1
EXHIBIT 10.9
▇▇▇▇▇▇ Services Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇, LCD #1
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
April 5, 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
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Dear Sirs:
RE: ▇▇▇▇▇▇ SERVICES CORP.
This letter agreement (this "Agreement") sets out the agreement among
▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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, and Dresdner Bank Canada and
Dresdner Bank AG New York Branch, as documentation agents, 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
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 shall be solicited and received from
holders of claims arising out of the Existing Credit Agreement prior
to commencement of the Cases and will be solicited from holders (or
representatives of such holders) of all other classes of impaired
claims and interests 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
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 its 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 term
sheet attached as Schedule C hereto (the "DIP Term Sheet") and the
granting of the security for the DIP
4
LOCKUP AGREEMENT
- 4 -
Financing (the "DIP Security") 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
prior to commencing the Cases, 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, prior to
commencing the Cases, those unsecured creditors
5
LOCKUP AGREEMENT
- 5 -
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. The Consenting Lenders will work together
with PSC and its Affiliates to coordinate cost-effective performance
of the advisors' work; and
(c) from February 28, 1999, 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
prepackaged Cases contemplated by the Term Sheet);
provided, however, that the filing of an involuntary
petition
6
LOCKUP AGREEMENT
- 6 -
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
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 would
have the right to indemnification from PSC, unless such settlement contains a
full and
8
LOCKUP AGREEMENT
- 8 -
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 ANY DISPUTE BETWEEN THE
PARTIES UNDER THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
9
LOCKUP AGREEMENT
- 9 -
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:
(a) 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; and
(b) PSC and ▇▇▇▇▇▇ Services (Delaware) Inc. have entered into the
DIP Term Sheet and an agreement with the Administrative Agent,
approved by the Required Lenders, with respect to the terms of
release of the net proceeds of sale of PSC's aluminum division and
other asset sale proceeds referred to in the Term Sheet.
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"),
10
LOCKUP AGREEMENT
- 10 -
the Consenting Lenders, and to the fullest extent allowed by applicable law,
all other creditors and shareholders of the Debtors:
(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 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) 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, and supersedes all prior agreements, understandings,
negotiations and discussions with respect to the subject matter hereof. There
are no promises, undertakings, representations or warranties by any of the
Parties not expressly set forth or referred to herein or therein.
11
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
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice-President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Case LLP
▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ Avenue of the Americas
Suite 2300 New York, New York
Toronto, Ontario 10036-2767 USA
▇▇▇ ▇▇▇
Attention.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
12
LOCKUP AGREEMENT
- 12 -
IF TO PSC:
▇▇▇▇▇▇ Services Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
LCD #1
Hamilton, Ontario
L8N 4J6
Attn.: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Stikeman ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇
▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ 333 West ▇▇▇▇▇▇ Drive
Toronto, Ontario Chicago, Illinois
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇.▇.▇.
Attn.: ▇▇▇▇ ▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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.
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,
▇▇▇▇▇▇ SERVICES CORP.
By:_______________________________________
13
LOCKUP AGREEMENT
- 13 -
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
LOCKUP AGREEMENT
- 14 -
ABN AMRO BANK CANADA ACCORD FINANCIAL
CORPORATION
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
BANCO CENTRAL
AMERICAN REAL ESTATE HISPANOAMERICANO, S.A.
HOLDINGS L.P. MIAMI AGENCY
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
BANQUE ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ (▇▇▇▇▇▇)
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
15
LOCKUP AGREEMENT
- 15 -
BEAR, ▇▇▇▇▇▇▇ & CO. INC. CHASE BANK OF TEXAS, N.A.
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
THE CHASE MANHATTAN BANK THE CHASE MANHATTAN BANK OF
CANADA
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
CITIBANK, N.A. COMERICA BANK
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
16
LOCKUP AGREEMENT
- 16 -
CREDIT SUISSE FIRST BOSTON CREDIT SUISSE FIRST
BOSTON CANADA
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
DAI-ICHI KANGYO BANK THE DAI-ICHI KANGYO
(CANADA) BANK, LTD.
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
DEUTSCHE BANK AG, NEW YORK
AND OR CAYMAN ISLAND
BRANCHES DEUTSCHE BANK CANADA
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
17
LOCKUP AGREEMENT
- 17 -
DRESDNER BANK AG NEW
YORK BRANCH AND
DRESDNER BANK AG
GRAND CAYMAN BRANCH DRESDNER BANK CANADA
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
▇▇▇▇▇ ▇▇▇▇▇ - SENIOR DEBT PORTFOLIO FERNWOOD ASSOCIATES L.P.
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
FOOTHILL CAPITAL
CORPORATION FUJI BANK CANADA
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
18
LOCKUP AGREEMENT
- 18 -
THE FUJI BANK, LIMITED, NEW YORK ▇▇▇▇▇▇▇ SACHS CANADA
BRANCH CREDIT PARTNERS CO.
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT HIGH RIVER LIMITED
PARTNERS L.P. PARTNERSHIP
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
KEYBANK NATIONAL
ASSOCIATION ▇▇▇▇▇▇▇▇▇ CORP.
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
19
LOCKUP AGREEMENT
- 19 -
▇▇▇▇▇▇▇▇▇ LLC MELLON BANK CANADA
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
MELLON BANK, N.A. THE MUTUAL LIFE
ASSURANCE COMPANY OF
CANADA
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
MUTUAL SHARES FUND, a
series of FRANKLIN
MUTUAL SERIES FUND
INC. NATIONSBANK, N.A.
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
20
LOCKUP AGREEMENT
- 20 -
PARIBAS PNC BANK, NATIONAL
ASSOCIATION
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
THE ROYAL BANK OF
SCOTLAND PLC SAKURA BANK (CANADA)
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
THE SAKURA BANK, LIMITED SOCIETE GENERALE
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
21
LOCKUP AGREEMENT
- 21 -
SOCIETE GENERALE (CANADA) SUMMIT BANK
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
THE TORONTO-DOMINION BANK TORONTO DOMINION (NEW
YORK), INC.
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
TRANS CANADA CREDIT
CORPORATION INCORPORATED TRI-LINKS INVESTMENT TRUST
by:_____________________________ by:______________________________
name: name:
title: title:
by:_____________________________ by:______________________________
name: name:
title: title:
22
LOCKUP AGREEMENT
- 22 -
WACHOVIA BANK, N.A.
by:_____________________________
name:
title:
by:_____________________________
name:
title:
23
SCHEDULE A
▇▇▇▇▇▇ SERVICES CORP.
RESTRUCTURING TERMS
This term sheet sets forth the principal terms and conditions for the
restructuring of ▇▇▇▇▇▇ Services Corp. ("PSC") and its Affiliates under a
prearranged plan of reorganization (the "Plan") under Chapter 11 of the United
States Bankruptcy Code and under the Companies Creditors Arrangement Act
(Canada).
This term sheet pertains only to the terms of a restructuring in the context of
the prepackaged 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 ▇▇▇▇▇▇ 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, Dresdner Bank Canada and
Dresdner Bank AG New York Branch as Documentation Agents, 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), $400 million of the Existing
Syndicate Debt will be restructured as senior
secured debt (the "Senior Secured Debt"), in two
tranches. One tranche will be $300 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
notes ("Secured PIK Notes"). 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.
24
- 2 -
(I) BORROWERS: PSC and ▇▇▇▇▇▇ Services (Delaware) Inc. (the "US
Borrower").
(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: $300 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 Borrowers 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 their 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 NOTES: The Secured PIK Notes will be issued to
the Lenders pro rata in exchange for an equal
amount of the Existing Syndicate Debt.
25
- 3 -
(A) AMOUNT: $100 million.
(B) INTEREST: 10% per annum. Subject to (iv)(A) below, interest
will accrue and be paid quarterly in arrears by
the issuance of additional Secured PIK Notes.
All interest calculations shall be based on a
360-day year and actual days elapsed.
(C) CONVERTIBILITY: The Secured PIK Notes 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 Notes 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 Notes issued in respect of interest
on Secured PIK Notes will not be convertible.
(D) MATURITY: 5 years from Plan Implementation.
(E) REDEMPTION: The Secured PIK Notes 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 Notes for a price (the
"Redemption Price") equal to 115% of the face
amount of such Secured PIK Notes plus all
accrued interest on the Secured PIK Notes.
26
- 4 -
If the Offeror has notified PSC that it
requires PSC to exercise the redemption
right and the amount the holders of the
Secured PIK Notes would have received by
converting the convertible Secured PIK
Notes 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 Notes, any Secured
PIK Note 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 Notes will be
entitled to receive the Tender Price.
(ii) The Secured PIK Notes 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 Notes upon payment of the
following percentage of the face amount of
the Secured PIK Notes during the periods
following Plan Implementation indicated
below, plus all accrued interest on the
Secured PIK Notes:
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.
(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
27
- 5 -
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, (a) to pay accrued but
unpaid interest with respect to the Secured
PIK Notes and (b) to repay Secured PIK
Notes previously issued in respect of
interest on the Secured PIK Notes; 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 and excluding PUMC EBITDA but
including any dividends which are paid or
payable by PUMC) 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 cumulative basis, plus the $68,500,000
currently being held by CIBC representing
proceeds of the sale of PSC's Aluminum division
less required
28
- 6 -
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
Notes 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 any appropriate modifications so
that they secure the Senior Secured Term Debt and
the Secured PIK
29
- 7 -
Notes. The Senior Secured Term Debt and
the Secured PIK Notes 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) PSC has advised the Lenders that it intends to
sell its interest in ▇▇▇▇▇▇ Utilities Management
Corporation ("PUMC"). PSC will actively market
its interest in PUMC and diligently proceed with
such sale.
If PSC sells its interest in PUMC prior to
Plan Implementation pursuant to a sale
approved by the Lenders, $70,000,000 of the
Existing Syndicate Debt will be repaid on
closing of the sale and the Senior Secured
Term Debt to be retained by the Lenders on
Plan Implementation will be reduced to
$250,000,000.
If PSC has not sold its interest in PUMC
prior to Plan Implementation, an additional
$20,000,000 of the Existing Syndicate Debt
will be restructured as senior debt which
will be represented by a non-interest
bearing secured promissory note (the "PUMC
Note") under which the recourse of the
Lenders will be limited to security over
PSC's rights in PUMC. The PUMC Note will
mature on the earlier of the closing of the
sale of PUMC and the maturity of the Senior
Secured Term Debt and will include
covenants relating to the disposition of
PUMC. On closing of a sale of PSC's
interest in PUMC approved by the Lenders,
PSC will repay
30
- 8 -
the PUMC Note and $50,000,000 of the Senior
Secured Term Debt.
If the Net Asset Sale Proceeds of PUMC
(whether before or after Plan
Implementation) exceed $70,000,000, the
excess will be applied as provided in the
asset sale proceeds formula in (iv)(B)
above.
(D) 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 90% of the common shares of
the restructured PSC, subject to dilution, inter
alia, upon the conversion of the Secured PIK
Notes.
All common shares issued will be freely
tradeable. 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 ("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
31
- 9 -
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.
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 upon customary trade
terms shall be paid in full in the ordinary course of business in
accordance with the terms of their respective obligations. Certain other
unsecured creditors identified by PSC (as may be agreed by the Lenders in
their sole discretion) shall have their claims exchanged for a pro rata
share of up to $50 million in unsecured payment in kind notes (the
"Unsecured PIK Notes").
UNSECURED PIK NOTES:
ISSUER: PSC
INTEREST: 6% per annum. Interest on the Unsecured PIK
Notes will accrue and be payable in kind by the
issuance of additional Unsecured PIK Notes.
Provided the Senior Secured Debt is not in
default,
32
- 10 -
cash interest will be payable on the
Unsecured PIK Notes following repayment in
full of the Secured PIK Notes.
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.
3. CLASS ACTION CLAIMS:
All class action claims against PSC and any of its Affiliates will be
settled in exchange for common shares of the restructured PSC. Any
equity issued to such claimants together with the equity to be retained
by PSC's existing shareholders shall equal 10% of the common shares of
the reorganized PSC, subject to dilution, inter alia, upon any conversion
of Secured PIK Notes.
4. EXISTING EQUITY HOLDERS OF PSC:
The existing shareholders of PSC will retain 10% of the common shares of
the restructured PSC inclusive of any common shares issued to class
action claimants, subject to dilution, inter alia, upon any conversion of
the Secured PIK Notes.
5. EXIT/WORKING CAPITAL FINANCING:
BORROWER: PSC and ▇▇▇▇▇▇ 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 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
33
- 11 -
(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:
Execution by April 23, 1999 of a definitive
agreement (the "Lock-Up Agreement") between
the Borrowers, the other Restricted Parties
and the Required Lenders consistent with
this term sheet pursuant to which the
Required Lenders (including a majority in
number of the Lenders) agree to vote for
the Plan.
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
and accompanying disclosure
34
- 12 -
statement and information circular (the
"Disclosure Statement"), not later than
June 1, 1999.
The Disclosure Statement shall be approved
by the US and Canadian courts presiding
over the Cases (the "Bankruptcy Courts")
not later than July 15, 1999.
The Bankruptcy Courts shall confirm the
Plan not later than August 16, 1999.
Plan Implementation shall occur not later
than September 15, 1999 (the "Plan
Implementation Date").
7. CONDITIONS: [NOTE: TO BE DELETED UPON EXECUTION OF LOCK-UP AGREEMENT
AND DIP TERM SHEET]
(a) Execution of the Lock-Up Agreement.
(b) PSC and ▇▇▇▇▇▇ Services (Delaware) Inc. shall
have entered into a term sheet, with BTCo as DIP
Agent and BTCo and/or its affiliates and CIBC as
co-arrangers, on or before the date of the
Lock-Up Agreement in form and substance
satisfactory to PSC and the Required DIP Lenders
(as defined in the DIP term sheet) and the
Required Lenders for the provision of up to
$100,000,000 of debtor-in-possession financing in
the Cases or such greater or lesser amount as may
be agreed to by PSC, the Required DIP Lenders and
the Required Lenders.
8. 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)
35
- 13 -
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 new 90% shareholders, i.e., 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 terminated, and (ii) each of the
conditions set out in Section 7 of the Lock-Up
Agreement shall have been satisfied.
9. 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 5th day of April, 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.
* 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 letters of credit
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.
Letters of credit 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 $20 million referred to in paragraph 1 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 or US LC Commitment as a proportion of the aggregate Cdn. LC
Commitment or US LC Commitment, as the case may be.
3. If the amount drawn under the Existing LCs on or before Plan Implementation
is less than $20 million (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 in cash or, to the extent an LC Lender does not
fund its share of the Unfunded LC Claim in cash, by receiving adjusted
distributions under the Plan, as provided in paragraph 5. Subject to paragraph
6, if the distributions an LC Lender would otherwise be entitled to are
insufficient to cover the adjustments provided for in paragraph 5, the LC
Lender will fund its share of the Unfunded LC Claim in cash.
4. Any amount drawn under the Existing LCs on or before Plan Implementation and
any cash paid by an LC Lender on account of its share of the Unfunded LC Claim
will be included in calculating the Existing Syndicate Debt and the pro rata
shares of each Lender in distributions under the Plan will be calculated
accordingly.
5. To the extent an LC Lender has not funded its share of the Unfunded LC Claim
in cash, its percentage share of the distributions under the Plan will be
reduced (or increased, if the difference is a negative number) by a percentage
equal to the difference between:
39
2
(a) the percentage share of the distributions to Lenders it would
have received if $20 million had been drawn under the Existing LCs
on or before Plan Implementation; and
(b) the percentage share of the distributions to Lenders it would
have received based on the Existing Syndicate Debt (including the
amounts referred to in paragraph 4) outstanding on Plan
Implementation.
There will be an increase in the percentage distributions to other Lenders
corresponding to the decrease in distributions to the LC Lenders.
6. If the distribution entitlement of an LC Lender together with that of any
Lender which is Affiliated with such LC Lender ("Affiliated Lender") would be
sufficient on an aggregate basis to cover the adjustments provided for in
paragraph 5, the LC Lender and its Affiliated Lender may elect to have the
adjustments under paragraph 5 apply to the aggregate distributions to them, and
all references in paragraph 5 to the LC Lender will be deemed to be references
to the LC Lender and its Affiliated Lender.
7. Any cash contribution by the LC Lenders on the Unfunded LC Claim will be
distributed to all of the Lenders on Plan Implementation pro rata, after giving
effect to the applicable adjustments described in paragraphs 4 and 5.
8. 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 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 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 prior to the date of the Lockup Agreement for the
benefit of the LC Lenders in respect of the Existing LCs will be paid to the LC
Lenders, and any cash paid into such cash collateral account after the date of
the Lockup Agreement will be distributed to the Lenders.
9. 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. Such amounts are shown in italics.
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
------------------------------------ -------------------------- -----------------------------
ABN Amro Bank Canada 15th Floor
Aetna Tower
P.O. Box 114
Toronto-Dominion Centre
Toronto, Ontario
M5K 1G8
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $18,458,771.00
------------------------------------ ------------------------- -----------------------------
Accord Financial Corporation ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $19,765,804.18
------------------------------------ -------------------------- -----------------------------
American Real Estate Holdings L.P. c/o Icahn Associates
Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $82,196,647.08
------------------------------------ -------------------------- -----------------------------
Banco Central HispanoAmericano, S.A. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ Agency ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 6,794,153.00
------------------------------------ -------------------------- -----------------------------
Bankers Trust Company One Bankers Trust Plaza
28th Floor, Mail Stop 2282 $ 8,147,187.76
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ $8,286,330.20 L/Cs
Attention: ▇▇▇▇▇ ▇▇▇▇▇ -$139,142.44
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ L/C cash collat.
------------------------------------ -------------------------- -----------------------------
Banque Nationale de Paris ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
==================================== ========================== =============================
41
- 2 -
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
---------------------------------- ------------------------------ -----------------------------
Banque Nationale de Paris (Canada) ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $11,134,779.00
---------------------------------- ------------------------------ -----------------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇,▇▇▇,▇▇▇.▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ $77,872,142.33 non-L/Cs
Attention: ▇▇ ▇▇▇▇▇ + $14,770,042 L/Cs
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ -$248,015.66 L/C cash collat.
---------------------------------- ------------------------------ -----------------------------
BT Bank of Canada ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ $34,828,810.50
▇▇▇ ▇▇▇ $ 32,084,478.00 non-L/Cs
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ + $2,791,201.81 L/Cs
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ - $46,869.31 L/C cash collat.
---------------------------------- ------------------------------ -----------------------------
Canadian Imperial Bank of Commerce ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ $50,054,294.89
▇▇▇ ▇▇▇ $46,394,914.00 non-L/Cs
Attention: ▇▇▇▇ ▇▇▇▇▇▇ + $3,721,877.94 L/Cs
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ -$62,497.05 L/C cash collat.
---------------------------------- ------------------------------ -----------------------------
Chase Bank of Texas, N.A. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
5 TCBE 78
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $21,082,701.00
---------------------------------- ------------------------------ -----------------------------
The Chase Manhattan Bank c/o Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 4,602,489.51
================================== ============================== =============================
42
- 3 -
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
---------------------------------- -------------------------------- -----------------------------
The Chase Manhattan Bank of Canada 1 First Canadian Place
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
P.O. Box 106
Toronto, Ontario
M5X 1A4
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $13,844,078.00
---------------------------------- -------------------------------- -----------------------------
CIBC Inc. Cross Border
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ $10,862,645.45
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $11,048,164.06 L/Cs
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ -$185,518.61 L/C cash collat.
---------------------------------- -------------------------------- -----------------------------
Citibank, N.A. ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 9,216,531.50
---------------------------------- -------------------------------- -----------------------------
Comerica Bank International Finance Department
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Persons
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $37,216,888.00
---------------------------------- -------------------------------- -----------------------------
Credit Suisse First Boston Eleven Madison Avenue
New York, New York 10010-3629
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ and
(▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
---------------------------------- -------------------------------- -----------------------------
Credit Suisse First Boston Canada Credit Suisse Centre
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $14,846,373.00
---------------------------------- -------------------------------- -----------------------------
Dai-Ichi Kangyo Bank (Canada) Commerce Court West
Suite 5025
P.O. Box 295
Toronto, Ontario
M5L 1H9
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 6,152,924.00
================================== ================================ =============================
43
- 4 -
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
------------------------------------ ---------------------------------- -------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
The Dai-Ichi Kangyo Bank, Ltd. Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $16,985,383.00
------------------------------------ ---------------------------------- -------------------------------
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Deutsche Bank AG, New York and or Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Cayman Island Branches Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
------------------------------------ ---------------------------------- -------------------------------
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Fax: (416)
682-8444
▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Deutsche Bank Canada Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $25,981,152.00
------------------------------------ ---------------------------------- -------------------------------
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ $27,848,028.45
Dresdner Bank ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ $16,985,383.00Non-L/Cs
and Dresdner Bank AG Grand Cayman Attention: ▇▇▇▇▇▇ von Finckenstein +$11,048,164.06L/▇▇
▇▇▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ -$185,518.61 L/C cash collat.
------------------------------------ ---------------------------------- -------------------------------
▇▇▇▇▇ ▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
P.O. Box 430
Toronto, Ontario $22,753,282.89
▇▇▇ ▇▇▇ $19,093,902.00non-L/Cs
Attention: ▇▇▇▇▇▇▇ ▇. Eeuwes +$3,721,877.94L/▇▇
▇▇▇▇▇▇▇▇ Bank Canada Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ -$62,497.05 L/C cash collat.
------------------------------------ ---------------------------------- -------------------------------
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ - Senior Debt Portfolio Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 6,794,152.50
------------------------------------ ---------------------------------- -------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Fernwood Associates L.P. Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $22,673,049.15
------------------------------------ ---------------------------------- -------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Foothill Capital Corporation Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 4,359,446.43
==================================== ================================== ===============================
44
- 5 -
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
----------------------------------- ---------------------------- -----------------------------
BCE Place
Canada Trust Tower
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Fuji Bank Canada Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 6,152,923.60
----------------------------------- ---------------------------- -----------------------------
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ van
The Fuji Bank, Limited, New York Ravenswaay
Branch Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
----------------------------------- ---------------------------- -----------------------------
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ Sachs Canada Credit Attention: ▇▇▇▇ ▇▇▇▇▇▇
Partners Co. Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 4,882,369.31
----------------------------------- ---------------------------- -----------------------------
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Sachs Credit Partners L.P. Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 3,367,452.56
----------------------------------- ---------------------------- -----------------------------
c/o Icahn Associates Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
High River Limited Partnership Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $159,619,758.52
----------------------------------- ---------------------------- -----------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Code: OH-01-27-0504
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Keybank National Association Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 13,588,307.00
----------------------------------- ---------------------------- -----------------------------
c/o Cerberus Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Corp. Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 19,883,776.56
----------------------------------- ---------------------------- -----------------------------
c/o Cerberus Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLC Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 30,573,691.38
=================================== ============================ =============================
45
- 6 -
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
------------------------------ ----------------------------------- ---------------------------
Mellon Bank Canada ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $14,846,373.00
------------------------------ ----------------------------------- ---------------------------
Mellon Bank, N.A. ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
#▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ 15258-0001
Attention: ▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or
(▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
------------------------------ ----------------------------------- ---------------------------
The Mutual Life Assurance ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Company of Canada ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $15,382,309.00
------------------------------ ----------------------------------- ---------------------------
Mutual Shares Fund, a series ▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ Mutual Series ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fund Inc. Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $11,306,398.97
------------------------------ ----------------------------------- ---------------------------
Nationsbank, N.A. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 47,689.76
------------------------------ ----------------------------------- ---------------------------
Paribas 1200 ▇▇▇▇▇ Fax:
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $13,588,307.00
------------------------------ ----------------------------------- ---------------------------
PNC Bank, National Association ▇▇▇ ▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $33,970,767.00
------------------------------ ----------------------------------- ---------------------------
The Royal Bank of Scotland PLC Wall Street Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $13,588,307.00
============================== =================================== ===========================
46
- 7 -
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
------------------------------------ ---------------------------------- -----------------------------
Sakura Bank (Canada) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $22,269,559.00
------------------------------------ ---------------------------------- --------------
The Sakura Bank, Limited Commerce Court West
Suite 3601
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
------------------------------------ ---------------------------------- --------------
Societe Generale Asset Recovery Management
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
------------------------------------ ---------------------------------- --------------
Societe Generale (Canada) Scotia Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $37,115,932.00
------------------------------------ ----------------------------------- -------------
Summit Bank ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 1200
Cranford, New Jersey 07016-1200
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 3,997,892.00
------------------------------------ ---------------------------------- --------------
The Toronto-Dominion Bank ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $37,115,932.00
------------------------------------- ---------------------------------- --------------
Toronto Dominion (New York), Inc. ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 0.00
==================================== ================================== ==============
47
- 8 -
CONSENTING LENDER ADDRESS CONSENTING LENDER'S DEBT
------------------------------------ -------------------------- -----------------------------
Trans Canada Credit 3 Concorde Gate
Corporation Incorporated ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $32,938,067.88
------------------------------------ --------------------------------- --------------
Tri-Links Investment Trust 2 World Financial ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $ 4,603,665.94
------------------------------------ --------------------------------- --------------
Wachovia Bank, N.A. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Fitzhogh ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ $13,588,307.00
==================================== ================================= ==============
48
SCHEDULE C
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 Bank: BTCo.
DIP Collateral Agents: BTCo for the collateral located in the United
States and CIBC for the collateral located in
Canada.
Borrowers: ▇▇▇▇▇▇ Services (Delaware), Inc. (the "US
Borrower") and ▇▇▇▇▇▇ 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.
-1-
49
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 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) October 31, 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 plus (iii) the US Credit
Parties constituting part of the US Copper
division; provided, however, that (iv) 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 (v) the
2
50
Borrowing Base shall not include assets of
the Canadian 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
bi-weekly (or more frequently, if required by
the DIP Agent) by the chief financial officer
of the US 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.
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) consistent with the Budget
(described below), 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 $5,000,000, 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,
and Letters of Credit issued for the account
of, the Canadian Borrower may only be
utilized to provide for the corporate
overhead requirements of the Canadian
Borrower.
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.
-3-
51
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 ▇▇▇▇▇▇ 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 Budge, plus $10,000,000.
Mandatory Repayments: Except (i) to the extent, if any, otherwise
provided in the DIP Credit Documentation (as
defined below), (ii) with respect to the
repayment of the obligations of the Borrowers
to the Pre-Petition Lenders under the
Existing Credit Agreement upon the sale of
▇▇▇▇▇▇ Utilities Management Corporation in
accordance with Section 1(a)(vi)(C) of the
Restructuring Term Sheet, and (iii) (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 , 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 interest 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
-4-
52
minimum principal amounts) without premium or
penalty (limited to the last day of the
applicable interest period for Eurodollar
Loans, as defined below).
Termination of Commitment: The commitment hereunder shall terminate on
May 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
$2,000,000 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
5
53
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 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 connection 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), all of 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
6
54
Borrowers and the Guarantors located in the
US, (iv) an enforceable first priority
security interest and charge on all of the
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.
7
55
Interest in respect of Eurodollar Loans shall
be payable in arrears at the end of the
applicable interest period or, if 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
8
56
covenants required by the DIP Agent,
including without 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) lines, (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 $5,000,000, 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)
9
57
of the Bankruptcy Code or in the Canadian
Cases, (xi) 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,
10
58
(viii) failure of any Credit Party to perform
or comply with 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 any Credit Party 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 October 31, 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
11
59
occurrence of the Closing Date, the Total
Commitment 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
60
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
13
61
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 have
14
62
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
October 31, 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 December 31, 1998, 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
15
63
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 the 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;
16
64
(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
17
65
(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 each of the Borrowers
and, to the extent such persons are not
executive officers of each Guarantor, by an
executive officer of each
18
66
Guarantor, to the effect that (i) the
proposed extension of credit and its intended
use are consistent with the terms of 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 (but not participations) by the
DIP Lenders to financial institutions and
funds will be permitted subject to such
limitations (including minimum amounts and
maximum
19
67
concentration limits) to be imposed by the
DIP Agent. Participation rights will not be
available.
Governing Law: New York, except as governed by the
Bankruptcy Code or the CCAA.
20