID-ILLINOIS BANCSHARES, INC.

    2007
      STOCK INCENTIVE PLAN

    

    
      	1.  	
              Purpose
                of the Plan

               

            

    

    First
      Mid-Illinois Bancshares, Inc. (the “Company”) hereby adopts the First
      Mid-Illinois Bancshares, Inc. 2007 Stock Incentive Plan (the “Plan”) as of
      February 27, 2007, subject to approval by Company stockholders at the Company’s
      annual meeting of stockholders to be held on May 23, 2007. The Plan is intended
      to provide a means whereby directors, employees, consultants and advisors of
      the
      Company and its Subsidiaries may sustain a sense of proprietorship and personal
      involvement in the continued development and financial success of the Company
      and its Subsidiaries, thereby advancing the interests of the Company and its
      stockholders. Accordingly, directors and selected employees, consultants and
      advisors may be provided the opportunity to acquire shares of Common Stock
      of
      the Company or otherwise participate in the financial success of the Company,
      on
      the terms and conditions established herein.

     

    
      	2.  	
              Definitions

               

            

    

    The
      following terms shall be defined as set forth below:

     

    (a)  “Award”
shall
      mean any award granted under the Plan, including Stock Options, Stock Awards,
      Stock Appreciation Rights and Stock Units.

     

    (b)  “Board”
shall
      mean the Board of Directors of the Company.

     

    (c)  “Change
      in Control”
shall
      mean:

    (i)  the
      consummation of the acquisition by any person (as such term is defined in
      Section 13(d) or 14(d) of the Exchange Act) of beneficial ownership (within
      the
      meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of
      the
      combined voting power of the then outstanding voting securities of the Company
      other than through the receipt of Shares pursuant to the Plan or the First
      Mid-Illinois Bancshares, Inc. Dividend Reinvestment Plan; 

    (ii)  the
      individuals who, as of the date hereof, are members of the Board cease for
      any
      reason to constitute a majority of the Board, unless the election, or nomination
      for election by the stockholders of the Company, of any new director was
      approved by a vote of a majority of the board, and such new director shall,
      for
      purposes of this Agreement, be considered as a member of the Board;
      or

    (iii)  approval
      by stockholders of the Company of: (A) a merger or consolidation if the
      stockholders, immediately before such merger or consolidation, do not, as a
      result of such merger or consolidation, own, directly or indirectly, more than
      50% of the combined voting power of the then outstanding voting securities
      of
      the entity resulting from such merger or consolidation in substantially the
      same
      proportion as their ownership of the combined voting power of the voting
      securities of the Company outstanding immediately before such merger or
      consolidation; or (B) a complete liquidation or dissolution or an agreement
      for
      the sale or other disposition of all or substantially all of the assets of
      the
      Company.

     

    Notwithstanding
      the foregoing, a Change in Control shall not be deemed to occur solely because
      50% or more of the combined voting power of the then outstanding securities
      of
      the Company are acquired by a trustee or other fiduciary holding securities
      under one or more employee benefit plans maintained for employees of the entity,
      or by any corporation which, immediately prior to such acquisition, is owner
      directly or indirectly by the stockholders in the same proportion as their
      ownership of stock immediately prior to such acquisition.

     

    (d)  “Code”
shall
      mean the Internal Revenue Code of 1986, and any amendments thereto.

     

    (e)  “Committee”
shall
      mean the committee appointed by the Board in accordance with Section 3
      hereof.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (f)  “Company”
shall
      mean First Mid-Illinois Bancshares, Inc., a Delaware corporation.

     

    (g)  “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, and any amendments
      thereto.

     

    (h)  “Fair
      Market Value”
shall
      mean the closing sales price of a Share on a given date, or as otherwise
      determined by the Committee in its discretion.

     

    (i)  “Incentive
      Stock Option”
or
      “ISO”
shall
      mean a stock option awarded under Section 5 of the Plan that satisfies the
      requirements of Code Section 422 or any successor provision.

     

    (j)  “Nonqualified
      Stock Option”
or
      “NSO”
shall
      mean a stock option awarded under Section 5 of the Plan that is not an Incentive
      Stock Option.

     

    (k)  “Participant”
shall
      mean any director or employee of, or consultant or advisor to, the Company
      or a
      Subsidiary who is selected to participate in the Plan.

     

    (l)  “Securities
      Act”
shall
      mean the Securities Act of 1933, and any amendments thereto.

     

    (m)  “Share”
shall
      mean a share of common stock of the Company.

     

    (n)  “Stock
      Appreciation Right”
or
      “SAR”
shall
      mean a right awarded under Section 7 of the Plan to receive the appreciation
      in
      the Fair Market Value of a stated number of Shares.

    (o)  “Stock
      Award”
shall
      mean a grant of Shares awarded under Section 6 of the Plan.

     

    (p)  “Stock
      Option”
shall
      mean an Incentive Stock Option or Nonqualified Stock Option granted under the
      Plan.

     

    (q)  “Stock
      Unit”
shall
      mean a right to receive Shares awarded under Section 8 of the Plan.

     

    (r)  “Subsidiary”
shall
      mean an entity of which the Company is the direct or indirect beneficial owner
      of not less than 50% of all issued and outstanding equity interest of such
      entity.

     

    
      	3.  	
              Administration
                of the Plan

               

            

    

    (a)  The
      Committee.
      The
      Plan shall be administered by a Committee appointed by the Board of Directors
      of
      the Company which shall be comprised of two or more directors who are “outside
      directors” (within the meaning of Code Section 162(m)) and “non-employee
      directors” (within the meaning of Rule 16b-3 under the Exchange Act). The
      Committee shall have sole authority to:

    (i)  select
      the directors, employees, consultants and advisors to whom the Awards shall
      be
      granted under the Plan;

    (ii)  establish
      the timing, amount and conditions of each such Award and other limitations,
      restrictions, terms and conditions applicable to each such Award;

    (iii)  prescribe
      any legend to be affixed to certificates representing such Awards;

    (iv)  interpret
      the Plan; and

    (v)  adopt
      such rules, regulations, forms and agreements, not inconsistent with the
      provisions of the Plan, as it may deem advisable to carry out the
      Plan.

    All
      decisions made by the Committee in administering the Plan shall be final. No
      member of the Board or the Committee shall be liable for any action taken or
      determination made hereunder in good faith. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (b)  Performance
      Goals.
      The
      Committee may, in its discretion, provide that any Award granted under the
      Plan
      shall be subject to the attainment of performance goals, including those that
      qualify the Award as “performance-based compensation” within the meaning of Code
      Section 162(m). Performance goals may be based on one or more business criteria,
      including but not limited to: earnings or earnings per share; return on equity;
      common stock price; return on investment; return on assets; net income; expense
      management; credit quality; revenue growth; or operating leverage. Performance
      goals may be absolute in their terms or measured against or in relationship
      to
      the performance of other companies or indices selected by the Committee. In
      addition, performance goals may be adjusted for any events or occurrences
      (including acquisition expenses, extraordinary charges, losses from discontinued
      operations, restatements and accounting charges and restructuring expenses),
      as
      may be determined by the Committee. Performance goals may be particular to
      one
      or more lines of business or Subsidiaries or may be based on the performance
      of
      the Company and its Subsidiaries as a whole. With respect to each performance
      period established by the Committee, the Committee shall establish such
      performance goals relating to one or more of the business criteria described
      above, and shall establish targets for Participants for achievement of
      performance goals. The performance goals and performance targets established
      by
      the Committee may be identical for all Participants for a given performance
      period or, at the discretion of the Committee, may differ among Participants.
      Following the completion of each performance period, the Committee shall
      determine the extent to which performance goals for that performance period
      have
      been achieved and shall authorize Awards, as applicable, to the Participant
      for
      whom the targets were established.

     

    
      	4.  	
              Shares
                Subject to the Plan

               

            

    

    (a)  Total
      Number of Shares.
      The
      total number of Shares that may be issued under the Plan shall be 200,000
      Shares. Any Shares that remain unissued at the termination of the Plan shall
      cease to be subject to the Plan, but until termination of the Plan, the Company
      shall at all times make available sufficient Shares to meet the requirements
      of
      the Plan. 

     

    (b)  Reuse
      of Shares.
      The
      number of Shares delivered by a Participant or withheld by the Company on behalf
      of any such Participant as full or partial payment of an Award, including the
      exercise price of a Stock Option or any required withholding taxes, shall once
      again be available for issuance pursuant to subsequent Awards, and shall not
      count towards the aggregate number of Shares that may be issued under the Plan.
      Any Shares subject to an Award may thereafter be available for issuance pursuant
      to subsequent Awards, and shall not count towards the aggregate number of Shares
      that may be issued under the Plan, if there is a lapse, forfeiture, expiration,
      termination or cancellation of any such prior Award for any reason, or if Shares
      are issued under such Award and thereafter are reacquired by the Company
      pursuant to rights reserved by the Company upon issuance thereof.

     

    (c)  Shares
      Under Awards.
      The
      maximum number of Shares as to which an employee of the Company or a Subsidiary
      may receive Stock Options in any calendar year is 50,000. The maximum number
      of
      Shares that may be used for Awards other than Stock Options that are intended
      to
      qualify as “performance based” in accordance with Code Section 162(m) that may
      be granted to any employee of the Company or a Subsidiary in any calendar year
      is 50,000, or, in the event the Award is settled in cash, an amount equal to
      the
      Fair Market Value of such number of Shares on the date on which the Award is
      settled. The maximum number of Shares that may be subject to Incentive Stock
      Options is 200,000.

     

    (d)  Adjustment.
      Awards
      under the Plan shall be adjusted to reflect a change in the outstanding Shares
      of the Company by reason of a recapitalization, reclassification,
      reorganization, stock split, reverse stock split, combination or exchange of
      shares, stock dividend or similar transaction. The adjustment shall be made
      in
      an equitable manner which shall cause the intended benefits under the Awards
      to
      remain unchanged as a result of the applicable transaction.

     

    
      	5.  	
              Stock
                Options

               

            

    

    (a)  Grants
      of Stock Options.
      The
      Committee may grant Stock Options that constitute Incentive Stock Options to
      employees and Nonqualified Stock Options to all Participants. Unless otherwise
      expressly provided at the time of grant, Stock Options granted under the Plan
      shall be NSOs.

     

    (b)  Terms
      and Conditions of Stock Options.
      Each
      Stock Option granted under the Plan shall be subject to the terms and conditions
      established by the Committee, including the type of Stock Option granted, the
      number of Shares subject to the Stock Option, the exercise price, the vesting
      schedule, the terms for payment of the exercise price and any withholding taxes,
      and the expiration date.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (c)  Additional
      Terms and Conditions Applicable to All Stock Options.
      Each
      Stock Option shall be subject to the following terms and
      conditions:

    (i)  Exercise
      Price.
      The
      exercise price of each Stock Option shall not be less than the Fair Market
      Value
      of a Share on the date the Stock Option is granted.

    (ii)  Vesting.
      Except
      as provided below in (d), each Stock Option that has not terminated earlier
      shall expire on the date 10 years after the date of grant.

    (iii)  Method
      of Exercise.
      A Stock
      Option may be exercised only by giving written notice to the Company specifying
      the number of Shares to be purchased. The
      Stock
      Option exercise price may be paid in any one or a combination of (A) cash
      (including personal check), (B) in cash received from a broker-dealer to whom
      the Participant has submitted an exercise notice together with irrevocable
      instructions to deliver promptly to the Company the amount of sales proceeds
      from the sale of the Shares subject to the Stock Option to pay the exercise
      price, (C) by directing the Company to withhold a number of Shares otherwise
      issuable in connection with the Stock Option having a Fair Market Value equal
      to
      the exercise price, or (D) by delivering (either directly or through
      attestation) previously acquired Shares that are acceptable to the Committee
      and
      that have an aggregate Fair Market Value on the date of exercise equal to the
      Stock Option exercise price.

     

    (d)  Additional
      Terms and Conditions Applicable to Incentive Stock Options.
      Each
      Incentive Stock Option shall be subject to the following terms and
      conditions:

    (i)  ISO
      Exercise Price.
      The
      exercise price of an ISO granted to an employee of the Company or a Subsidiary
      who, at the time such ISO is granted, owns stock of the Company possessing
      more
      than 10% of the total combined voting power of all classes of Shares (or its
      parent or subsidiaries as defined in Code Section 422(b)(6)) (hereinafter
      referred to as a “10% Stockholder”) shall not be less than 110% of the Fair
      Market Value of a Share on the date the ISO is granted.

    (ii)  Term
      of ISO.
      No ISO
      granted to a 10% Stockholder may be exercised more than five years after the
      date of grant.

    (iii)  Annual
      Exercise Limit.
      The
      aggregate Fair Market Value (determined at the time the ISO is granted) of
      Shares which first become exercisable during any calendar year shall not exceed
      $100,000. In the event that this limit is exceeded, so much of the ISO that
      does
      not exceed the limit shall be an ISO and the remainder shall be a NSO, but
      in
      all other respects the original terms and conditions of the Stock Option shall
      remain in full force and effect.

     

    
      	6.  	
              Stock
                Awards

               

            

    

    (a)  Grants.
      The
      Committee may grant Shares under the Plan to any Participant.

     

    (b)  Terms
      and Conditions of Grant.
      Each
      Stock Award shall be subject to the terms and conditions as established by
      the
      Committee, including the number of Shares granted, and any restrictions,
      including without limitation, prohibitions against transfer, substantial risks
      of forfeiture or attainment of performance objectives.

     

    (c)  Stockholder
      Rights.
      Subject
      to the foregoing, and except as otherwise provided by the Committee, the
      Participant receiving a Stock Award shall have all other rights of a stockholder
      including, but not limited to, the right to receive dividends and the right
      to
      vote such Shares; provided that the Committee shall have the discretion to
      accumulate and hold such dividends and pay them to the Participant only upon
      the
      lapse of the restrictions to which the Award is subject.

     

    
      	7.  	
              Stock
                Appreciation Rights

               

            

    

    (a)  Grants.
      The
      Committee may grant SARs under the Plan to any Participant.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (b)  Terms
      and Conditions of Grant.
      

    (i)  Each
      SAR
      granted under the Plan shall be subject to the terms and conditions established
      by the Committee, including the number of Shares subject to the SAR, the
      exercise price, the vesting schedule, and the expiration date. 

    (ii)  An
      SAR
      may be granted independently of a Stock Option, or in tandem with or with
      reference to a related Stock Option granted prior to or at the same time as
      the
      grant of the SAR, in which event the Participant may elect to exercise the
      Stock
      Option or the SAR, but not both, as to the same Shares subject to the Stock
      Option and the SAR. The tandem SAR shall be exercisable only at such time as
      the
      Stock Option to which it relates is exercisable and shall be subject to the
      restrictions and conditions and other terms applicable to such Stock Option.
      Upon the exercise of a tandem SAR, the unexercised Stock Option, or the portion
      thereof to which the exercised portion of the tandem SAR is related, shall
      expire. The exercise of any Stock Option shall cause the expiration of the
      tandem SAR related to such Stock Option, or portion thereof, that is
      exercised.

     

    (c)  Additional
      Terms and Conditions Applicable to All SARs.
      Each
      SAR shall be subject to the following terms and conditions:

    (i)  Exercise
      Price.
      The
      exercise price of each SAR shall not be less than the Fair Market Value of
      a
      Share on the date the SAR is granted.

    (ii)  Vesting.
      Each
      SAR that has not terminated earlier shall expire on the date 10 years after
      the
      date of grant.

     

    (d)  Payment
      on Exercise.
      An SAR
      may be exercised only by giving written notice to the Company specifying the
      number of Shares to be purchased. Upon exercise of an SAR, the Participant
      shall
      be paid the excess of the then Fair Market Value of a Share on the date of
      such
      exercise over the exercise price of the SAR multiplied by the number of Shares
      with respect to which the SAR is being exercised. Such amount shall be paid
      in
      cash or in Shares having a Fair Market Value equal to such amount.

     

    
      	8.  	
              Stock
                Units

               

            

    

    (a)  Grants.
      The
      Committee may grant Stock Units to any Participant. Each Stock Unit shall
      entitle the Participant to receive, on the date or occurrence of an event
      determined by the Committee, one Share or cash equal to the Fair Market Value
      of
      a Share on the date of such event, as determined by the Committee at the time
      of
      grant.

     

    (b)  Terms
      and Conditions of Grant.
      Stock
      Units, and the Shares received pursuant to the Stock Units, shall be subject
      to
      such terms and conditions established by the Committee, including the number
      of
      Stock Units granted, and any restrictions, including without limitation,
      prohibitions against transfer, substantial risks of forfeiture or attainment
      of
      performance objectives.

     

    (c)  Stock
      Unit Holder Rights.
      Unless
      otherwise provided by the Committee, a Participant shall have no rights of
      a
      stockholder, including voting or dividend or other distribution rights, with
      respect to any Stock Units prior to the date they are settled in Shares. The
      Committee may provide that, until the Stock Units are settled in Shares or
      cash,
      the Participant shall receive, on each dividend or distribution payment date
      applicable to the Shares, an amount equal to the dividends or distributions
      that
      the Participant would have received had the Stock Units held by the Participant
      as of the related record date been actual Shares; provided that the Committee
      shall have the discretion to accumulate and hold such dividends or distributions
      and pay them to the Participant only upon the lapse of the restrictions to
      which
      the Award is subject.

     

    
      	9.  	
              Change
                in Control

               

            

    

    In
      the
      event of a Change in Control, all outstanding Awards shall become immediately
      and fully exercisable, all restrictions applicable to Awards shall lapse, and
      any performance goals applicable to any Awards shall be deemed satisfied at
      the
      target or higher levels as determined by the Committee. Upon such Change in
      Control, the Committee has sole discretion to: (i) provide for the purchase
      of
      any outstanding Stock Option, and the mandatory exercise of any outstanding
      SAR,
      for an amount of cash equal to the difference between the exercise price of
      the
      Stock Option or SAR and the then Fair Market Value of the Shares covered
      thereby, multiplied by the number of Shares subject to the Stock Option or
      SAR,
      (ii) make such adjustment to any such Award then outstanding as the Committee
      deems appropriate to reflect such Change in Control, or (iii) cause any such
      Award then outstanding to be assumed by the acquiring or surviving corporation
      after such Change in Control. 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	10.  	
              Award
                Agreements

               

            

    

     Each
      Award under the Plan shall
      be evidenced by a written Award Agreement specifying the terms and conditions
      of
      the Award. In the sole discretion of the Committee, the Award Agreement may
      condition the grant of an Award upon the Participant’s entering into one or more
      of the following agreements with the Company: (a) an agreement not to compete
      with, or solicit the customers or employees of, the Company and its Subsidiaries
      which shall become effective as of the date of the grant of the Award and remain
      in effect for a specified period of time following termination of the
      Participant’s employment with the Company; (b) an agreement to cancel any
      employment agreement, fringe benefit or compensation arrangement in effect
      between the Company and the Participant; and (c) an agreement to retain the
      confidentiality of certain information. Such Award Agreement or other agreement
      may contain such other terms and conditions as the Committee shall determine,
      including provisions for the Participant’s forfeiture of an Award in the event
      of the Participant’s noncompliance with the provisions of such Award Agreement
      or other agreement. If the Participant shall fail to enter into any such
      agreement at the request of the Committee and within any period specified by
      the
      Committee, then the Award granted or to be granted to such Participant shall
      be
      forfeited and cancelled.

     

    
      	11.  	
              Nontransferability

               

            

    

    

      Awards
        granted under the Plan, and any rights and privileges pertaining thereto,
        may
        not be transferred, assigned, pledged or hypothecated in any manner, or be
        subject to execution, attachment or similar process, by operation of law
        or
        otherwise, other than: (a) by will or by the laws of descent and distribution;
        (b) pursuant to the terms of a qualified domestic relations order to which
        the
        Participant is a party that meets the requirements of any relevant provisions
        of
        the Code; or (c) as permitted by the Committee with respect to a NSO
        transferable by the Participant during his or her lifetime. In each case,
        the
        transfer shall be for no value, and the other terms and conditions applicable
        to
        the transferability of the Award shall be established by the
        Committee.

    

     

    
      	12.  	
              Withholding
                of Tax

            

    

     

    In
      connection with any Award, and as a condition to the issuance or delivery of
      any
      Shares or cash amount to the Participant in connection therewith, the Committee
      may require the Participant to pay the Company an amount equal to the minimum
      amount of the tax the Company or any Subsidiary may be required to withhold
      to
      obtain a deduction for federal, state or local income tax purposes as a result
      of such Award or to comply with applicable law. The Committee in its sole
      discretion may make available one or more of the following alternatives for
      the
      payment of such taxes: (a) in cash; (b) in cash received from a broker-dealer
      to
      whom the Participant has submitted notice together with irrevocable instructions
      to deliver promptly to the Company the amount of sales proceeds from the sale
      of
      the Shares subject to the Award to pay the withholding taxes; (c) by directing
      the Company to withhold such number of Shares otherwise issuable in connection
      with the Award having an aggregate Fair Market Value equal to the minimum amount
      of tax required to be withheld; or (d) by delivering (either directly or through
      attestation) previously acquired Shares that are acceptable to the Committee
      that have an aggregate Fair Market Value equal to the amount required to be
      withheld. The Committee shall have the sole discretion to establish the terms
      and conditions applicable to any alternative made available for payment of
      the
      required withholding taxes.

     

     

    
      	13.  	
              Stock
                Certificates

               

            

    

    

    Once
      a
      Participant becomes entitled to receive Shares in connection with an Award
      under
      the Plan, the Company shall either (a) issue, in the name of the Participant,
      stock certificates representing the total number of Shares granted or sold
      to
      the Participant, as soon as may be reasonably practicable after such grant
      or
      sale, which shall be held by the Secretary of the Company until such time as
      the
      Shares are forfeited, resold to the Company, or the restrictions lapse, or
      (b)
      in lieu of issuing stock certificates, reflect the issuance of Shares to a
      Participant on a non-certificated basis, with the ownership of such Shares
      by
      the Participant evidenced solely by book entry in the records of the Company’s
      transfer agent. Each stock certificate issued, or each book-entry made, in
      respect of any Award subject to any restriction or forfeiture shall bear or
      be
      subject to the following legend:

     

    
      The
        Shares represented hereby are subject to the terms and conditions (including
        forfeiture and restrictions on transfer) contained in the First Mid-Illinois
        Bancshares, Inc. 2007 Stock Incentive Plan and any related Award Agreement
        between the Company and the individual receiving the Shares. Release from
        such
        terms and conditions shall be obtained only in accordance with the provisions
        of
        the Plan and Award Agreement, a copy of each of which is on file in the office
        of the Secretary of the Company.

    

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      	14.  	
              Right
                of First Refusal

               

            

    

    (a)  Purchase
      by Company.
      If a
      holder of Shares acquired under the Plan wishes to sell such Shares, such holder
      shall first offer such Shares to the Company for purchase, and the Company
      shall
      have 10 business days to exercise its right to purchase such Shares. The
      purchase price shall be as negotiated by the Company and the holder, or if
      applicable, the price offered to the holder pursuant to a bona fide third party
      written offer (such offer to include the number of Shares to be sold, the name
      and address of the person(s) offering to purchase the Shares and the purchase
      price and terms of payment of such sale). The Committee in its discretion may
      pay the holder in a lump sum or, if the lump sum exceeds $225,000, in
      substantially equal annual or more frequent installments over a period not
      exceeding five years. If the purchase price is paid in installments, the unpaid
      balance shall earn interest at a rate that is substantially equal to the rate
      at
      which the Company could borrow the amount due and shall be secured by a pledge
      of the Shares purchased or such other adequate security as agreed to by the
      Company and the holder. If the Company does not exercise its right to purchase
      such Shares (including by reason of the parties’ inability to agree on a
      purchase price), the holder may sell such Shares to any purchaser; provided
      that
      if the holder does not sell such Shares within 10 business days after the
      Company’s right to repurchase expires, such Shares shall again become subject to
      the Company’s right to repurchase as described in this Section 14, and the
      holder may not offer to sell such Shares to the Company until six months from
      the expiration of such 10-business day period. For purposes of this Section,
      a
      holder shall include any person who acquires Shares issued under the Plan from
      any other person and for any reason; including, but not limited to, by gift,
      death or sale. Notwithstanding the foregoing, any purchase of Shares pursuant
      to
      this Section 14 shall be subject to any restrictions set forth in the Company’s
      insider trading policy or applicable law, regulation or rule of any stock
      exchange on which the Shares are listed, and any such restrictions shall toll
      the 10-business day periods described herein. Each Share issued under the Plan
      shall bear or be subject to the legend provided under Section 13. 

     

    (b)  Change
      in Control.
      Notwithstanding Section 14(a) above, following a Change in Control of the
      Company, (i) the Company’s repurchase right described therein shall not apply,
      and any Shares acquired under the Plan, whether before, on, or after the Change
      in Control shall be freely transferable by the holder thereof; and (ii) any
      amount of the purchase price remaining to be paid by the Company in connection
      with any prior purchase of Shares pursuant to Section 14(a) above shall be
      paid
      to the holder in an immediate lump sum.

     

    
      	15.  	
              Delivery
                and Registration of Stock

               

            

    

    The
      Company shall not be required to deliver any Shares under the Plan prior to
      (a)
      the admission of such Shares to listing on any stock exchange on which Shares
      may then be listed, (b) the completion of registration or other qualification
      of
      such Shares under any state or federal law, rule or regulation, as the Committee
      shall determine to be necessary or advisable and (c) the determination by the
      Committee that the issuance of such Shares does not violate any applicable
      law,
      or regulation or rule of any stock exchange. Any provision of the Plan which
      is
      inconsistent with said law, regulation or rule should to the extent of such
      inconsistence, be inoperative and shall not affect the validity of the remaining
      provisions of the Plan. Any such postponement of Share delivery shall not extend
      the term of an Award and the Company shall have no obligation or liability
      to a
      Participant, the Participant’s successor or any other person with respect to any
      Shares as to which the Award shall lapse because of such
      postponement

     

    
      	16.  	
              Amendment
                or Termination of the Plan or Award Agreements

               

            

    

    (a)  Plan.
      The
      Board may amend, suspend or terminate the Plan, or a portion thereof, at any
      time, but no amendment shall be made without approval of stockholders of the
      Company if such approval is required by applicable law, regulation or rule
      of
      any stock exchange on which the Shares are listed. No amendment, suspension
      or
      termination of the Plan shall materially impair the rights of any Participant,
      without his or her consent, with respect to any outstanding Awards.

     

    (b)  Award
      Agreements.
      The
      Committee shall have the authority to amend any Award Agreement at any time;
      provided however, that no such amendment shall adversely affect the right of
      any
      Participant under any outstanding Award Agreement in any material way without
      the written consent of the Participant, unless such amendment is required by
      applicable law, regulation or rule of any stock exchange on which the Shares
      are
      listed.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      	17.  	
              Term
                of Plan

               

            

    

    The
      Plan
      shall be effective upon the date of its adoption by the Board; provided that
      the
      Plan is approved by the stockholders of the Company within 12 months after
      the
      date of adoption. Unless sooner terminated under the provisions of Section
      15,
      Awards shall not be granted under the Plan after the expiration of 10 years
      from
      the effective date of the Plan; provided that outstanding Awards granted prior
      to such time shall continue to be subject to the terms and conditions of the
      Plan in effect prior to such date.

    

    
      	18.  	
              Service

               

            

    

    A
      Participant shall be considered to be in the service of the Company or a
      Subsidiary as long as he or she remains a director, employee, consultant or
      advisor of the Company or such Subsidiary. Nothing herein shall confer on any
      Participant that right to continued service with the Company or a Subsidiary
      or
      affect the right of the Company or such Subsidiary to terminate such
      service.

     

    
      	19.  	
              Governing
                Law

               

            

    

    All
      questions pertaining to the validity, construction and administration of the
      Plan and all Awards granted under the Plan shall be determined in conformity
      with the laws of the State of Delaware, without regard to the conflict of law
      provisions of any state, and, in the case of Incentive Stock Options, Section
      422 of the Code and regulations issued thereunder.

    

    
      
        
        

      

      
        8

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