1
EXHIBIT N
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 1 -
Xxxxxx Services Corp.
000 Xxxx Xxxxxx Xxxx
X.X. Xxx 0000, LCD #1
Xxxxxxxx, Xxxxxxx X0X 0X0
(000) 000-0000
June 21, 1999
Lenders under a Credit Agreement dated as of
August 11, 1997, as amended
c/o Canadian Imperial Bank of Commerce, as
Administrative Agent for the Lenders
0xx Xxxxx
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Sirs:
RE: XXXXXX SERVICES CORP.
This letter agreement (this "Agreement") sets out the revised agreement
among Xxxxxx Services Corp ("PSC") on behalf of itself and each of its
Affiliates, and each of the lenders which is a signatory hereto (individually, a
"Consenting Lender" and collectively the "Consenting Lenders") in its capacity
as a lender under a credit agreement dated as of August 11, 1997 among PSC, as
borrower in Canada, Xxxxxx Services (Delaware) Inc., as borrower in the United
States, the persons from time to time parties to such agreement as lenders,
Canadian Imperial Bank of Commerce ("CIBC"), as administrative agent for the
lenders (the "Administrative Agent"), Bankers Trust Company ("BTCo"), as
syndication agent, CIBC and BTCo, as co-arrangers, as amended by amending
agreements dated as of October 31, 1997, February 19, 1998, June 24, 1998,
October 20, 1998 and December 4, 1998 (the "Existing Credit Agreement")
regarding the principal terms and conditions of a prearranged plan of
reorganization or arrangement (the "Plan") involving PSC and its Affiliates
under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code")
and under the Companies' Creditors Arrangement Act (Canada) (the "CCAA").
2
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 2 -
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed thereto in the Term Sheet (as defined in Section 1 below) or
the Existing Credit Agreement, as applicable. The Consenting Lenders, PSC and
its Affiliates are collectively referred to as the "Parties".
1. RESTRUCTURING AND SOLICITATION
(a) The principal terms and conditions of the Plan as agreed among the
Parties are set forth in the term sheet attached hereto as Schedule A
(the "Term Sheet"), which is incorporated herein and made a part of
this Agreement. In the case of a conflict between the provisions
contained in the text of this Agreement and Schedule A, the provisions
of this Agreement shall govern. References in this Agreement to the
term "Plan" include revisions thereto approved by the Consenting
Lenders in accordance with the terms of Section 4(a) hereof.
(b) Acceptances of the Plan from holders of claims arising out of the
Existing Credit Agreement and from holders (or representatives of such
holders) of all other classes of impaired claims and interests will be
solicited after the commencement of the Cases.
2. REPRESENTATIONS AND COVENANTS OF EACH PARTY
Each of the Parties hereto represents and warrants to the other Parties
hereto that: (i) it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with all requisite power
and authority to carry on the business in which it is engaged, to own its
property, to execute this Agreement and, subject to requisite approvals from the
Bankruptcy Courts in which the Cases are commenced, to consummate the
transactions contemplated hereby; (ii) the execution, delivery and performance
hereof has been duly authorized by all necessary corporate or other actions; and
(iii) no proceeding, litigation or adversary proceeding before any court,
arbitrator or administrative or governmental body is pending against it which
would adversely affect its ability to enter into this Agreement or to perform
its obligations hereunder.
3. CONSENTING LENDER REPRESENTATIONS
Each Consenting Lender represents severally and not jointly to each of the
other Parties that, as of the date of this Agreement:
(a) it is a lender under the Existing Credit Agreement and in that
capacity is owed the principal amount set forth next to such
Consenting Lender's name on Schedule B attached hereto (the
"Consenting Lender's Debt"). The amount of the Consenting Lender's
Debt has been determined without reference to any Participations
granted by such Consenting Lender;
3
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 3 -
(b) it holds its Consenting Lender's Debt free and clear of all liens,
security interests and other encumbrances of any kind and it has not
assigned or transferred, in whole or in part, any portion of its
right, title or interests in the Consenting Lender's Debt other than
by way of Participation in accordance with Section 12.01 of the
Existing Credit Agreement; and
(c) it is a sophisticated party with sufficient knowledge and experience
to evaluate properly the terms and conditions of this Agreement; it
has made its own analysis and decision to enter in this Agreement and
has obtained such independent advice in this regard as it deemed
appropriate; it qualifies as an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D under the Securities Act of
1933, as amended; and it has not relied in such analysis or decision
on the Administrative Agent or any other person other than its own
independent advisors.
4. CONSENTING LENDER COVENANTS AND CONSENTS
Each Consenting Lender agrees that, subject to Section 6 hereof and, as to
Sections 4(a) and 4(b) hereof, subject to the filing of the Plan and its receipt
of solicitation materials in respect of the Plan that are consistent with this
Agreement:
(a) it will vote both its secured and unsecured claims in respect of the
Consenting Lender's Debt and any claims under the Existing Credit
Agreement it acquires after the date hereof in favour of the Plan at
or prior to the deadline to be established for voting on the Plan and
will not change or withdraw (or cause to be changed or withdrawn) such
vote(s), provided that the terms of the Plan are consistent with the
terms of the Plan described in the Term Sheet, as modified by any
revisions thereto that have been agreed to in writing by such
Consenting Lender after the date hereof;
(b) it will not oppose the confirmation of the Plan, provided that the
terms of the Plan are consistent with the terms of the Plan described
in the Term Sheet, as modified by any revisions thereto referred to in
Section 4(a);
(c) it will not sell, transfer, pledge, participate or assign any of the
Consenting Lender's Debt or any voting interest therein during the
term of this Agreement, except in accordance with Section 12.01 of the
Existing Credit Agreement and then only to an Assignee that agrees in
writing prior to such acquisition, pledge or participation to be bound
by all the terms of this Agreement as if such Assignee had originally
executed this Agreement with respect to the Consenting Lender's Debt
being acquired by such Assignee;
(d) it consents to the incurrence of the debtor-in-possession financing
(the "DIP Financing") on the terms described in the draft Term Sheet
attached hereto as
4
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 4 -
Schedule C hereto (the "DIP Term Sheet") and the granting of the
security for the DIP Financing described under the heading "Security"
in the DIP Term Sheet;
(e) it consents to the entry of orders in the Cases effecting the
subordination of any Security delivered pursuant to the Existing
Credit Agreement to the DIP Security as provided in the DIP Term
Sheet, and in particular to the entry of orders in the Cases effecting
the subordination of the Security to:
(i) a priming lien pursuant to Section 364(d)(1) of the Bankruptcy
Code on all of the existing and after-acquired assets of the
Borrowers and the Guarantor Subsidiaries located in the United
States constituting collateral (the "Pre-Petition Collateral")
securing obligations to the Agents and the lenders under the
Existing Credit Agreement;
(ii) a security interest and charge in the Pre-Petition Collateral
located in Canada; and
(iii) the other liens and security interests referred to in the DIP
Term Sheet; and
all as provided in the DIP Term Sheet;
(f) it consents to the subordination of the security for the Senior
Secured Debt to the security for the exit/working capital financing
having the terms disclosed in Section 5 of the Term Sheet.
This Agreement relates only to the rights of the Consenting Lenders in their
capacity as the holders of the Consenting Lender's Debt and does not affect or
limit any rights or claims any Consenting Lender may have in any other capacity.
For greater certainty, nothing in the Term Sheet or this Agreement affects or
limits the priorities of the security of the Bank Account Service Providers, the
security for the Permitted LC Facility or the security held by the Cdn. LC
Issuer pursuant to section 5.06 of the Existing Credit Agreement, which will
rank in priority to the DIP Security and the security for the exit/working
capital facility.
5. PSC COVENANTS
PSC agrees on behalf of itself and its Affiliates that:
(a) it will use its best efforts to (i) comply with the Plan Timetable set
out in the Term Sheet (ii) obtain written agreements, to the extent
legally permissible, from holders (or representatives of such holders)
of claims of all classes of impaired claims in terms of amount of
claims and number of holders as required for the approval of the Plan
by the relevant classes of claims under the Bankruptcy Code and the
CCAA; and (iii) to identify to the satisfaction of the Consenting
Lenders,
5
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 5 -
prior to commencing the Cases, those unsecured creditors whose claims
will be reinstated under or unaffected by the Plan and those executory
contracts that will be assumed;
(b) PSC and its Affiliates will cooperate fully with the Lenders' advisors
and permit them complete access to PSC, its subsidiaries and their
books and records, officers and personnel throughout the restructuring
process; and
(c) subject to the provisions of the Bankruptcy Code, at least 90% of the
cash balances and other near-cash financial instruments of the
Restricted Parties including term deposits and marketable securities
will be maintained with one or more Lenders (subject to exclusions
acceptable to the Majority Lenders (as defined below)).
6. TERMINATION
(a) Upon the occurrence of any Termination Event (as defined below) this
Agreement may be terminated upon the election to do so by Consenting
Lenders holding in the aggregate at least 51% of the aggregate amount
of claims under the Existing Credit Agreement held by the Consenting
Lenders (the "Majority Lenders").
For the purposes hereof, a "Termination Event" shall occur if:
(i) any of the events described under "Plan Timetable" in the
Term Sheet have not occurred within 15 days of the deadline
specified for such event;
(ii) the Bankruptcy Courts have not granted final approval of the
DIP Financing within 30 days following commencement of the
Cases;
(iii) in the opinion of the Majority Lenders PSC has disclaimed
its intention or otherwise acted in a manner materially
inconsistent with an intention to pursue the Plan or has
otherwise breached the Term Sheet or this Agreement;
(iv) in the opinion of the Majority Lenders there is any material
adverse change in the terms or the feasibility of the Term
Sheet or the Plan not previously consented to by the
Majority Lenders, or in the confirmability of the Plan in
the United States or in the likelihood of its approval by
the required creditor majorities in Canada; or
(v) PSC or any of its Affiliates is the subject of a voluntary
or involuntary petition or other proceedings under any
insolvency statute in any jurisdiction (other than the Cases
contemplated by the Term Sheet and
6
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 6 -
the chapter 11 case of RESI Acquisition Corporation);
provided, however, that the filing of an involuntary
petition under an insolvency statute shall not be deemed to
be a Termination Event if the deadlines referred to in the
Plan Timetable are met within the time permitted by Section
6(a)(i) above.
(b) Upon termination of this Agreement, each Consenting Lender, in its
sole discretion and without limiting its other rights, may change or
withdraw any votes previously cast by it in favour of the Plan. PSC
and its Affiliates will not contest any such decision by a Consenting
Lender to change or withdraw its vote or to oppose confirmation of the
Plan by reason of such termination, and will consent to any motion
filed by a Consenting Lender under Federal Rule of Bankruptcy
Procedure 3018(a) in the U.S. Cases.
(c) This Agreement may be terminated by PSC if one or more Consenting
Lenders have withdrawn or changed their votes pursuant to Section 4(a)
or Section 6(b) or have breached the Term Sheet or this Agreement, and
as a result there are no longer sufficient Lenders holding claims
under the Existing Credit Agreement which have agreed to vote in
favour of the Plan to ensure that the majorities of Lenders in number
and amounts of claims required under section 1126(c) of the Bankruptcy
Code and section 6 of the CCAA will be satisfied.
(d) None of the Parties shall have any liability to any other Party in
respect of any termination of this Agreement in accordance with the
terms hereof.
7. CONDITIONS
The respective obligations of the Parties to consummate each of the
transactions contemplated by the Plan are also subject to the satisfaction of
each of the following conditions:
(a) negotiation, preparation and execution of mutually satisfactory
definitive transaction agreements and other documents including
without limitation the Plan and the Disclosure Statement,
incorporating the terms and conditions of each of the transactions
contemplated by the Plan set forth herein and in the Term Sheet and
such other terms and conditions as the Parties may mutually agree;
(b) all authorizations, consents and regulatory approvals required, if
any, in connection with Plan Implementation and the continuation of
the businesses of PSC and its Affiliates as currently conducted shall
have been obtained; and
(c) PSC shall have received commitments from bonding companies which are
sufficient for the reasonable operating requirements of PSC and its
Affiliates both prior to and following Plan Implementation.
7
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 7 -
8. AMENDMENTS
Except as otherwise provided herein, this Agreement may not be modified,
amended or supplemented except in writing signed by each of the signing Parties
or their Assignees.
9. OTHER PROPOSALS
Notwithstanding anything in this Agreement or the Term Sheet to the
contrary, PSC and its Affiliates may at all times (both before and after the
execution of this Agreement and the filing of the Plan) respond to unsolicited
offers (but for greater certainty may not, directly or indirectly, seek,
solicit, encourage or initiate any discussions respecting any offers) relative
to potential transactions which (i) restructure substantially all of the equity
and debt of PSC and its Affiliates, and (ii) are demonstrably more favourable to
the Consenting Lenders and the other stakeholders in PSC than the transactions
set forth in the Term Sheet or in the Plan. Nothing in this Agreement binds any
of the Consenting Lenders to agree to or vote in favour of any such alternate
proposal.
10. INDEMNIFICATION OBLIGATIONS
PSC and its Affiliates jointly and severally agree to fully indemnify each
Consenting Lender, the Administrative Agent, the Other Agents, and their
respective Affiliates, directors, officers, employees, agents or representatives
including counsel (collectively, the "Indemnitees") against any manner of
actions, causes of action, suits, proceedings, liabilities and claims of any
nature, costs or expenses (including reasonable legal fees) which may be
incurred by such Indemnitee or asserted against such Indemnitee arising out of
or during the course of, or otherwise in connection with or in any way related
to, the negotiation, preparation, formulation, solicitation, dissemination,
implementation, confirmation and consummation of the Plan, other than any
liabilities to the extent arising from the gross negligence or wilful or
intentional misconduct of any Indemnitee as determined by a final judgment of a
court of competent jurisdiction. If any claim, action or proceeding is brought
or asserted against an Indemnitee in respect of which indemnity may be sought
from PSC, the Indemnitee shall promptly notify PSC in writing, and PSC may
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnitee, and the payment of all costs and expenses. The
Indemnitee shall have the right to employ separate counsel in any such claim,
action or proceeding and to consult with PSC in the defense thereof, and the
fees and expenses of such counsel shall be at the expense of PSC unless and
until PSC shall have assumed the defense of such claim, action or proceeding. If
the named parties to any such claim, action or proceeding (including any
impleaded parties) include both the Indemnitee and PSC, and the Indemnitee
reasonably believes that the joint representation of PSC and the Indemnitee may
result in a conflict of interest the Indemnitee may notify PSC in writing that
it elects to employ separate counsel at the expense of PSC, and PSC shall not
have the right to assume the defense of such action or proceeding on behalf of
the Indemnitee. In addition, PSC shall not effect any settlement or release from
liability in connection with any matter for which the Indemnitee
8
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 8 -
would have the right to indemnification from PSC, unless such settlement
contains a full and unconditional release of the Indemnitee, or a release of the
Indemnitee satisfactory in form and substance to the Indemnitee.
11. SEVERAL AND NOT JOINT
Notwithstanding anything herein to the contrary, or in any document or
instrument executed and delivered in connection herewith, the Parties agree that
the representations, warranties, obligations, liabilities and indemnities of
each Consenting Lender hereunder shall be several and not joint, and no
Consenting Lender shall have any liability hereunder for any breach by any other
Consenting Lender of any obligation of such Consenting Lender set forth herein.
12. PUBLICITY
The Parties agree that all public announcements of the entry into or the
terms and conditions of this Agreement shall be mutually acceptable to the
Administrative Agent and PSC.
13. NO THIRD PARTY BENEFICIARIES; SEPARATE RESPONSIBILITIES
This Agreement is only for the benefit of the undersigned Parties and
nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person or entity, other than such persons or
entities, any rights or remedies under or by reason of, and no person or entity,
other than such persons or entities, is entitled to rely in any way upon, this
Agreement.
14. GOVERNING LAW; JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to any conflicts of law provision
which would require the application of the law of any other jurisdiction. By its
execution and delivery of this Agreement, each of the Parties hereby irrevocably
and unconditionally agrees for itself that, subject to the following sentence,
any legal action, suit or proceeding against it with respect to any matter under
or arising out of or in connection with this Agreement or for the recognition or
enforcement of any judgment rendered in any such action, suit or proceeding, may
be brought in any state or federal court of competent jurisdiction in New York
County, State of New York, and, by execution and delivery of this Agreement,
each of the Parties hereby irrevocably accepts and submits itself to the
nonexclusive jurisdiction of such court, generally and unconditionally, with
respect to any such action, suit or proceeding. Nothing in this section shall
limit the authority of the Bankruptcy Courts to hear any matter arising in the
Cases.
15. WAIVER OF JURY TRIAL
THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY JURISDICTION IN
ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
9
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 9 -
ANY DISPUTE BETWEEN THE PARTIES UNDER THIS AGREEMENT, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.
16. SPECIFIC PERFORMANCE
It is understood and agreed by the Parties that money damages would not be
a sufficient remedy for any breach of this Agreement by any of the Parties and
the non-breaching Party shall be entitled to specific performance and injunctive
or other equitable relief as a remedy of any such breach.
17. EFFECT
This Agreement shall become effective and enforceable against each
Consenting Lender and against PSC and its Affiliates when it has been executed
by PSC and by Consenting Lenders in number and holding an aggregate amount of
claims outstanding under the Existing Credit Agreement sufficient to satisfy the
requirements of Section 1126(c) of the Bankruptcy Code and Section 6 of the CCAA
in respect of such claims.
18. CONFIRMATION
Notwithstanding this Agreement, PSC, on behalf of itself and its
Affiliates, acknowledges and agrees that the Existing Credit Agreement and all
of the Security delivered by PSC or any of its Affiliates to any one or more of
the Administrative Agent, the Security Agent, the LC Issuers or the Lenders in
connection with, or otherwise applicable to, the debts or liabilities of PSC or
any of its Affiliates to any one or more of the Administrative Agent, the
Lenders, the Other Agents and their Eligible Affiliates under the Existing
Credit Agreement, are hereby ratified and confirmed and remain in full force and
effect.
19. SURVIVAL
Notwithstanding any assignment or transfer of all or any part of the
Consenting Lender's Debt in accordance with Section 4(c), or the termination of
each Consenting Lender's obligations hereunder in accordance with Section 6
hereof, the agreements and obligations of PSC and its Affiliates in Sections
6(b), 10, 13, 15, 16 and 18 shall survive such termination (other than the
indemnification provided for in Section 10, which shall terminate if this
Agreement is terminated by the Majority Lenders under Section 6) and shall
continue in full force and effect for the benefit of such Consenting Lender in
accordance with the terms hereof.
20. PLAN RELEASES
The Plan shall include releases by PSC and each of its Affiliates which is
included in the Cases, in their individual capacities and as debtors in
possession (collectively, the "Debtors"), the Consenting Lenders, and to the
fullest extent allowed by applicable law, all other creditors and shareholders
of the Debtors:
10
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 10 -
(a) in favour of each of the respective present officers, directors,
employees, agents and professionals (other than the Debtor's auditors)
of each of the Debtors ("Debtor Releasees") in form and substance and
on terms satisfactory to PSC and the Consenting Lenders; and
(b) in favour of each of the Consenting Lenders, the LC Issuers, the
Administrative Agent, the Security Agent and the Other Agents, and
their respective Affiliates, officers, directors, employees, agents
and professionals (the "Lender Releasees") from any and all claims or
causes of action existing as of Plan Implementation against any of the
Lender Releasees, including without limitation, statutory claims and
causes of action under the Bankruptcy Code or under similar laws of
any state, of Canada or of any province, and claims and causes of
action relating to, arising out of or in connection with the subject
matter of, or the transaction or event giving rise to the claims of
the releasing party affected by the Plan, the business and affairs of
the Debtors, the Plan and the Cases, including any act, occurrence or
event in any manner related to the claim of the releasing party, any
activities of the members of the informal Lender steering committee,
and any activities prior or subsequent to the filing of the Cases
leading to the promulgation and confirmation of the Plan.
The Plan shall also require the delivery to the Debtor Releasees and the Lender
Releasees of releases to the same effect from each of PSC's Restricted
Subsidiaries which is not a Debtor.
21. HEADINGS
The headings of the Sections, paragraphs and subsections of this Agreement
are inserted for convenience only and shall not affect the interpretation
hereof.
22. SUCCESSORS AND ASSIGNS
This Agreement shall bind and enure to the benefit of the Parties and their
respective successors, assigns, heirs, executors, administrators and
representatives.
23. PRIOR NEGOTIATIONS
This Agreement (including the Term Sheet) amends and restates the letter
agreement dated April 5, 1999, which as amended and restated hereby constitutes
the entire agreement between the Parties with respect to the subject matter
hereof except as otherwise expressly agreed in writing executed by or on behalf
of PSC and the Consenting Lenders. All references in any other agreement to the
Letter Agreement dated April 5, 1999 shall be deemed to be references to this
agreement. There are no promises, undertakings, representations or warranties by
any of the Parties not expressly set forth or referred to herein or therein.
11
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 11 -
24. COUNTERPARTS
This Agreement (and any modifications, amendments, supplements or waivers
in respect hereof) may be executed in counterparts by manual or facsimile
signature of each undersigned Party, and all such counterparts shall be deemed
to constitute one and the same instrument.
25. NOTICE PROVISIONS
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by hand delivery, by confirmed facsimile, or by registered
or certified mail (postage prepaid, return receipt requested) to the respective
Parties as follows:
IF TO EACH CONSENTING LENDER:
To the address set forth
For each Consenting Lender on
Schedule B annexed hereto
with copies to:
Canadian Imperial Bank of Commerce
as Administrative Agent
Risk Management Division
0xx Xxxxx, Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Vice-President
Facsimile: (000) 000-0000
Blake, Xxxxxxx & Xxxxxxx Xxxxx & Case LLP
Xxx 00, Xxxxx 0000, Commerce Court West 1155 Avenue of the Americas
Toronto, Xxxxxxx Xxx Xxxx, Xxx Xxxx
X0X 0X0 10036-2767 USA
Attention.: Xxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
12
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 12 -
IF TO PSC:
Xxxxxx Services Corp.
000 Xxxx Xxxxxx Xxxx
X.X. Xxx 0000,
LCD #1
Hamilton, Ontario
L8N 4J6
Attention.: Xxxxx Xxxxx
Facsimile: (000) 000-0000
with copies to:
Stikeman Xxxxxxx Xxxxxxx, Arps, Slate, Xxxxxxx
Xxx 00, Xxxxxxxx Xxxxx Xxxx & Xxxx
Xxxxx 0000 333 West Xxxxxx Drive
Toronto, Ontario Chicago, Illinois
X0X 0X0 00000 X.X.X.
Attention.: Xxxx Xxxxxx Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
26. FURTHER ASSURANCES
From and after the date hereof, each of the Parties covenants and agrees to
execute and deliver all such agreements, instruments and documents and to take
all such further actions as the Parties may reasonably deem necessary from time
to time (at the requesting Party's expense) to carry out the intent and purposes
of this Agreement and to consummate the transactions contemplated hereby.
13
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 13 -
27. CONFIRMATION
Please confirm your agreement with the foregoing by signing and returning
the enclosed copy of this Agreement to the undersigned.
Very truly yours,
XXXXXX SERVICES CORP.
By:_________________________________
Accepted and Agreed as
of the date first written above
CANADIAN IMPERIAL BANK OF
COMMERCE (in its capacity
as a Lender) CIBC INC.
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
BANKERS TRUST COMPANY BT BANK OF CANADA
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
14
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 14 -
(Signatures continued from preceding page)
ABN AMRO BANK CANADA ACCORD FINANCIAL CORPORATION
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
AMERICAN REAL ESTATE HOLDINGS L.P. THE BANK OF EAST ASIA (CANADA)
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
BANCO CENTRAL HISPANOAMERICANO, S.A. BANQUE NATIONALE DE PARIS
MIAMI AGENCY
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
(Signatures continued on next following page)
15
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 15 -
(Signatures continued from preceding page)
BANQUE NATIONALE DE PARIS (CANADA) BEAR, XXXXXXX & CO. INC.
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
CHASE BANK OF TEXAS, N.A. THE CHASE MANHATTAN BANK
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
XXX XXXXX XXXXXXXXX XXXX XX XXXXXX CITIBANK, N.A.
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
(Signatures continued on next following page)
16
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 16 -
(Signatures continued from preceding page)
COMERICA BANK CREDIT SUISSE FIRST BOSTON
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
CREDIT SUISSE FIRST BOSTON CANADA DAI-ICHI KANGYO BANK (CANADA)
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
THE DAI-ICHI KANGYO BANK, LTD. DEUTSCHE BANK AG, NEW YORK AND OR
CAYMAN ISLAND BRANCHES
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
(Signatures continued on next following page)
17
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 17 -
(Signatures continued from preceding page)
DEUTSHCE BANK CANADA XXXXX XXXXX-SENIOR DEBT PORTFOLIO
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
FERNWOOD ASSOCIATES L.P. FOOTHILL CAPITAL CORPORATION
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
XXXXXXX SACHS CANADA CREDIT XXXXXXX XXXXX CANADA CREDIT
PARTNERS CO. PARTNERS L.P.
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
(Signatures continued on next following page)
18
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 18 -
(Signatures continued from preceding page)
HIGH RIVER LIMITED PARTNERSHIP KEYBANK NATIONAL ASSOCIATION
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
XXXXXXXXX CORP. XXXXXXXXX LLC
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
MELLON BANK CANADA MELLON BANK, N.A.
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
(Signatures continued on next following page)
19
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 19 -
(Signatures continued from preceding page)
THE MUTUAL LIFE ASSURANCE MUTUAL SHARES FUND, a series of
COMPANY OF CANADA FRANKLIN MUTUAL SERIES FUND INC.
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
NATIONSBANK, N.A. PARIBAS
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
PNC BANK NATIONAL ASSOCIATION THE ROYAL BANK OF SCOTLAND
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
(Signatures continued on next following page)
20
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 20 -
(Signatures continued from preceding page)
SAKURA BANK (CANADA) THE SAKURA BANK, LIMITED
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
SOCIETE GENERALE SOCIETE GENERALE (CANADA)
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
SUMMIT BANK THE TORONTO-DOMINION BANK
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
(Signatures continued on next following page)
21
JUNE 21 AMENDMENT TO LOCKUP AGREEMENT
- 21 -
(Signatures continued from preceding page)
THE TORONTO-DOMINION (NEW YORK), INC. TRI-LINKS INVESTMENT TRUST
by:_________________________________ by:_________________________________
name: name:
title: title:
by:_________________________________ by:_________________________________
name: name:
title: title:
WACHOVIA BANK, N.A.
by:_________________________________
name:
title:
by:_________________________________
name:
title:
22
SCHEDULE A
XXXXXX SERVICES CORP.
RESTRUCTURING TERMS
This term sheet sets forth the principal terms and conditions for the
restructuring of Xxxxxx Services Corp. ("PSC") and its Affiliates under a
prearranged plan of reorganization (the "Plan") under Chapter 11 of the United
States Bankruptcy Code ("Bankruptcy Code") and under the Companies Creditors
Arrangement Act (Canada) ("CCAA").
This term sheet pertains only to the terms of a restructuring in the context of
the prearranged reorganization plan described in this term sheet and is not an
agreement or commitment to a restructuring on any other terms or in any other
context.
Capitalized terms used in this term sheet and not otherwise defined have the
meanings set forth in the Credit Agreement dated as of August 11, 1997 among PSC
and Xxxxxx Services (Delaware) Inc., as borrowers, Canadian Imperial Bank of
Commerce ("CIBC") as Administrative Agent, Bankers Trust Company ("BTCo") as
Syndication Agent, CIBC and BTCo as Co-Arrangers, and the various lenders from
time to time parties thereto, including all amendments and modifications thereto
(the "Existing Credit Agreement"). All amounts shown are in US Dollars.
1. EXISTING SENIOR SECURED LENDERS:
The obligations of the Borrowers to the Lenders under the Existing Credit
Agreement (the "Existing Syndicate Debt") will be restructured as of Plan
Implementation as follows:
(a) SENIOR SECURED DEBT: Subject to (vi)(C), $350 million of the
Existing Syndicate Debt will be restructured
as senior secured debt (the "Senior Secured
Debt"), in two tranches. One tranche will be
$250 million of senior secured term debt
(the "Senior Secured Term Debt") and the
other tranche will be $100 million of
secured convertible payment in kind debt
("Secured PIK Debt"). PSC shall have the
right to prepay the Senior Secured Term Debt
at any time provided that at the time of
such prepayment PSC also pays all accrued
and unpaid interest, fees and other amounts
payable with respect to the amount prepaid,
and any call premium payable under (iv) (C)
below.
(i) BORROWERS: PSC as to the Secured PIK Debt and Xxxxxx
Services (Delaware) Inc. (the "US Borrower")
as to the Senior Secured Term Debt.
23
-2-
(ii) SENIOR SECURED
TERM DEBT: The terms of the Senior Secured Term Debt
will be set forth in a restatement of the
Existing Credit Agreement (the "Senior Term
Credit Agreement") in form and substance
satisfactory to the Lenders and PSC.
(A) AMOUNT: $250 million.
(B) INTEREST: 9% per annum.
Interest on the Senior Secured Term Debt
will be payable in cash, quarterly in
arrears on the last business day of each
calendar quarter; provided, however, that
during the first 12 months subsequent to the
effective date of the Plan (such effective
date being "Plan Implementation"), the US
Borrower shall pay interest on the Senior
Secured Term Debt to the extent of the
lesser of 9% per annum and $20,000,000, and
accrue the balance thereof (subject to the
mandatory prepayment obligations described
below). Interest will also be payable at the
time of repayment of any Senior Secured Term
Debt and at maturity of such Senior Secured
Term Debt. All interest calculations shall
be based on a 360-day year and actual days
elapsed.
The Senior Term Credit Agreement shall
include protective provisions for such
matters as default interest, capital
adequacy, increased costs, funding losses,
illegality and withholding taxes.
(C) MATURITY: 5 years from Plan Implementation.
(D) COVENANTS: As in the Existing Credit Agreement on the
date hereof, with revisions as approved by
the Lenders and PSC. Financial covenants
will be as set out in Exhibit 1 hereto.
(iii) SECURED PIK DEBT: The Secured PIK Debt will be issued to the
Lenders pro rata in exchange for an equal
amount of the Existing Syndicate Debt.
(A) AMOUNT: $100 million.
24
-3-
(B) INTEREST: 10% per annum. Subject to (iv)(A) below,
interest will accrue and be compounded
quarterly in arrears. All interest
calculations shall be based on a 360-day
year and actual days elapsed.
(C) CONVERTIBILITY: The Secured PIK Debt exchanged for the
Existing Syndicate Debt will be convertible
until maturity at the option of the holders
into 25% of the common shares of the
restructured PSC, in the aggregate, on a
fully diluted basis as of Plan
Implementation. The Secured PIK Debt will
contain the usual anti-dilution provisions
applicable in a public offering of
convertible debt, including giving effect to
the issuance of any common shares under the
shareholder rights plan referred to below.
Any Secured PIK Debt issued in respect of
interest on Secured PIK Debt will not be
convertible.
(D) MATURITY: 5 years from Plan Implementation.
(E) REDEMPTION: The Secured PIK Debt will be redeemable by
PSC in the following circumstances:
(i) If (a) an offer is made to the
common shareholders of PSC to
acquire all of the common shares
of PSC, or, in the case of an
offer by an existing beneficial
owner or owners of PSC common
shares, to acquire all of the
common shares of PSC not already
owned by such owner(s) together
with persons acting in concert
(the shares already owned being
the "Offeror's Existing
Holdings"), (b) under the offer
the Offeror acquires (1) common
shares which together with the
Offeror's Existing Holdings amount
to 67% or more of the common
shares of PSC, or (2) a majority
of the common shares of PSC other
than the Offeror's Existing
Holdings, whichever is greater,
and (c) the person or persons
making the offer (the "Offeror")
notifies PSC that it requires PSC
to exercise such redemption right,
then, subject to the following
sentence, PSC will have the right
to redeem the Secured PIK Debt for
a price (the "Redemption Price")
equal to 115% of the face amount
of such
00
-0-
Xxxxxxx XXX Xxxx plus all accrued
interest on the Secured PIK Debt.
If the Offeror has notified PSC that
it requires PSC to exercise the
redemption right and the amount the
holders of the Secured PIK Debt
would have received by converting
the convertible Secured PIK Debt to
common shares of PSC and tendering
them to the Offeror under its offer
(the "Tender Price") would be
greater than the Redemption Price of
such Debt, any Secured PIK Debt
which has not been converted by the
close of business on the day prior
to the redemption date set out in
the redemption notice issued by PSC
will be deemed to have been
converted and tendered to the
Offeror's offer, and the holders of
the convertible Secured PIK Debt
will be entitled to receive the
Tender Price.
(ii) The Secured PIK Debt may not be
redeemed prior to the end of the
first full year after Plan
Implementation except as provided in
(i) above. Commencing in the second
year after Plan Implementation, PSC
may redeem the Secured PIK Debt upon
payment of the following percentage
of the face amount of the Secured
PIK Debt during the periods
following Plan Implementation
indicated below, plus all accrued
interest on the Secured PIK Debt:
Year 1 Not redeemable
Year 2 125%
Year 3 125%
Year 4 116 2/3%
Year 5 108 1/3%
Maturity 100%
(F) COVENANTS: To be the same as for the Senior Secured
Term Debt.
26
-5-
(iv) MANDATORY PREPAYMENTS:
(A) 75% of Cash Flow Available for Debt
Service will be swept on an annual
basis for the first two years and
will be swept each quarter
thereafter based on cumulative
quarterly Cash Flow Available for
Debt Service in each subsequent
annual period. The first annual
period for the cash sweep will be
the period from Plan Implementation
until the end of the fourth full
Financial Quarter after Plan
Implementation, the second annual
period for the cash sweep will be
the next four Financial Quarters,
and so on.
The cash sweep will be applied in
the following manner: (i) first, to
pay any interest accrued during the
first 12 months subsequent to Plan
Implementation with respect to the
Senior Secured Term Debt, together
with accrued interest on any such
deferred interest at the rate of 9%
per annum; (ii) second, to pay
accrued but unpaid interest with
respect to the Secured PIK Debt; and
(iii) third, to repay the Senior
Secured Term Debt.
"Cash Flow Available for Debt
Service" will be defined as PSC's
consolidated EBITDA for the
applicable period (excluding asset
sale proceeds) less permitted
capital expenditures and mandatory
cash payments of principal and
interest on other permitted fixed
obligations as such amounts become
due and owing pursuant to applicable
agreements, cash taxes and interest
on the Senior Secured Term Debt and
on the exit/working capital
financing. "Permitted capital
expenditures" will be defined to
mean capital expenditures paid in
cash during the period plus amounts
deposited to a reserve account to
pay known future capital
expenditures, in each case to the
extent of the capital expenditures
forecast for such period in the most
recent budget approved by the
Required Lenders.
(B) Subject to (vi)(C) below, the Senior
Secured Term Debt will be repaid
from 75% of Net Asset Sale Proceeds
(as defined below), subject to the
following: (i) this repayment
formula will apply to the extent
such Net Asset Sale Proceeds on a
27
-6-
cumulative basis, plus the
$68,500,000 proceeds of the sale of
PSC's Aluminum division less
required post-closing adjustments to
a maximum of $4,000,000, exceed
$93,000,000; and (ii) if PSC sells
its US Ferrous division the Net
Asset Sale Proceeds of such sale
will not be part of the $93,000,000
referred to in (i), and the Senior
Secured Term Debt will be repaid to
the extent of 66-2/3% of the first
$200,000,000 of Net Asset Sale
Proceeds of such division and then
to the extent of 75% of the balance
of the proceeds, if any.
"Net Asset Sale Proceeds" will be
defined to mean the cash proceeds of
asset sales of PSC and its
Affiliates approved by the Lenders
after the date hereof, net only of
reasonable costs and expenses and of
payment of indebtedness secured by
such assets senior to the security
for the Existing Syndicate Debt or
the Senior Secured Term Debt, as the
case may be, on such assets.
(C) At the time of any optional
prepayment of any Senior Secured
Term Debt, PSC shall also pay the
Call Premium, if any, on the amount
prepaid. The "Call Premium" on any
such repayment under the Senior
Secured Term Debt shall be with
respect to any repayment made during
the periods following Plan
Implementation indicated below, the
corresponding percentage of the
amount repaid:
0-12 months 5%
13-24 months 4%
25-36 months 3%
37-48 months 2%
49-60 months 1%
(v) SECURITY: The Senior Secured Term Debt and the
Secured PIK Debt will be secured by
guarantees and charges over
substantially all of the assets of
PSC and its Affiliates, ranking in
priority to all claims other than
the exit/working capital financing,
and existing senior liens as may be
applicable to particular assets
(including without limitation the
liens for any Permitted LC Facility
and for the Bank Account Service
Liabilities). The guarantees and
security for the Existing Syndicate
Debt will be retained, with
28
-7-
any appropriate modifications so
that they secure the Senior Secured
Term Debt and the Secured PIK Debt.
The Senior Secured Term Debt and the
Secured PIK Debt shall rank pari
passu under such security.
(vi) OTHER TERMS:
(A) Events of default, remedies and
other terms acceptable to the
holders of Senior Secured Debt and
PSC.
(B) The $26,600,000 of cash collateral
held as part of the Permitted LC
Facility Cash Collateral Security
and as security for the benefit of
the Bank Account Service Providers
(the "Cash Collateral") will be
released to PSC as such Cash
Collateral is released by the issuer
of letters of credit under the
Permitted LC Facility and the Bank
Account Service Providers following
Plan Implementation.
(C) The treatment in the Plan of undrawn
letters of credit issued under the
Existing Credit Agreement (which for
greater certainty does not include
letters of credit issued under the
Permitted LC Facilities) will be as
set out in Exhibit 2 hereto.
(b) EQUITY: The balance of the Existing
Syndicate Debt will be exchanged for
a number of common shares to be
issued to the Lenders pro rata by
PSC representing (1) if the Voting
Requirement (as defined herein) is
met, 90% or (2) if the Voting
Requirement is not met, 100%, of the
common shares of the restructured
PSC, subject to dilution, inter
alia, upon the conversion of the
Secured PIK Debt.
All common shares issued will be
freely tradeable (subject to the
status of any Lender being an
"underwriter" or an "affiliate"
pursuant to Section 1145 of the
Bankruptcy Code). PSC will use its
best efforts to retain the listing
of its common shares on the Toronto,
Montreal and New York stock
exchanges.
There will be a shareholder rights
plan for the restructured PSC which
will give the shareholders (other
than the Acquiror, as defined below)
rights
29
-8-
("Rights") attached to the common
shares, but redeemable at the option
of PSC's board of directors, to
subscribe at 50% of the then current
trading price for one additional
common share of PSC for each common
share held, but only where a person
(together with those acting in
concert with such person)
(collectively, the "Acquiror")
acquires issued common shares which
would bring the Acquiror's
beneficial ownership to 20% or more
of the common shares of PSC (a)
through purchases from non-residents
of Canada or from persons whose PSC
shares are registered on PSC's books
with a non-Canadian address, or (b)
through purchases under the
exemptions from the takeover bid
requirements of the Securities Act
(Ontario) applicable to purchases
(i) from 5 or fewer persons, or (ii)
in transactions in any twelve months
which aggregate less than 5% of the
issuer's outstanding shares. These
Rights will not be triggered if the
acquisition is made through a
takeover bid made to all common
shareholders which must remain open
for at least 45 days and which
complies with Canadian takeover bid
regulations and policies. Holdings
of common shares as of Plan
Implementation will be
grandfathered. For greater
certainty, the Rights will not be
triggered by acquisitions of
authorized but unissued shares or
treasury shares. Apart from the
Rights, there will be no other
provisions of any charter, by-laws
or other agreement by which PSC is
bound (other than existing
agreements) which would provide for
or could permit shareholder rights
or rights to the other party to such
agreement as a result of the
ownership or proposed ownership of
PSC common shares by any person or
group of persons or the change of
ownership or proposed change of
ownership of PSC common shares or
control of PSC.
The Articles of the restructured PSC
will not limit the number of common
shares of PSC that may be issued
from time to time and will provide
that PSC could adopt no rights plan
or other poison pill device other
than as provided herein.
30
-9-
The distributions of debt and equity
to the Lenders may be allocated
between the US and Canadian Plans as
agreed between PSC and the Lenders.
2. EXISTING UNSECURED CLAIMANTS AND SENIOR SECURED CREDITORS:
Senior secured creditors shall be paid in full or have their claims and
liens preserved or reinstated. Furthermore, trade creditors who agree to
conduct ongoing business relationships with PSC in accordance with existing
trade terms shall have their claims paid in full in the ordinary course of
business. Subject to the Voting Requirements, certain other unsecured
creditors identified by PSC (as may be agreed by the Lenders in their sole
discretion) ("Impaired Unsecured Claims") shall have their claims exchanged
for a pro rata share of (a) up to $60 million in unsecured payment in kind
notes (the "Unsecured PIK Notes") and (b) up to 5% of the common shares of
the restructured PSC, subject to dilution, inter alia, upon the conversion
of the Secured PIK Debt. The Lenders will waive their right to receive
distributions in respect of their unsecured deficiency claims under the US
Plan if the Voting Requirement is satisfied in the US without regard to the
votes of the Lenders, and under the Canadian Plan if the Voting Requirement
is satisfied in Canada, without regard to the votes of the Lenders. The
"Voting Requirement" shall mean the acceptance of the US Plan or the
Canadian Plan, as the case may be, by the requisite holders of Impaired
Unsecured Claims in an amount and number sufficient to cause such class to
accept the Plan under the Bankruptcy Code, or the CCAA, as applicable.
UNSECURED PIK NOTES:
ISSUER: PSC
INTEREST: 6% per annum. Interest on the Unsecured PIK
Notes will accrue and compound. Provided the
Senior Secured Debt is not in default, cash
interest will be payable on the Unsecured
PIK Notes and on accrued unpaid interest
following repayment in full of the Secured
PIK Debt.
MATURITY: 10 years from Plan Implementation.
AMORTIZATION: Commencing 5 years from Plan Implementation
provided the Senior Secured Debt is not in
default, in equal instalments at the end of
years 6 to 10 after Plan Implementation.
SECURITY: None.
31
-10-
3. SECURITIES CLAIMS AND EXISTING EQUITY HOLDERS OF PSC:
The claims of the putative class action plaintiffs in the action previously
pending against PSC in the United States District Court for the Southern
District of New York and pending against PSC in the Ontario Court, General
Division (the "Securities Action") and all other claims against PSC and any
of its Affiliates arising out of securities fraud, recission and similar
claims will be discharged under the Plan and will share, together with the
existing shareholders of PSC, in 5% of the common shares of restructured
PSC, subject to paragraph 2 and subject to dilution. In addition, subject
to Bankruptcy Court approval, the settlement of the Securities Action may
include the payment on Plan Implementation of attorneys fees for counsel to
such plaintiffs in an amount not to exceed $575,000.
4. ALTERNATE PROPOSAL FOR IMPAIRED UNSECURED CLAIMS
In the alternative to the arrangements described in paragraphs 2 and 3
above, if prior to commencing the Cases PSC enters into an agreement with
representatives of the holders of the Allwaste 7 1/4% Convertible
Subordinated Debentures (the "Old Debentureholders") acceptable to the
Required Lenders on substantially the terms of this Term Sheet including
this paragraph 4, then, subject to the Voting Requirement, the treatment of
holders of Impaired Unsecured Claims will be as follows:
(a) subject to (b), distributions to holders of Impaired Unsecured Claims
in the US Plan and the Canadian Plan will be made on a pro rata basis
based on allowed Claims amounts from a pool of (i) $60 million of
Unsecured PIK Notes and (ii) 5% of the common shares of the
restructured PSC, subject to dilution;
(b) the holders of Impaired Unsecured Claims in the US Plan will have
their claims exchanged for a pro rata share of the equity referred to
in (a)(ii) above and either a pro rata share of
(i) the $60 million of Unsecured PIK Notes; or
(ii) $18 million of unsecured convertible debt described below (the
"Convertible Debt")
provided that
(iii) the $60 million pool of Unsecured PIK Debt shall be reduced by
$1.00 for every $1.50 of Convertible Debt issued; and
(iv) if holders of more than $27.5 million of such Impaired Unsecured
Claims elect to receive Convertible Debt, the Convertible Debt
shall be issued to the holders who make such election pro rata
and the balance of their claims shall be exchanged for Unsecured
PIK Notes;
32
-11-
(c) The distributions to Impaired Unsecured Claims in the Canadian Plan
will not be affected by this election, and such claims will continue
to be exchanged for a pro rata share of the equity and Unsecured PIK
Notes referred to above.
CONVERTIBLE DEBT:
(A) AMOUNT: $18 million
(B) INTEREST: no interest for the first 3 years after Plan
Implementation. Cash interest payable
commencing in Year 4 at 3% per annum.
(C) CONVERTIBILITY: The Convertible Debt will be convertible or
exchangeable until maturity at the option of
the holders into common shares of the
restructured PSC at a price of $30 of
Convertible Debt per share based on the
assumption that the outstanding equity of
restructured PSC immediately following
consolidation will be 24,000,000 common
shares.
(D) MATURITY: 20 years from Plan Implementation.
In such case:
(c) the balance of the Existing Syndicate Debt referred to in paragraph
1(b) above will be exchanged for a number of common shares issued to
the Lenders pro rata by PSC representing (i) if the Voting Requirement
is met, 91% or (ii) if the Voting Requirement is not met, 100%, of the
common shares of the restructured PSC, subject to dilution; and
(d) the holders of claims or interests referred to in paragraph 3 will
share in 4% of the equity of the restructured PSC, subject to
paragraph 4(b)(ii) and subject to dilution.
5. EXIT/WORKING CAPITAL FINANCING:
BORROWER: PSC and Xxxxxx Services (Delaware) Inc.
(others to be determined).
AMOUNT: $100 million.
If the resolution of the letter of credit
issue described in item (vi)(D) under
"Senior Secured
33
-12-
Debt" above results in undrawn letters of
credit being transferred to the exit
facility, the exit lenders will give
consideration, in their sole discretion, to
increasing the facility to as much as $125
million to provide for such letters of
credit.
PURPOSE: To fund repayment of debtor-in-possession
financing provided to the Borrowers in the
Cases (as defined below), short-term working
capital needs and letters of credit within a
sub-limit of the credit.
SECURITY: Secured by guarantees and charges over the
accounts receivable and inventory and, if
required, substantially all of the other
assets, of PSC and its subsidiaries, senior
to all other security including the security
for the Senior Secured Debt, other than
existing senior liens applicable to
particular assets as provided in 1(a)(v)
above.
INTEREST RATE: To be discussed (intended to be a market
rate at the relevant time).
FEES: To be discussed.
MATURITY: Two years from Plan Implementation. The exit
facility may be refinanced in whole but not
in part by a replacement facility with the
same priority as, and in an amount equal to,
the exit facility, and having terms
substantially the same as the exit facility
to the extent commercially available.
OTHER TERMS: To be negotiated.
6. PLAN TIMETABLE:
PSC and its Affiliates will use their best efforts to achieve the following
Plan Timetable:
PSC and its Affiliates in the United States
and Canada will commence, in a venue
mutually agreeable to PSC and the Required
Lenders, voluntary insolvency proceedings in
the United States and Canada (the "Cases"),
including the filing of the Plan not later
than June 30, 1999.
The Disclosure Statement shall be approved
by the US and Canadian courts presiding over
the Cases
34
-13-
(the "Bankruptcy Courts") not later than
August 31, 1999.
The Bankruptcy Courts shall confirm the Plan
not later than October 31, 1999.
Plan Implementation shall occur not later
than November 30, 1999 (the "Plan
Implementation Date").
7. OTHER PLAN TERMS: (a) The Plan will include an employee and
management incentive plan acceptable to PSC
and the Lenders which may include the
granting of options, such incentive plan to
be consistent with customary practices
involving restructured companies.
(b) Notwithstanding anything in this term sheet
to the contrary, PSC and its Affiliates may
at all times (both before and after the
execution of the Lock-Up Agreement and the
filing of the Plan) respond to unsolicited
offers (but for greater certainty may not,
directly or indirectly, seek, solicit,
encourage or initiate any discussions
respecting any offers) relative to potential
transactions which (i) restructure
substantially all of the equity and debt of
PSC and its Affiliates, and (ii) are
demonstrably more favourable to the Lenders
and the other stakeholders in PSC than the
transactions set forth in this term sheet or
in the Plan.
(c) The board of directors of the reorganized
PSC will consist of 9 directors, who will be
nominated by the Lenders. The Lenders agree
that their nominees will include two members
of the existing PSC board and will include
two members nominated by High River Limited
Partnership ("High River") provided that
High River and Lenders acting in concert
with it beneficially own at least 25% of the
Existing Syndicate Debt. If one or both of
the nominees from the existing board is a
nominee on that board of High River or
persons acting in concert with it, that
person will be counted as a High River
nominee on the slate for the new board.
(d) It shall be a condition to confirmation of
the Plan that (i) the Lock-Up Agreement
shall not have been
35
-14-
terminated, and (ii) each of the conditions
set out in Section 7 of the Lock-Up
Agreement shall have been satisfied.
8. PUBLIC ANNOUNCEMENTS: The parties hereto agree that all public
announcements of the entry into or the terms
and conditions of this term sheet shall be
mutually acceptable to the Administrative
Agent and PSC.
DATED this 21st day of June, 1999.
36
EXHIBIT 1
(Financial Covenants)
1. the ratio of (x) current assets to (y) current liabilities, at all times
from and after the first day of the first Financial Quarter commencing
after Plan Implementation, must be equal to or greater than 1.5 to 1.0.*
2. aggregate EBITDA for the third and fourth Financial Quarters commencing
after Plan Implementation must not be less than 80% of budgeted EBITDA as
approved by the Lenders.
3. the ratio of (x) Non PIK Debt to (y) EBITDA, at all times from and after
December 31, 2000 [INTENDED TO BE END OF FIRST FULL FINANCIAL YEAR AFTER
PLAN IMPLEMENTATION], must be equal to or less than 3.75 to 1.0.
4. the ratio of (x) Total Debt to (y) EBITDA, at December 31, 2000 [INTENDED
TO BE END OF FIRST FULL FINANCIAL YEAR AFTER PLAN IMPLEMENTATION], and from
that date until March 31, 2001, must be equal to or less than 5.5 to 1.0,
and at all times thereafter must be equal to or less than 5.0 to 1.0.
5. the ratio of (x) EBITDA to (y) Cash Interest Expense, at all times from and
after December 31, 2000 [INTENDED TO BE END OF FIRST FULL FINANCIAL YEAR
AFTER PLAN IMPLEMENTATION], must be greater than 3.5 to 1.0.
6. the ratio of (x) EBITDA to (y) Total Interest Expense, at all times from
and after December 31, 2000 [INTENDED TO BE END OF FIRST FULL FINANCIAL
YEAR AFTER PLAN IMPLEMENTATION], must be greater than 2.25 to 1.0.
For the purpose of these financial covenants:
(a) EBITDA, Total Interest Expense and Cash Interest Expense are intended to be
calculated on a rolling 4 quarter basis. The calculations of these items
will exclude the periods prior to the commencement of the third full
Financial Quarter following Plan Implementation with EBITDA under covenants
3 and 4 being annualized until there are four full Financial Quarters of
EBITDA for such calculations.
(b) EBITDA will exclude any net extraordinary, unusual or non recurring gains
or net non cash extraordinary, unusual or non recurring losses, and will be
adjusted as provided in the definition of EBITDA in the Existing Credit
Agreement on any Sale approved by the Lenders.
(c) Total Interest Expense will be the existing definition of "Interest
Expense".
37
-2-
(d) Cash Interest Expense will be Total Interest Expense excluding any accrued
non-cash interest on the Senior Secured Term Debt and any interest on the
Secured PIK Notes or on the Unsecured PIK Notes.
(e) Total Debt will be the existing definition of Debt (which, for greater
certainty, includes contingent liabilities under letters of credit but
excludes contingent liabilities incurred in support of bonds or similar
arrangements delivered in support of goods or services provided by PSC in
the ordinary course of its business until such bonds or similar
arrangements are called upon or are required to be accrued as a charge
against income on PSC's financial statements).
(f) Non PIK Debt will be Total Debt other than Debt owing under the Secured PIK
Notes and the Unsecured PIK Notes.
[FN]
* If PSC (with the Lenders' approval) makes a significant asset disposition
in any Financial Year after Plan Implementation which could affect its
compliance with the working capital ratio requirements in covenant 1 above,
the Lenders in their sole discretion will consider such covenant.
38
EXHIBIT 2
TREATMENT OF LCS OUTSTANDING UNDER THE EXISTING CREDIT AGREEMENT
1. For the purposes of the Plan, the aggregate claim of the LC Issuers and the
LC Lenders against PSC and the US Borrower with respect to LCs issued under the
Existing Credit Agreement ("Existing LCs") will be deemed to be the greater of :
(a) $20 million; and
(b) the amount actually drawn under the Existing LCs on or before Plan
Implementation.
This amount will be the "Agreed LC Claim". (LCs issued under a Permitted LC
Facility are outside the Existing Credit Agreement and the claims of the
issuer(s) of such letters of credit will not be compromised.)
2. For greater certainty, references in this Exhibit to the claims of the LC
Lenders with respect to the Existing LCs are to the reimbursement claims the LC
Lenders would have against PSC or the US Borrower, as applicable, under section
2.06(3) of the Existing Credit Agreement for drawings under an Existing LC,
following the purchase of such claims by the LC Lenders from the LC Issuers
under section 2.06(4) of the Existing Credit Agreement. Each LC Lender's share
of the Agreed LC Claim and of any Unfunded LC Claim (as defined below) will be
its pro rata share of such Claim based on its respective Cdn. LC Commitment and
US LC Commitment as a proportion of the aggregate Cdn. LC Commitment and US LC
Commitment.
3. To the extent that the Agreed LC Claim is greater than the amount actually
drawn under the Existing LCs on or before Plan Implementation (such difference
being the "Unfunded LC Claim"), this amount will be funded by the LC Lenders.
Each LC Lender will fund its share of the Unfunded LC Claim either:
(a) in cash; or
(b) to the extent an LC Lender does not fund its share of the Unfunded LC
Claim in cash, by contributing distributions it receives in the Plan
equivalent to its share of the Unfunded LC Claim. This contribution
will be calculated by a formula reflecting these principles which will
be set out in the definitive documentation.
The contribution by the LC Lenders (whether in cash or as provided in (b) above)
will be included in calculating their share of the Existing Syndicate Debt and
in calculating the total amount of Existing Syndicate Debt, and will be
distributed to all of the Lenders on Plan Implementation pro rata as a
distribution on the Existing Syndicate Debt.
4. The arrangements described in this Exhibit will be the only effect of the
Plan on the respective rights and obligations of the LC Lenders, the LC Issuers,
PSC and the US Borrower in
39
2
connection with the Existing LCs. The obligations supported by the Existing LCs
will not be impaired or compromised in the Plan without the consent of the LC
Lenders and the LC Issuers. To the extent the Existing LCs are undrawn on Plan
Implementation, they will be transferred to the exit facility and will be deemed
to be outstanding under that facility on Plan Implementation. The obligations of
the PSC and the US Borrower to reimburse the LC Issuers and the LC Lenders under
section 2.06(3) of the Credit Agreement with respect to drawings made under
Existing LCs following Plan Implementation will be unimpaired and will be
included in the exit facility. On Plan Implementation, any cash collateral held
under section 5.06 of the Credit Agreement for the benefit of the LC Lenders in
respect of the Existing LCs will be paid to the LC Lenders.
5. These arrangements will not in any way limit or discharge any of the
present or future liabilities of the LC Lenders to the LC Issuers. The Plan and
the exit facility will include acknowledgements to this effect.
40
SCHEDULE B
All amounts stated in United States dollars. For the purposes of this schedule,
outstanding letters of credit and operating lines denominated in other
currencies have been converted to U.S. Dollars at the prevailing rate of
exchange.
The Debt of each LC Lender includes its non-LC Debt together with its rateable
share of the face value of outstanding letters of credit, less its rateable
share of all cash collateral held for application against outstanding letters of
credit.
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
ABN Amro Bank Canada 15th Floor $17,210,651
Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxxx-Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
- and -
00 Xxxx, 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Wimpeny
Facsimile: (000) 000-0000
Accord Financial Corporation 000 Xxxxxxx Xxxxxx $4,586,796
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
Facsimile: (000) 000-0000
American Real Estate Holdings L.P. c/o Icahn Associates Corp. $76,638,787
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
- and -
000 Xxxxx Xxxxxxx Xxxx
Xx. Xxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Banco Central HispanoAmericano, S.A. 000 Xxxxxxxx Xxx. $6,334,755
Miami Agency Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
41
-2-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
The Bank of East Asia (Canada) Xxxxx 000-000, Xxxx Xxxx Xxxxxx $5,736,884
000 Xxxxxxx 0 Xxxx
Xxxxxxxx Xxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxx
Facsimile: (000) 000-0000
Bankers Trust Company 000 Xxxxxxx Xxxxxx $7,526,760
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx/Xxxx Xxxxx
& Xxxxx Xxxxx
Facsimile: (000) 000-0000
- and -
000 Xxxxxxx Xxxxxx, Mail Stop 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Banque Nationale de Paris 000 Xxxx Xxxxxx x0
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxx
Facsimile: (000) 000-0000
- and -
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Banque Nationale de Paris (Canada) 000 Xxxx Xxxxxx $10,381,883
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxx
Facsimile: (000) 000-0000
- and -
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
42
-3-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
Bear, Xxxxxxx & Co. Inc. 000 Xxxx Xxxxxx $85,015,472
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx Xxxxx
Facsimile: (000) 000-0000
- and -
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
BT Bank of Canada Royal Bank Plaza, North Tower $31,879,886
Xxxxx 0000
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Canadian Imperial Bank of Commerce Commerce Court West $45,877,648
0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx/
Xxxxx XxXxxxxxx
Facsimile: (000) 000-0000
Chase Bank of Texas, N.A. 000 Xxxx Xxxxxx $19,657,160
5 TCBE 78
Xxxxxxx, Xxxxx 00000
Attention: Xx Xxxxxxxx
Facsimile: (000) 000-0000
The Chase Manhattan Bank c/o Chase Securities Inc. $4,291,285
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
- and -
Special Loan Department
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx XxXxxxxx/
Xxx Xxxxx
Facsimile: (000) 000-0000
43
-4-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
The Chase Manhattan Bank of Canada 1 First Canadian Place $12,907,988
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxxx Xxxx
Facsimile: (000) 000-0000
CIBC Inc. Cross Border $10,035,681
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Citibank, N.A. 000 Xxxxxxxxx Xxxxxx $8,593,341
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
Comerica Bank International Finance Department $34,700,407
One Detroit Center
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Persons
Facsimile: (000) 000-0000
- and -
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
Credit Suisse First Boston Eleven Madison Avenue $0
New York, New York 10010-3629
Attention: Xxx Xxxxx
Facsimile: (000) 000-0000
Credit Suisse First Boston Canada Credit Suisse Centre $13,842,511
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
44
-5-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
Dai-Ichi Kangyo Bank (Canada) Commerce Court West $5,736,884
Xxxxx 0000
X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
The Dai-Ichi Kangyo Bank, Ltd. One World Trade Centre $15,836,889
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx
Facsimile: (000) 000-0000
Deutsche Bank AG, New York and or 00 Xxxx 00xx Xxxxxx $0
Xxxxxx Xxxxxx Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
Deutsche Bank Canada 000 Xxx Xxxxxx $24,224,394
Fax: (000) 000-0000
Xxxxx 0000
X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
Xxxxx Xxxxx - Senior Debt Portfolio 00 Xxxxxxx Xxxxxx $6,334,755
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxxxx
Facsimile: (000) 000-0000
Fernwood Associates L.P. c/o Intermarket Corp. $21,139,974
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxx/Xxxx Xxxxxx
Facsimile: (000) 000-0000
Foothill Capital Corporation 00000 Xxxxx Xxxxxx Xxxx. $37,643,856
00xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx/
Xxxx Xxxxx
Facsimile: (000) 000-0000
Xxxxxxx Xxxxx Canada Credit Partners Co. 00 Xxxxx Xxxxxx. 0xx Xxxxx $1,683,888
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx/
Xxxxxx XxXxxxxxx
Facsimile: (000) 000-0000
45
-6-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
Xxxxxxx Sachs Credit Partners L.P. 00 Xxxxx Xxxxxx, 0xx Xxxxx $3,139,757
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
- and -
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
Facsimile: (000) 000-0000
High River Limited Partnership c/o Icahn Associates Corp. $199,887,471
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx/Xxxx Xxxxx
Facsimile: (000) 000-0000
- and -
0 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Keybank National Association 000 Xxxxxx Xxxxxx $12,669,511
Mail Code: OH-01-27-0504
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx/
Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Xxxxxxxxx Corp. c/o Cerberus Partners, L.P. $18,539,302
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
- and -
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
Xxxxxxxxx LLC c/o Cerberus Partners, L.P. $28,506,401
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
- and -
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
46
-7-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
Mellon Bank Canada One Mellon Bank Center $13,842,511
Suite 1525
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Mellon Bank, N.A. One Mellon Bank Centre $0
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
The Mutual Life Assurance Company 000 Xxxx Xxxxxx Xxxxx $14,342,209
of Canada Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
Mutual Shares Fund, a series of 51 Xxxx X. Xxxxxxx Parkway $19,865,732
Franklin Mutual Series Fund Inc. Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Nationsbank, N.A. 000 Xxxxx Xxxxx Xxxxxx $44,465
NC1-007-12-04
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx/Xxx Xxxx
Facsimile: (000) 000-0000
- and -
Special Assets Office, New York
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
- and -
Nationsbanc, Xxxxxxxxxx
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: 000-000-0000
Xxxxxxx 0000 Xxxxx $12,669,511
Fax: (000) 000-0000
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
- and -
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile: 000-000-0000
47
-8-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
PNC Bank, National Association Xxx XXX Xxxxx - 0xx Xxxxx $31,673,778
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
The Royal Bank of Scotland PLC Wall Street Plaza $12,669,511
00 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Sakura Bank (Canada) Commerce Court West $20,763,766
Xxxxx 0000
X.X. Xxx 00
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
The Sakura Bank, Limited Commerce Court West $0
Suite 3601
X.X. Xxx 00
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Societe Generale Asset Recovery Management $0
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx
Facsimile: (000) 000-0000
Societe Generale (Canada) Scotia Plaza $34,606,278
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
Summit Bank 000 Xxxxxx Xxxxxx $3,727,568
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx/
Xxxxxx Xxxx
Facsimile: (000) 000-0000
48
-9-
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------- ------- ------------------------
The Toronto-Dominion Bank 00 Xxxx Xxxxxx Xxxx $34,606,278
0xx Xxxxx
Xxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
Toronto Dominion (New York), Inc. 00 Xxxx 00xx Xxxxxx x0
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Tri-Links Investment Trust 2 World Financial Center $4,292,382
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
Wachovia Bank, N.A. 000 Xxxxxxxxxx Xxxxxx Xxxxx Xxxx $12,669,511
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx/
Xxxx Xxxxxxxxx &
Xxxxx Xxxxx
Facsimile: (000) 000-0000
49
SCHEDULE C
CONFIDENTIAL
June 28, 1999
Xxxxxx Services Corp.
000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Colin Xxxxx
Xxxxxx Services (Delaware), Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxx
re Debtor-in-Possession Financing Letter
-----------------------------------------
Dear Xx. Xxxxx:
At your request, Canadian Imperial Bank of Commerce ("CIBC") and Bankers
Trust Company ("BTCo") and/or its affiliates (together with CIBC, the "DIP
Co-Arrangers") have reviewed certain information provided to date in connection
with a possible debtor-in-possession financing (the "DIP Financing") in the
form of the credit facility described below for Xxxxxx Services (Delaware),
Inc. (the "US Borrower") and Xxxxxx Services Corp. (the "Canadian Borrower")
as borrowers thereunder on an individual basis (collectively, the "Borrowers")
in connection with the pre-arranged plan of reorganization (the "Pre-Arranged
Plan") contemplated in the Lock-Up Agreement and Restructuring Terms Sheet,
dated June 21, 1999, agreed to by the Canadian Borrower on behalf of itself and
each of its affiliates.
We understand that you have requested a revolving credit and letter of
credit facility (the "DIP Facility") of up to $100,000,000, which shall be
used (x) to pay all professional fees incurred by the DIP Agent (as defined
below) and the DIP Lenders (as defined
08/13/99 2:52 PM
[6HPXP01!.DOC]
-1-
50
below) in connection with the DIP Facility, (y) to provide for working capital
and general corporate requirements and payments of professional fees and
expenses (including professionals retained pursuant to Section 327 of the US
Bankruptcy Code) of the US Borrower and certain of its US affiliates
(collectively, the "US Credit Parties") and (z) to provide for working capital
and general corporate overhead requirements of the Canadian Borrower and the
other Canadian Credit Parties in an amount not to exceed the Canadian Loan
Amount (as defined below), during the continuance of pre-arranged bankruptcy
proceedings with respect to the Borrowers and certain of their subsidiaries
incorporated in the United States or Canada that may be commenced under Chapter
11 of the United States Code entitled "Bankruptcy" (the "Bankruptcy Code," and
the proceedings commenced thereunder, the "US Cases") and/or under the
Companies Creditors Arrangement Act (the "CCAA," and the proceedings commenced
thereunder, the "Canadian Cases" and, together with the US Cases, the "Cases").
The DIP Co-Arrangers are pleased to advise you of their agreement to
co-arrange the DIP Facility on the terms and subject to the conditions set
forth herein, in the "Summary of Certain Terms" attached hereto and in the
letter dated as of the date hereof regarding the payment of fees (the "Fee
Letter"). In addition, BTCo agrees to act as administrative agent (the "DIP
Agent") and as collateral agent for the collateral located in the United
States, and CIBC as collateral agent for the collateral located in Canada (the
"DIP Collateral Agents"), for the DIP Facility.
The DIP Facility may be provided by all or a sub-group of the lenders
parties to the existing Credit Agreement dated as of August 11, 1997 (the
"Existing Credit Agreement") among the Borrowers, CIBC, as Administrative
Agent, BTCo, as Syndication Agent, CIBC and BTCo, as Co-Arrangers, Dresdner
Bank Canada and Dresdner Bank AG New York Branch (collectively, "Dresdner"), as
Documentation Agent (CIBC, BTCo, and Dresdner, collectively, the "Pre-Petition
Agents"), and the various lenders from time to time parties thereto (in such
capacity, collectively, the "Pre-Petition Lenders"), which will have executed
an Addendum (in the form attached hereto as Exhibit A) evidencing such
Pre-Petition Lender's consent to and approval of the terms and conditions of
this letter and the term sheet and each such Pre-Petition Lender's commitment
to make loans and issue or participate in letters of credit under the DIP
Facility, subject to the negotiation, execution and delivery of definitive
documentation for the DIP Facility that is in form and substance satisfactory
to the DIP Agent (collectively, the "DIP Credit Documentation"). The DIP
Credit Documentation shall be prepared by White & Case LLP and Blake, Xxxxxxx &
Xxxxxxx and shall contain such covenants, representations and warranties,
events of default, conditions precedent, security arrangements, indemnities and
other terms and provisions as shall be satisfactory to the DIP Agent and the
lenders that agree to provide the DIP Financing (the "DIP Lenders").
The DIP Co-Arrangers shall manage all aspects of the syndication of the
DIP Financing and the Borrowers hereby agree to assist in such syndication
process. To assist the DIP Co-Arrangers in their syndication efforts, you
hereby agree (a) to provide and cause your advisors to provide the DIP
Co-Arrangers and the other syndicate members upon request with all reasonable
information deemed necessary by the DIP Co-Arrangers to complete syndication,
including but not limited to information and evaluations prepared by the
Borrowers and their advisors on their behalf relating to the transactions
contemplated hereby and (b) to assist the DIP
2
51
Co-Arrangers upon request in the preparation of an Information Memorandum to be
used in connection with the syndication of the DIP Financing, including making
available officers of the Borrowers from time to time and attending and making
presentations regarding the business and prospects of the Borrowers as
appropriate at a meeting or meetings of DIP Lenders or prospective DIP Lenders.
The Borrowers hereby confirm their understanding that the DIP
Co-Arrangers' agreement to co-arrange the DIP Facility is independent of their
agreement to participate as DIP Lenders in the proposed financing contemplated
by the DIP Facility, and that nothing contained herein shall be deemed a
commitment of the DIP Co-Arrangers to participate as DIP Lenders in the
proposed financing. The DIP Co-Arrangers shall not be responsible or liable for
damages which may be alleged as a result of their failure to arrange or
participate in the DIP Facility in the event that they decline to arrange or
participate in the proposed financing contemplated by the DIP Facility in
accordance with the terms outlined in this letter, the term sheet or any other
terms.
The Borrowers hereby represent, warrant and covenant that all information
(other than projections, if any) and data concerning the Borrowers and their
affiliates which has been or is hereafter furnished or otherwise made available
to the DIP Co-Arrangers, the DIP Agent and the DIP Lenders by the Borrowers was
at the time made, and will be, complete and correct in all material respects
and does not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statements were or are made. Projections, if any, do and will constitute the
Borrowers' good faith estimates of the items projected.
The Borrowers further represent that prior to the filing of the Cases, (i)
the Borrowers shall have engaged in negotiations regarding the Pre-Arranged
Plan with the holders (or representatives of such holders) of claims against
the Borrowers and/or their subsidiaries entitled to vote on the Pre-Arranged
Plan, (ii) the Borrowers shall have used their best efforts to obtain written
agreements, to the extent legally permissible, from such holders of claims in
terms of amount of claims and number of holders as required for the approval of
the Pre-Arranged Plan by the relevant classes of claims and interests under the
Bankruptcy Code and the CCAA, committing such holders (a) to vote in favor of
the Pre-Arranged Plan and (b) not to sell or assign their claims or interests
except to an entity that agrees in writing to be bound by the terms of such
agreements, and (iii) the Pre-Arranged Plan shall be feasible and there shall
exist no known impediment to confirmation of the Pre-Arranged Plan and
consummation thereof by November 30, 1999.
To induce the DIP Co-Arrangers to issue this letter, the Borrowers hereby
agree that all reasonable fees and expenses (including syndication expenses and
the reasonable fees and expenses of counsel and consultants) of the DIP
Co-Arrangers, arising in connection with this letter and in connection with the
transactions described herein shall be for their joint and several account,
whether or not the DIP Financing is consummated or the DIP Credit Documentation
is executed. The Borrowers further agree, on a joint and several basis, to
indemnify and hold harmless the DIP Co-Arrangers, the DIP Agent, the DIP
Collateral Agents, each DIP Lender and each of the foregoing entities'
respective directors, officers, employees, agents, attorneys and affiliates
(all such persons and entities being referred to hereafter as "Indemnified
Persons") from
3
52
and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against
or involve any Indemnified Person (whether asserted by you or any third party)
as a result of or arising out of or in any way related to or resulting from
this letter or any eventual extension of the DIP Financing, and, upon demand,
to pay and reimburse any Indemnified Person for any reasonable legal or other
out-of-pocket expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any inquiry or
investigation) or claim (whether or not any Indemnified Person is a party to
any action or proceeding out of which any such expenses arise); provided,
however, the Borrowers shall not be obligated to indemnify pursuant to this
paragraph any Indemnified Person against any loss, claim, damage, expense or
liability to the extent it resulted from the gross negligence or willful
misconduct of such Indemnified Person as finally determined by a court of
competent jurisdiction. You also hereby agree to pay the amounts set forth in
the Fee Letter. This letter is issued for your benefit only and no other
person or entity may rely thereon.
Each DIP Co-Arranger reserves the right to employ the services of its
affiliates in providing the services contemplated by this letter and to
allocate to them, in whole or in part, certain fees payable to such DIP
Co-Arranger in such manner as they may agree in their sole discretion. You
acknowledge that each DIP Co-Arranger may share with any of its affiliates any
information (including information relating to creditworthiness) related to the
Borrowers or their affiliates or any of the other matters contemplated hereby.
Neither you nor your affiliates are authorized to show or circulate this
letter or disclose the existence or terms hereof to any other person or entity
(other than your legal and financial advisors in connection with your
evaluation hereof) until such time as you have accepted this letter as provided
in the final paragraph hereof and paid the amount set forth herein and in the
Fee Letter. In any event neither you nor your affiliates are authorized to
disclose the terms hereof (or file copies hereof) in any public filings made by
you other than filings made pursuant to the Bankruptcy Code and the CCAA and
shall not in any event disclose the terms of the Fee Letter, unless in either
case (and then only to the extent) required by law, without our prior written
consent.
The provisions of the four immediately preceding paragraphs, the sixth
immediately preceding paragraph, and the following two paragraphs shall survive
any termination of this letter.
This letter and the Fee Letter shall be construed in accordance with and
governed by the laws of the State of New York. Each party hereto waives all
rights to trial by jury such party may have with respect to the matters
hereunder and thereunder.
If you are in agreement with the foregoing, please sign and return to us
the enclosed copy of this letter no later than 5:00 p.m., New York time on
____, 1999. At such time, you must also wire to the DIP Agent the following:
(x) $300,000 as a deposit toward payment of our counsel's fees to be incurred
in connection with the preparation of the DIP Credit Documentation and (y) $
50,000 as a deposit toward payment of our consultant's fees to be incurred in
connection with our due diligence with respect to the DIP Facility. If you
decline to
4
53
take the foregoing actions, you are to return all copies of this letter to us
as promptly as possible and in such event you are not authorized to disclose
this letter or the contents thereof to any other party.
Very truly yours,
BANKERS TRUST COMPANY
not individually, but in its capacity as DIP
Administrative Agent, DIP Co-Arranger, DIP
Collateral Agent and L/C Issuing Lender under the
DIP Facility
By_________________________
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
not individually, but in its capacity as DIP
Co-Arranger and DIP Collateral Agent under the
DIP Facility
By_________________________
Title:
Agreed and accepted this
____ day of ___, 1999:
XXXXXX SERVICES CORP.
By________________________
Title:
XXXXXX SERVICES (DELAWARE), INC.
By________________________
Title:
5
54
SUMMARY OF CERTAIN TERMS(1)
DIP Co-Arrangers: Bankers Trust Company ("BTCo") and /or its
affiliates and Canadian Imperial Bank of Commerce
("CIBC").
DIP Agent: BTCo.
L/C Issuing Lender: BTCo.
DIP Collateral Agents: BTCo for the collateral located in the United States
and CIBC for the collateral located in Canada.
Borrowers: Xxxxxx Services (Delaware), Inc. (the "US
Borrower") and Xxxxxx Services Corp. (the "Canadian
Borrower"), as debtors-in-possession in the Cases, on
an individual basis.
DIP Lenders: All or a sub-group of the lending institutions
parties to the existing Credit Agreement dated as of
August 11, 1997 (the "Existing Credit Agreement") among
the Borrowers, as Borrowers, CIBC, as Administrative
Agent, BTCo, as Syndication Agent, CIBC and BTCo, as
Co-Arrangers, Dresdner, as Documentation Agent, and the
various lenders from time to time parties thereto,
which will have executed an Addendum (in the form
attached hereto as Exhibit A) evidencing such
Pre-Petition Lender's consent to and approval of the
terms and conditions of the financing letter and this
term sheet and each such Pre-Petition Lender's
commitment to make loans and issue or participate in
letters of credit under the DIP Facility.
Guarantors: The obligations of each Borrower under the DIP
Facility shall be unconditionally guaranteed by the
other Borrower, all subsidiaries of the Borrowers
incorporated in the United States (together with the US
Borrower, the "US Credit Parties") as
debtors-in-possession in the US Cases, and all
subsidiaries of the Borrowers incorporated in Canada
(together with the Canadian Borrower, the "Canadian
Credit Parties" and, collectively with the US Credit
Parties,
------------------
(1) Capitalized terms used but not defined herein shall have the meanings
provided in the Existing Credit Agreement.
6
55
the "Credit Parties"), on the same basis as such
entities guaranty the obligations under the Existing
Credit Agreement, provided, however, that the
Guarantors shall not include the subsidiaries of the
Borrowers incorporated in Canada until such time as the
Canadian Approvals (as described below) have been
obtained.
DIP Facility: Revolving credit and letter of credit facility
of $100,000,000. In addition to loans (the "Loans"), a
portion of the DIP Facility up to a sublimit of
$20,000,000 ( the "LC Sublimit") may be utilized by the
Borrowers for the issuance of standby or trade letters
of credit in support of certain obligations
satisfactory to the DIP Agent (collectively, the
"Letters of Credit"), subject in each case to the
limitations described below.
Maturity: The date (the "Maturity Date") which is the
earliest of (x) November 30, 1999, (y) the effective
date of a plan of reorganization in the US Cases (or
the equivalent occurrence in the Canadian Cases) and
(z) the date of substantial consummation of a confirmed
plan of reorganization in the US Cases (or the
equivalent occurrence in the Canadian Cases).
Availability: To the extent the interim order and/or final
order issued by the bankruptcy court (the "Bankruptcy
Court") hearing the US Cases is limited as to the
amount of credit covered by such order, availability
under the DIP Facility shall be limited to the amount
of credit covered by such order of the Bankruptcy
Court.
In addition, availability under the DIP Facility
will be subject to a borrowing base (the
"Borrowing Base") equal to, on the Closing Date
(defined below), the sum of up to 80% of the
value of the Eligible Accounts Receivable (to be
defined and to include a reserve in the amount of
the Carve-Out and, with respect to Canadian
accounts receivable, the amount of the Liens on
Canadian Accounts Receivable (as defined below))
of (i) the Credit Parties constituting part of
the Industrial Services Group plus (ii) the US
Credit Parties constituting part of the US
Ferrous division; provided, however, that (a) the
DIP Agent may determine or impose eligibility
requirements, impose reserves or reduce the
advance rates described above upon the exercise
of its Permitted Discretion (to be defined) and
(b) the Borrowing Base shall not include assets
of the Canadian
7
56
Credit Parties until the Canadian Approvals have been
obtained.
Availability in respect of the Borrowing Base shall be
determined on the basis of a Borrowing Base Certificate
delivered according to a schedule satisfactory to the
DIP Agent by the chief financial officer of the
Canadian Borrower.
Notwithstanding the above, the Canadian Borrower's
borrowings under the DIP Facility will be limited to an
amount to be determined by the DIP Agent from time to
time based on the corporate overhead requirements of
the Canadian Borrower, not to exceed $15,000,000
(the "Canadian Loan Amount")
Purpose: To pay all professional fees incurred by the DIP
Agent and the DIP Lenders in connection with the
DIP Facility and to provide for working capital
and general corporate requirements (or in the case
of Letters of Credit issued for the account of the US
Borrower, to support such general corporate
requirements), including, without limitation, in the
case of the US Borrower (a) to make
investments in and advances to direct and indirect
subsidiaries of the Canadian Borrower that are
not Credit Parties, subject to an aggregate limitation
of $10,000,000, and (b) after the Canadian
Approvals (as defined below) are obtained, to make
investments in and advances to the Canadian
Credit Parties, through the Maturity Date. Letters of
Credit under the DIP Facility may only be
issued as permitted under the DIP Facility, and only
in an aggregate amount not to exceed the LC
Sublimit.
Notwithstanding the above, the Loans made to the
Canadian Borrower may only be utilized to provide
for working capital and general corporate requirements
of the Canadian Borrower and the other
Canadian Credit Parties.
The Borrowers and the Guarantors shall waive any
right to commence or prosecute any defense,
action, objection or counterclaim with respect to
the claims, liens or security interests of the
DIP Lenders and/or the DIP Agent.
8
57
Budget: The Borrowers shall provide to the DIP Agent and
each DIP Lender a copy of a budget (the "Budget"),
in form and substance satisfactory to the DIP Agent
and the Required DIP Lenders (as defined
below), reflecting the projected cash requirements
of the Xxxxxx Entities (including, without
limitation, utilization of the Pre-Petition Lenders'
cash collateral) from the Closing Date through
the Maturity Date, calculated on a monthly basis.
The DIP Lenders shall not be obligated at any
time to advance funds in excess of the then
cumulative monthly projected cash borrowings indicated
in the Budget, plus $10,000,000.
Mandatory Repayments: Except (i) to the extent, if any, otherwise provided
in the DIP Credit Documentation (as defined
below) and (ii) (in the absence of an event of
default under the DIP Credit Documentation) to the
extent that Asset Sale Proceeds (as defined in
Proceeds Agreement dated April 5, 1999 (the
"Proceeds Agreement")) exceed $93,000,000 (after
post-closing adjustments of no more than
$4,000,000 with respect to the Aluminum Proceeds
(as defined in the Proceeds Agreement)), the Loans
will be repaid upon a sale of any assets of the
Borrowers or any of their subsidiaries, in an
amount equal to the cash proceeds (net of reasonable
costs, payment of senior obligations secured
by such assets, and, unless and until the Bank
Account Service Providers (as defined below) release
their security interests in such proceeds, the
amount of such cash proceeds constituting proceeds
of Canadian Accounts Receivable (as defined below))
received by the Borrowers or such subsidiary
with respect to such asset sale. In addition, if
the amount of the Loans and/or Letters of Credit
outstanding at any time is higher than the amount
permitted under the Borrowing Base, the Borrowers
will be required to make mandatory repayments,
and/or to cash-collateralize Letters of Credit, in
an amount equal to such excess.
Optional Commitment Reductions;
Voluntary Prepayments: At the Borrowers' option, the unutilized portion
of the Total Commitment may be reduced or
terminated at any time without penalty. Voluntary
prepayments may be made at any time, in whole or
in part (subject to specified minimum principal
amounts) without premium or penalty (limited to the
last day of the applicable interest period for
Eurodollar Loans, as defined below).
9
58
Termination of Commitment:The commitment hereunder shall terminate on June 30,
1999 unless a definitive credit agreement in
form and substance satisfactory to the DIP Agent
and related documentation (the "DIP Credit
Documentation") have been entered into and the
conditions to initial Loans and Letters of Credit
set forth therein have been satisfied on or prior
to such date (the date on which the DIP Credit
Documentation is executed and such conditions are
satisfied, the "Closing Date").
Super - Priority: All the obligations of the Borrowers and the
Guarantors incorporated in the United States under the
DIP Credit Documentation (the "DIP Obligations")
shall constitute an allowed administrative expense
claim in the US Cases pursuant to Section 364(c)(1)
of the Bankruptcy Code having priority over all
administrative expenses of the kind specified in
Sections 503(b) and 507(b) of the Bankruptcy Code,
subject only to (a) any allowed super-priority
administrative claim granted by the Bankruptcy Court
to the LC Issuers, the LC Lenders, issuers of
letters of credit under the Permitted LC Facility (as
defined below) and the Bank Account Service
Providers (as defined below), and (b) a $3,000,000
carve-out (the "Carve-Out") for the payment of (i)
allowed professional fees and disbursements
incurred by the professionals retained, pursuant
to Sections 327 or 1103(a) of the Bankruptcy Code
(or, after such time as the Canadian Approvals
have been obtained, authorized pursuant to any
equivalent orders in the Canadian Cases), by the
Borrowers and the Guarantors and any statutory
committee appointed in the Cases and (ii) quarterly
fees required to be paid pursuant to 28 U.S.C.
Section 1930(a)(6) and any fees payable to the Clerk
of the Bankruptcy Court (or, after such time
as the Canadian Approvals have been obtained,
authorized pursuant to any equivalent orders in the
Canadian Cases); provided, however, the Carve-Out
shall not include professional fees and
disbursements incurred in connection with asserting
any claims or causes of action against the
Pre-Petition Lenders, the Pre-Petition Agents,
the security agent (the "Security Agent") under the
Security Agency Agreement dated as of March 16,
1998 among the Borrowers and CIBC as administrative
agent, the DIP Lenders, the DIP Agent, the DIP
Collateral Agents, the DIP Co-Arrangers, or any DIP
Lenders or Pre-Petition Lenders providing bank
10
59
account services for any of the Credit Parties in
their capacity as such bank account service
providers (the "Bank Account Service Providers")
and/or challenging or raising any defense,
objection or counterclaim to any of the obligations
of the Borrowers or the Guarantors under the
Pre-Petition Credit Agreement or the DIP Credit
Agreement or any claim, lien or security interest
of the Pre-Petition Agents, the Security Agent,
the Pre-Petition Lenders, the DIP Agent, the DIP
Collateral Agents, the DIP Co-Arrangers, the DIP
Lenders and/or the Bank Account Service Providers.
Security: Subject only to the Carve-Out, cash collateral
held under Section 5.06 of the Existing Credit
Agreement for the benefit of the LC Lenders under
the Existing Credit Agreement, and to liens on
Canadian accounts receivable (the "Canadian Accounts
Receivable") and the proceeds thereof (such
liens, collectively, the "Liens on Canadian Accounts
Receivable") and specified cash collateral
addressed in documentation entered into in con-
nection with the establishment of operating accounts
of certain of the Canadian Credit Parties at CIBC
and the maintenance of operating accounts of
certain of the US Credit Parties at Comerica Bank
and the establishment of the Permitted LC
Facility (the "Permitted LC Facility") under
Amending Agreement No. 3 to the Existing Credit
Agreement (which liens shall be senior to the
Carve-Out), and liens of the bonding companies, as
approved by the Required Lenders, all the DIP
obligations shall be secured by (i) an enforceable
first priority priming lien (the "Priming Lien")
pursuant to Section 364(d)(1) of the Bankruptcy
Code on all of the existing and after-acquired
assets of the Borrowers and the Guarantors located
in the US constituting collateral (the "US Pre-
Petition Collateral") securing obligations to the
Pre-Petition Agents and the Pre-Petition Lenders
under the Existing Credit Agreement, (ii) an
enforceable first priority lien pursuant to
Section 364(c)(2) of the Bankruptcy Code on all
unencumbered assets of the Borrowers and the
Guarantors located in the US, (iii) an enforceable
junior lien pursuant to Section 364(c)(3) of the
Bankruptcy Code on all previously encumbered
assets (excluding the US Pre-Petition Collateral),
existing and after-acquired, of the Borrowers
and the Guarantors located in the US, (iv) an
enforceable first priority security interest and
charge on all of the
11
60
existing and after-acquired assets of the Borrowers
and the Guarantors located in Canada (the
"Canadian Pre-Petition Collateral") securing
obligations to the Pre-Petition Agents and the
Pre-Petition Lenders under the Existing Credit
Agreement, ranking in priority to the security of
the Pre-Petition Agents and the Pre-Petition
Lenders in the Canadian Pre-Petition Collateral, (v)
an enforceable first priority security interest and
charge on all unencumbered assets of the
Borrowers and Guarantors located in Canada,
and (vi) an enforceable junior security interest and
charge on all previously encumbered assets (excluding
the Canadian Pre-Petition Collateral),
existing and after-acquired, of the Borrowers and
the Guarantors located in Canada (all foregoing
liens described in clauses (i) through (vi), the
"Facility Liens"), whether in existence at the time
of the filing of the Cases or acquired thereafter.
Interest Rates: All Loans under the DIP Facility shall be maintained
initially as Base Rate Loans, which shall bear
interest at the Applicable Margin in excess of the
Base Rate in effect from time to time; provided
that, commencing thirty days after the Closing Date,
at the Borrowers' option, Loans may be
maintained from time to time as (i) Base Rate Loans
or (ii) Eurodollar Loans, which shall bear
interest at the Applicable Margin in excess of the
Eurodollar Rate (adjusted for maximum reserves)
as determined by the DIP Agent for the respective
interest period.
"Applicable Margin" shall be 2.5% in the case of
Base Rate Loans and 3.5% in the case of
Eurodollar Loans.
"Base Rate" shall mean the higher of (x) 1/2 of
1% in excess of the Federal Reserve reported
certificate of deposit rate and (y) the rate that
the DIP Agent announces from time to time as its
prime lending rate, as in effect from time to
time.
An interest period of one month shall be
available in the case of Eurodollar Loans.
Interest in respect of Base Rate Loans shall be
payable monthly in arrears on the last business
day of each month. Interest in respect of
Eurodollar Loans shall be payable in arrears at
the end of the applicable interest period or, if
12
61
shorter, at the end of each monthly interval of
the first day thereof. Interest will also be
payable at the time of repayment of any Loans and
at maturity of such Loans. All interest and fee
calculations shall be based on a 360-day year and
actual days elapsed.
Upon the occurrence and continuance of any
default in the payment of principal or interest,
all Loans shall bear interest at a rate per annum
equal to the rate which is 2% in excess of the
rate then borne by such Loans, to the extent
permitted by law. Such interest shall be payable
on demand.
The DIP Credit Documentation shall include
protective provisions for such matters as capital
adequacy, increased costs, funding losses,
illegality and withholding taxes.
Fees:
Commitment Fee: 1/2 of 1% per annum on the
average unused portion of the DIP Facility
for the period commencing on the Closing
Date and ending on the date the Total
Commitment is terminated, to be owed by the
Borrowers on a joint and several basis.
Usage for such purpose shall include Letter
of Credit usage. Commitment Fee will be
payable monthly in arrears and on the date
the Total Commitment is terminated.
L/C Fees: 3.5% per annum on aggregate outstanding
stated amounts thereof, plus .25% per annum
for fronting fees, plus customary issuance
and drawing charges, in each case payable
monthly.
Covenants: Covenants applicable to the Borrowers, the Guarantors
and their subsidiaries shall include those customary
for debtor-in-possession financings (having reasonable,
customary and appropriate exceptions), including but
not limited to the following:
Affirmative
Covenants: The DIP Credit Documentation shall contain affirmative
covenants required by the DIP Agent, including, without
13
62
limitation: (i) delivery of financial statements and
reports, the Budget, Borrowing Base Certificates,
bi-weekly reports containing comparisons of actual to
projected cash flows, descriptions of proposed asset
divestitures and other significant events and rolling
fourteen (14) week cash flow forecasts, copies of
accountants' letters upon receipt thereof by the
Borrowers or the Guarantors, projections, officers
certificates, monthly reporting packages and other
information requested by the DIP Agent, (ii) payment of
all postpetition taxes and other obligations, (iii)
continuation of business and maintenance of existence
and material rights and privileges, (iv) compliance
with laws and material contractual obligations, (v)
maintenance of property and insurance, (vi) maintenance
of books and records, (vii) right of the DIP Agent and
the DIP Lenders to inspect property and books and
records, (viii) notice of defaults, litigation and
other material events, (ix) compliance with
environmental laws and (x) delivery of the consultants
reports necessary to determine the value of the
collateral of the Credit Parties, including, without
limitation, the receivables of the Credit Parties that
will be taken into account in the calculation of the
Borrowing Base as described under "Availability" above.
Negative Covenants: The DIP Credit Documentation shall contain negative
covenants required by the DIP Agent, with exceptions to
be permitted as necessary to comply with the provisions
of the Pre-Arranged Plan, including, without
limitation, limitations on (i) indebtedness, (ii)
liens, (iii) guarantee obligations, (iv) mergers,
consolidations, liquidations and dissolutions, (v)
sales of assets, (vi) leases, (vii) capital
expenditures, (viii) investments, loans and advances
(other than, in the case of the US Borrower (a)
investments in and advances to direct and indirect
subsidiaries of the Canadian Borrower that are not
Credit Parties, subject to an aggregate limitation of
$10,000,000, and (b) investments and advances to the
Canadian Credit Parties after the Canadian Approvals
(as defined below) have been obtained), (ix) payment of
prepetition claims or debt, or amendments thereto, (x)
the existence of any claims (other than any granted to
the LC Issuers, the LC Lenders, issuers of letters of
credit under the Permitted LC Facility, the Bank
Account Service Providers, the DIP Lenders and the
Pre-Petition Lenders) entitled to a superpriority under
Section 364(c)(1) of the Bankruptcy Code or in the
Canadian Cases, (xi)
14
63
change in business, (xii) maintenance of financial
covenants satisfactory to the DIP Agent, (xiii)
dividends and other distributions on equity, (xiv)
transactions with affiliates, (xv) the filing of a plan
of reorganization, disclosure statement or plan of
arrangement, as applicable, in the Cases, other than
the Pre-Arranged Plan and the disclosure statement
approved by the Required DIP Lenders with respect
thereto, without the consent of the Required DIP
Lenders, (xvi) the amendment, modification or
withdrawal of the Pre-Arranged Plan, or the disclosure
statement approved by the Required DIP Lenders with
respect thereto, without the consent of the Required
DIP Lenders and (xvii) failure to comply with any
material applicable provisions of the Pre-Arranged
Plan.
Events of
Default: The DIP Credit Documentation shall contain Events of
Default required by the DIP Agent including, without
limitation: (i) the entry of an order dismissing any of
the Cases, converting any of the US Cases to a Chapter
7 case or lifting the stay in the Canadian Cases to
permit the enforcement of any security against any
Credit Party or the appointment of a receiver, or the
making of a receiving order against any Credit Party,
(ii) the entry of an order appointing a Chapter 11
trustee in any of the US Cases, (iii) the entry of an
order granting any other claim superpriority status or
a lien equal or superior to that granted to the DIP
Agent and the DIP Lenders, other than orders entered in
respect of (x) reclamation claims pursuant to Section
546(c) of the Bankruptcy Code or (y) the Bank Account
Service Providers, (iv) the entry of an order staying,
reversing, vacating or otherwise modifying the DIP
Credit Documentation, the Interim Order or the Final
Order (as defined below), or the entry of an order by
the Canadian Court having the equivalent effect,
without the prior written consent of the DIP Agent and
the Required DIP Lenders, (v) the entry of an order in
any of the US Cases appointing an examiner having
enlarged powers beyond those set forth under Section
1106(a)(3) and (4) of the Bankruptcy Code, or the entry
of an order by the Canadian Court having a similar
effect, (vi) failure of any Credit Party to pay (A)
interest or fees when due and such default shall
continue for two business days or (B) principal when
due, (vii) failure of any Credit Party to comply with
any negative covenants, (viii) failure of any Credit
Party to perform or comply with
15
64
any other term or covenant and such default shall
continue unremedied for a period of 20 days, (ix) any
representation or warranty by any Credit Party shall be
incorrect or misleading in any material respect when
made, (x) there shall occur a material disruption in
the senior management of either Borrower or a Change of
Control (to be defined) shall occur, (xi) the entry of
any order granting relief from the automatic stay in
the US Cases, or lifting the stay in the Canadian
Cases, so as to allow a third party to proceed against
any material asset of any Credit Party, (xii) the
filing of any pleading by any Credit Party, seeking any
of the matters set forth in clauses (i) through (v) or
(xi), (xiii) the entry of the Final Order shall not
have occurred within 30 days after the Closing Date and
(xiv) failure to obtain the confirmation of the
Pre-Arranged Plan and to consummate such plan by
November 30, 1999.
Remedies: Upon the occurrence of an Event of Default, the
Required DIP Lenders may terminate the Total Commitment
(the date of any such termination, the "Termination
Date"), declare the obligations in respect of the DIP
Credit Documentation to be immediately due and payable
and exercise all rights and remedies under the DIP
Credit Documentation and the Interim Order or Final
Order (and the equivalent Canadian orders), as
applicable. The DIP Agent and the DIP Lenders shall
have customary remedies under the DIP Credit
Documentation including, but not limited to, the right
to realize on all or part of the Facility Liens without
the necessity of obtaining further relief or order from
the Bankruptcy Court or the Canadian Court.
Notwithstanding the foregoing, other than with respect
to the termination of the Commitments, the acceleration
of the Loans, and the imposition of an administrative
freeze or administrative hold with respect to cash
collateral, the DIP Agent, the DIP Collateral Agents
and the DIP Lenders may only exercise other remedies
after providing three business days' prior written
notice to the Borrowers, the Guarantors, the United
States Trustee and any statutory committee or monitor
appointed in the Cases.
Interim
Advances: Upon entry of the Interim Order (described below) and
the occurrence of the Closing Date, the Total
Commitment
16
65
shall be limited to an interim amount of $30,000,000
pending entry of the Final Order (described below). If
the Final Order is not entered within 30 days after the
Closing Date, all interim advances made to the
Borrowers shall be due in full and immediately payable.
Canadian Approvals: The following orders of the Canadian Court (and
together with the consents from the Pre-Petition
Lenders described in paragraph (B) below, the "Canadian
Approvals") shall have been entered, shall be in full
force and effect and shall not have expired or been
stayed, reversed, vacated or rescinded, and all such
orders shall be satisfactory to the DIP Agent and the
DIP Lenders in order for (y) the assets of the Canadian
Credit Parties to be taken into account for the
calculation of the Borrowing Base as described under
"Availability" above and (z) the Canadian Credit
Parties to become Guarantors as described under
"Guarantors" above:
(A) The DIP Facility, including the
security interests and charges over
assets in Canada described under
"Security" above, with the priority
described therein, shall have been
approved by an order of the Canadian
Court in the Canadian Cases, in form
and substance satisfactory to the DIP
Agent and the DIP Lenders, which shall
also contain provisions:
1. authorizing the execution and
delivery by the Canadian Credit
Parties of all documents, and
the granting of all security,
required in connection with the
DIP Facility, and providing
that such documents or security
shall not be challengeable by
any present or future creditors
of the Canadian Credit Parties
(provided, however, that such
security shall be junior to the
security granted to the Bank
Account Service Providers),
2. providing that such documents
and security shall be effective
notwithstanding that the
execution of such documents and
the granting of
17
66
such security may result in a
breach of any contract or
restriction to which any of
the Canadian Credit Parties is
bound,
3. prohibiting the granting of
any additional security on the
assets of any of the Canadian
Credit Parties,
4. providing that the obligations
of the Canadian Credit Parties
to the DIP Agent, the DIP
Lenders and the Bank Account
Service Providers shall not be
subject to, or compromised or
affected in any way by, any
plan of compromise or
arrangement in the Canadian
Cases, and
5. granting relief from the stay
in the Canadian Cases to permit
enforcement by (a) the DIP
Agent, the DIP Collateral
Agents and the DIP Lenders of
the rights and remedies under
the DIP Facility and their
security and (b) the Bank
Account Service Providers of
their rights and remedies, upon
the occurrence of an event of
default under the DIP Facility;
(B) The Pre-Petition Lenders shall have
agreed, in a manner acceptable to the
DIP Agent and the DIP Lenders, to
postpone their security in the
Pre-Petition Collateral to the
Facility Liens, and such agreement and
postponement shall be in form and
substance satisfactory to the DIP
Agent and the DIP Lenders;
(C) All orders of the Canadian Court in
form and substance satisfactory to the
DIP Agent and the DIP Lenders,
authorizing the use by the Borrowers
and the Guarantors of (a) the
Pre-Petition Lenders' cash collateral
(other than the cash collateral of the
LC Issuers, the LC Lenders, issuers of
letters of credit under
18
67
the Permitted LC Facility and the Bank Account
Service Providers) and (b) the Asset Sale
Proceeds deposited in the Proceeds Account (as
defined in the Proceeds Agreement) prior to
the commencement of the Cases;
(D) All other "first day" orders in the Canadian
Cases necessary or appropriate in the judgment
of the DIP Agent and the DIP Lenders;
(E) The orders of the Canadian Court referred to
in clauses (A), (B), (C) and (D) above shall
not have expired or been stayed, reversed,
vacated or otherwise modified without the
prior written consent of the DIP Agent and the
Required DIP Lenders; and
(F) The DIP Agent and the DIP Lenders shall be
satisfied that all orders described above
shall be binding on all existing material
creditors (or other persons described therein)
of the Borrowers and the Guarantors, and shall
be effective to provide the stay of actions,
priorities, liens and other protections for
the Borrowers, the Guarantors, the DIP Agent,
the DIP Collateral Agents and the DIP Lenders
purported to be granted thereby.
Conditions Precedent
to Initial Loans and
L/Cs: Customary for debtor-in-possession financings including,
without limitation, accuracy of representations and
warranties, absence of defaults, evidence of authority,
legal opinions, compliance with laws, and receipt of
necessary consents and approvals, and shall also
include, without limitation:
(1) (i) The Borrowers shall have engaged in
negotiations regarding the Pre-Arranged Plan with
the holders (or representatives of such holders) of
claims and interests against the Borrowers and/or
their subsidiaries entitled to vote on the
Pre-Arranged Plan, (ii) the Borrowers shall
19
68
have used their best efforts to obtain written
agreements, to the extent legally permissible, from
such holders of claims in terms of amount of claims
and number of holders as required for the approval
of the Pre-Arranged Plan by the relevant classes of
claims under the Bankruptcy Code and the CCAA,
committing such holders (a) to vote in favor of the
Pre-Arranged Plan and (b) not to sell or assign
their claims except to an entity that agrees in
writing to be bound by the terms of such
agreements, (iii) the Pre-Arranged Plan, and a
disclosure statement approved by the Required DIP
Lenders with respect thereto, shall have been
appropriately filed by the Borrowers in the Cases,
and the Borrowers shall have requested hearings in
respect of approval of such disclosure statement
and confirmation of the Pre-Arranged Plan, and
(iv) the Pre-Arranged Plan shall be feasible and
there shall exist no known impediment to
confirmation of the Pre-Arranged Plan and
consummation thereof by November 30, 1999;
(2) Execution of the DIP Credit Documentation in form
and substance satisfactory to the DIP Agent and the
DIP Lenders;
(3) Since the date of this letter there shall not have
occurred, and the DIP Agent shall not have
discovered the existence of, (i) facts (to the
extent not previously known) which constitute any
material adverse change in the business,
properties, assets, condition (financial or
otherwise) or prospects of the Borrowers or the
Guarantors, their affiliates and their
subsidiaries, as a whole, from that set forth in
their financial statements dated as of September
30, 1998, other than as set forth in their
financial statements dated as of March 31, 1999, or
(ii) litigation, which after giving effect to the
commencement of the Cases, is reasonably likely to
be material and adverse to the Borrowers, the
Guarantors, their affiliates and their
subsidiaries, as a whole;
(4) The following orders of the US Court shall have
been entered, shall be in full force and effect and
shall not have been stayed, reversed, vacated or
rescinded, and all such orders shall be
satisfactory to the DIP Agent and the DIP Lenders:
(A) All orders authorizing the DIP Facility (a
portion or all of which may be authorized by
entry of an initial
20
69
order to be followed by a final order) and the
Facility Liens. An initial order may be entered on
an emergency and/or interim basis in the US Cases
(the "Interim Order"), after notice given and a
hearing conducted in accordance with Bankruptcy
Rule 4001 (c) no later than 15 days after the date
of the commencement of the US Cases, authorizing
and approving the transactions contemplated in the
DIP Credit Documentation and finding that the DIP
Lenders are extending credit to the Borrowers and
their affiliates in good faith within the meaning
of Bankruptcy Code Section 364(e), which Interim
Order shall (i) approve the payment by the
Borrowers of the fees set forth in the Fee Letter
and the professional fees of the DIP Agent and DIP
Lenders referred to herein, (ii) otherwise be in
form and substance satisfactory to the DIP Agent
and the DIP Lenders and (iii) prior to the entry of
the Final Order, be in full force and effect and
not have expired or been stayed, reversed, vacated
or otherwise modified without the prior written
consent of the DIP Agent and the Required DIP
Lenders;
(B) All orders of the US Court (which may be combined
with the Interim Order), in form and substance
satisfactory to the DIP Agent and the DIP Lenders,
pursuant to Section 363(c)(2)(B) of the Bankruptcy
Code authorizing the use by the Borrowers and the
Guarantors incorporated in the United States of (a)
the Pre-Petition Lenders' cash collateral (other
than the cash collateral of the LC Issuers, the LC
Lenders, issuers of letters of credit under the
Permitted LC Facility and the Bank Account Service
Providers) and (b) the Asset Sale Proceeds
deposited in the Proceeds Account prior to the
commencement of the Cases, which orders shall not
have been stayed, reversed, vacated or otherwise
modified without the prior written consent of the
DIP Agent and the Required DIP Lenders; and
(C) All other "first day" orders in the US Cases
necessary or appropriate in the judgment of the DIP
Agent and the DIP Lenders, including without
limitation, as to the continued availability of bid
and performance bonding requirements;
21
70
(5) The DIP Agent shall be satisfied that all orders
described in paragraph (4) above shall be binding
on all existing material creditors (or other
persons described therein) of the Borrowers and the
Guarantors, and shall be effective to provide the
stay of actions, priorities, liens and other
protections for the Borrowers, the Guarantors, the
DIP Agent, the DIP Collateral Agents and the DIP
Lenders purported to be granted thereby;
(6) Cash management systems, including cash
concentration accounts subject to the Facility
Liens and collection requirements satisfactory to
the DIP Agent and the Bank Account Service
Providers, for the US Credit Parties shall have
been established to the reasonable satisfaction of
the DIP Agent and the Bank Account Service
Providers;
(7) Absence of any material adverse change or condition
with respect to the market for debtor-in-possession
financings, the bank syndication market or the
capital markets generally;
(8) Payment of all costs, fees and expenses (including,
without limitation, attorneys and other
professional fees) owing to the DIP Agent and the
DIP Lenders as referenced herein and in the Fee
Letter;
(9) Receipt by the DIP Agent and the DIP Lenders of the
Budget covering the period from the Closing Date
through the Maturity Date, and other cash flow and
financial information that the DIP Agent may
request, all in form and substance satisfactory to
the DIP Agent and, with respect to the Budget, the
Required DIP Lenders;
(10) Satisfactory completion by the DIP Agent and its
professionals of all due diligence deemed
necessary;
(11) Receipt by the DIP Agent of legal opinions of
counsel to the Borrowers and the Guarantors, in
form and substance satisfactory to the DIP Agent;
(12) Resolutions of the Boards of Directors of each of
the Borrowers and the Guarantors in form and
substance satisfactory to the DIP Agent,
authorizing and approving the commencement of the
Cases and the borrowings and other transactions
contemplated by the DIP Credit Agreement; and
22
71
(13) Receipt by the DIP Agent of satisfactory
consultants' reports and projections necessary to
determine advance rates and eligibility
requirements to substantiate and monitor the
Borrowing Base with respect to the Industrial
Services Group, the US Ferrous division, the US
Copper division and any other division of the
Borrowers, the accounts receivable of which are to
be included in the Borrowing Base on the Closing
Date.
Conditions
Precedent to
Each Loan and L/C: The DIP Credit Documentation shall contain
conditions precedent to each extension of credit
(including the initial extension of credit)
required by the DIP Agent, including, without
limitation:
(a) No Default or Event of Default exists.
(b) All representations and warranties shall be true
and correct in all material respects as of the date
of each extension of credit, including that there
shall not have occurred any material adverse change
since the Closing Date in the business, properties,
assets, condition (financial or otherwise) or
prospects of the Borrowers, the Guarantors and
their subsidiaries and affiliates taken as a whole.
(c) The Interim Order shall be in full force and effect
or, if the date of the requested extension of
credit is more than 30 days after the Closing Date,
or if the amount of such requested extension of
credit, together with the amount of all extensions
of credit under the DIP Credit Documentation then
outstanding, shall exceed the maximum amount
authorized pursuant to the Interim Order, an order
of the Bankruptcy Court granting final approval of
the DIP Loan Agreement (the "Final Order") shall
have been entered in form and substance
satisfactory to the DIP Agent, and shall be in full
force and effect and shall not have been stayed,
reversed, vacated or otherwise modified without the
prior written consent of the DIP Agent and the
Required DIP Lenders.
(d) Receipt by the DIP Agent of a certificate (a
"Borrowing Certificate") executed by an executive
officer of one of the Borrowers, to the effect that
(i) the proposed extension of credit and its
intended use are consistent with the terms of
23
72
the DIP Credit Documentation and the Budget and
is necessary, after utilization and application
of available cash, in order to satisfy the
obligations of the Borrowers and the Guarantors
in the ordinary course of business or as
otherwise permitted under the DIP Credit
Agreement, (ii) the Borrowers and the Guarantors
have observed or performed all of their covenants
and other agreements and have satisfied in all
material respects every condition contained in
the DIP Credit Documentation and the Interim
Order or the Final Order (as applicable) to be
observed, performed or satisfied by the Borrowers
or such Guarantor and (iii) such officer has no
knowledge of any Default or Event of Default.
(e) Payment of all fees, costs, expenses and other
amounts then due and payable.
(f) Prior to the first advance, if any, the proceeds of
which shall be used by any US Credit Party to make
a loan, dividend or any other advance to any
Canadian Credit Party (including any loan, dividend
or other advance to the Canadian Borrower in an
amount in excess of the corporate overhead
requirements of the Canadian Borrower), the
Canadian Approvals shall have been obtained, and
all appeal periods relating thereto shall have
expired.
(g) All funds remaining in the Proceeds Account on the
date that the Cases are commenced (other than funds
subject to the liens of the Bank Account Service
Providers that have not been released pursuant to
the Proceeds Agreement), shall have been released.
Voting and
Amendments: "Required DIP Lenders" shall mean, as of any date
of determination, the DIP Lenders who in the
aggregate hold at least a majority in amount of
the Total Commitment (which, if terminated, shall
be deemed outstanding in the amount outstanding
immediately prior to such termination), subject to
customary exceptions.
Assignments/
Participations: Assignments and participations by the DIP Lenders
to financial institutions and funds will be
permitted subject to such limitations (including
minimum amounts and maximum concentration limits)
to be imposed by the DIP Agent.
24
73
Governing Law: New York, except as governed by the Bankruptcy
Code or the CCAA.
25
